#1Klarna Business Update. January-December 2020 K.#2We broke the billion dollar mark - USD 1.2 billion revenue. ■ 2020 was defined by Covid-19 and its wide-ranging impacts. It has accelerated the structural shift of preference from credit to debit, with e-commerce becoming an increasingly dominant channel for retail. ■ 87 million active consumers globally are now choosing Klarna for a healthier, simpler and smarter way to shop, pay and bank every day. ■ Globally, the Klarna app now has 18 million monthly active users, and the number of installs has increased 2.4x comparing Q4 '19 to Q4 '20. ■ In the US, we reached 14 million consumers by year end, and more than 3.5 million monthly active app users. Our app averaged 60,000 daily downloads in December and was downloaded close to 4 million times more than our nearest competitor in 2020. ■ More than 250,000 retailers now trust us to connect them with consumers and work together to deliver incremental sales. We signed more high grossing US retailers - including Sephora, Etsy, Macy's, Foot Locker, Urban Outfitters, Ralph Lauren, Timberland, Saks OFF 5th - than any of our competitors. ■ Credit losses as a percentage of total gross merchandise volume decreased across all major markets. ■ We have launched our pay later offering in 4 new markets - Australia, Italy, Belgium and Spain. More to follow next year. For revenue bridge between management accounts view and statutory view see slide 16.#3Strong financial growth across the board. 46% Gross merchandise volume FY 2020 vs. FY 20193 37% Revenue FY 2020 vs. FY 20194 29.5% (28.1) CET1 ratio - December 2020 USD 53bn¹ (35)² Gross merchandise volume SEK 484bn (332) USD 1.2bn¹ (0.0² Revenue SEK 11,030m (8,060) The information is presented for Klarna Bank AB (publ). 1,2 Klarna Bank AB (publ)'s results are reported in SEK. To arrive at USD values, the average exchange rates YTD have been used; 1 USD equals approximately 9.2 SEK for 2020 and 9.5 SEK for 2019. 3 The % increase in GMV is based on the SEK value between FY 2020 and FY 2019. 4 The % increase in Revenue is based on the SEK value between FY 2020 and FY 2019. For revenue bridge between management accounts view and statutory view see slide 16. 00 O Smoooth#4Our increasing momentum is powered by the strength and relevance of our product. Accelerated growth Year-on-year growth in gross merchandise volume (rolling 12 months) - SEK - Constant FX 29% 28% 28% 31% 34% 39% 41% 48% 46% 2019 2019 2019 2019 2020 2020 2020 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 In 2020 we found new and better ways to ensure that consumers always chose Klarna first and can use Klarna everywhere through our shopping browser, card and In-store capabilities. ■ We are building our brand presence in every market, focusing on providing retail partners and consumers with a smoooth Klarna experience, resulting in an NPS score of 80 in the US. ■ We continue to focus on Klarna being easy to use and easy to keep using. We now offer a one-click experience, digital receipts, images of items bought, shipment tracking, and enhanced customer service and returns. We have also provided consumers with useful tools to enhance their shopping experience including saved wishlists and notifications on deals and price-drops. ■ We have leveraged our data to offer our consumers what they really want, and our retailers the opportunity to capture their intent. ■ These factors have led us to see continuous accelerating growth. Constant FX calculates the rolling 12 months daily volume weighted average FX to SEK and apply those rates to the comparing period. K.#5A one-stop shopping destination. Our app is at the front and center of our experience. Klarna. Your shopping browser Q Search or type URL Q Bookmarks. Wish list Featured stores K. macvs Macy's Sephora Recently viewed History Foot Locker Foot Locker One-time cards K. SHEIN SHEIN View all Shopping browser Klarna app users can now shop and pay for their purchases at any retailer online through the shopping browser. In-store Where do you want to shop? Q Find retailer Top stores Foot Locker Foot Locker H&M H&M ● Sephora Nike > In-store Brick-and-mortar customers can make purchases at any physical store while enjoying a seamless, personalized and engaging shopping experience as they would online. My wish list 4 items $360 $306 Smartwatch 15% 357 ... $125 this Sneakers Wish list Users can add their favorite items to sharable wishlists and get price drop notifications on any item they pin. 6 $10% 10% off your first purchase Sephora 10% - Get 10% off on Deals SEPHORA 20% 20% off on all brushes Sephora www 15% Up to 45% off on all Deals The Klarna app gives users access to daily exclusive deals and price drops from around the globe. G Deliveries Connected email Last updated: 1 min ago Ongoing 09 Durham sporting goods Ready for pickup-3 min ago - Eli's shop Pickup code: 2948 Readalot Estimated in 2 days Delivery Users get all their delivery information in one place by connecting their email, regardless if they paid with Klarna or not, to help keep track of all their orders. K.#6Klarna app continuing to show strong momentum. App usage increases as we add more customer-focused enhancements such as price drop notifications, paying with flexible alternatives and delivery tracking. US app installs 10m 2019 4m 2.6x vs 2019 US monthly active users 2020 Closest competitor (2020) Dec 2019 3x vs 2019 Dec 2020 Global app installs 20m 2019 20m 2.3x vs 2019 Global monthly active app users 1.6x vs 2019 2020 Closest competitor (2020) Dec 2019 Dec 2020 Klarna was ranked in the Top 10 most downloaded shopping apps in US app stores for the entire Q4. Our app was also one of the top five most downloaded apps in the US during Black Friday. Q4'20 US Shopping Apps Download Leaders X amazon O shop Shop Wish SHEIN ebay K. 1. 5. Walmart 6. Amazon 7. 8. Offer Up 9. Target 10. Wish SHEIN eBay 2. shop Shop 3. SHEIN Nike 4. K. Klarna amazon Source: Apptopia / Semrush Black Friday US Online Shopping Apps Download Leaders Bark ebay wish Etsy Amazon Rakuter SHEIN Klarna Offer Up eBay Wish Etsy Rakuten Afterpay 12M Source: Sensor Tower. Based on first-time US app installs from Apple's App Store and Google Play for Friday, November 27, 2020- 11M 8M 6.1M 5.8M 5.7M 5.2M 4.7M 4.6M 4.4M K.#71 million active Vibe members. Our loyalty program which rewards consumers who pay for their goods on time. Vibe - Klarna loyalty program # of vibe users in the US 1m Sep 20 Oct 20 Nov 20 Dec 20 Launched September 2020 - the first shopper loyalty program globally within our industry. More than 1 million customers signed and growing. Currently live in the US and Australia, rolling out in additional markets during 2021. M Rewards th 250 vibes Unlocked rewards a p Sama.com arch K.#8Klarna Everywhere on one powerful app. The Klarna Card is part of the "Klarna everywhere" concept - allowing consumers to shop with us anywhere. The popularity of the Klarna card is evident as Klarna users shift a larger portion of their everyday purchases to Klarna. The Klarna Card is now live in Sweden and Germany. More markets to follow. GMV for users before and after signing up to the Klarna Card, Sweden Before sign-up 2.6x After sign-up 4bn Immediate traction for our savings accounts in the first 12 weeks in Sweden, providing competitive consumer rates and expanded banking offering. In February 2021 we also launched current accounts in Germany. SEK 4bn saved through our new accounts within 12 weeks Amount of SEK in deposit account (SE) # of weeks post launch 0 1 2 3 4 5 6 7 The Klarna savings account and the Klarna card are the first step in building an integrated banking experience for our consumers. 8 9 10 11 12 K.#9Our customer obsession drives greater engagement and loyalty. Our considerable effort to improve our customer experience and add more useful features for our consumers is paying off. In every market, we see that earlier cohorts transact more frequently and the frequency per cohort increases over time. Our products are clearly resonating with consumers. Sweden, our most mature market, showcases the strength of our offer Average # of orders by consumer in Sweden 2014 2016 2018 ~27x ~20x ~17x ~16x ~14x ~11x ~9x 2020 In the US, our high NPS scores are leading to a fast growing loyal customer base NPS score 80 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21#10Leading the industry in putting the consumer first. Actively managing down late fees Driven by the growing app usage adoption as the app helps consumers keep track of their outstanding payments, giving them greater control over their personal finances. Indexed late fees as share of volume. Late fees are defined as fees that originate from consumers not paying on time. 100 - 15 2013 2014 2015 2016 2017 2018 2019 2020 Launch of the "Never forget test" (SE) ■ Part of Klarna's overall work to actively manage down the share of late fees in relation to total volume. ■ Consumers can get reminder fees back by doing the "Never forget test", which promotes responsible spending and gives tips to consumers on how to pay future invoices on time. Nollmissionen (SE) - "Mission zero" ■ Our long-term commitment to increase transparency around customer complaints and reduce them to zero to ensure 100% happy customers. Halved complaints in 2 years from 40 per one million purchases in 2018 to less than 20 per one million in 2020. ■ Mission zero will become global in 2021. 5₂₂ Purchases Q Search for a purchase Transactions Items Today Bela Hauto Due in 30 days Brite Electrical Auto-paying with card Paid off: $30 of $120 Yesterday June 4 Indoor Paid Olive Kitchenware Paid +2 $120 $120 $200 $75#11A preferred growth partner for retailers. Active retailers Growth in number of active retailers¹ during the last twelve months. Global 2019 1.4x vs 2019 2020 In-store² ¹ Retailers that have more than one transaction in the past 12 months. 2 Number of active stores with integrated Klarna In-store solutions at year end. Dec 2019 Our unique brand offering drives millions of referrals and traffic each month from owned channels to our retailers. 22m US lead referrals during December. 1.8x vs Dec 2019 Dec 2020 Rapid growth of Klarna's In-store offering. Global retailers continue to choose Klarna as their preferred payment provider and onboarding has accelerated throughout 2020.#12The big players are choosing Klarna. Among the top 100 highest grossing e-commerce retailers in the US, Klarna is the partner of choice. Number of retailers offering pay later in the Internet Retailer's Top 100 list: 2012 Klarna. Competitor 1 Data: Digital Commerce 360, 2020 5 Competitor 2 EXPRESS Abercrombie & Fitch Co. A&F a&f gilly hicks H&M ★macy's asos RALPH LAUREN CALVIN KLEIN ticketmaster Saky Fifth Avenue SEPHORA JD TOMMY HILFIGER Etsy Lenovo bkomingdale's overstock. boohoo K. Timberland#13Klarna x Sephora. Sephora wanted to provide new levels of financial flexibility online, in-app and in-store across the US and Canada to help their clients shop more easily for the beauty brands and essentials they love. "It's not just about payments. What's really cool is that we can now lean on Klarna for client insights and marketing ideas." Carolyn Bojanowski, GM of E-commerce at Sephora US 65% increase in average order value in physical stores 35% increase in average order value in Sephora's webstore ty is you to g AUTY TOOM 9:41 Sephora K. Sephora Products Lashstash Set $48 sephora.com Power of the Petal $36 sephora.com Makeup Must Haves $48 sephora.com Sephora Where would you like to shop? X Cancel Sephora PRO Face Palette... $58 sephora.com Online View all In-store 5 [2 & L FRAGRANCE#14Strong base of more than 250,000 retail partners. Fashion ANTHROPOLOGIE Theory FARFETCH H&M ★macy's Saksith Avenue EXPRESS GOOD AMERICAN Premium fashion RIVER ISLAND RALPH LAUREN boohoo CALVIN KLEIN Shoes & Accessories pandora® JD Timberland FINISH LINE Mariens DANIEL WELLINGTON Beauty & Cosmetics SEPHORA BEAUTY BAY bluemercury makeup skincare spa Charlotte Tilbury ADOREBEAUTY BEAUTYCOUNTER Sports & Outdoors GYMSHARK THEI NORTH FACE SurfStitch LOTON PELOT BURTON HIBBETT SPORTS Slululemon Marketplace, Electronics & Entertainment Etsy <>nTWPK AliExpress GameStop POWER TO THE PLAYERS dyson SAMSUNG Fender LG K.#15Financial overview.#16Management to statutory revenue reconciliation. Management accounts view Amounts in SEKM Revenue Net financials Commission expenses Financial gains and losses & Other Total net operating income Jan Dec 2020 11,030 -514 -574 Management accounts revenue bridge 58 10,000 Statutory income statement Amounts in SEKm Interest income calculated according to the effective interest rate method Interest expenses Net interest income Commission income Commission expenses Net result from financial transactions Other operating income Jan Dec 2020 Total net operating income The information is presented for Klarna Bank AB (publ). ¹ Klarna Bank AB (publ)'s results are reported in SEK. To arrive at USD values, the average exchange rates YTD have been used; 1 USD equals approximately 9.2 SEK for 2020. The information is presented for Klarna Bank AB (publ). 3,265 -601 2,664 7,673 -574 92 146 10,000 ■ Klarna Bank AB (publ)'s Revenue sets a new record with USD 1.2bn¹ (SEK 11bn). The bridge shows the management accounts breakdown from Revenue to the statutory figure for Total net operating income. ■ We believe Revenue is the best indicator for how much value we are sustainably generating from our business. We consider Net financials a cost, in-line with our peers. Commission expenses is a cost associated with customer acquisition, and Financial gains and losses & Other are also considered cost items, with most of it not related directly to our core business. K.#17Income statement. Amounts in SEKm Total net operating income Total operating expenses before credit losses Operating profit before credit losses, net Credit losses, net Credit losses, net (excl. additional reserve) Operating profit Net profit for the year Numbers may not sum due to rounding. The information is presented for Klarna Bank AB (publ). Jan-Dec 2020 10,000 -9,098 902 -2,531 -2,478 -1,629 -1,376 Jan-Dec 2019 7,155 -6,381 774 -1,863 -1,863 -1,089 -902 ■ Merchant revenue (recognized in commission income) increased by 57% as we continued to drive sales for and add value to our partners. ■ Interest income grew by 17% YoY to SEK 3,265m, driven by the Financing product in the Nordics and DACH while we see an accelerating consumer demand for our interest free payments offering across all markets. ■ Growth in commission income was driven by increased sales volumes and higher consumer activity across all markets but especially in the US and UK market. ■ Total net operating income growth of 40% to SEK 10bn, driven primarily by growth in net interest income of 10% and growth in commission income of 47%. ■ Total operating expenses before credit losses grew by 43% YOY. We remain committed to further investing in expanding and enhancing our consumer-friendly product offering as well as in top talent and increased brand awareness, with a focus on the US, UK and continued market expansion. K.#18Balance sheet. Amounts in SEKm Assets Cash and balances with central banks Treasury bills chargeable at central banks, etc. Loans to the public Other current and non-current assets Total assets Liabilities Liabilities to credit institutions Deposits from the public Debt securities in issue Other current and non-current liabilities Equity Total equity Total liabilities and equity 31 Dec 2020 5,014 5,219 41,718 9,844 61,795 2,415 30,835 4,183 18,038 The information is presented for Klarna Bank AB (publ). ¹ The effect on equity will be reflected in the annual report for Klarna Holding AB. 6,324 61,795 30 Jun 2020 31 Dec 2019 1,922 5,301 32,975 8,503 48,701 2,541 23,687 4,768 11,970 5,735 48,701 107 2,511 29,655 7,595 39,868 4,940 12,288 5,583 11,762 5,295 39,868 ■ Volume growth contributed to an increase in Loans to the public of 41% YoY to SEK 41,718m (USD 4,535m). Growth has been funded by the increase in Deposits from the public, which are primarily driven by EUR deposits. ■ The average duration of our credit portfolio is ~40 days. This means we can steer balance sheet growth and related risk quickly. In the context of the current macro environment, we maintain a reserve of SEK 70m as market conditions remain uncertain in light of Covid-19 and its related effects. ■ In September, we raised USD 650m in an equity funding round¹ to fuel our continued growth. The funding round was led by Silver Lake, the global leader in technology investing, alongside GIC - Singapore's sovereign wealth fund - as well as funds and accounts managed by BlackRock and HMI Capital. K.#19Cash flow statement. Amounts in SEKm Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow for the year Cash and cash equivalents at the beginning of the period Exchange rate diff. in cash and cash equivalents Cash and cash equivalents at the end of the period Cash and cash equivalents include the following items: Cash and balances with central banks Loans to credit institutions Cash and cash equivalents Numbers may not sum due to rounding. The information is presented for the Klarna Bank AB (publ). Jan-Dec 2020 7,585 -471 -1,551 5,562 1,618 -266 6,914 5,014 1,900 6,914 Jan-Dec 2019 -2,430 -1,379 3,474 -335 1,917 35 1,618 107 1,511 1,618 Positive cash flow from operating activities, as increased negative operating profit was offset by increased non-cash items (such as provision for credit losses) and positive change in the assets and liabilities of operating activities (such as increase in deposits from the public). ■ Decreased negative cash flow from investing activities, as higher investments in intangible and tangible assets were offset by lower investments in business combinations (last year's period includes the acquisition of Close Brothers Retail Finance). ■ Negative cash flow from financing activities due to reduced amount of debt securities in issue. K.#20This is Klarna. ■ Founded 2005 in Stockholm. ■ Active in 17 core markets on three continents. ■ Partners with +250,000 retailers globally. More than 87 million active consumers worldwide. ■ +57% volume growth and +30% revenue growth (CAGR) during the last seven years. ■ Top tier investor base including Sequoia Capital, Permira, Bestseller, Commonwealth Bank of Australia, Silver Lake, Dragoneer, Atomico, Ant Group, Blackrock, H&M and Macy's. K.#21Klarna.