Good afternoon and welcome back to Investor Days. For everyone's information, our upcoming presentation will be held in English and followed by a short Q&A session with questions from myself. My name is Gustaf Jörgensen, and I'm an equity research analyst in the financial sector here at ABG. Next up, I have the pleasure of presenting Christoffer Rutgersson, CEO of Qliro. With that said, I leave the floor to you, Christoffer.
Thank you. Nice to be here to present to you. Sorry, I'm not physically joining today, but we'll run it digital. Don't hesitate if you have any questions to interrupt. My plan today is to run through a quick strategic update, talk a bit about our financials and our story going forward. Let's jump into the details. First of all, I want to share some strategic highlights of where Qliro is today after the first quarter this year. First of all, we see a big opportunity to build a new European leader in what we call Composable Payments. The financial ecosystem and the technology ecosystem around payments is changing, and we want to be the best-positioned player for that change in the market.
We have the ambition to deliver a world-leading experience for merchants and their customer journey, really emphasize that it's the merchant customer journey. That's one of our key selling points. I will come back to that soon, what that means. During the first quarter of this year, we took Qliro back to breakeven, reaching profitability according to guidance. We were also growing our total payments volume growth by 38% compared to last year, more or less in line with the full-year figures for 2025 at 39% growth. Our most profitable payments volumes, what we call "Buy Now, Pay Later" or BNPL here, we accelerated growth to 41% compared to last year. Our net revenue is also accelerating. Typically, we see a bit of lag between acceleration of volume growth and net revenue growth.
Net revenue growth is accelerating to 19% in the quarter, up from 14% in Q4. A lot of this, both volume as well as our net revenue growth, is driven by our strategic focus on the small and medium-sized enterprise segment, which is now driving more than 50% of our volume growth, and we expect that to continue to grow in contribution, both to volume, income, as well as gross profit. We have also, in the last two years, initiated a Nordic expansion. Historically, Qliro was only selling to merchants in Sweden. I've been a CEO here now for almost four years, and two years ago, we really started the internationalization with the investments in expansion to expand sales office in Norway in August 2024, Finland in April last year, and we see a very good momentum in both of these markets, also contributing to our growth overall.
We'll talk a bit about what that means. Going back to the first point, we want to be a European leader in Composable Payments. We see that the tech ecosystem around payments is breaking up in more and more small pieces for where e-commerce players are working with a lot of different technology providers, and we want to be locally the best integrated player of all our competitors. I think we can claim that position today, which is one of the main drivers for our strong growth. We've added a lot of new platform connections in the last year. We today focused on the Nordic market from a customer perspective. We're targeting merchants in the Nordic markets, but we're doing that with global capabilities, and we continuously are adding more global features to enable the global sales for our merchants.
That will also be enabled to grow with our merchants in new markets and adding local sales offices in the future. We're following our customers. Our mission is to deliver a world-leading experience for merchants and their customer journey. I've myself been in the payments industry for more than 10 years. I was one of the co-founders of Bambora, which was sold to Ingenico in 2017 for EUR 1.5 billion . I was leading strategy for Ingenico in all the payments businesses in Europe. I know the European payments market quite well, and I think there's no one in Europe today that's doing a good combination of creating a really good experience and partner experience for merchants and actually focusing on their consumer journey.
Most BNPL and Pay Later players focusing on their own customer journey, making it Klarna experience or similar, not really a merchant experience. That's very important for us and a key differentiator in our sales. Our ambition in the short term, in the next three to five years, is to establish a market-leading position in the Nordic markets. During last year, we launched a new generation of our checkout, the checkout is the main product we're selling to e-commerce merchants. It's the last step when consumers are buying something online. When they come to the cart and want to pay, we are providing that checkout experience to the merchants, including all relevant payment methods for their markets. We have done a lot of testing, and we see now that we now have the strongest checkout performance in the Nordic markets across all countries.
We have done extensive testing when merchants are upgrading to our solution. Typically, when a merchant is changing their existing provider to Qliro, they run what we call an A/B test. They may continue with some volume on their former supplier, and then they run some volume with us, typically 50/50, and they measure performance for one to three months to see if we are actually improving the performance. We typically see a conversion uplift of everything from 1.6-6 percentage points. That is a direct impact also on the merchant's own growth and sales figures. We can contribute to their revenue growth, which is the main value for merchants to shifting to our platform. So far, we haven't lost a single A/B test over the last two years. From a positioning perspective, we're looking at why are e-commerce merchants upgrading to Qliro.
We have a quite unique position of focusing on both the merchant experience for the merchants and their consumer journey. It was a position that Klarna was quite good at, maybe seven, kind of 10 years ago in the Nordics, and how they built their position in the Nordics before they acquired PriceRunner, built Klarna Shopping, and went more into the marketplace direction, focusing fully on the consumer experience and the Klarna experience for consumers. Today, just like Amazon, Klarna is actually competing with many merchants, especially multi-brand merchants. Because around 80% of retail is multi-brand in the Nordics. For a multi-brand merchant, they typically have quite low margin. Selling brands that are sold at multiple sites, they may have a margin of everything between kind of 5% and 30%.
To actually get all the consumers into a price competition after sales within the Amazon experience or Klarna experience similar, is not very strategic. That is strategic reason for many merchants shifting to us or other payment players. Secondly, we invest much more in product development than the local niche banks, which we are competing with to some extent. We have had quite high CapEx numbers in previous years. We are investing more in CapEx than most of the niche banks for the full banking service, including their payments business. We have a much more advanced product, and has capabilities for the consumer experience. We want to be as good as the global leaders, from a merchant perspective, and we typically compare ourselves to players like Adyen or Stripe.
We are, of course, also meeting the local payment service provider, Kustom, the former Klarna Checkout. Klarna Checkout was the market-leading solution when Klarna exited that business in the autumn 2024. At that point, we decided to accelerate our investments to scale quicker in the Nordics because we see a big opportunity to help those merchants on the former Klarna Checkout to upgrade to a better experience. That's been a main driver of our growth. Around 75%-80% of all new merchants that are upgrading to Qliro are actually shifting from Kustom to us. If you look at the total Nordic market, it's around SEK 400 billion in transaction volume. Out of that, I think Kustom is maybe at around SEK 150 billion of that. We were at SEK 80 billion last year, so we have still less than a 5% market share.
We see a big growth opportunity continuing on that journey. If you look on the right-hand side of some of the drivers for merchants to change, first of all, leading conversion, as I mentioned before, but also that we enable upsell for merchants, increasing their margins. We have a very modular solution fitting into this kind of composable e-commerce, Composable Payments landscape. We're working very well with partners, very performance oriented, and typically, with our premium consumer experience, we also drive more loyalty and overall delivering a business case of kind of 10x-20x in value compared to the cost of change. Financially, as I mentioned, when Klarna sold the Klarna Checkout in summer, autumn 2024, we started to accelerate our growth investments and decided to launch sales also in Norway, Finland.
Since then, we have done a couple of capital raises to fund this growth journey. After now six quarters with those growth investments, we are in Q1 this year, back at profitability, fueled by the growth momentum we now see in the business. That growth momentum is, from a volume perspective or TPV, 38% in Q1. TPV is including all payment methods. That's all the pay now payment methods like card payments, Swish in Sweden, Vipps in Norway, and so on, and our own pay later and BNPL products. Typically, when we started to see quick growth during last year or growth acceleration in total volume, it took some time for our BNPL products to start to grow as well.
What we see from a consumer perspective, when we were growing with new merchants in new markets, we were also seeing a lot of new consumers. We increased the last year from around 6 million - 8 million consumers using our product during the last year. Strong growth also on the consumer side. With new consumers, it also takes some time for them to adapt to start using our products. Typically, they may start to pay by invoice, which where we don't earn a lot because they are paid off early. The more they get used to the Qliro app and the Qliro experience, we see the consumer adoption increasing, and hence also the BNPL volume growth increasing, as you can see here in yellow on the right-hand side. When we process BNPL, that's all the part payments.
That may be everything from a product where consumers buy now and pay in a month or two, or where they take up to a 36-month kind of fixed installment payment plan. It means that when we process transactions today, in May, we would only get losses or costs. We will get identification cost, the credit scoring cost, we need to take up the cost for credit provisions. We have some variable cost and so on. Next month we start to earn money when the first invoice is sent to the customer, and then we earn money until the loan is paid off. Overall, that BNPL growth is in turn building up a loan book, which is the main driver of our revenue generation.
Looking at net revenue growth, that is lagging a bit behind the BNPL growth and have been increasing from fairly flat growth early last year to now 19% growth in Q1. We expect the net revenue growth to continue to accelerate going forward in line with the BNPL volume growth. Lagging a couple of quarters behind as that volume is in turn converting into growth in our loan book. From a merchant perspective, we see rapid growth. Since I joined Qliro, we expand from focusing only on enterprise merchants to also focus on small and medium-sized merchants. We have, since I joined, 10x the number of merchants active on the platform. In Q1 this year, we were growing 148% in number of merchants, adding more than 100 active merchants on the platform.
From contribution to our net revenue, SME is now representing, 19% and we're growing 185% compared to last year. This is a snapshot of the SME part of the business on the right-hand side, not covering the full net revenue. From an international perspective, we have went from selling only in Sweden to launching a sales office in Norway in August 2024, and we launched in Finland April of last year. Now we have roughly one year in Finland. We see more and more volume coming from our new markets. Roughly 10% volume contribution just from the growth in this first phase from those markets. Secondly, we also have a plan to continue to add more international capabilities to improve the local experience across Europe for our merchants and hence, grow with our merchants in new markets, outside the Nordics.
Third, we also have a strategic plan going forward to start addressing Nordic volumes and Nordic kind of pay later volumes of European merchants. That's part of our kind of growth strategy going forward. With that said, let's jump into quick financial update. First looking at the loan book growth on the left-hand side, the loan book is growing lower than the BNPL volume growth, given that we also have a large loan book from the past. It takes some time for the BNPL growth to kind of turn into full momentum also in the loan book growth. BNPL volume is also important to look at as a share of our total volume. During the first half of last year, that was declining as we were growing with a lot of new volume and new consumers, as I mentioned before.
That have since then returned to now being higher than Q1 last year. We see a very good trend also in the NPL as share of our total volume. That in turn is leading to a net revenue growth of 19% in a quarter. We were achieving SEK 121 million in net revenue in Q1, of which SME represent 90%, up from 8% last year. From a cost perspective, we took some big growth investments when we launched in these new markets during the second half of 2024 and early 2021. We also did a bit of a restructuring program, a cost efficiency program in the autumn last year, and have since been able to grow with more or less flat cost. Comparing to Q1 last year, we're up 6% in cost.
Comparing to the higher number when we also launched Finland in Q2, we're actually down 6% if we're excluding D&A on the cost side. From a CapEx perspective, our investments in product and development, we launched our new generation of the checkout, and a lot of platform upgrades when we're shifting many of our services to cloud last year and have since then reduced our product investments by roughly 30%. We're still running at quite high product investments if you compare to the niche banks in the Nordic market. We're confident that we will continue to grow and expand our offering. Also now we're doing much more with AI than we did before. We're now kind of fully out with all kind of AI tools in our product and development teams. We're much more effective on kind of a lower CapEx base.
This is leading to what I showed in the beginning of the presentation, that we have taken some growth investments in recent quarters but are now back above profitability in Q1 this year. We expect profitability for the full year as we expect to continue to accelerate our growth also going forward. That limited cost increase. From a capital perspective, we're well-funded. We just closed a rights issue, where we took in roughly SEK 100 million in additional capital base. We are well-funded to finance the growing loan book going forward. With that said, if we look ahead and from a strategic perspective, we have our midterm ambition to build a market leading position in the Nordic markets. We expect our commercial momentum to continue to drive a strong volume growth. We're seeing a new all-time high in sales also during the spring.
Even if we are now at a fairly stable base in terms of marketing and sales spend, we continue to see increase in inflow of new merchants that are upgrading to our platform. We expect our income growth to continue to accelerate, catching up with the BNPL growth. We continue to expect that SME will be a big part of the business. We see in Q1 more than 50% of the volume, and also going forward, we expect at least 30%, maybe more. It is a bit binary if we bring in very large enterprise merchants, then that figure may decline in some quarters, but at least 30% growth in new volumes from enterprise merchants. We also expect our Nordic expansion to mature and bring in more value going forward.
Typically, we see quite short sales cycles on the SME side, while the pipeline for enterprise takes up to two, three years to materialize. Now we've been live in both markets for more than a year. We expect also more contribution from enterprise in our new Nordic markets going forward. We're also expanding continuously with new platforms, connecting to e-commerce platforms, expanding our addressable market. As an example, we added 24Nettbutikk, which is a large SME platform in Norway during Q1. We added Vilkas, a large SME platform in Finland as well. We are now expanding also with local platforms. Initially in the Nordics, we expanded with the Swedish and international platforms that were already active in Norway, Finland. Now we're also expanding with the full local coverage.
We also expect to focus going forward to continue to grow income, working on scalability and efficiency, and especially driven by our recent investments in AI tools across the business. Overall, we expect continued growth acceleration and profitability for the full year 2026. With that said, I open up for questions. I'm not sure if you see me, I will remove the presentation here.
We can see you. Thank you, Christoffer. I believe we have time for maybe one or two questions. I'll start by asking, your main driver in the business model is of course, the Buy Now, Pay Later products, which translates into the loan book and grows the balance sheet. As transaction volumes continues to grow, how should investors think about that share coming from the BNPL products going forward?
If you look historically, it was a bit higher than now. I think we were up at around 20%, now we're trending at around 16% share of volume on BNPL. I don't think we will get back to 20% in the short term as we continue to accelerate our growth, I think we can expect it to increase a bit more.
As a follow-up, you spend a lot of time refining your credit models and are becoming more selective in your underwriting process. How should we think about the impact this will have on the conversion from transaction volumes into the loan book?
That's a good question. I didn't mention so much about the credit scoring in the presentation today, given the short timing. In 2024, we brought in a new chief credit officer that's been building all the models at Klarna in the past, built up a new data science team, new data platform, have completely modernized our whole infrastructure for credit analytics and credit decisions and credit modeling. That's been giving very good results so far. We have drastically decreased the exports to debt collection continuously during last year and this year. We see a very good momentum on the credit losses kind of trending downwards. In Q1, we actually reduced losses, even if we were rapidly growing in both volumes and revenue.
We expect the loss ratio to be able to decline going forward as also some of the losses we have today are, of course, also driven by historic volumes that are still on the loan book. All the impact from all the kind of improvements are not yet fully visible financially.
Okay. Thank you. With that said, I believe our time is unfortunately running out. I want to say a big thanks for the presentation and for your answers, and as well as to the ones that have been listening. Thank you.
Thank you.