SecProbe.io

December 10, 2024
Sebastian Siemiatkowski
Chief Executive Officer
Klarna Group plc
10 York Road
London SE1 7ND
United Kingdom
Re:Klarna Group plc
Draft Registration Statement on Form F-1
Submitted November 13, 2024
CIK No. 0002003292
Dear Sebastian Siemiatkowski:
            We have reviewed your draft registration statement and have the following comments.
            Please respond to this letter by providing the requested information and either
submitting an amended draft registration statement or publicly filing your registration
statement on EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing the information you provide in response to this letter and your
amended draft registration statement or filed registration statement, we may have additional
comments.
Draft Registration Statement on Form F-1
General
Please disclose the basis for all your assertions about your competitive position within
your industry. If you do not have appropriate independent support for a statement,
please revise the language to make clear that this is your belief based upon your
experience in the industry, if true. As non-exclusive examples, please provide the
basis for the below statements:
•"Through both our payment and advertising solutions, we help our merchants
attract new customers, drive higher AOV with higher purchase frequency and
offer frictionless commerce and higher conversion rates" (see pages 9, 99, and
153);1.

December 10, 2024
Page 2
•"Our underwriting process results in credit losses that are lower than the industry
average, while providing more value to consumers and merchants than alternative
payment methods, which helps drive our financial performance" (see pages 9, 99,
and 153);
•"The proportion of our revenue generated from merchants, consumers and
advertising is generally more balanced compared to many of our competitors in
the payments and the banking industries, who tend to depend more heavily than
us on either merchant revenue or interest income" (see pages 11, 102, 156, and
171);
•"Our average balance per consumer is lower than credit cards and average loan
duration is shorter than other banks and credit providers, which provides us the
ability to quickly react to market changes and efficiently manage our credit risk"
(see page 13);
•"We have built one of the largest commerce networks in the world, serving
approximately 84 million active Klarna consumers and more than 550,000
merchants in 25 countries as of December 31, 2023, and facilitating $92.5 billion
of GMV in 2023" (see pages 8, 98, and 152);
•"We operate one of the largest account-to-account (A2A) networks in Europe and
the United States with direct connectivity to over 13,500 banks as of October
2024" (see page 159); and
•"Our credit underwriting capabilities differentiate us from other payment
networks and improve our overall commerce experience" (see pages 13 and 160).
2.We note your disclosure that you are reliant on partner organizations to operate your
business. For instance, we note that you originate loans in the United States through
WebBank, have arrangements with Apple, AliPay, Amazon and others, as well as
your reliance on certain vendors. Your risk factor on page 44 notes that a loss of one
of these arrangements might materially impact your operations as you seek to replace
the partner. However, you currently do not list your arrangements with any of these
companies as material contracts in your Exhibit Table. Please tell us, with a view
towards additional disclosure, about the key business agreements that you rely on, or
that management believes are necessary for your continued growth, including the key
terms of those agreements. Also, tell us how you determined that each of those
agreements is not a material contract, as defined by Item 601(b)(10) of Regulation S-
K, or file those material contracts with your next amendment.
3.Please supplementally provide us with copies of all written communications, as
defined in Rule 405 under the Securities Act, that you, or anyone authorized to do so
on your behalf, present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or not they retain copies of the communications. Please
contact the staff member associated with the review of this filing to discuss how to
submit the materials, if any, to us for our review.
Prospectus Summary, page 1
Refer to your statement on page 9 that on average, 44% of the top 100 merchants in
each of the major markets you serve (based on data from eCommDB and Digital 4.

December 10, 2024
Page 3
Commerce 360) used Klarna in October 2024 to facilitate payments, while an even
greater percentage (63%) advertised on your network in 2023. Please state here the
major markets you serve and the key partners you rely on to serve those markets.
5.We note your disclosure on page 10 discussing your history of "positive net income"
for the first 14 years as you scaled your operations in Europe, as well as the impact of
your expansion into the United States on your results since 2019. Revise your
disclosure to clarify, if true, that while your efforts to expand in the U.S. market
have yielded greater volume, it also led to net losses in that time period. Make similar
balancing changes to your disclosure elsewhere in this registration statement.
6.We note your discussion on page 11 that your funding model relies on your ability to
raise deposits through your banking operations. Refer to your disclosure on page 163
that you offer savings accounts in Sweden and Germany and your disclosure on page
174 that consumers in Sweden and Germany can hold a variety of deposit accounts,
including fixed-term deposits, savings and bank accounts. Please revise your
disclosure early in your prospectus and where you discuss your deposit and savings
services to clarify, if true, that you offer such services only to consumers in Sweden
and Germany.
7.In order for investors to understand how you interact with merchants, advertisers, and
key payment and other service providers in the life cycle of your most significant
credit products, consider providing a graphical presentation of the transaction flow,
and the flow of fees and other remittances throughout the process, similar to what is
currently presented on page 104. The presentation may permit investors to better
understand your discussion of your business model presented in the Summary.
8.We note your disclosure in the Summary, as well as in other portions of the
registration statement, that indicates that one of your competitive advantages is your
access to consumer deposits through your banking subsidiary. We also note your
disclosure on page 163 that most of the deposits collected by Klarna Bank are located
in Sweden, Germany and the rest of the European Economic Area (EEA). Please tell
us, with a view towards revised disclosure, whether there are any limitations on using
funds deposited through Klarna Bank to fund loans made through your partners in
markets beyond the EEA, including in the U.S. through WebBank and in Asia. Clarify
your disclosure throughout so investors understand the key locations you rely on for
both transaction growth and funding resources.
9.Given your company's structure, operating in a number of distinct markets, often
through key partners, please provide an organizational chart that shows the key
components of your business, including how you own and control your key operating
units as well as areas where you are dependent on partners, particularly for access to
significant markets.
10.Please move the Market and Industry Data starting on page 2 and the Glossary of
Terms starting on page 5 to the end of the Prospectus Summary.
Next-Generation Digital Financial Services, page 10
11.Please revise to describe the characteristics of your savings and current accounts that
make them “next-generation.”

December 10, 2024
Page 4
Licensed Bank, page 13
12.Please revise here or where most appropriate to provide a more detailed description of
Klarna Bank AB’s operations including the following:
•The number and location/country of any locations/branches and the primary
services offered.
•Describe any deposit insurance regulatory structure and if you incur any fees.
Key Business Metrics, page 25
13.Please tell us how you considered the guidance in Item 10(e) of Regulation S-K in
determining whether transaction margin dollars is a non-IFRS financial measure. If
you conclude that it is a non-IFRS financial measure, please revise to disclose the
required information including a reconciliation to the most directly comparable
financial measure.
14.We note transaction margin dollars is defined as total revenue less total transaction
costs and that transaction costs do not include technology costs nor customer service
and operations costs. Please tell us why you believe excluding these technology and
customer service and operations costs from transaction costs provides useful
information to investors. In this regard, we note your disclosure on page F-26 that
consumer service revenue is included in your total revenue.
15.We note you define active Klarna consumers as consumers who have made a purchase
or a payment using a Klarna-branded product or logged into the Klarna app within the
past 12 months. Please advise us if you track monthly or quarterly active users. If you
use more frequent than annual data, please provide disclosure, including how you use
the data.
16.We note the statement on page 18 that your success depends on your underwriting
process and ability to accurately price consumer credit. Please revise here and where
appropriate to describe the type of consumers that you target for your key products
and the nature of the products. For example, indicate whether most of your short-term
credit is extended to prime, near prime, or subprime customers.
The success of our business depends on our underwriting process, page 39
17.Revise this section to discuss whether you have experienced periods in which your
delinquencies increased, particularly where any such increases required that you
change your underwriting and credit monitoring process. We note your disclosure, as
well as press reports, that showed that delinquencies on your loans in the U.S.
expanded in the 2022 and 2023 periods, before declining in more recent periods.

December 10, 2024
Page 5
To support our network and operations, we partner with banks in different geographies, page
44
18.Please revise here or where most appropriate to include a description of the general
terms for how you compensate your partner banks and a discussion of the
magnitude and type of business that is generated from your partner banks. For
example, and to the extent material, discuss whether compensation is a volume-based
percentage, fixed fee or other arrangement. Also address how often your agreements
with partner banks are renegotiated (i.e. yearly basis, some other term or ad hoc).
19.We note that you appear to rely on your relationship with WebBank to originate loans
in the U.S. and to help address loan documentation and licensing requirements. We
also note that U.S. banking regulators have increased their scrutiny over banks
providing banking as a service to non-bank customers like Klarna. Revise this section
to separately discuss, under an appropriate heading, the risks associated with your
U.S. expansion and the regulatory oversight impacting you and your U.S. banking
partners, from the more general discussion of your reliance on banking partners in
other portions of the world. In this regard, we note the statement on page 45 that you
are “subject to the examination authority of the FDIC under the Bank Service
Company Act.”
We are subject to regulatory requirements to facilitate the orderly resolution of large financial
institutions, page 69
20.Revise this risk factor to disclose the extent to which your existing debt securities,
including any of the medium term notes you have issued, can be subject to bail-in
provisions. Revise your disclosure related to any impacted debt securities described in
this registration statement to clarify the application of the bail-in provisions to that
security.
Some aspects of the technology supporting our network include open source software, page
73
21.We note that certain key components of your technology that support your network
are developed using open source software. Clarify whether the components that utilize
AI are governed by those open source licenses and address any related risks.
Management's Discussion and Analysis of Financial Condition and Results of Operations,
page 98
22.Please revise to provide additional detail regarding the subsidiaries, currencies, and
any other information necessary to fully understand the key factors resulting in any
material translation adjustments recognized in other comprehensive income for each
year presented.
Merchant-Led Fees, page 103
23.Please further describe your payment flexibility features, such as "snooze," the
specific services offered through each feature, and how you generate fees or interest
based on those features.

December 10, 2024
Page 6
24.We note your illustrative presentation of a "pay later" transaction on page 104. In
order for investors to understand how you interact with merchants, advertisers, and
key payment and other service providers in the life cycle of your most significant
credit products, consider providing a graphical presentation of the transaction flow,
and the flow of fees and other remittances throughout the process. To the extent there
are material differences between the flows for a pay later program, and a Klarna loan
originated through Apple Pay, using the Klarna Card through Visa, or for your other
key loan types (e.g. pay now), provide illustrative examples.
Gross Merchandise Volume, page 105
25.We note your disclosure and discussion of gross merchandise volume (“GMV”).
Please revise here or where most appropriate to detail GMV by point of purchase (i.e.
web sales, app sales, or physical terminal) and/or some other relevant characteristic
for each period presented to provide an investor with a better understanding of how
your customers use your services and the magnitude and trends related to the source
of your GMV.
Consumer Service Revenue, page 109
26.We note disclosure on page 104 that revenue from Klarna Plus is presented as
consumer service revenue. Please revise this section accordingly and provide
quantification or disclosure to allow an investor to understand the types of fees that
were the material drivers of consumer service revenue (i.e. Klarna Plus, Reminder
Fees, Klarna card ownership fees, etc.) for each period presented.
27.Please revise to clearly describe what a reminder fee is.
Our Ability to Attract Merchants and Enable Merchant Success, page 116
28.We note your presentation of case studies for several of your partner merchants on
pages 118 and 119. Revise your discussion supporting each presentation to discuss the
extent that the presented results are, in management's view, representative of your
typical merchant relationship, or exemplary of what successful integration with
Klarna can mean for some merchants, or otherwise. Balance the presentation with a
discussion of the extent that the financial and performance results presented are not
typical of the results enjoyed by your average merchant partner.
Merchant vertical mix, page 121
29.We note your disclosure that your merchants' verticals impact your operating results,
and different verticals have different purchase frequencies, AOV, and may transact to
varying degrees with different Klarna payment methods. Based on the chart provided
on page 179, "...and Diversified Across Merchant Segments," it appears your largest
merchant segment is apparel and accessories. Please revise your disclosure here to
discuss you