Klarna returned to profitability in the second quarter of 2026, posting net income of $9 million versus a $53 million loss a year earlier and beating market expectations for a $17.4 million loss. Revenue rose 27% year over year to $1.04 billion, ahead of the roughly $993 million consensus, while adjusted operating profit more than tripled to $91 million from $29 million. Gross merchandise volume increased 18% to $36.6 billion, with U.S. GMV up 27% to $7.9 billion and accounting for 22% of total GMV. The company said weakness in German consumer spending, especially in discretionary retail, emerged late in the second quarter and continued into the third quarter. Klarna now expects only marginal growth in Germany, its largest market by volume, and assumes conditions will remain soft rather than recover this year. It cut its 2026 GMV guidance to $149 billion to $151 billion from more than $155 billion, citing about $600 million in currency translation effects and weaker German volume expectations, while lowering 2026 revenue guidance to $4.08 billion to $4.16 billion, below analyst estimates. Klarna also issued weaker-than-expected third-quarter guidance, forecasting volume of $35 billion to $36 billion and revenue of $940 million to $980 million, below market expectations, as it enters what it called its main investment quarter. The company expects higher share-based compensation and launch-related spending before benefits emerge in the fourth quarter. Shares fell 22.81% in the prior session before edging 0.40% higher to $15.12 in Wednesday premarket trading as investors weighed strong underlying transaction metrics against a softer near-term outlook.