Klarna Group plc (NYSE:KLAR) shares tumbled over 7% in premarket trading despite reporting fourth quarter revenue of $1.08 billion, slightly above analyst expectations of $1.07 billion. The digital bank and flexible payments provider reached its first billion-dollar revenue quarter, with revenue growing 38% year-over-year. The company's transformation from a payments network to a global digital bank continues to show momentum.

U.S. revenue increased 58% and gross merchandise volume (GMV) reached $38.7 billion, up 32% YoY, with U.S. GMV growing 43%. Klarna reported 118 million active consumers, up 28% YoY, and added a record 115,000 merchants in the quarter, bringing the total to 966,000, a 42% increase YoY. The company's Fair Financing service saw GMV increase 165%, accelerating from 139% growth in the third quarter.

CEO Sebastian Siemiatkowski highlighted that banking consumers doubled to 15.8 million, generating more than three times the revenue of average consumers. Provisions for credit losses declined to 0.65% of GMV in Q4 from 0.72% in Q3, demonstrating the strength of the company's underwriting capabilities. Since Q4 2022, Klarna's revenue has grown 104% while operating expenses declined 8%, with revenue per employee reaching $1.24 million. The company will publish its full annual financial statements on February 26.