Earnings call transcript: Qliro AB Q2 2025 reports operating loss amid growth

Qliro AB reported its second-quarter 2025 earnings with an operating loss of $259 million, even as it experienced significant growth in total payment volume. According to InvestingPro data, the company remains unprofitable over the last twelve months, with weak gross profit margins being a key concern. The company’s stock fell by 6.7% in pre-market trading, reflecting investor concerns over financial results despite robust commercial momentum. The earnings call highlighted strategic initiatives and future growth prospects, but market reaction was cautious.

Key Takeaways

• Total Payment Volume (TPV) increased by 37%, accelerating to 45% in July.
• Operating loss reached $259 million despite efforts to reduce costs.
• Stock price decreased by 6.7% in pre-market trading.
• Qliro aims for a 15% income growth in Q4.
• Successful capital raise of SEK 117 million was oversubscribed by 300%.

Company Performance

Qliro AB demonstrated strong growth in its total payment volume, with a notable 37% increase in Q2 and an acceleration to 45% in July. However, the company faced challenges, including a declining checkout share and renegotiated enterprise agreements, contributing to an operating loss of $259 million. Despite these hurdles, Qliro continues to expand its presence in the Nordic market, signing over SEK 1.3 billion in new merchant volumes in Norway and Finland.

Financial Highlights

• Operating loss: $259 million
• Total Payment Volume growth: 37% in Q2, 45% in July
• Income growth: 2% like-for-like
• Investment in cost reduction: €2 million

Market Reaction

Qliro’s stock fell by 6.7% in pre-market trading, closing at 22.4, down from the previous close. With a market capitalization of $67 million and a price-to-book ratio of 1.16, InvestingPro analysis suggests the stock is currently fairly valued. This decline reflects investor concerns over the company’s financial performance despite its growth in payment volumes and strategic initiatives. The stock is trading closer to its 52-week low of 17.6, indicating cautious sentiment in the market. InvestingPro subscribers have access to 12 additional key insights about Qliro’s valuation and growth prospects.

Outlook & Guidance

Looking ahead, Qliro has updated its guidance, expecting a 15% income growth in the fourth quarter, significantly higher than its current revenue growth rate of 5.51%. The company plans to accelerate sales in the SMB and enterprise segments, aiming for a 40% volume growth from new merchants. InvestingPro rates Qliro’s overall financial health as ’FAIR’ with a score of 2.15, suggesting moderate stability as it pursues its strategic focus on turning volume into income and becoming a market leader in the Nordics within the next 3-5 years.

Executive Commentary

CEO Christopher Rutgersen emphasized the company’s mission to become a leader in compostable payments in Europe, stating, "We still see a large opportunity to build a new European leader in compostable payments." CFO Karl Lofgren acknowledged the financial challenges, noting, "Despite very strong underlying commercial momentum... we’re not happy with the financial results."

Risks and Challenges

• Declining checkout share could impact future revenue.
• Renegotiated enterprise agreements may pressure margins.
• Economic conditions in the Nordic region could affect growth.
• Competition in the payment processing industry remains intense.
• Execution risk in expanding SME and enterprise sales efforts.

The earnings call did not include a Q&A session, leaving some analyst questions unaddressed. However, the company’s strategic focus and growth initiatives provide a roadmap for future performance improvements.

Full transcript - Qliro AB (QLIRO) Q2 2025:

Conference Moderator: Welcome to Claro Q2 Presentation twenty twenty five. Now I will hand the conference over to CEO, Christopher Rutgersson and CFO, Karl Lofgren. Please go ahead.

Christopher Rutgersen, CEO, Claro: Thank you. Hi, everyone, and welcome to our Q2 presentation. I’m Christopher Rutgersen, and with me today, I also have our CFO, Karl Lofgren. Today, I will talk through our strategic highlights. I will hand over to Karl for our financial update.

We’ll come back to our for outlook, and we’ll walk through any kind of questions that comes up. So in terms of our strategic highlights, we still see a large opportunity to build a new European leader in compostable payments to deliver a word learning experience for merchants and their consumer journey. We’re taking big steps in that direction during the quarter. We see a growth of more than kind of 37% in the quarter, accelerating to 45% in July. So we have a great momentum in terms of new volumes on the platform.

Part of this is a significant contribution from SME, turning into an operating income contribution of 13% from the SME segment. And when we look at new volumes, more than 30% of the new volumes on board on the platform are coming from the SME segment. Our Nordic expansion, where we have launched into Norway and Finland during the last year, we are above expectations with more than 1,300,000,000.0 in volume signed for new merchants in Norway and Finland, of which around SEK 1,100,000,000.0 from Norway, which is more than double the signed volume we announced in Norway in the last quarter. So it’s an accelerated momentum in Norway. And the early indications in Finland, we’ve only been live for since April in Finland, is a quicker growth than we had when we launched in Norway.

So that’s also a positive indication of our momentum in the Nordic expansion. Our NPL volumes, which is important for our income contribution, is turning around to growth and bottoming out in the quarter, but still lagging behind the total volume growth. We see also kind of a success with the fundraising we did during the spring with an oversubscribed rights issue of 117,000,000. And it was always subscribed by more than 300% with strong support from more or less all our top 10 owners, including myself, Right Ventures, and Mandatum. We’ll we’ll also kind of increase our focus to improve income generation from the new volume.

We’ll focus on increasing our scalability and efficiency going forward. And we’ll talk that through now. So first of all, on our vision to become a new European leader in compostable payments, We are starting in The Nordics, and we have an ambition to become a local market leader in The Nordics within the three to five years. With the the kind of the volume growth and all the market share we’re taking now in The Nordics, if we continue that momentum, we will be there within three to five years. So from a volume perspective, we’re only growing in actual numbers in the quarter with acceleration in July to 45% volume.

If you look at all the volume that are kind of signed with new merchant, but are not fully not yet fully live on the platform, we expect an additional 40% growth compared to the last twelve months when those merchants are fully live on the platform, which will bring us to around a bit more than kind of 20,000,000,000 in kind of total payments volume process on the platform. Part of this is kind of driven by our strong acceleration in the SME segment. So we see a strong uplift in number of active merchants on the platform. In q two, we had the largest number of merchants going live on the platform ever, around 90 merchants that went live with Clero in q two, which is also kind of on the back book of our new product launch of our new checkout generation three, which I will come back to shortly. Looking at the segment in total, that’s now generating 13% of our income in the quarter, up from 3% last year, and it’s an increase from 8% in q one.

We see an additional 5% income contribution from SME increasing just quarter over quarter, signaling kind of the strong momentum we have in the kind of the buildup of the SME business. As I mentioned before, more than 30% of all new volume on the platform is coming from SME, and we see higher profitability in SME segment and higher income per volume in SME segment compared to enterprise. So expect this to kind of increase as kind of importance for our income generation also going forward. When it comes to our market launch and the Nordic expansion, we launched in Norway in August. So we’ve now been live for a year.

And we launched in April in April or launched in Finland in April. As I mentioned before, we have more than 1,300,000,000.0 in kind of volume with signed merchants from from these markets, with more than 1,000,000,000 coming from Norway. So last quarter in Q1, we announced the 500,000,000 signed volume in Norway. So we more than doubled the momentum in Norway, which is good. And as you know, we have fairly long sales cycles, primarily in the enterprise segment that may be up to several years in the most complex cases.

So we expect this momentum to continue to increase as our sales teams get more mature and as our pipeline in these markets get more mature. The early signs in Finland is also positive with 200,000,000 on kind of signed volume so far, only being in live a few months in the market. And that is slightly more kind of more quicker than we signed volume when we launched in Norway. So we expect similar results also in Finland going forward. Apart from the launch in The Nordics, we also see an opportunity to continue to grow with our merchants outside The Nordics.

So most new merchants on the platform are now using Clearro for all their markets, not only for The Nordics. And we will continue to increase our payment capabilities for markets outside The Nordics with more local payment methods. We also see an opportunity to support European merchants that have a significant volume in The Nordics, and we have a capital of these dialogues ongoing with larger merchants. When it comes to our income generation and especially our NPL volume, which is critical for our income generation, the NPL volume is turning around to growth in the quarter and in especially in July after the quarter. But it’s lagging behind the the volume growth.

And we see that this is due to both kind of new merchants and new markets coming live, where we face a lot of new consumers. They may not be kind of fully used to Clear yet. A positive signal is that we see a very strong growth in invoice volume with more than 40% in the quarter. And we’re also taking different measures to improve this trend and kind of turn around the the bell volume growth so that comes closer to the growth going forward. One of those initiatives was the launch of our new payment product, new payment method, monthly invoice in the quarter.

That are not fully rolled out with all merchants and all markets yet, but this is positive signals that this will be very well received by consumer. It’s basically like buy now, pay later product where you buy now and you pay after next month’s salary, which is a good consumer experience. So a bit better than the thirty day invoice that quite popular in the market from competitors, where we see that that most consumer want to pay after they they get the salary. So that’s why we package this as a monthly invoice where you get the invoice the same date every month and you always pay after the salary. So with that said, we are growing the NPL volume 9% in July.

It’s been declining previously, it’s stabilized in Q2 and we see a positive trend, But it’s slightly later than we expected, which impact our income generation a bit. And we’ll come back to that. In terms of product offering, we continue to launch new products. So we launched a new generation of our clear check out during the quarter. We see very positive momentum in the market from this.

We have new sales records, new all time high in sales almost every month before summer, and we see continued trend in August being very positive after vacation. We So have more merchants upgrading to Cleo. And it’s both due to new functionality, like our integration to a new CRM systems. We integrated new payment methods for bit to bill, so we’re becoming stronger on bit to bill in the checkout for merchants that are selling both to consumers and businesses. But we also benchmark this quite carefully with with competitors.

So for merchants that are going live with Quizero, we have done a lot of performance testing, both kind of performance with the previous solution, our new solution, and when we went live with ClearOff, or kind of real a b testing running both solutions in parallel. With all the local competitors, we see an uptake in in kind of conversion when merchants are shifting over to ClearOff up to 10% in conversion rates, which means the merchants get more than 10% in additional sales, which is a large value for the merchants, which is also leading to that more and more merchants are upgrading with Clero. One of the official reference cases we’ve seen on this is the reference case we launched with Findiq, that an enterprise merchant that went live with Cleary in the spring. And we see an uptake of more than kind of 6% increase in conversion when they shifted over to Cleary Checkout generation three. Also, had a successful capital raise during summer, and we have raised 117,000,000 in an oversubscribed rights issue.

It was more than 300% overs subscribed with strong support from our main owners, Right Ventures, Mandatum, many of the other top 10 owners, also including myself. Together with tier two bond that we raised in in q two of seventy million, were well capitalized to continue to drive our growth journey. With that said, we’re also focusing strongly on turning the new volume into income generation through our BNPL products, where we do several initiatives to improve or optimize our play through offering. But it is here to generate the income from volume that we have compared to volume that we don’t have, so which is very positive that this is such a strong momentum in in volume growth. We’re also working hard to kinda modernize our platforms.

This been ongoing for a while, through kind of platform by platform at Clear. So as you know, first we launched the unified payments, then we upgraded the whole checkout. With the the launch of the third generation of the checkout, we also shifted out a lot of our infrastructure for more scalability, shorter latency, and higher stability on the platform. During this summer, we also migrated our deposit, kind of have a saving system. Also in relation to that, divested the digital banking services loan portfolio last year, so we don’t have any private loans any longer.

So we’re exiting that platform and shifting over to a more modern platform for deposit product that will give us more flexibility going forward. With that, we also sold one of the larger kind of non performing loan kind of portfolios we had left connected to the digital bank services, which means we had a kind of a one off effect on that in the quarter. Karl will come back to that. But going forward, the main platform modernization that we are still targeting is to shift out our core platform for our related products to an internally built system. We’re going live with the first products in the autumn, and that will give us more flexibility and more scalability to improve our consumer offering and being more dynamic in that both across Nordics, but also to potentially launch it in other markets in the future.

We’re also working hard on process automations. As we grow, we want to manage that in a smart way to not increase cost while we grow drastically both in markets, merchants and volume. So we’re working hard to kind of sort out our internal bottlenecks as we grow more than we have done in the past. All our new platforms is kind of contributing to that and the CapEx investment we’re making into the platforms to be more automated in in kind of our handling of both consumers and merchants. Also, given that we have much more volume now on PayNow and the success of our unified payments offering, we worked hard to reduce our variable cost related debt to increase our margin going forward.

That’s been an effort in Q2. We invested around EUR 2,000,000 in that, and we will see an impact of around SEK 4,000,000 on a yearly basis in kind of cost savings, variable costs connected to that. We also working hard to kind of optimize our credit underwriting to reduce our credit losses. We see early indications on that in the quarter. If you reduce the one off effect of the portfolio you just mentioned, we see ratios going down.

And if you look at the underlying trends of kind of how much we’re exporting to debt collection, we’re down around 15% of the portfolio and more in Sweden. So we see early indications that the investments we’re doing in optimizing credit is starting to pay off, and we expect more impact from that going forward. With that said, now we have taken the investment to launch in Norway and to launch in Finland. From here on, we will also kind of keep a strict cost control to make sure we we get the scalability of the new volumes going forward to to bring us back to profitability and doing what we can to accelerate that that journey. So looking at strategic highlights and kind of forward looking.

So first of all, we’ll see a midterm ambition to build market leading position in The Nordics over the next three to five years. If we continue this growth, we will get there. And we see an increased commercial momentum every quarter. We are now growing more than 40%. And also with all the new volumes we have contracted but not went live on the platform, we know we will add another 40% on top of the LTM kind of figures.

So that’s a positive indication of the growth going forward, and that will continue. We’ll also expect SME to continue to grow also as share of our business, given that we have more than 30% of the new volumes or the growth in new volumes coming from the SMS segment, with a higher profitability in SMS than in enterprise. We also see our Nordic expansion with much more potential. We have just started in Norway and Finland, And we expect that to accelerate going forward. Our short term focus from a kind of product perspective and financial perspective is to turn around the NPL trend that we’ve seen declining over the last year.

We see that bottoming out in the quarter. We were kind of driving that growth going forward. And also, as I mentioned, we have now kind of secured capital to fund our growth journey going forward, which is extremely positive. And we’re very happy for all the support from both existing and new investors. And we will focus to improve income generation from the new volume, continue to focus on our scalability and internal efficiency.

And with that, we are also kind of updating our guidance of our income growth for 15% in Q4, and we expect that to continue to accelerate into 2026 as kind of volumes are converted into income growth. With that said, I will hand over to Karl for our financial update, and I will come back for questions later on.

Karl Lofgren, CFO, Claro: Thank you, Kristofer. So starting off with an overview of our second quarter. As Kristofer mentioned, despite very strong underlying commercial momentum with TPV growth of 37%, we’re not happy with the financial results in the quarter. The growth in volumes has not fully translated into income and profit growth, and I’ll give more details on this evolution in the following slides. We made an operating loss of $259,000,000 in the quarter.

And even though the result is burdened by a number of one off items, the underlying financial performance is weaker than we would like. And we have already executed a number of profitability initiatives in the quarter and are implementing new initiatives, like Kristoffer mentioned, to further accelerate our route to profitability. First, let’s take a more detailed look at operating income evolution. This graph shows the evolution of operating income from Q2 last year. The comparison is somewhat distorted by a one off accounting adjustment made in q two last year, where the treatment of merchant and platform commissions was harmonized with how we account for revenues.

This led to a release of an accounting reserve of 6,600,000.0 SEK in q two last year. On a like for like basis, excluding this impact, income grew by 2%. Despite more than SEK 12,000,000 in contribution from new merchants, a number of headwinds almost completely offset this contribution. First of all, we’ve observed a declining share of checkout, which is the share of TPV that flows to our most profitable BMPL products. This impacted operating income negatively in the quarter.

Another headwind was the remaining impact of the renegotiation of certain major enterprise agreements, which we highlighted already in the q one report. Additionally, net interest income was a headwind as we see declining policy rates, which impacts our income from consumers and merchants almost immediately, while our funding costs are driven largely by deposit rates in the Swedish and German markets, which have not declined to the same extent. Given its importance to our business, I wanna give a little bit more color on what Christopher mentioned around the share of checkout evolution. The graph on the left here shows our TPV growth sorry, TPV in each quarter that flows into our most profitable BMPL products, such as the Clearer account and the part payment products. As you can see, this share has declined over the past quarters.

This is partially driven by our new credit processes, where we have consciously reduced our acceptance rates for these products to reduce credit losses over time. However, given the importance of these products to our income generation, over the past quarters, we’ve also launched a number of product and checkout improvements to reverse the trend, including the new monthly invoice product that Christopher showed and mentioned. And happily, we’re now observing that these upgrades are being well received by merchants and consumers, and the trend has stabilized and signs of recovery are visible in July. As a result of these efforts, we’re now also seeing that the NPL volumes on the right are back to growth, with 1% growth year on year in the quarter, sequentially up to 9% year on year growth in July. However, given the lag in our business model, which you’re all aware of, where volumes in one quarter contribute significantly to incoming coming quarters, the decline in the share of checkout that we have experienced in the first half of the year will continue to impact our business in coming quarters, which is a key driver of our updated guidance for the second half of the year.

Moving on to a second important item, credit losses. Credit losses in the quarter reported credit losses in the quarter were 27,700,000.0 SEK, which is an increase versus last year, partially driven by increasing pay later volumes, but also impacted by one off write down and revaluation of the small remaining digital banking portfolio held for sale, as Christopher mentioned. Consistent with our treatment in Q1, where we had a positive impact from this portfolio, we have not classified this as items affecting comparability, but we highlight it here for transparency. The 5,400,000.0 impact is a result of the sale of a large share of this remaining portfolio, which triggered the write down of certain exposures. As you can see in the report, we have now sold the majority of the remaining digital banking portfolio, and as such, do not expect future sales in this portfolio to have a material impact on the P and L in coming quarters.

The underlying ECL of SEK 22,300,000.0 is an improvement versus last year. And especially considering the larger loan book, this is evidence of the emerging impact our improved credit processes are having on credit losses. Enhancements we have made include improved predictive models, refined risk assessments, as well as improvements to the gunning chain. These initiatives are already delivering measurable results. And here to the right, we show an example of this in the reduction of the number of loans that we’re exporting to debt collection.

For the Swedish BMPL portfolio, which represents a large share of our losses and therefore where we have invested the bulk of our efforts, we have observed a reduction in exported volumes around 30% versus q two last year. And across the full portfolio, the improvement is around 15%. Given that the IFRS nine models for ECL are based on historical data, we expect reported credit losses to reflect more of these improvements over time. Moving on to cost. Overall, costs grew by SEK 21,000,000 versus q 2 last year, largely driven by our growth and expansion strategy, as Christopher mentioned.

The higher volumes we’re achieving also on PayNow products drove a 2,000,000 increase in the variable costs. And our investments in growth and expansion are also evident in the sales and marketing spend increasing by SEK 6,600,000.0 year on year or SEK 1,400,000.0 sequentially versus the first quarter. Beyond this, D and A increased by SEK 4,600,000.0 year on year, driven by increasing amortization of intangible assets. Other operating expenses increased by SEK 8,600,000.0 year on year, but roughly half of that increase was driven by the SEK 2,200,000.0 of costs we took in the quarter to accelerate our profitability initiatives, as well as an extraordinary settlement with a large merchant of SEK 1,900,000.0 following an operational incident in the first half of the year. I want to share a little bit more details on the initiatives that we’re taking to drive profitability.

Over the past months, we have taken a number of initiatives to further accelerate our path to profitability. These include a large number of process improvements and renegotiation with major suppliers, the most important of which are bank, card and Swiss providers. To drive these initiatives, we incurred costs of roughly SEK2.2 million in the quarter, but we’ve already secured annual run rate savings around SEK4 million, with full run rate impacts from Q4. Beyond this, as Kristofer mentioned, we’re implementing a number of further initiatives to address our income generation, scalability and efficiency over the coming quarters. Lastly, taking a look at our capital base.

As Christopher noted, we closed our oversubscribed rights issue with the associated over allotment option in July. So the proceeds from that are not visible in the reported numbers for q two. And the total gross proceeds, as Christopher mentioned, were 117,000,000 SEK, but and the net proceeds after fees of SEK 105,000,000. This now strengthens our capital position together with the t two issuance, where we on a pro form a basis for Q2, including the rights issue, have a total CET1 buffer above the Pillar two requirement of SEK 199,000,000 or SEK 124,000,000 when including the Pillar two guidance from the FSA. This capital buffer provides us with additional headroom for growth and investments going forward.

With that, I’d like to hand over to Christopher for some concluding remarks.

Christopher Rutgersen, CEO, Claro: Thank you, Karl. So overall, looking ahead, we will continue on our growth acceleration. We’re updating our guidance on income growth to around 15% in Q4, with continued acceleration in 2026 as more of our volume turns into income growth. We expect an additional 40% in new volume compared to the last twelve months across on the platform from new merchant that are not yet fully live. We also will accelerate our SMB and enterprise sales engine even further as more of our sales reps in our new markets are becoming more mature and the pipelines are becoming more mature.

Fourth, we’ll continue to build our growth momentum on the early success of our launch in Norway and Finland. It’s still early days in both markets, and we see a lot of positive opportunities. And on top of that, we will also, in parallel to our growth journey, focus on initiatives to make sure we turn the volume into income as well as focus on initiatives that improves our scalability and cost efficiency. With that said, our mission is to deliver a market leading experience for merchant in our customer journey. We see clear trends on that with more and more kind of merchants choosing to upgrade to Klero, which we are very proud of.

And thank you all for listening to our Q2 presentation. With that said, I open up for questions.

Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Christopher Rutgersen, CEO, Claro: Thank you for looking and listening into our presentation. If you have more questions, don’t hesitate to reach out to our Investor Relations. I will get back to you. Thank you.

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