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A table that compares key metrics for Klarna and Affirm in 2024. Klarna had  a GMV of $105 billion and revenue growth of 23.5%. Affirm grew faster, with 46% in 2024. Both companies report equal revenue of $2.8 billion, but Klarna has a net income of $21 million, while Affirm shows a loss of $199 million.

Key 2024 metrics for Klarna vs. Affirm

Data: Klarna's F-1, Affirm's 10Q; Chart: Axios Visuals

Klarna is reportedly targeting a $15 billion valuation in its IPO, similar to rival Affirm's (Nasdaq: AFRM) current market cap.

Why it matters: Investors would be setting the same value on two businesses with marked differences.

Zoom in: Klarna has a much broader reach among consumers, processing more payments with more customers, but it has been less effective at turning it into revenue.

The two companies are currently on par for revenue, at around $2.8 billion for 2024. But last year, Klarna posted gross merchandise value (GMV) of $105 billion, while Affirm's was $31.3 billion.

That difference is in part due to the kinds of BNPL business each does: Affirm focuses on longer-duration, interest-bearing loans that can last months versus Klarna's average of 40 days.

According to Mizuho, interest revenue was around 50% of Affirm's revenue, compared with 16% of Klarna's.

The intrigue: Longer-duration loans make more money but tend to be riskier and harder to underwrite, per Mizuho's Dan Dolev.

Between the lines: The key question is trajectory. Affirm's revenue was up 46% over the course of 2024, while Klarna grew 23.5% in the same period.

Affirm core merchant revenue business simply grew faster (up 29.5%). But its fastest growth came from interest income (up 52%) and the sale of loans (96.6%) at a time when asset-backed credit is back in high demand.

Klarna bulls will probably cite recent partnerships with Walmart and Doordash, which have yet to show up in revenue, as a counterpoint.

Behind the scenes: Klarna has emphasized that it funds many of its loans via deposits, which are a steadier source of funding and arguably cheaper.

Klarna's funding costs and credit losses are certainly lower as a percentage of GMV, but are higher than Affirm's as a percentage of revenue. Credit losses were about 17.6% of revenue for Klarna last year, against 14% for Affirm.

Funding costs were also about 17.8% for Klarna, against 14.4% for Affirm.

Between the lines: Klarna's business is profitable, eking out a $21 million net income for 2024, while Affirm posted a loss of $199 million for that period.

But in 2024, Klarna also booked a $171 million gain from selling Klarna Checkout (KCO) for about $520 million — without which it would not have been profitable.

The bottom line: The $15 billion valuation that Klarna is said to be seeking is reasonable given these metrics.

At a time when AI is the headlining act, a lending business is not the ideal silver-bullet market opener. But it does have a comparable on the market, making it a more predictable IPO for bankers.

In this post-ZIRP era, investors have higher demands for IPOs — including revenue of at least $300 million, growth of at least 40%, and profitability.

Klarna vs. Affirm: $15B gets investors different things

The two similarly sized businesses have key differences.

ALT Text: A table that compares key metrics for Klarna and Affirm in 2024. Klarna had a GMV of $105 billion and revenue growth of 23.5%. Affirm grew faster, with 46% in 2024. Both companies report equal revenue of $2.8 billion, but Klarna has a net income of $21 million, while Affirm shows a loss of

Klarna is reportedly targeting a $15 billion valuation in its IPO, similar to rival Affirm&#x27;s (Nasdaq: AFRM) current market cap.Why it matters: Investors would be setting the same value on two businesses with marked differences.

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Klarna vs. Affirm: $15B gets investors different things

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