Matt Frankel

Average revenue per customer was flat year over year.

Despite the company really leaning into deepening relationships and getting repeat customers and engaging its customers more, you would expect that number to be going up.

The rising reserves for credit losses are a concern.

They come with the shifting loan mix.

I'm a Klarna shareholder, and the reason I own shares is for Buy Now, Pay Later.

I love the business dynamics of that part of the business.

But they're shifting more toward a banking product focus.

Their long-term financing product is called Fair Financing.

Their debit card product,

versus traditional buy now, pay later.

In a way, it's a good problem to have.

Fair financing is growing fast.

But it does add an element of risk.

Their CEO said in the earnings release that banking products, including that fair financing and the Klarna card, will be the key drivers of growth going forward.

which might be concerning investors.

Buy Now, Pay Later has generally better economics.

It has much lower loss requirements to really short-term loans and things like that, and greater predictability.

The Colorado's fair financing, their gross merchandise volume increased by 165% year-over-year in the quarter.

Their number of banking customers has more than doubled.

It could be that the banking side of the business is simply growing too fast for comfort.