Klarna vs PayPal: Revenue, Profit and Business Model
Klarna reported $3.5B of revenue in FY2025 and a net loss of $273M. PayPal reported $33.2B of revenue in FY2025 and $5.2B of net income.
Latest financial snapshot
Financial summary
Klarna
Klarna's revenue grew from $2.28 billion in 2023 to $2.81 billion in 2024 and $3.51 billion in 2025, according to its 2025 Form 20-F. Net income swung from a $244 million loss in 2023 to a $21 million profit in 2024, then back to a $273 million loss in 2025, even as adjusted operating profit reached $65 million. Q4 2025 was its first billion-dollar quarter at $1.082 billion of revenue on $38.7 billion of GMV. In Q2 2026, revenue rose 27% to $1.042 billion, transaction margin dollars rose 42% to $446 million and net income was $9 million, against a $53 million loss a year earlier. The market cap was about $5.2 billion in late September 2026, well below the roughly $15 billion valuation at its September 2025 IPO.
PayPal
PayPal is large and profitable, but growth has slowed. Revenue climbed from $21.45 billion in 2020 to $33.17 billion in 2025, yet annual growth fell from about 21% to about 4%. Net income reached $5.23 billion in 2025, up from $4.15 billion in 2024. In Q2 2026 revenue rose 5% to $8.68 billion (3% currency-neutral), total payment volume rose 10% to $486.4 billion, transaction margin dollars rose 1% to about $3.9 billion, and non-GAAP EPS was $1.38. Management then raised full-year 2026 non-GAAP EPS guidance to about $5.38 and guided to at least $6 billion of adjusted free cash flow, most of which goes to buybacks. The stock still trades at roughly 10 times earnings, which shows how skeptical investors are about long-term branded checkout growth.
Revenue and profit by year
Klarna
| Year | Revenue | Net income | Margin | Growth | Source |
|---|---|---|---|---|---|
| FY2025 | $3.5B | -$273M | -7.8% | +24.8% | Source |
| FY2024 | $2.8B | $21M | 0.7% | +23.5% | Source |
| FY2023 | $2.3B | -$244M | -10.7% | — | Source |
PayPal
| Year | Revenue | Net income | Margin | Growth | Source |
|---|---|---|---|---|---|
| FY2025 | $33.2B | $5.2B | 15.8% | +4.3% | Source |
| FY2024 | $31.8B | $4.1B | 13.0% | +6.8% | Source |
| FY2023 | $29.8B | $4.2B | 14.3% | +8.2% | Source |
| FY2022 | $27.5B | $2.4B | 8.8% | +8.5% | Source |
| FY2021 | $25.4B | $4.2B | 16.4% | +18.3% | Source |
| FY2020 | $21.5B | $4.2B | 19.6% | +20.7% | Source |
| FY2019 | $17.8B | $2.5B | 13.8% | +15.0% | Source |
| FY2018 | $15.5B | $2.1B | 13.3% | +18.0% | Source |
| FY2017 | $13.1B | $1.8B | 13.7% | +20.8% | Source |
| FY2016 | $10.8B | $1.4B | 12.9% | — | Source |
Where the revenue comes from
Klarna
- Merchant fees
Fees charged to merchants on Klarna transactions; the largest source of revenue.
- Consumer interest and fees
Interest on Fair Financing and other credit products, plus late fees where permitted.
- Card and memberships
Interchange from the Klarna Card and subscription revenue from Memberships, which grew more than 600% in Q2 2026.
- Advertising and other
Sponsored placements and affiliate revenue in the Klarna app.
PayPal
- Transaction RevenueDominant
Merchant fees and payment-related revenue from branded and unbranded volume.
- Value-Added ServicesMaterial
Interest, credit products, fraud tools, merchant services, and other payments-adjacent products.
- Venmo and Consumer Financial ServicesGrowing
Consumer payment and commerce monetization around Venmo and wallet products.
Business model and strategy
Klarna
How it makes money
Klarna earns money on both sides of a purchase. Merchants pay Klarna a fee on each transaction because offering installments tends to lift conversion and basket size; Klarna pays the merchant upfront and carries the repayment risk (its published US standard rate for Pay in 4 has been 3.29% plus $0.30).
Growth strategy
Klarna calls itself an 'everyday finance network'. The strategy has three parts: distribution through large acquirers and platforms (J.P. Morgan Payments went live in August 2026), higher-frequency products such as the Klarna Card and paid Memberships (2 million subscribers in Q2 2026, eight times a year earlier), and higher-yield lending such as Fair Financing, which 256,000 merchants offered by Q2 2026.
Competitive advantage
Klarna's edge is scale and funding. It reaches more than 120 million active consumers and over 1.2 million merchants in 26 markets, and distribution deals with payment platforms such as J.P. Morgan Payments, Stripe and Adyen switch Klarna on for merchants without a new integration.
PayPal
How it makes money
PayPal makes most of its money from transaction revenue: fees merchants pay when customers check out with the PayPal or Venmo button (branded checkout), fees on unbranded card processing through Braintree, and consumer fees such as instant transfers, cross-border and currency conversion charges. Branded checkout carries the highest margin because PayPal controls the customer relationship;
Growth strategy
Under Enrique Lores, PayPal's 2026 plan has three parts. First, restore growth in branded checkout, which rose only about 2% in Q2 2026, by improving conversion, Fastlane guest checkout and agentic or AI-assisted commerce. Second, make Venmo and Braintree pull more weight: Venmo is being pushed into merchant payments and debit cards, while Braintree is priced for profit rather than volume.
Competitive advantage
PayPal's edge is a two-sided network: about 439 million active accounts at the end of 2025 on one side and millions of merchants on the other. Shoppers who already store cards and bank accounts in PayPal can pay without typing details, and merchants add the button because it can lift conversion with those shoppers. Processors such as Stripe and Adyen serve merchants but do not own a consumer wallet of that size.
Questions about Klarna vs PayPal
Which company has higher revenue — Klarna Group plc or PayPal Holdings, Inc.?
Klarna Group plc reported $3.5B (FY2025), while PayPal Holdings, Inc. reported $33.2B (FY2025). By last reported revenue, PayPal Holdings, Inc. is the larger business, with Klarna Group plc reporting a smaller revenue base.
What is the market cap of Klarna Group plc vs PayPal Holdings, Inc.?
Klarna Group plc's market capitalisation stands at $5.2B, while PayPal Holdings, Inc.'s is $47.0B. PayPal Holdings, Inc. carries the higher market valuation, reflecting investors' expectations of its future earnings power relative to Klarna Group plc.
Which is more financially efficient — Klarna Group plc or PayPal Holdings, Inc.?
Klarna Group plc generates $1.24M / employee in revenue per employee, while PayPal Holdings, Inc. generates $1.39M / employee. PayPal Holdings, Inc. shows higher revenue efficiency per headcount, though this reflects business model differences — capital-light software companies routinely outperform labour-intensive manufacturers on this metric.
How do Klarna Group plc and PayPal Holdings, Inc. make money?
Klarna Group plc and PayPal Holdings, Inc. generate revenue in fundamentally different ways. Klarna Group plc: Klarna earns money on both sides of a purchase. PayPal Holdings, Inc.: PayPal makes most of its money from transaction revenue: fees merchants pay when customers check out with the PayPal or Venmo button (branded checkout), fees on unbranded card processing through Braintree, and consumer fees such as instant transfers, cross-border and currency conversion charges.
Which company is valued higher relative to revenue — Klarna Group plc or PayPal Holdings, Inc.?
On a price-to-sales (P/S) basis, Klarna Group plc trades at 1.5x P/S and PayPal Holdings, Inc. at 1.4x P/S. Klarna Group plc commands a higher revenue multiple, typically indicating that investors expect faster growth or higher future margins compared to PayPal Holdings, Inc.. A higher multiple is not inherently better — it may also signal that the stock is priced for perfection.
Is Klarna Group plc bigger than PayPal Holdings, Inc.?
By last reported revenue, PayPal Holdings, Inc. ($33.2B (FY2025)) is the larger company compared to Klarna Group plc ($3.5B (FY2025)). Revenue scale is one dimension of size — market capitalisation, employee count, and geographic reach are also relevant depending on the context.
Figures come from each company's filings and the sources linked beside them. Amounts reported in another currency are shown in US dollars at an approximate rate and marked with ~. Back to the Klarna vs PayPal overview