Q2 2024 Klaviyo Inc Earnings Call

August 7, 2024

Thanks. Good afternoon and thanks for joining Klaviyo's second quarter 2024 earnings call. Our earnings press release, investor presentation, SEC filings, and a replay of today's call can be found on our IR website at investors.klaviyo.com.

Operator: 24 Earnings Call. Earnings press release, investor presentation, SEC filings, and a replay of today's call can be found on our IR website at investors.claviyo.com.

Operator: Our earnings press release, investor presentation, SEC filings, and a replay of today's call can be found on our investor relations website at investors.klaviyo.com. Joining me on the call today are Andrew Bialecki, co-founder and CEO, and Amanda Whalen, CFO.

David Hynes: Hynes' press release, investor presentation, SEC filings, and a replay of today's call can be found on our investor website at investors.klaviyo.com. With me on the call today are Andrew Bialecki, co-founder and CEO, and Amanda Whalen, CFO.

Operator: With me on the call today, are Andrew Bialecki, co-founder and CEO, and Amanda Whalen, CFO. As a reminder, our commentary today will include non-GAAP measures. Reconciliation to the most directly comparable gap measures can be found in today's earnings press release or earnings release supplemental materials, which can be found on our Investor Relations website.

Speaker Change: With me on the call today are Andrew Bialecki, co-founder and CEO , and Amanda Whalen, CFO . As a reminder, our commentary today will include non-GAAP measures.

David Hynes: As a reminder, our commentary today will include non-GAP members. Reconciliation to the most directly comparable gap measures can be found in today's earnings press release or earnings release supplemental materials, which can be found on our investor relations website. Additionally, some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions, which could change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements.

Operator: As a reminder, our commentary today will include non-GAAP measures. Reconciliation to the most directly comparable gap measures can be found in today's earnings press release or earnings release supplemental materials, which can be found on our investor relations website. Additionally, some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions, which could change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results, is included in our SEC filings, including our most recent report on Form 10-K and subsequent reports.

Reconciliation to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials which can be found on our investor relations website.

Operator: Additionally, some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions, which could change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. The description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K and subsequent reports on Form 10-Q. Except as required by law, we do not undertake any responsibility to update these forward-looking statements.

Speaker Change: Additionally, some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions, which could change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements.

David Hynes: A description of these risks, uncertainties, and assumptions and other factors that could affect our financial results is included in our SEC filings, including our most recent report on Form 10-K and subsequent reports on Form 10-Q. Except as required by law, we do not undertake any responsibility to update these forward-looking statements.

Speaker Change: A description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K and subsequent reports on Form 10-Q .

Speaker Change: Except as required by law, we do not undertake any responsibility to update these forward-looking statements. With that, I'll now turn it over to Andrew.

Operator: With that, I'll now turn it over to Andrew.

Andrew Bialecki: Thanks, Zilli, and thanks to everyone for joining us today. Klaviyo delivered very strong results in the second quarter, with revenue of $222 million, growing 35% year-over-year. We believe we are a must-have platform for more than 151,000 customers around the world, as we help them easily and quickly transform their data into more valuable connections across every touch point. Our customers are at the heart of everything we do, and we work to earn their trust every day.

Andrew Bialecki: Thanks, Zilli, and thanks to everyone for joining us today. Klaviyo delivered very strong results in the second quarter with revenue of $222 million, growing 35%.

Andrew Bialecki: Thanks, Billy, and thanks to everyone for joining us today. Playground delivered very strong results in the second quarter with revenue of 222 million from 35% to over year. We believe we are a month-half platform for more than 151,000 customers around the world as we help them easily and quickly transform their data into more valuable connections across every touchpoint.

Andrew: Thanks, Dilley, and thanks to everyone for joining us today.

Speaker Change: Klaviyo delivered very strong results in the second quarter with revenue of $222 million growing 35% year over year.

Andrew: We believe we are a must-have platform for more than 151,000 customers around the world.

Andrew: as we help them easily and quickly transform their data into more valuable connections across every touchpoint. Our customers are at the heart of everything we do. We work to earn their trust every day and our model is built for joint success. So as our customers grow, Klaviyo grows.

Andrew Bialecki: Our customers are at the heart of everything we do. We work to earn their trust every day, and our model is built for joint success, so as our customers grow, Cladio grows. The power smarter digital relationships are vertically integrated platform enabled customers to use real-time first-party data to create segments, orchestrate personalized on-the-channel campaigns, and measure every interaction. Both, importantly, we've made it incredibly easy. Marketers no longer have to hire a developer to build and manage an API to connect to a new data source or write code to create a consumer segment. With Cladio, complex tasks are made simple, allowing marketers to be more efficient and focus more time on their consumer engagement.

Andrew Bialecki: Our customers are at the heart of everything we do, and we work to earn their trust every day. Our model is built for joint success. So, as our customers grow, Klaviyo grows. We power smarter digital relationships. Our vertically integrated platform enables customers to use real-time, first-party data to create segments, orchestrate personalized, on-the-channel campaigns, and measure every interaction. And, importantly, we've made it incredibly easy

Andrew Bialecki: Our model is built for joint success. So as our customers grow, Klaviyo grows. We power smarter digital relationships. Our vertically integrated platform enables customers to use real-time first-party data to create segments, orchestrate personalized, on-the-channel campaigns, and measure every interaction. And, importantly, we've made it incredibly easy.

Andrew: To power smarter digital relationships, our vertically integrated platform enables customers to use real-time, first-party data to create segments, orchestrate personalized, on-the-channel campaigns, and measure every interaction.

Andrew Bialecki: Marketers no longer have to hire a developer to build and manage an API to connect to a new data source or write code to create a consumer site. With Klaviyo, complex tasks are made simple, allowing marketers to be more efficient and focus more time on their customers. From entrepreneurs just starting their businesses to established, internationally known brands, Klaviyo is a revenue engine for our customers. Our unified platform across the data and marketing layer, our omnichannel orchestration, our fast, flexible functionality, and our more than 350 integrations drive companies to choose Klaviyo.

Andrew Bialecki: Marketers no longer have to hire a developer to build and manage an API to connect to a new data source or write code to create a consumer segment. With Klaviyo, complex tasks are made simple, allowing marketers to be more efficient and focus more time on their customers. From entrepreneurs just starting their businesses to established, internationally known brands, Klaviyo is a revenue engine for our customers. Our unified platform across the data and marketing layer, our omnichannel orchestration, our fast, flexible functionality, and our more than 350 integrations drive companies to choose Klaviyo.

Andrew: Most importantly, we've made it incredibly easy. Marketers no longer have to hire a developer to build and manage an API to connect to a new data source or write code to create a consumer segment.

Andrew: With Klaviyo, complex tasks are made simple, allowing marketers to be more efficient and focus more time on their consumer engagement.

Andrew Bialecki: From entrepreneurs just starting their businesses to established internationally known brands, Cladio is a revenue engine for our customers. Our unified platform across the data and marketing later, our on-the-channel orchestration, our fast flexible functionality, and are more than 350 integrations drive companies to choose Cladio. Then, if they say and grow with us, adding products like SMS, CDP, and Reviews, and take advantage of our new AI features and advanced analytics across their entire consumer data sets. As customers leverage all of these tools, we can show the actual value of our platform is driving with Cladio-extruded value, or KAB, which measures the revenue generated through consumer transactions after engagement with any of our channels.

Andrew Bialecki: Then, they stay and grow with us, adding products like SMS, CDP, and reviews and taking advantage of our new AI features and advanced analytics across their entire consumer data set. As customers leverage all these tools, we can show the actual value of our platform with Klaviyo Attributed Value, or KAV, which measures the revenue generated through consumer transactions after engagement with any of our channels. When customers sign in to Klaviyo, KV is one of the first things they see, so they know how much revenue our platform is driving.

Andrew: From entrepreneurs just starting their businesses to established, internationally known brands, Klaviyo is a revenue engine for our customers.

Andrew: Our unified platform across the data and marketing layer, our omni-channel orchestration, our fast, flexible functionality, and our more than 350 integrations drive companies to choose Klaviyo.

Andrew Bialecki: Then, they stay and grow with us, adding products like SMS, CDP, and reviews and taking advantage of our new AI features and advanced analytics across their entire consumer data. As customers leverage all of these tools, we can show the actual value of our platform with Klaviyo Attributed Value, or KAV, which measures the revenue generated through consumer transactions after engagement with any of our channels. When customers sign in to Klaviyo, KV is one of the first things they see, so they know how much revenue our platform is driving.

Andrew: Then they stay and grow with us, adding products like SMS, CDP, and Reviews, and take advantage of our new AI features and advanced analytics across their entire consumer data set.

Andrew: As customers leverage all of these tools, we can show the actual value of our platform is driving with Klaviyo Attributed Value, or KAV, which measures the revenue generated through consumer transactions after engagement with any of our channels.

Andrew Bialecki: When customers sign in to Cladio, KAB is one of the first things they see, so they know how much revenue our platform is driving for them. Our ease of use and the direct correlation to revenue is a key reason why companies choose Cladio - a great example is our new relationship with a Fortune 1000 global company. They wanted to build out their direct consumer offering, engaging consumers with new content. They were previously using a legacy platform, but selected Klaviyo for our ease of use and the ability to integrate their data across all their core marketing channels.

Andrew: When customers sign in to Klaviyo, KV is one of the first things they see, so they know how much revenue our platform is driving for them.

Andrew Bialecki: Our ease of use and the direct correlation to revenue is a key reason why companies choose Klaviyo. A great example is our new relationship with a Fortune 1000 global company. They wanted to build out their direct-to-consumer offering, engaging consumers with new concepts. They were previously using a legacy platform but selected Klaviyo for its ease of use and the ability to integrate their data across all their core marketing. They also selected our SMS solution, a channel they'll be using for the very first time to execute their omni-channel strategy to fuel additional revenue growth.

Andrew Bialecki: Our ease of use and the direct correlation to revenue is a key reason why companies choose Klaviyo. A great example is our new relationship with a Fortune 1000 global company. They wanted to build out their direct-to-consumer offerings, engaging consumers with new concepts. They were previously using a legacy platform but selected Klaviyo for its ease of use and the ability to integrate their data across all their core marketing. They also selected our SMS solution, a channel they'll be using for the very first time to execute their omni-channel strategy to fuel additional revenue growth.

Andrew: Our ease of use and the direct correlation to revenue is a key reason why companies choose Klaviyo. A great example is our new relationship with a Fortune 1000 global company.

Andrew: They wanted to build out their direct-to-consumer offering, engaging consumers with new content.

Andrew: They were previously using a legacy platform, but selected Klaviyo for our ease of use and the ability to integrate their data across all their core marketing channels.

Andrew Bialecki: They also selected our SMF solution, a channel they'll be using for the very first time to execute their army channel strategy to fuel additional revenue growth. We also closed the deal with a multi-billion dollar revenue, national chain of grocery stores. They were using a homegrown solution to batch and blast communication. Each email had to be created from scratch, and they couldn't do any segmentation. The CIO demoed Klaviyo and quickly realized the team would see big productivity gains from our out-of-the-box segmentation, data orchestration, and the flexibility of our campaign and flow creation. Companies of all sizes are building on-the-channel marketing strategies using email, SMF, and push notifications to build personalized consumer relationships.

Andrew: They also selected our SMS solution, a channel they'll be using for the very first time to execute their omni-channel strategy to fuel additional revenue growth.

Andrew Bialecki: We also closed the deal with a multi-billion dollar national chain of grocery stores. They were using a homegrown solution for batch and blast communication. Each email had to be created from scratch, and they couldn't do any segmentation.

Andrew: We also closed a deal with a multi-billion dollar revenue national chain of grocery stores.

Speaker Change: They were using a homegrown solution to batch and blast communications. Each email had to be created from scratch, and they couldn't do any segmentation.

Andrew Bialecki: The CIO demoed Klaviyo and quickly realized the team would see big productivity gains from our out-of-the-box segmentation, data orchestration, and the flexibility of our campaign and flow creation. Companies of all sizes are building omni-channel marketing strategies using email, SMS, and push notifications to build personalized consumer relationships. But many use multiple-point solutions, leaving them with disjointed consumer data, an incomplete view of their consumers, and a fragmented communication, If you've ever received an email from a brand asking you to review a product that you returned weeks ago, and you've seen this breakdown in action, That's why we've integrated all of those channels on one platform, injecting data from every touchpoint, and giving our customers powerful insights that enable them to execute a differentiated omnichannel strategy.

Speaker Change: The CIO demoed Klaviyo and quickly realized the team would see big productivity gains from our out-of-the-box segmentation, data orchestration, and the flexibility of our campaign and flow creation.

Andrew Bialecki: Samsonite, the world's largest travel luggage company, chose Klaviyo this quarter because Klaviyo could bring all of their data into one place. Stantonite was using multiple point solutions for email and SMS. They had fragmented data, and after 8 years with their email provider, they had only built 4 automated workflows due to the difficulty of customizing the solution.

Speaker Change: Companies of all sizes are building omnichannel marketing strategies using email, SMS and push notifications to build personalized consumer relationships.

Andrew Bialecki: But many use multiple-point solutions, leaving them with disjointed super-data and an incomplete view of their consumers in a fragmented communication experience. If you've ever received an email from a brand asking you to review a product that you returned weeks ago, and you've seen this breakdown in action. That's why we've integrated all of those channels on one platform, ingesting data from every touchpoint and giving our customers powerful insights that enable them to execute a differentiated army channel strategy. Samsonite, the world's largest travel luggage company, shows Klaviyo this quarter because we could bring all of their data into one place.

Speaker Change: But many use multiple point solutions, leaving them with disjointed consumer data, an incomplete view of their consumers, and a fragmented communication experience.

Speaker Change: If you've ever received an email from a brand asking you to review a product that you returned weeks ago, and you've seen this breakdown in action.

Andrew Bialecki: They were impressed with the number of easy-to-build options that Klaviyo provides across its templates, forms, and flows. Stantonite selected Klaviyo over a large legacy provider to unify all seven of their North American brands, bringing email and SMS together on our platform. SMS continues to be a key driver of growth for us, as companies look to consolidate their SMS capabilities with Klaviyo to better leverage our data platform for multi-channel flows and campaigns. This quarter, we expanded our relationship with Barstool Sports, a sports digital media company with over 65 content franchises and 198 million social followers.

Andrew Bialecki: They were impressed with the number of easy-to-build options that Klaviyo provides across its templates, forms, and flows. Stantonite selected Klaviyo over a large legacy provider to unify all seven of their North American brands, bringing email and SMS together on our platform. SMS continues to be a key driver of growth for us, as companies look to consolidate their SMS capabilities with Klaviyo to better leverage our data platform for multi-channel flows and campaigns. This quarter, we expanded our relationship with Arsenal Sports, a sports digital media company with over 65 content franchises and 198 million social followers.

Speaker Change: That's why we've integrated all of those channels on one platform, ingesting data from every touchpoint, and giving our customers powerful insights that enable them to execute a differentiated on-the-channel strategy.

Speaker Change: Stantonite, the world's largest travel luggage company, chose Klaviyo this quarter because we could bring all of their data into one place.

Andrew Bialecki: Samsonite was using multiple-point solutions for email and SMFs. They had fragmented data in after eight years of their email provider that had only built four automated workflows due to the difficulty of customizing the solution. They were impressed with the number of easy to build options that Klaviyo provides across our templates, forms, and flows. Samsonite selected Klaviyo over a large legacy provider, used by all seven of their North American brands, bringing email and SMFs together onto our platform. SMS continues to be a key driver who grows for us as companies look to consolidate SMS capabilities with Klaviyo to better leverage our data platform for multi-channel flows and campaigns.

Speaker Change: Stantonite was using multiple point solutions for email and SMS. They had fragmented data and after eight years with their email provider, they had only built four automated workflows due to the difficulty of customizing the solution.

Speaker Change: They were impressed with the number of easy-to-build options that Klaviyo provides across our templates, forms, and flows.

Speaker Change: Samsonite selected Klaviyo over a large legacy provider to unify all seven of their North American brands, bringing email and SMS together onto our platform.

Speaker Change: SMS continues to be a key driver of growth for us as companies look to consolidate SMS capabilities with Klaviyo to better leverage our data platform for multi-channel flows and campaigns.

Andrew Bialecki: This quarter we expanded our relationship with our small sports, the sports digital media company with over 65 content franchises and 198 million social followers. They've been a Klaviyo email customer for eight years and have seen tremendous success, selling their merchandise, expanding their influence, and the sports entertainment communities. As their contract with a point solution SMS provider came to an end, it offers to consolidate with Klaviyo so that all of their consumer data will be housed on our platform, allowing them to better segment and orchestrate the data for more personalized communications across channels. We also started a new relationship with Boston Proper, a legacy fashion and a parallel brand that historically is relied on selling by a catalog.

Speaker Change: This quarter we expanded our relationship with Barswell Sports, the sports digital media company with over 65 content franchises and 198 million social followers.

Andrew Bialecki: They've been a Klaviyo email customer for eight years, and they have seen tremendous success selling their merchandise, expanding their influence in the sports and entertainment community. As their contract with a point solution SMS provider came to an end, they opted to consolidate with Klaviyo so that all of their consumer data would be housed on our platform, allowing them to better segment and orchestrate the data for more personalized communications across channels. We also started a new relationship with Boston Proper, a legacy fashion and apparel brand that historically has relied on selling via catalog.

Speaker Change: They have been a Klaviyo email customer for 8 years and have seen tremendous success selling their merchandise and expanding their influence in the sports and entertainment communities.

Speaker Change: As their contract with a point solution SMS provider came to an end, they opted to consolidate with Klaviyo so that all of their consumer data will be housed on our platform, allowing them to better segment and orchestrate the data for more personalized communications across channels.

Speaker Change: We also started a new relationship with Boston Proper, a legacy fashion and apparel brand that historically has relied on selling via catalogs.

Andrew Bialecki: The company's technology infrastructure was fragmented during its ability to provide a seamless and personalized shopping experience for its consumers. They chose to consolidate from multiple point solutions to Klaviyo, centralizing all online and offline consumer data into our data platform. Awesome Proper is leveraging our email, SMS, and CDP solutions can build stronger relationships and to help grow their top line. The more first-party consumer data you have on one platform, the stronger your campaigns will be. With help from our own ecosystem, we build out an incredible third-party integration library so our customers can hold in their data from anywhere.

Andrew Bialecki: The company's technology infrastructure was fragmented, hindering its ability to provide a seamless and personalized shopping experience for its consumers. They chose to consolidate from multiple point solutions to Klaviyo, centralizing all online and offline consumer data into our data platform. Austin Proper is leveraging our email, SMS, and CDP solutions to build stronger relationships and to help grow their top line. The more first-party consumer data you have on one platform, the stronger your campaigns will be.

Speaker Change: The company's technology infrastructure was fragmented, hindering its ability to provide a seamless and personalized shopping experience for its consumers. They chose to consolidate from multiple point solutions to Klaviyo, centralizing all online and offline consumer data into our data platform.

Speaker Change: Austin Proper is leveraging our email, SMS, and CDP solutions to build stronger relationships and to help grow their top line.

Speaker Change: The more first-party consumer data you have on one platform, the stronger your campaigns will be. With help from our growing ecosystem, we've built out an incredible third-party integration library so our customers can pull in their data from anywhere.

Andrew Bialecki: With help from our growing ecosystem, we've built out an incredible third-party integration library so our customers can pull in their data from anywhere. These integrations are both inbound and outbound, allowing customers to bring all of their data onto our platform, as well as leverage Klaviyo data on other platforms, like Google and Meta. This quarter, we added Toast and Bizarre Voice, new inbound integrations, and TikTok and Pinterest, outbound integrations, which allow customers to connect their Klaviyo profiles to the ad audience, Rubin, for return on ads.

Andrew Bialecki: With help from our own ecosystem, we've built out an incredible third-party integration library so our customers can pull in their data from anywhere. These integrations are both inbound and outbound, allowing customers to bring all of their data onto our platform, as well as leverage Klaviyo data on other platforms, like Google and Meta. This quarter, we added Toast and Bizarre Voice, new inbound integrations, and TikTok and Pinterest, outbound integrations, which allow customers to connect their Klaviyo profiles to the ad audience, Rubin, for return on ads.

Andrew Bialecki: These integrations are both inbound and outbound, allowing customers to bring all of their data onto our platform, as well as leverage Klaviyo data on other platforms, like Google and Meta. This quarter, we added toast and bizarre voice, new inbound integrations, and kick-talk and Pinterest outbound integrations, which allow customers to connect to their Klaviyo profiles to the ad audiences, improving return on assets. We also announced a new integration framework that significantly reduces time to build on Klaviyo by up to 43%. We plan to open up this framework to third-party developers in the future, enabling them to create both inbound and outbound integrations with Klaviyo more efficiently.

Speaker Change: These integrations are both inbound and outbound, allowing customers to bring all of their data onto our platform, as well as leverage Klaviyo data on other platforms, like Google and Meta.

Speaker Change: This quarter, we added Toast and Bizarre Voice, new inbound integrations, and TikTok and Pinterest outbound integrations, which allow customers to connect their Klaviyo profiles to the ad audiences, improving return on ad spend.

Andrew Bialecki: We also announced a new integration framework that significantly reduces time to build on Klaviyo by up to 43%. We plan to open up this framework to third-party developers in the future to enable them to create both inbound and outbound integrations with Klaviyo more efficiently. Personal Supply Company, the global travel lifestyle brand, chose Klaviyo and Q2 in part because of our third-party integration. They were frustrated with their prior point solution due to lack of innovation, poor integration, and reporting challenges.

Andrew Bialecki: We also announced a new integration framework that significantly reduces time to build on Klaviyo by up to 43%. We plan to open up this framework to third-party developers in the future to enable them to create both inbound and outbound integrations with Klaviyo more efficiently. Personal Supply Company, a global travel lifestyle brand, chose Klaviyo and Q2 in part because of our third-party integration. They were frustrated with their prior point solution due to lack of innovation, poor integration, and reporting challenges.

Speaker Change: We also announced a new integration framework that significantly reduces time to build on Klaviyo by up to 43%.

Speaker Change: We plan to open up this framework to third-party developers in the future to enable them to create both inbound and outbound integrations with Klaviyo more efficiently.

Andrew Bialecki: Personal supply company, the Global Travel Lifestyle Brand, shows Klaviyo and QSU in part because of our third-party integration. They were frustrated with their prior point solution due to lack of innovation for integration and reporting challenges. Following a competitive RFP process across point solutions and legacy providers, they chose Klaviyo because they felt that our massive integration library and functionality, and AI features would give them the right edge for growth. Speaking to AI, we continue to enhance our AI suite. As I mentioned previously, we think about AI freeways, productivity, optimization, and creation of new marketing strategies. Marketers need artificial intelligence to be practical, effective, and easy to use, but AI is only as good as the underlying data.

Speaker Change: Commercial Supply Company, the global travel lifestyle brand, chose Klaviyo and Q2 in part because of our third-party integration.

Speaker Change: They were frustrated with their prior point solution due to lack of innovation, poor integration, and reporting challenges.

Andrew Bialecki: Following a competitive RFP process for cross-point solutions and legacy providers, they chose Klaviyo because they felt that our massive integration library and functionality and AI features would give them the right edge for growth. Speaking of AI, we continue to enhance our AI. As I've mentioned previously, we think about AI in three ways. Productivity, Optimization, and Creation of New Marketing Strategies. Marketers need artificial intelligence to be practical, effective, and easy to use. But AI is only as good as the underlying data.

Speaker Change: Following a competitive RFP process across point solutions and legacy providers, they chose Klaviyo because they felt that our massive integration library and functionality and AI features would give them the right edge for growth.

Speaker Change: Speaking to AI, we continue to enhance our AI suite.

Speaker Change: As I've mentioned previously, we think about AI three ways, productivity, optimization, and creation of new marketing strategies.

Andrew Bialecki: Productivity, Optimization, and Creation of New Marketing Strategies. Marketers need artificial intelligence to be practical, effective, and easy to use. But AI is only as good as the underlying data.

Speaker Change: Marketers need artificial intelligence to be practical, effective, and easy to use.

Andrew Bialecki: Because our platform can ingest up to the second, third-party consumer data, Klaviyo can provide more accurate benchmarks and drive actionable insights through our artificial intelligence tools. A few weeks ago, we announced several new features. Blow the AI allows marketers to build a flow in seconds with a simple prompt that ultimately drives more revenue. First slide campaigns take AB testing to the next level by determining the winning version of a campaign for each individual subscriber based on their likelihood to engage. And review a sentiment AI quickly analyzes product reviews at scale, so brands can get insights and take action faster than ever.

Andrew Bialecki: Because our platform can ingest up to second-party first-party consumer data, Klaviyo can provide more accurate benchmarks and drive actionable insights through our artificial intelligence tools. A few weeks ago, we announced several new features. Flows.ai allows marketers to build floating seconds with a simple prompt and ultimately drive more revenue. Our five campaigns take A-B testing to the next level by determining the winning version of a campaign for each individual subscriber based on their likelihood to engage.

Andrew Bialecki: Because our platform can ingest up to second-party first-party consumer data, Klaviyo can provide more accurate benchmarks and drive actionable insights through our artificial intelligence tool. A few weeks ago, we announced several new features. Flows.ai allows marketers to build a flow in seconds with a simple prompt and ultimately drive more revenue. Our five campaigns take A-B testing to the next level by determining the winning version of a campaign for each individual subscriber based on their likelihood to engage.

Speaker Change: But AI is only as good as the underlying data. Because our platform can ingest up to the second first-party consumer data, Klaviyo can provide more accurate benchmarks and drive actionable insights through our artificial intelligence tools.

Speaker Change: A few weeks ago, we announced several new features.

Speaker Change: Flow's AI allows marketers to build a flow in seconds with a simple prompt and ultimately drive more revenue.

Speaker Change: Our five campaigns take A-B testing to the next level by determining the winning version of a campaign for each individual subscriber based on their likelihood to engage.

Andrew Bialecki: And Review Sentiment AI quickly analyzes product reviews at scale so brands can get insights and take action faster than ever. We also want our AI features to easily provide guidance, so we recently introduced a feature that gives recommended actions and tailored next steps, powered by artificial intelligence, as soon as customers log into their Klaviyo home page. Our customers are increasingly adopting our AI products. For example, we've seen a 61% increase in accounts using one of our generative AI features.

Speaker Change: And Review Sentiment AI quickly analyzes product reviews at scale so brands can get insights and take action faster than ever.

Andrew Bialecki: We also want our AI features to easily provide guidance, so we recently introduced a feature that gives recommended actions and tailor next steps powered by artificial intelligence as soon as customers log into their Klaviyo home. Page. Our customers are increasingly adopting our AI products as we see a 61% increase in accounts using one of our generative AI features. We're excited by Klaviyo AI's ability to help marketers move beyond what was previously possible, unlocking new growth strategies.

Speaker Change: We also want our AI features to easily provide guidance, so we recently introduced a feature that gives recommended actions and tailored next steps, powered by artificial intelligence, as soon as customers log into their Klaviyo homepage.

Speaker Change: Our customers are increasingly adopting our AI products, as we've seen a 61% increase in accounts using one of our generative AI features.

Andrew Bialecki: We're excited by Klaviyo AI's ability to help marketers move beyond what was previously possible, unlocking new growth strategies. As a customer-first organization, we are focused on investing in areas that will help us support our customers and make them more successful across sales, products, and support.

Speaker Change: We're excited by Klaviyo AI's ability to help marketers move beyond what was previously possible, unlocking new growth strategies.

Andrew Bialecki: As a customer-first organization, we are focused on investing in areas that will help us support our customers and make them more successful across sales, product, and support. We've been investing in our go-to-market efforts over the last few quarters to focus on growing our sales capacity to address mid-market and international opportunities. Additionally, we continue to invest in training for new sales hires and expanding our partner ecosystem to ensure we have the right agencies, system integrators, and technology partners to help our customers succeed. International, we are investing to expand our presence and platform offering. During the quarter, we continue to enhance our localization and internationalization with the expansion of our SMS capabilities into Australia, Switzerland, and Spain, as well as adding NMS in Australia.

Speaker Change: As a customer-first organization, we are focused on investing in areas that will help us support our customers and make them more successful across sales, products, and support.

Andrew Bialecki: We've been investing in our go-to-market efforts over the last few quarters with a focus on growing our sales capacity to address mid-market and international opportunities. Additionally, we continue to invest in training for new sales hires and expanding our partner ecosystem to ensure we have the right agencies, system integrators, and technology partners to help our customers. Internationally, we are investing to expand our presence and platform offering. During the quarter, we continued to enhance our localization and internationalization with the expansion of our SMS capabilities into Austria, Switzerland, and Spain, as well as adding MMS in Australia. We now provide SMS coverage in 12 countries, more than double the five countries we had coverage for this time last year.

Speaker Change: We have been investing in our go-to-market efforts over the last few quarters with a focus on growing our sales capacity to address mid-market and international opportunities.

Operator: Bhatia

Andrew Bialecki: Additionally, we continue to invest in training for new sales hires and expanding our partner ecosystem to ensure we have the right agencies, system integrators, and technology partners to help our customers. Internationally, we are investing to expand our presence and platform offering. During the quarter, we continue to enhance our localization and internationalization with the expansion of our SMS capabilities into Austria, Switzerland, and Spain, as well as adding MMS in Australia. We now provide SMS coverage in 12 countries, more than double the five countries we had coverage for at this time last year.

Speaker Change: Additionally, we continue to invest in training for new sales hires and expanding our partner ecosystem to ensure we have the right agencies, system integrators, and technology partners to help our customers succeed.

Speaker Change: Internationally, we are investing to expand our presence and platform offerings.

Speaker Change: During the quarter, we continued to enhance our localization and internationalization with the expansion of our SMS capabilities into Austria, Switzerland, and Spain, as well as adding MMS in Australia.

Andrew Bialecki: We now provide SMS coverage in 12 countries, more than double the five countries we had coverage for this time last year. We plan to continue to expand our international footprint going forward. This quarter, we launched our product in French, and we saw a large increase in new customers and usage as a result. For example, we signed a new deal with Lupitee Palon, a French wine subscription company. We're looking for a new solution to help them generate more revenue through email and to improve overall consumer retention. It shows Klaviyo because of our data platform and plan to start testing SMS in addition to their use of email.

Speaker Change: We now provide SMS coverage in 12 countries, more than double the five countries we had coverage for this time last year. And we plan to continue to expand our international footprint going forward.

Andrew Bialecki: And we plan to continue to expand our international footprint going forward. This quarter, we launched our product in French, and we saw a large increase in new customers and usage as a result. For example, we signed a new deal with Le Petit Boulogne, a French wine description.

Speaker Change: This quarter, we launched our product in French, and we saw a large increase in new customers and usage as a result. For example, we signed a new deal with Le Petit Boulogne, a French wine subscription company.

Andrew Bialecki: And we're looking for a new solution to help them generate more revenue through email and to improve overall consumer retention. They chose Klaviyo because of our data platform and plan to start testing SMS in addition to their use of email. We are dedicated to continually improving our platform and product offering for our customers. Our customers tell us that our product roadmap is a key differentiator. In Q2, we released a number of new features, including a bulk profile suppression tool, which helps our customers keep their active profiles clean by suppressing profiles that may have stopped engaging with their brand. Companies can now suppress those profiles with one click so they can market to the right consumer and ensure good deliverability.

Speaker Change: We're looking for a new solution to help them generate more revenue through email and to improve overall consumer retention.

Speaker Change: They chose Klaviyo because of our data platform and plan to start testing SMS in addition to their use of email.

Andrew Bialecki: We are dedicated to continually improving our platform product offering for our customers. Customers tell us that our product roadmap is a key differentiator. In Q2, we release a number of new features, including a bulk profile suppression tool, which helps our customers keep their active profile clean by suppressing profiles and may stop engaging with their brands. Companies can now suppress those profiles with one click, so they can market to the right consumer and ensure a deliverability. Today, we also release Reputation Repair AI, which will determine when an account has poor deliverability, identify and segment out those accounts, create a clean list, and ensure brands are setting the highest quality profiles, leading to stronger deliverability in email performance.

Speaker Change: We are dedicated to continually improving our platform and product offering for our customers.

Speaker Change: Customers tell us that our product roadmap is a key differentiator. In Q2 we released a number of new features including a bulk profile suppression tool which helps our customers keep their active profiles clean by suppressing profiles that may have stopped engaging with their brands.

Andrew Bialecki: So they can market to the right consumer and ensure good deliverability. Today, we also released Reputation Repair AI, which will determine when an account has poor deliverability, identify and segment out those accounts to create a clean list, and ensure brands are sending to the highest quality profiles, leading to stronger deliverability and email performance. Deliverability is hugely important. You may have the best content in the world, but it only works if it gets delivered. We've been investing heavily in our deliverability infrastructure and systems, and I want to thank our team, who are focused day and night on ensuring the highest quality, deliverability, and sender reputation. Equally important is compliance.

Speaker Change: Companies can now suppress those profiles with one click, so they can market to the right consumer and ensure good deliverability.

Andrew Bialecki: Today, we also released Reputation Repair AI, which will determine when an account has poor deliverability, identify and segment out those accounts to create a clean list, and ensure brands are setting the highest quality profiles leading to stronger deliverability and email performance. You may have the best content in the world, but it only works if it gets delivered. We've been investing heavily in our deliverability infrastructure and systems, and I want to thank our team who is focused day and night on ensuring the highest quality, deliverability, and sender reputation.

Speaker Change: Today we also released Reputation Repair AI, which will determine when an account has poor deliverability, identify and segment out those accounts to create a clean list, and ensure brands are setting to the highest quality profiles, leading to stronger deliverability and email performance.

Andrew Bialecki: Deliverability is hugely important. You may have the best content in the world, but it only works if it gets delivered. We've been investing heavily in our deliverability infrastructure and systems, and I want to thank our team who is focused day and night on ensuring the highest quality deliverability and sender replications. Equally important is compliance. Our team is focused on preventing abuse of these channels, whether malicious or accidental. We're able to maintain strong compliance because we have insight into an enormous amount of data that allows us to see what's going on and how to stop. As a result of these efforts, we've navigated the changes from the email service providers extremely well, and we're seeing the benefits from those efforts as companies turn to Klaviyo after negative experiences with other providers.

Speaker Change: Deliverability is hugely important. You may have the best content in the world, but it only works if it gets delivered. We've been investing heavily in our deliverability infrastructure and systems, and I want to thank our team who is focused day and night on ensuring the highest quality deliverability and sender reputations.

Andrew Bialecki: Our team is focused on preventing abuse of these channels, whether malicious or accidental. We're able to maintain strong compliance because we have insight into an enormous amount of data that allows us to see what's going on and how to stop it. As a result of these efforts, we've navigated the changes from the email service providers extremely well, and we're seeing the benefits from those efforts as companies turn to Klaviyo after negative experiences with other providers. A great example of this is Olive and June, a leading provider of at-home manicure and pedicure products. They were using a lower cost provider but were facing severe deliveryability issues.

Andrew Bialecki: Equally important is compliance, and our team is focused on preventing abuse of these channels, whether malicious or accidental. We're able to maintain strong compliance because we have insight into an enormous amount of data that allows us to see what's going on and how to stop it. As a result of these efforts, we've navigated the changes from the email service providers extremely well, and we're seeing the benefits from those efforts as companies turn to Klaviyo after negative experiences with other providers. A great example of this is Olive and June, a leading provider of at-home manicure and pedicure products. They were using a lower cost provider but were facing severe deliveryability issues.

Speaker Change: Equally important is compliance, and our team is focused on preventing abuse of these channels, whether malicious or accidental.

Speaker Change: We are able to maintain strong compliance because we have insight into an enormous amount of data that allows us to see what's going on and how to stop it.

Speaker Change: As a result of these efforts, we've navigated the changes from the email service providers extremely well, and we're seeing the benefits from those efforts as companies turn to Klaviyo after negative experiences with other providers.

Andrew Bialecki: Great example of this is all of a June, a leading provider of at-home manicure and pedicure products. They were using a lower cost provider, but we're facing severe delivery issues. They came to Klaviyo because of our strong reputation in the market, the power of our platform, our deliverability strength, and our integrations with their other systems that will help them build better relationships with their end consumers.

Speaker Change: A great example of this is Olive and June , a leading provider of at-home manicure and pedicure products. They were using a lower-cost provider, but were facing severe deliverability issues.

Andrew Bialecki: They came to Klaviyo because of our strong reputation in the market, the power of our platform, our deliverability strength, and our integrations with their other systems that will help them build better relationships with their end consumers. As we continue to add more features and functionality to the platform, we are committed to empowering our customers to get the most out of Klaviyo by making it easy to find answers about best practices, partners to work with, and a community to engage with.

Andrew Bialecki: They came to Klaviyo because of our strong reputation in the market, the power of our platform, our deliverability strengths, and our integrations with their other systems that will help them build better relationships with their end consumers. As we continue to add more features and functionality to the platform, we are committed to empowering our customers to get the most out of Klaviyo by making it easy to find answers about best practices, partners to work with, and a community to engage with.

Speaker Change: They came to Klaviyo because of our strong reputation in the market, the power of our platform, our deliverability strength, and our integrations with their other systems that will help them build better relationships with their end consumers.

Andrew Bialecki: As we continue to add more features and functionality to the platform, we are committed to empowering our customers to get the most out of Klaviyo by making it easy to find answers about best practices, partners to work with, and a community to engage with. To provide excellent customer support across all segments, we recently launched Klaviyo Power Up, our new centralized customer resource center. Design is bringing all of these assets together in one place. Power Up will help customers easily discover self-service resources and deliver curated content throughout their journey with Klaviyo. It will continue to enhance power up as part of our dedication to support our customers' long term success.

Speaker Change: As we continue to add more features and functionality to the platform, we are committed to empowering our customers to get the most out of Klaviyo by making it easy to find answers about best practices, partners to work with, and a community to engage with.

Andrew Bialecki: To provide excellent customer support across all segments, we recently launched Klaviyo PowerUp, our new centralized customer resource center designed to bring all of these assets together in one place. PowerUp will help customers easily discover self-service resources and deliver curated content throughout their journey with Klaviyo. We will continue to enhance PowerUp as part of our dedication to support our customers' long-term success.

Speaker Change: To provide excellent customer support across all segments, we recently launched Klaviyo PowerUp, our new centralized customer resource center designed to bring all of these assets together in one place.

Speaker Change: PowerOff will help customers easily discover self-service resources and deliver curated content throughout their journey with Klaviyo.

Speaker Change: We will continue to enhance PowerUp as part of our dedication to support our customers' long-term success.

Andrew Bialecki: I'm extremely happy with our second quarter results at the strong first half of the year. We have a tremendous long-term opportunity ahead of us as we help our customers power smarter digital relationships around the world. And we have even bigger plans for the future to unlock use cases beyond marketing for our customers.

Andrew Bialecki: I'm extremely happy with our second quarter results and the strong first half of the year. We have a tremendous long-term opportunity ahead of us as we help our customers power smarter digital relationships around the world. And we have even bigger plans for the future to unlock use cases beyond marketing for our customers. Before I hand it over to Amanda, I'm very proud to announce that Klaviyo was named an Inc. Best Workplace for the sixth year in a row, and Newsweek listed us as one of America's greatest workplaces for 2020. Thanks to all the Klaviyos for keeping up the energy of our culture. And with that, I'll turn it over to Amanda.

Speaker Change: I'm extremely happy with our second quarter results and the strong first half of the year. We have a tremendous long-term opportunity ahead of us as we help our customers power smarter digital relationships around the world.

Andrew Bialecki: We have a tremendous long-term opportunity ahead of us as we help our customers power smarter digital relationships around the world. And we have even bigger plans for the future to unlock use cases beyond marketing for our customers. Before I hand it over to Amanda, I'm very proud to announce that Klaviyo was named an Inc. Best Workplace for the sixth year in a row, and Newsweek listed us as one of America's greatest workplaces for 2020. Thanks to all the Klaviyos for keeping up the energy of our culture. And with that, I'll turn it over to Amanda.

Speaker Change: And we have even bigger plans for the future to unlock use cases beyond marketing for our customers.

Andrew Bialecki: Before I hand it over to Amanda, I'm very proud to announce that Klaviyo was named an Inc. Best Workplace for the sixth year in a row. And Newsweek listed us as one of America's greatest workplaces for 2024. Thanks to all the Klaviyos for keeping up the energy of our culture.

Speaker Change: Before I hand it over to Amanda, I'm very proud to announce that Klaviyo was named an Inc. Best Workplace for the sixth year in a row, and Newsweek listed us as one of America's greatest workplaces for 2024.

Amanda Whalen: And with that, I'll turn it over to Amanda.

Speaker Change: Thanks to all the Klaviyos for keeping up the energy of our culture. And with that, I'll turn it over to Amanda.

Amanda Whalen: Thanks, Andrew. Klaviyo delivered another quarter of strong financial performance in Q2 as we continue to drive efficient growth at scale. Red new growth 35% year over year to 222 million dollars. And we reported a 15% non-GAAP operating margin, both exceeding our expectations. We're very pleased to deliver well above the Rule of 40 with this performance.

Amanda Whalen: Klaviyo delivered another quarter of strong financial performance in Q2 as we continue to drive efficient growth at scale. Revenue grew 35% year over year to $222 million, and we reported a 15% non-gas operating margin, both exceeding our expectations. We're very pleased to deliver well above the rule of 40 with this performance.

Amanda Whalen: Klaviyo delivered another quarter of strong financial performance in Q2 as we continue to drive efficient growth at scale. Revenue grew 35% year over year to $222 million, and we reported a 15% non-gap operating margin, both exceeding our expectations. We're very pleased to deliver well above the rule of 40 with this performance.

sandrew clayia: Thanks, Andrew. Klaviyo delivered another quarter of strong financial performance in Q2 as we continue to drive efficient growth at scale.

Amanda: Revenue grew 35% year-over-year to $222 million, and we reported a 15% non-GAAP operating margin, both exceeding our expectations.

Speaker Change: We're very pleased to deliver well above the rule of 40 with this performance.

Amanda Whalen: We continue to deliver across our four primary growth factors, adding new customers, expanding with those customers, expanding internationally, and growing in the mid market. In Q2, we added over 5,000 new customers and now have more than 151,000 customers, up 16% year over year. We saw strength and entrepreneurs and in the high end of the market.

Amanda Whalen: We continue to deliver across our four primary growth factors, adding new customers, expanding with those customers, expanding internationally, and growing in the mid-market. In Q2, we added over 5000 new customers and now have more than 151,000, up 16% year-over-year. We saw strength in entrepreneurs and in the high end of the market. However, we are seeing some of the softness in the SMB market that has been widely discussed across the industry over the last several months.

Amanda Whalen: We continue to deliver across our four primary growth factors: adding new customers, expanding with those customers, expanding internationally, and growing in the mid-market. In Q2, we added over 5,000 new customers and now have more than 151,000, up 16% year-over-year. We saw strength in entrepreneurs and in the high end of the market. However, we are seeing some of the softness in the SMB market that has been widely discussed across the industry over the last several months.

Speaker Change: We continue to deliver across our four primary growth factors.

Speaker Change: Hicks, adding new customers, expanding with those customers, expanding internationally, and growing in the mid-market.

Speaker Change: In Q2, we added over 5,000 new customers and now have more than 151,000 customers.

Speaker Change: We saw strength in entrepreneurs and in the high end of the market. However, we are seeing some of the softness in the SMB market that has been widely discussed across the industry over the last several months.

Amanda Whalen: However, we are seeing some of the softness in the SMD market that has been widely discussed across the industry over the last several months. Despite this, we delivered a strong quarter due to the diversity of our customer base, cross customer size, and geography. Existing customers continue to expand with us by growing their existing usage and adding new products, as can be seen in our dollar-based net revenue retention rate or NRR, which was 12% for the quarter. And expected decline due to the laughing of our September 2022 price increase, as well as the customer trends we spoke about earlier this year.

Amanda Whalen: Despite this, we delivered a strong quarter due to the diversity of our customer base, cross customer size, and geography. Existing customers continue to expand with us by growing their existing usage and adding new products, as can be seen in our dollar-based net revenue retention rate, or NRR, which was 112% for the quarter. An expected decline due to the lapping of our September 2022 price increase, as well as the customer trends we spoke about earlier this year. We continue hearing from customers about macro pressures, and they remain focused on the value they're deriving from their software. As a result, our expectations for continued decline in NRR in the near term haven't changed.

Amanda Whalen: Despite this, we delivered a strong quarter due to the diversity of our customer base, across customer size and geography. Existing customers continue to expand with us by growing their existing usage and adding new products, as can be seen in our dollar-based net revenue retention rate, or NRR, which was 112% for the quarter, an expected decline due to the lapping of our September 2022 price increase, as well as the customer trends we spoke about earlier this year. We continue hearing from customers about macro pressures, and they remain focused on the value they're deriving from their software. As a result, our expectations for continued decline in NRR in the near term haven't changed.

Speaker Change: Despite this, we delivered a strong quarter due to the diversity of our customer base across customer size and geography.

Speaker Change: Existing customers continue to expand with us by growing their existing usage and adding new products, as can be seen in our Dollar-Based Net Revenue Retention Rate, or NRR, which was 112% for the quarter.

Speaker Change: An expected decline due to the lapping of our September 2022 price increase, as well as the customer trends we spoke about earlier this year.

Amanda Whalen: We continue hearing from customers about macro pressures, and they remain focused on the value they're deriving from their software. As a result, our expectations for a continuous decline in NRR and the near term haven't changed.

Speaker Change: We continue hearing from customers about macro pressures, and they remain focused on the value they're deriving from their software.

Speaker Change: As a result, our expectations for continued decline in NRR in the near term haven't changed.

Amanda Whalen: It's important to note that, despite this, we continue to see strength and stability in our gross retention rates, which confirms our beliefs that Klaviyo is a must-have platform for our customers. You'll recall that we announced the launch of our French language product in Q2, and we have seen extremely strong trends there as a result. France was our fastest growing country in new business in the quarter, up more than 65% Q1. We also saw strength in the UK, Ireland, Italy, and Germany. In fact, our year-over-year revenue growth in Amia accelerated to 45% in Q2 from 43% in Q1.

Amanda Whalen: It's important to note that despite this, we continue to see strength and stability in our gross retention rates, which confirms our belief that Klaviyo is a must-have platform for our customers. Internationally, we continue to grow our global presence. You'll recall that we announced the launch of our French-language product in Q2, and we have seen extremely strong trends there as a result. France was our fastest-growing country in new business in the quarter, up more than 65% in Q1.

Speaker Change: It's important to note that despite this, we continue to see strength and stability in our gross retention rates, which confirms our belief that Klaviyo is a must-have platform for our customers.

Speaker Change: Internationally, we continue to grow our global business.

Speaker Change: You'll recall that we announced the launch of our French language product in Q2, and we have seen extremely strong trends there as a result. France was our fastest growing country in new business in the quarter, up more than 65% from Q1.

Amanda Whalen: We also saw strength in the UK, Ireland, Italy, and Germany. In fact, our year-over-year revenue growth in EMEA accelerated to 45% in Q2 from 43% in Q1. In aggregate, our international revenue grew 41% year over year. Finally, the go-to-market initiatives we implemented last year are delivering great results.

Speaker Change: We also saw strength in the UK, Ireland, Italy, and Germany.

Speaker Change: In fact, our year-over-year revenue growth in EMEA accelerated to 45% in Q2, from 43% in Q1. In aggregate, our international revenue grew 41% year-over-year.

Amanda Whalen: In aggregate, our international revenue grew 41% year-over-year.

Amanda Whalen: Finally, the go-to-market initiatives we implemented last year are delivering great results. At the end of Q2, we had 2,386 customers generating over $50,000 in ARR, which was up 62%. We're also seeing a healthy trend of landing new customers in this cohort from the start, adding the largest quarterly number in our history, evidence that our strategy is working, and of the growing importance of our platform to our customers. Non-GAAP gross profits for the quarter was $175 million, representing a non-GAAP gross margin of 79%, up 140 basis points year-over-year. This came in slightly better than expected as we continue to absorb mixed shift pressure from our growing SMS business through operational efficiencies across our infrastructure and support organizations.

Speaker Change: Finally, the go-to-market initiatives we implemented last year are delivering great results. At the end of Q2, we had 2,386 customers generating over $50,000 in ARR, which was up 64% year-over-year.

Amanda Whalen: At the end of Q2, we had 2,386 customers generating over $50,000 in ARR, which was up 64% year-over-year. We're also seeing a healthy trend of landing new customers in this cohort from the start, adding the largest quarterly number in our history. This is evidence that our strategy is working and of the growing importance of our platform to our customers.

Speaker Change: We're also seeing a healthy trend of landing new customers in this cohort from the start, adding the largest quarterly number in our history, evidence that our strategy is working and of the growing importance of our platform to our customers.

Amanda Whalen: Non-GAAP gross profit for the quarter was $175 million, representing a non-GAAP gross margin of 79%, up 140 basis points year-over-year. This came in slightly better than expected as we continue to absorb next shift pressure from our growing SMS business through operational efficiencies across our infrastructure and support organizations. For the full year, we expect the non-gap gross margin to be down slightly from last year. Turning to non-GAAP operating expenses, sales and marketing expense was 32% of revenue for the quarter, up 140 basis points over last year as a result of our investments in sales headcount and marketing programs that we've discussed the last few quarters. Other expenses are in the expense with 19% of revenue, down 100 basis points year over year, primarily driven by an increase in capitalized software as a result of more development work on customer-facing features that we

Amanda Whalen: Non-GAAP gross profit for the quarter was $175 million, representing a non-GAAP gross margin of 79%, up 140 basis points year-over-year. This came in slightly better than expected, as we continue to absorb next shift pressure from our growing SMS business through operational efficiencies across our infrastructure and support organizations. For the full year, we expect non-GAP gross margin to be down slightly from last year. Turning to non-GAAP operating expenses, sales and marketing expense was 32% of revenue for the quarter, up 140 basis points over last year as a result of our investments in sales headcount and marketing programs that we've discussed the last few quarters. Other expenses are in the expense with 19% of revenue, down 100 basis points year over year, primarily driven by Finally, G&A expense was 13% of revenue, down 170 basis points year over year, primarily as a result of the release of some international tax-related reserves.

Speaker Change: non-GAAP gross profit for the quarter was $175 million, representing a non-GAAP gross margin of 79%, up 140 basis points year over year.

Speaker Change: This came in slightly better than expected as we continue to absorb mixed-shift pressure from our growing SMS business through operational efficiencies across our infrastructure and support organizations.

Amanda Whalen: For the full year, we expect non-GAAP gross margins to be down slightly for last year, turning to non-GAAP operating expenses. Sales and marketing expense was 32% of revenue for the quarter, up 140 basis points over last year. As a result of our investments in sales, headcount, and marketing programs, we've discussed the last few quarters. R&D expense was 19% of revenue, down 100 basis points year-over-year, primarily driven by an increase in capitalized software as a result of more development work on customer-facing features that we'll be rolling out. Finally, G&A expense was 13% of revenue, down 170 basis points year-over-year, primarily as the result of the release of some international tax-related reserves.

Speaker Change: For the full year, we expect non-GAAP gross margin to be down slightly from last year.

Speaker Change: Turning to non-GAAP operating expenses.

Speaker Change: Sales and marketing expense was 32% of revenue for the quarter up 140 basis points over last year as a result of our investments in sales headcount and marketing programs that we've discussed the last few quarters.

Speaker Change: R&D expense was 19% of revenue, down 100 basis points year over year, primarily driven by an increase in capitalized software as a result of more development work on customer facing features that we'll be rolling out.

Amanda Whalen: Finally, G&A expense was 13% of revenue, down 170 basis points year over year, primarily as a result of the release of some international tax-related reserves. We do expect more of these releases over the next few quarters, which may drive some fluctuation in GNA expense.

Speaker Change: Finally, G&A expense was 13% of revenue, down 170 basis points year-over-year, primarily as the result of the release of some international tax-related reserves.

Amanda Whalen: We do expect more of these releases over the next few quarters, which may drive some fluctuation in G&A expenses. For the second quarter, our non-GAAP operating income was $34 million, representing a non-GAAP operating margin of 15%. This was stronger than our guidance as a result of the revenue string, the items I discussed earlier, as well as headcount coming in a bit lighter than expected for the quarter. We generated free cash flow of $37 million during the quarter, down slightly from the prior year due to payroll and other operational expenses, as well as the timing of collections.

Amanda Whalen: We do expect more of these releases over the next few quarters, which may drive some fluctuation in GNA expense. For the second quarter, our non-GAAP operating income was $34 million, representing a non-GAAP operating margin of 15%. This was stronger than our guidance as a result of the revenue strength, the items I discussed earlier, as well as headcount coming in a bit lighter than expected for the quarter. We generated free cash flow of $37 million during the quarter, down slightly from the prior year due to payroll and other operational expenses, as well as the timing of collection.

Speaker Change: We do expect more of these releases over the next few quarters, which may drive some fluctuation in G&A expenses.

Amanda Whalen: For the second quarter, our non-GAAP operating income was $34 million, representing a non-GAAP operating margin of 15%. This was higher than our guidance as a result of the revenue strength, the items I discussed earlier, as well as headcount coming in a bit lighter than expected for the quarter. We generated free cash flow of $37 million during the quarter, down slightly from the prior year due to payroll and other operational expenses, as well as the timing of collection. Moving on,

Speaker Change: For the second quarter, our non-GAAP operating income was $34 million, representing a non-GAAP operating margin of 15 percent.

Speaker Change: This was stronger than our guidance as a result of the revenue strength, the items I discussed earlier, as well as headcount coming in a bit lighter than expected for the quarter.

Speaker Change: We generated free cash flow of $37 million during the quarter, down slightly from the prior year due to payroll and other operational expenses, as well as the timing of collections.

Amanda Whalen: Moving to guidance for the third quarter, we expect revenue to be $225 to $227 million, representing growth of 28 to 29% year over year. We expect non-GAAP operating incomes to be $21.5 to $24. $4.5 million, representing non-GAAP operating margin of 10 to 11%. This is a bit better than we had suggested last quarter due to a shift in the timing of some investments, as well as the lower op-EX related to slower than anticipated headcount growth in Q2. For the third quarter, we expect fully diluted shares outstanding to be approximately 300 million.

Amanda Whalen: For the third quarter, we expect revenue to be $225 to $227 million, representing growth of 28 to 29 percent year-over-year. We expect non-GAAP operating income to be $21.5 to $24.5 million, representing a non-GAAP operating margin of 10 to 11 percent. This is a bit better than we had suggested last quarter due to a shift in the timing of some investments, as well as lower OPEX related to slower than anticipated headcount growth in Q2.

Amanda Whalen: Moving to guidance for the third quarter, we expect revenue to be 225 to 227 million dollars, representing growth of 28 to 29 percent year over year. We expect non-GAAP operating income to be $21.5 to $24.5 million, representing a non-GAAP operating margin of 10 to 11 percent. This is a bit better than we had suggested last quarter due to a shift in the timing of some investments, as well as lower OPEX related to slower than anticipated headcount growth in Q2.

Speaker Change: Moving to guidance, for the third quarter we expect revenue to be 225 to 227 million dollars, representing growth of 28 to 29 percent year-over-year.

Speaker Change: We expect non-GAAP operating income to be $21.5 to $24.5 million, representing non-GAAP operating margin of 10 to 11 percent.

Speaker Change: This is a bit better than we had suggested last quarter due to a shift in the timing of some investments, as well as the lower OPEX related to slower than anticipated headcount growth in Q2.

Speaker Change: For the third quarter, we expect fully diluted shares outstanding to be approximately $300 million.

Amanda Whalen: For the full year, we are increasing our revenue guidance by $11 million to 910 to 918 million, representing growth of 30 to 31% year over year. We are also raising our non-GAAP operating income guidance by $6 million to 103 to 111 million, representing a non-GAAP operating margin of 11 to 12%. We continue to make incremental investments across go-to-market and product opportunistically and expect those investments to be spread across Q3 and Q4 as we set Klaviyo up for long-term growth. Finally, for the full year, we expect fully diluted share count to be approximately 301 million.

Amanda Whalen: For the third quarter, we expect fully diluted shares outstanding to be approximately $300 million. For the full year, we are increasing our revenue guidance by $11 million to $910 to $918 million, representing growth of 30 to 31% year over year. We're also raising our non-GAAP operating income guidance by $6 million to $103 to $111 million, representing a non-GAAP operating margin of 11 to 12 percent. We continue to make incremental investments across go-to-market and product opportunistically and expect those investments to be spread across Q3 and Q4 as we set Klaviyo up for long-term growth.

Amanda Whalen: For the third quarter, we expect fully diluted shares outstanding to be approximately $300 million. For the full year, we are increasing our revenue guidance by $11 million to $910 to $918 million, representing growth of 30 to 31% year over year. We're also raising our non-GAAP operating income guidance by $6 million to $103 to $111 million, representing a non-GAAP operating margin of 11 to 12%. We continue to make incremental investments across go-to-market and product opportunistically and expect those investments to be spread across Q3 and Q4 as we set Klaviyo up for long-term growth.

Speaker Change: For the full year, we are increasing our revenue guidance by $11 million to $910-918 million, representing growth of 30-31% year-over-year.

Speaker Change: We are also raising our non-GAAP operating income guidance by $6 million to $103 to $111 million.

Speaker Change: representing a non-GAAP operating margin of 11 to 12 percent.

Speaker Change: We continue to make incremental investments across go-to-market and product opportunistically and expect those investments to be spread across Q3 and Q4 as we set Klaviyo up for long-term growth.

Amanda Whalen: Finally, for the full year, we expect the fully diluted share count to be approximately $301 million. In closing, these strong results are a clear indication that Klaviyo's platform is driving success for our customers. We are excited about the remainder of 2024 and the coming years as we continue to build the foundation for durable and efficient growth going forward.

Speaker Change: Finally, for the full year, we expect fully diluted share count to be approximately $301 million.

Amanda Whalen: In closing, the strong results are a clear indication that Klaviyo's platform is driving success for our customers. We are excited about the remainder of 2024 and the coming years as we continue to build the foundation for durable and efficient growth going forward.

Speaker Change: In closing, these strong results are a clear indication that Klaviyo's platform is driving success for our customers.

Speaker Change: We are excited about the remainder of 2024 and the coming years as we continue to build the foundation for durable and efficient growth going forward. And with that, we'll open up the call for Q&A. Operator?

Operator: And with that, we'll open up the call for Q&A, operator. We are now opening the floor for a question-and-answer session. If you'd like to ask a question, please press star one. We do want to incorporate as many analysts as possible on the call, so please limit one question before returning to the queue.

Operator: We are now opening the floor to questions and answers. If you'd like to ask a question, please press star 1. We do want to include as many analysts as possible on the call, so please limit one question before returning to the queue. Our first question comes from Brent Bracelin from Piper Sandler. Your line is now open.

Speaker Change: We are now opening the floor for question and answer session. If you'd like to ask a question, please press star 1.

Speaker Change: We do want to incorporate as many analysts as possible on the call, so please limit one question before returning to the queue. Our first question comes from Brent Bracelin from Piper Sandler. Your line is now open.

Brent Bracelin: Our first question comes from Brent Graceland from Piper Sandler. Your line is now open. Thank you, good afternoon. I guess I want to start out here with the durability of growth. Clearly, the macro is pretty challenged out there; it remains challenging for many, but it looks like growth for you is actually stronger. This June quarter than it was a year ago, growth accelerate is a little bit on top line. You're guiding up for the year.

Brent Bracelin: Thank you. Good afternoon.

Brent Braceland: Thank you. Good afternoon. I guess I wanted to start out here with

Brent Braceland: the durability of growth.

Speaker Change: Clearly, the macro is pretty challenged out there, remains challenging for many, but

Speaker Change: It looks like growth for you is actually stronger this June quarter than it was a year ago. Growth accelerated a little bit on top line. You're guiding up for the year. Can you just double-click into the demand drivers that's giving you optimism and underpinning the strength here?

Amanda Whalen: I guess I wanted to start out here with the durability of growth. Clearly, the macro is pretty challenging out there, and it remains challenging for many, but it looks like growth for you is actually stronger this June quarter than it was a year ago. Growth accelerated a little bit on the top line. You're guiding it up for the year. Can you just double click into the demand drivers that's giving you optimism and underpinning the strength here? It is surprising, and I'd love to hear a little bit more around what's driving the optimism in the business and momentum. Thanks.

Brent Bracelin: I guess I want to start out here with the durability of growth. Clearly, the macro is pretty challenging out there, and it remains challenging for many, but it looks like growth for you is actually stronger this June quarter than it was a year ago. Growth accelerated a little bit on the top line. You're guiding it up for the year. Can you just double click on the demand drivers that's giving you optimism and underpinning the strength here? It is surprising, and I'd love to hear a little bit more on what's driving the optimism in the business and momentum. Thanks.

Amanda Whalen: Can you just double-click into the demand drivers that's giving you optimism and underpinning this the strength here? It is surprising and just love to hear a little bit more on what's driving the optimism in the business and momentum. Thanks.

Speaker Change: Surprising and just love to hear a little bit more around what's what's driving the optimism in the in the business and momentum. Thanks.

Amanda Whalen: Yeah, thanks, Brent. It's Amanda.

Amanda Whalen: Yeah, thanks, friends. It's Amanda. Appreciate the question, and we're very pleased with the results from the quarter. You know, it was a really strong resident quarter in Q2. As we talked about on the call, we saw strength and the entrepreneur side of the market driven by efficiency from our marketing investments, as well as some investments we've made in product to increase our free to pay conversion. We saw strength and the upper end of the market, and we added this quarter, as we said, our highest number greater than 50k ARR customers that we have in our company's history.

Speaker Change: Thanks, Brent. It's Amanda. I appreciate the question and we're very pleased with the results from the quarter. It was a really strong revenue quarter in Q2. As we talked about on the call, we saw strength in the entrepreneur side of the market.

Amanda Whalen: I appreciate the question. And we're very pleased with the results from the quarter. It was a really strong revenue quarter in Q2. As we talked about on the call, we saw strength in the entrepreneur side of the market, driven by efficiency from our marketing investments, as well as some investments we made in product to increase our free to pay conversion. We saw strength in the upper end of the market, and we added this quarter, as we said, our highest number of greater than 50K ARR customers that we have had in our company's history.

Speaker Change: Driven by efficiency from our marketing investments, as well as some investments we've made in product.

Speaker Change: to increase our free-to-pay conversion. We saw strength in the upper end of the market and we added this quarter, as we said, our highest number of greater than 50K ARR customers that we have in our company's history.

Amanda Whalen: And then we also continue to see strength in SMS. We're expanding our penetration and our usage with customers, and we're seeing strong growth internationally. International had a terrific quarter growing 41% year over year. So, really, multiple drivers of the strength in the quarter, and I think what it is a testament to is the diversity of our customer base across customer size and geography, which shows that we can be durable and resilient with multiple operating environments.

Amanda Whalen: And then we also continue to see strength in SMS. We're expanding our penetration and our usage with customers, and we're seeing strong growth internationally. International have its worth of quarter growing 41% year over year. So really, you know, multiple drivers of the strength in the quarter. And I think what it is a testament to is the diversity of our customer base across customer size across geography that shows that we can be durable and resilient. So multiple operating and dark.

Speaker Change: And then we also continue to see strength in SMS. We're expanding our penetration and our usage with customers.

Speaker Change: And we're seeing strong growth internationally. International had a terrific quarter growing 41% year over year. So really, you know, multiple drivers of the strength in the quarter. And I think what it is a testament to is the diversity of our customer base.

Speaker Change: Across customer size, across geography that shows that we can be durable and resilient across multiple operating environments.

Amanda Whalen: Helpful color. Thank you.

Brent Bracelin: Helpful color. Thank you.

Operator: Paul Keller, thank you.

Keith Weiss: Our next question comes from Keith Weiss from Morgan Stanley; your line's now open. Thank you guys for taking the question, and congratulations on a really solid quarter in an event macro backdrop, if you will. I wanted to focus maybe one question on the top line, one question on the bottom line. On the top line, new customer ads were definitely highlighted; picked up a lot from last quarter. What's enabling that? Is it some of the partner initiatives? Is it the expansion of products into international companies? Can you give us a little bit of color on what's enabling you to sort of pick up that customer ads even with the weaker SMBs and the weaker backdrop?

Keith Weiss: Our next question comes from Keith Weiss from Morgan Stanley. Your line is now open.

Speaker Change: Helpful color, thank you.

Speaker Change: Our next question comes from Keith Weiss from Morgan Stanley . Your line is now open.

Keith Weiss: I just want to thank you guys for taking the question and congratulations on a really solid quarter and an uneven macro backdrop, if you will. I wanted to focus maybe one question on the top line and one question on the bottom line. On the top line, new customer ads were definitely highlighted and picked up a lot from last quarter. What's enabling that? Is it some of the partner initiatives? Is it the expansion of products into international companies?

Keith Weiss: I just want to thank you guys for taking the question and congratulations on a really solid quarter in an uneven macro backdrop, if you will. I wanted to focus maybe one question on the top line and one question on the bottom line. On the top line,

Speaker Change: New customer ads were definitely highlighted, picked up a lot from last quarter.

Speaker Change: What's enabling that? Is it some of the partner initiatives? Is it the expansion of products into international companies? Can you give us a little bit of color on what's enabling you to sort of pick up that customer ads, even with the weaker SMBs and the weaker backdrop?

Amanda Whalen: Can you give us a little bit of color on what's enabling you to sort of pick up that customer ad even with the weaker SMBs and the weaker backdrop? And then on the bottom line side of the equation, really good operating margin performance this quarter, but it does seem like our Q4 numbers are coming down a lot. If we take the Q3 guide and the full year guide, anything in particular that's going to be pulling down that Q4 or any like... the different timing and investments or ramp up in investments that explains that.

Keith Weiss: Can you give us a little bit of color on what's enabling you to sort of pick up that customer ad even with the weaker SMBs and the weaker backdrop? And then on the bottom line side of the equation, really good operating margin performance this quarter, but it does seem like our Q4 numbers are coming down a lot. If we take the Q3 guide and the full year guide, anything in particular that's going to be pulling down that Q4 or any like... the different timing and investments or ramp up in investments that explains that.

Amanda Whalen: Thank you.

Keith Weiss: Thank you.

Amanda Whalen: Then, on the bottom line side of the equation, really good operating margin performs this quarter, but it does seem like our Q4 numbers are coming down a lot if we take the Q3 guide and the full year guide. Anything in particular that's going to be pulling down that Q4, or any different timing and investments, or ramp up an investment that explains that. Thank you. Thanks so much, Keith, and appreciate your kind words. It was a strong quarter for net ads. We added 5,000 net new customers in C2, and now we've got over 151,000 customers. As we talked about last quarter, increasingly, we are shifting our go-to-market resources towards SMB and mid market, and in the entrepreneur group, we're putting more into product line growth, and this quarter, we saw the benefit of those efforts.

Speaker Change: And then on the bottom line side of the equation, really good operating margin performance this quarter, but it does seem like our Q4 numbers are coming down a lot if we take the Q3 guide and the full year guide. Anything in particular that's gonna be pulling down that Q4 or any like...

Speaker Change: the different timing and investments or ramp up in investments that explains that. Thank you.

Amanda Whalen: Thanks so much, Keith, and I appreciate your kind words. It was a strong quarter for net ads. We added 5,000 net new customers in Q2, and now we've got over 151,000 customers. As we talked about last quarter, increasingly, we are shifting our go-to-market resources towards S&B and the mid-market, and in the entrepreneur group, we're putting more into product-led growth. And this quarter, we saw the benefit of those efforts.

Speaker Change: Thanks so much, Keith. I appreciate your kind words. It was from Porter for Net Ads. We added 5,000 net new customers in Q2, and now we've got over 151,000 customers.

Speaker Change: As we talked about last quarter, increasingly we are shifting our go-to-market resources towards S&B and mid-market, and in the entrepreneur group, we're putting more into product-led growth. And this quarter, we saw the benefit of those efforts. We saw strength in that entrepreneur-customer group that was really driven by efficiency from our direct marketing spend, as well as improvements in free-to-pay conversion coming from our product-led growth efforts.

Amanda Whalen: We saw strength in that entrepreneur customer group that was really driven by efficiency from our direct marketing spend, as well as improvements and free of paid conversion coming from our product-wide growth efforts. We talked a little bit just a minute ago about the strength that we saw at the upper end of the market as well, and that is the result of the go-to-market investments that we've been making to really drive that strength in those larger customer lands as well. Now, I will say on the net ads, keep in mind that is a number that might move around a bit over time.

Amanda Whalen: We saw strength in that entrepreneur-customer group that was really driven by efficiency from our direct marketing spend, as well as improvements in free-to-paid conversion coming from our product-led growth efforts. We talked a little bit just a minute ago about the strength that we saw at the upper end of the market as well, and that is as a result of the go-to-market investments that we've been making to really drive that strength in those larger customer territories as well. Now, I will say on the internet ads. Keep in mind that is a number that might move around a bit over time.

Speaker Change: We talked a little bit just a minute ago about the strength that we saw at the upper end of the market as well, and that is as a result of the go-to-market investments that we've been making to really drive that strength in those larger customer lands.

Speaker Change: as well now i will say on the net as keep in mind that is a number that might move around a bit over time we're ok with that because our focus is really on adding high quality customers

Amanda Whalen: We're okay with that because our focus is really on adding high-quality customers. We're really pleased with this quarter that we added customers like Samsonite, Boston Proper, the Fortune 1000 company, Andrew spoke about in the National Grocery Retailer, and we're looking forward over time to helping even more customers grow. And then regarding your question on investments and the timing of investments and how those may unfold during the year, as we spoke about at the beginning of the year, as we are going through the year and see out performance in the business, we're going to be reinvesting that back to continue to drive durable growth.

Amanda Whalen: We're okay with that because our focus is really on adding high-quality customers. We're really pleased this quarter that we added customers like Samsonite, Boston Proper, the Fortune 1000 company Andrew spoke about, and the National Grocery Retailer, and we're looking forward to helping even more customers grow. And then regarding your question on investments and the timing of investments and how those may unfold during the year, you know, as we spoke about at the beginning of the year, as we go through the year and, you know, see outperformance in the business, we're going to be reinvesting that back to continue to drive durable growth.

Speaker Change: We're really pleased this quarter that we added customers like Samsonite, Boston Proper, the Fortune 1000 company Andrew spoke about, and the National Grocery Retailer, and we're looking forward over time to helping even more customers grow.

Speaker Change: And then regarding your question on investments and the timing of investments and how those may unfold during the year,

Speaker Change: You know, as we spoke about at the beginning of the year, as we are going through the year and, you know, see outperformance in a business, we're going to be reinvesting that back to continue to drive durable growth. We're reinvesting it incrementally across go to market and product.

Amanda Whalen: We're reinvesting it incrementally across go-to-market and product. And two of the areas of focus for investment for us are mid-market and international. Those investments are ongoing. We're continuing to build out the right team and the right infrastructure to capture those markets. And importantly, we're seeing strong returns. As we talked about on the call, international investments are leading to really strong growth in EMEA and APAC. As we look towards the back half of the year, we're going to be increasing our marketing efforts in the run-up to Black Friday and Cyber Monday, and we're continuing to invest in our product team to enhance existing features and launch new features.

Amanda Whalen: We're reinvesting it incrementally across go-to-market and product, and two of the areas that focus for investment for us are mid-market and international. Those investments are ongoing. We're continuing to build out the right team, the right infrastructure to capture those markets. And importantly, we're seeing strong returns, as we talked about on the call. International investments are leading to really strong growth in a MIA and APAC. As we look towards the back half of the year, we're going to be increasing our marketing efforts in the run-up to Black Friday Cyber Monday, and we're continuing to invest in our product team to enhance existing features, to launch new features.

Speaker Change: And two of the areas of focus for investment for us are mid-market and international. Those investments are ongoing. We're continuing to build out the right team, the right infrastructure to capture those markets. And importantly, we're seeing strong returns, as we talked about on the call.

Speaker Change: International investments are leading to really strong growth in EMEA and APAC.

Speaker Change: as we look towards the back half of the year we're going to be increasingin our marketing efforts in a runup to black friday cyber monday and we're continuing to invest in our product team to enhance existing features to launch new features some great examples of that this quarter were the new features that we launched ai that we announced recently

Amanda Whalen: Some great examples of that, this quarter were the new features that we launched AI that we announced recently. So, as always, as we make those investments, we're doing it with a really clear eye and a focus on unit economics to make sure that we're getting good returns to continue to drive that efficient growth.

Amanda Whalen: Some great examples of that this quarter were the new features that we launched AI, which we announced recently. So, as always, as we make those investments, we're doing it with a really clear eye and a focus on unit economics to make sure that we're getting good returns to continue to drive that efficient growth in the future.

Speaker Change: So, as always, you know, as we make those investments, we're doing it with a really clear eye and a focus on unit economics to make sure that we're getting good returns to continue to drive that efficient growth in the future.

Keith Weiss: Outstanding, super helpful. Thank you guys.

Speaker Change: Outstanding, super helpful. Thank you guys.

Operator: Next question comes from the city. Thank you very much. Thanks for taking my question, and congratulations strong quarter. It's my question about your new product. You guys talked about AI events, some of the integration as well, and reviews. Some of that don't have the direct pricing. How do you monetize that to your base? And then, as you're seeing large customers using your product, how does that influence your product strategy? How should we think about the upcoming products in next few years?

Sitikantha Panigrahi: Our next question comes from Siti Panigrahi from Mizzou. Your line is now open.

Siti Panigrahi: Our next question comes from Siti Panigrahi from Mizzou. Your line is now open.

Speaker Change: Our next question comes from Siti Panigrahi from Mizzou. Your line is now open.

Siti Panigrahi: Thanks for taking my question and congratulations on a strong quarter. And my question about your new products, you guys talked about AI, even some of the integration as well and review, some of that doesn't have direct pricing. How do you monetize that for your base? And then, as you are seeing large customers using your product, how does that influence your product strategy? How should we think about those upcoming products in the next few years? Sure.

Sitikantha Panigrahi: Thanks for taking my question and congratulations on a strong quarter. And my question about your new products, you guys talked about AI, even some of the integration as well and review, some of that doesn't have direct pricing. How do you monetize that for your base? And then, as you are seeing large customers using your product, how does that influence your product strategy? How should we think about those upcoming products in the next few years? Sure.

Siti Panigrahi: Thanks for taking my question and

Speaker Change: and...

Siti Panigrahi: It's my question about your new product you guys talked about.

Siti Panigrahi: A, when some of the integration as well and review some that don't have the direct pricing, how do you monetize that to your base? And then as you are seeing large customers using your product, how does that influence your product strategy? How should we think about the upcoming products?

Operator: Sure. Can I be done? So if you think about the products that we've released, you know, we started out with our core, you know, database and email products. We added on SMS. And in the last year, we've added both reviews and CDP, and those are both products that were monetizing directly. And we're seeing good adoption there. Very excited about the progress we're making with both of those. And then on the artificial intelligence, the AI side, you know, one of the things we think about is AI and these three different use faces: productivity, optimization, and expanding your marketing strategy.

Andrew Bialecki: Sure. So if you think about the products that we've released, you know, we started out with our core database and email products; we added SMS. And in the last year, we've added both reviews and CDP, and those are both products that we're monetizing directly, and we're seeing good adoption there. Very excited about the progress we're making with both of those.

Speaker Change: next few years.

Speaker Change: Sure, happy to dive into that. So if you think about the products that we've released, you know, we started out with our core, you know, database and email products, we added on SMS,

Siti Panigrahi: And in the last year we've added both reviews and CDP, and those are both products that we're monetizing directly.

Andrew Bialecki: And then on the artificial intelligence side, one of the things we think about is AI and these three different use cases, productivity, optimization, and expanding your marketing strategy. So, for AI, the productivity tools we're building, we expect that those will-we're not monetizing that directly, but those do drive incremental usage, so there's an indirect mechanism there. And then for a lot of the stuff we're doing around helping you optimize marketing campaigns, figuring out the right content, the right timing, tuning to who receives which message, as well as generating net new strategies, what products customers often buy together, and helping you come up with new marketing ideas, those, we think, are going to be incremental to Klaviyo-attributed value, or the revenue that we help our customers create.

Andrew Bialecki: Very excited about the progress we're making with both of those. And then on the artificial intelligence side, one of the things we think about is AI in these three different use cases: productivity, optimization, and expanding your marketing strategy. So, for AI, the productivity tools we're building, we expect that those will, we're not monetizing that directly, but those do drive incremental usage. So, there's an indirect mechanism there.

Speaker Change: We're seeing good adoption there. I'm very excited about the progress we're making with both of those.

Siti Panigrahi: And then on the artificial intelligence, the AI side, you know, one of the things we think about is AI and these three different use cases, productivity, optimization, and expanding your marketing strategy.

Operator: So for artificial intelligence, the productivity tools we're building, we expect that those will run monetizing that directly, but those do drive incremental usage. So there's an indirect mechanism there. And then for a lot of the stuff we're doing around helping you optimize marketing campaigns through the right content, the right timing, tuning to who receives which message, as well as generating net new strategies. What products that customers often buy together, helping you come up with new marketing ideas, those we think are going to be incremental to claim your attributed value or the revenue that we help our customers create.

Speaker Change: So for artificial intelligence, the productivity tools we're building, we expect that those will, we're not monetizing that directly, but those do drive incremental usage. So there's an indirect mechanism there.

Andrew Bialecki: And then for a lot of the stuff we're doing around helping you optimize marketing campaigns, figuring out the right content, the right timing, tuning to who receives which message, as well as generating net new strategies, what products that customers often buy together, and helping you come up with new marketing ideas. Those, we think, are going to be incremental to Klaviyo-attributed value, or the revenue that we help our customers create. And while we're not monetizing those today, we do think that there's an opportunity to monetize those over time. And what's great about them is that they're not just for productivity. They really are; they're directly revenue-deriving.

Speaker Change: And then for a lot of the stuff we're doing around helping you optimize marketing campaigns, figuring out the right content, the right timing, tuning to who receives which message, as well as generating net new strategies, what products that customers often buy together, helping you come up with new marketing ideas.

Siti Panigrahi: Those, we think, are going to be incremental to Klaviyo Attributed Value, or the revenue that we help our customers create.

Operator: And while we're not monetizing those today, we do think that there's an opportunity to monetize over time. And what's great about them is they're not just for productivity; they really are directly revenue driving. So our customers really understand the value of those. So we're working with a lot of customers on building that actually out of the out.

Andrew Bialecki: And while we're not monetizing those today, we do think that there's an opportunity to monetize those over time. And what's great about them is that they're not just for productivity. They really are-they're directly revenue-generating, so our customers really understand the value of those. So, we're working with a lot of customers on building the functionality out. We don't have any timelines right now to monetize those, but we know there's an opportunity. And lastly, you talked about product strategy and how as we drive more adoption, we have more customers that are multi-product. How do we think about that?

Speaker Change: And while we're not monetizing those today, we do think that there's an opportunity to monetize those over time.

Andrew Bialecki: So, our customers really understand the value of those. So, we're working with a lot of customers on building the functionality out. We don't have any timelines right now to monetize those, but we know there's an opportunity. And lastly, you talked about product strategy. How does as we drive more adoption, we have more customers that are multi-product. How do we think about that?

Siti Panigrahi: And what's great about them is they're not just for productivity, they really are, they're directly revenue driving, so our customers really understand the value of those. So we're working with a lot of customers on building the auctioneering out. We don't have any timelines right now to monetize those, but we know there's an opportunity.

Operator: We don't have any timelines right now to monetize those, but we know there's an opportunity. And lastly, you talk about, you know, product strategy. How does, as we drive more adoption, we have more customers that are multi products. How do we think about that? You know, the core of Claudio is the data platform that we built. The single source of truth for everything you need to know about your consumers. We want to help every business take advantage of that and use it so that for every interaction that consumers have with that business. That's personalized, that they can measure how much customers like it.

Speaker Change: And lastly, you talked about, you know, product strategy, how does, as we drive more adoption, we have more customers that are multi-products.

Andrew Bialecki: You know, the core of Klaviyo is the data platform that we've built, the single source of truth for everything you need to know about your consumers. We want to help every business take advantage of that and use it so that for every interaction that consumers have with that business, it's personalized, they can measure how much customers like it, and then they can use artificial intelligence to optimize it. And we think we can take that well beyond just marketing and channels; we can take that to other customer services.

Speaker Change: How do we think about that? You know, the core of Klaviyo is the data platform that we've built. The single source of truth for everything you need to know about your consumers.

Speaker Change: We want to help every business take advantage of that and use it so that for every interaction that the consumers have with that business.

Operator: And then you can use artificial intelligence to optimize it. And we think we can take that well beyond just marketing and channels, but we can take that to other customer services. When you think about things like what it means to when somebody's trying to get educated or they have a question or to digital properties like people's websites and mobile apps. So I think you'll see from us, you know, the use cases and therefore the products that can expand often on top of this data platform we built. There's a lot of those.

Speaker Change: That it's personalized, that they can measure how much customers like it, and then they can use artificial intelligence to optimize it. And we think we can take that well beyond just marketing and channels, but we can take that to other customer services.

Andrew Bialecki: When you think about things like what it means when somebody's trying to get educated or they have a question or to digital properties like people's websites and mobile apps. So I think you'll see from us, the use cases and, therefore, the products that can expand often on top of this data platform we've built. There are a lot of those.

Andrew Bialecki: When you think about things like what it means when somebody's trying to get educated or they have a question, or to digital properties like people's websites and mobile apps. So, I think you'll see from us, the use cases and, therefore, the products that can expand often on top of this data platform we've built. There are a lot of those, and I'm very excited about the building we're going to do on that over the coming months and years.

Speaker Change: When you think about things like what it means to when somebody is trying to get educated or they have a question or to digital properties like people's websites and mobile apps. So I think you'll see from us, you know, the use cases and therefore the products that can expand often on top of this data platform we've built. There's a lot of those. I'm very excited about the building we're going to do on that over the coming months and over the coming years.

Operator: I'm very excited about the building we're going to do on that over the coming months and over the coming years. Thanks for the call.

DJ Heinz: Our next question comes from DJ Heinz from Canacred. Your line is now open. Hey, guys, congrats on the really nice quarter. Thanks for taking the question. So Shopify obviously reported this morning. I'm sure you saw that really strong merchant ads. Interestingly, they said about half of their new merchant ads in Q2 came from outside of core English-speaking markets. So two questions there. A, do you see the same demand characteristics in those markets?

Speaker Change: Thanks for the call.

D.J. Hynes: I'm very excited about the building. We're going to do that over the coming months and over the coming years. Thanks for the call. Our next question comes from D.J. Hynes from Canaccord. Your line is now open. Hey guys.

D.J. Hynes: Our next question comes from D.J. Hynes from Canaccord. Your line is now open.

D.J. Hynes: Our next question comes from D.J. Hynes from Canaccord. Your line is now open. Hey guys, congrats on the really nice car.

Speaker Change: Our next question comes from DJ Hynes from Canaccord, your line is now open.

D.J. Hynes: Hey guys, congrats on a really nice quarter and thanks for taking the question. Shopify obviously reported this morning, I'm sure you saw that, really strong merchant ads. Interestingly, they said about half of their new merchant ads in Q2 came from outside of core English-speaking markets.

DJ Hynes: Hey guys, congrats on the really nice quarter and thanks for taking the question.

DJ Hynes: Shopify obviously reported this morning, I'm sure you saw that, really strong merchant ads. Interestingly, they said about half of their new merchant ads in Q2 came from outside of core English-speaking markets. So two questions there.

Andrew Bialecki: So two questions there. A, do you see the same demand characteristics in those markets? And then, B, how quickly can you guys move to localize the platform for those merchants? Yeah, I'll try to give a little.

Andrew Bialecki: And then B, how quickly can you guys move to localize the platform for those merchants? Yeah, I'll start to give a little color on international. And Amanda can follow on. So I think we're seeing strong international growth as well. So we mentioned, you know, earlier this year, in the last few months, we launched our product in French, you know, along with local language marketing. And that's gone very well. And I think that there's, we can take that playbook that we've run in France and take that to other languages and then other markets. And so if you have some great wins there, like with companies like Look to Keep along.

Speaker Change: A, do you see the same demand characteristics in those markets, and then B, how quickly can you guys move to localize the platform for those merchants?

Andrew Bialecki: Yeah, I'll start to give a little color on international growth, and Amanda can follow on. So, I think we're seeing strong international growth as well. So, we mentioned earlier this year, the last few months, we launched our product in French, you know, along with local language marketing, and that's gone very well. And I think that we can take that playbook that we've run in France and take that to other languages and then other markets.

Andrew Bialecki: Yeah, I'll start to give a little color on international growth, and Amanda can follow on. So, I think we're seeing strong international growth as well. So, we mentioned earlier this year, in the last few months, we launched our product in French, you know, along with local language marketing, and that's gone very well. And I think that we can take that playbook that we run in France and take that to other languages and then other markets.

Speaker Change: Yeah, I'll sort of give a little color on international...

Speaker Change: And Amanda can follow on. So I think we're seeing strong international growth as well. So we mentioned, you know, earlier this year, the last few months, we launched our product in French.

Amanda: along with local language marketing and that's goingone very well and i think that there we can take that playbook that we've run in france and take that to other languages and then other markets

Andrew Bialecki: And so, you can see we've had some great wins there, like with companies like Look, Keith, and Ballant. And more broadly, internationally, I think we're starting to invest in plays to look like, you know, the documentation, the customer stories. Also, we're localizing now some of the digital marketing ad campaigns we're running. So, I think you'll see those play out, you know, over the coming months.

Andrew Bialecki: And so, you can see we've had some great wins there, like, with companies like Look, Keep, Belong, and more broadly internationally, I think we're starting to invest in plays to look like, you know, the documentation, the customer stories. Also, we're localizing now some of the digital marketing ad campaigns we're running. So, I think you'll see those play out, you know, over the coming months.

Speaker Change: And so you can see we've had some great wins there, like, with companies like Look, Keith, Balal, and more broadly internationally.

Andrew Bialecki: And we're broadly international internationally. I think we're starting to invest in plays to look like, you know, the documentation, the customer stories. Also, we're localizing now some of the digital marketing ad campaigns we're running. So I think you'll see those play out, you know, over the coming months.

Speaker Change: I think we're starting to invest in plays to look like, you know, the documentation, the customer stories. Also, we're localizing now some of the digital marketing ad campaigns we're running. So I think you'll see those play out, you know, over the coming months.

Arjun Bhatia: Thank you. Our next question comes from Arjun Bethga from William Blair. Your line is now open. Perfect. Thank you.

Arjun Bhatia: Our next question comes from Arjun Bhatia of William Blair. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Arjun Bhatia from William Blair. Your line is now open.

Arjun Bhatia: Perfect, thank you and I'll add my congrats on a nice quarter here. Andrew, maybe one for you, just one of the things that we didn't touch on as far as your push, mobile push capabilities, and I'm curious how progress is going there and when you think about some of these upmarket, some of this upmarket momentum that we're seeing, especially with new customers landing in that 50k cohort, how much is that, the mobile capabilities, contributing to it where customers might be buying all of your channels up front as they look for a platform that they can scale on?

Andrew Bialecki: Perfect, thank you and I'll add my congrats on a nice quarter here. Andrew, maybe one for you, just one of the things that we didn't touch on as far as your push, mobile push capabilities, and I'm curious how progress is going there and when you think about some of these upmarket, some of the upmarket momentum that we're seeing, especially with new customers landing in that 50k cohort, how much is that, the mobile capabilities, contributing to it where customers might be buying all of your channels up front as they look for a platform that they can scale on?

Andrew Bialecki: And I'll add my congrats on a nice quarter here. Andrew, maybe one for you, just one of the things that we didn't touch on as far as your push mobile push capabilities. I'm curious how progress is going there. And when you think about some of these upmarket, some of the upmarket momentum that we're seeing, especially with new customers landing in that 50k poll, how much is that the mobile capabilities contributing to it where customers might be buying all of your channels up front as they look for a platform that they can scale on? Yeah, absolutely.

Arjun Bhatia: Perfect. Thank you. And I'll add my congrats on a nice quarter here. Andrew, maybe one for you.

Arjun Bhatia: One of the things that we didn't touch on as far as your mobile push capabilities, I'm curious how progress is going there and when you think about...

Speaker Change: Some of these upmarket momentum that we're seeing, especially with new customers landing in that 50K cohort. How much is that, the mobile capabilities, contributing?

Speaker Change: to it where customers might be buying all of your channels up front as they look for a platform that they can scale on.

Andrew Bialecki: Yeah, absolutely. So, I think as we start to reach into the mid-market and the enterprise, I think folks are coming to us primarily for our data platform and then all of the marketing channels in one place, and it's that tight integration. So, specifically on mobile, I think we talked about on the last call, we now have several customers that are sending high-volume numbers of push notifications and using other mobile functionality.

Andrew Bialecki: So I think when we, as we start to reach into the mid-margin and the enterprise, I think folks again are coming to us primarily for our data platform and then all of the marketing channels in one place and it's that tight integration. So specifically on mobile, I think we talked it on the last call. We now have several customers that are saying high volume number of push notifications and using other mobile functionality. We obviously have a good chunk of our product team that's working on building out those capabilities. And what we're finding is similar with email and FMS; folks are interested in how the interplay between those channels, and they want all of them in one place.

Speaker Change: Yeah, absolutely. So I think when we, as we start to reach into the mid-market and the enterprise, I think

Speaker Change: Folks, again, are coming to us primarily for our data platform and then all of the marketing channels in one place, and it's that tight integration.

Speaker Change: So, specifically on mobile, I think we talked about on the last call, we now have several customers that are sending high volume number of push notifications and using other mobile functionality.

Andrew Bialecki: We obviously have a good chunk of our product team that's working on building out those capabilities, and what we're finding is, similar to email and SMS, folks are interested in how the interplay between those channels works, and they want all of them in one place. They want great content creation tools. They want to use the data that Klaviyo provides to help personalize and measure the performance of each of those campaigns. So, I think it's too early for us.

Speaker Change: We obviously have a good chunk of our product team that's working on building out those capabilities. And what we're finding is, similar with email and SMS,

Speaker Change: Folks are interested in how, you know, the interplay between those channels and they want all of them in one place. They want great content creation tools. They want to use the data that Klaviyo provides to help personalize and measure the performance of each of those campaigns.

Andrew Bialecki: They want great content creation tools. They want to use the data that Claudio provides to help personalize and measure the performance of each of those campaigns. So I think it's early for us. We're finding customers where that was a requirement for them. Now we're able to address that, and I expect over time, you know, we can enterprise. There's a mix of folks that either have mobile, you know, mobile properties where they need that functionality, and then those that don't. I think we're finding that we can now address those, and, you know, we didn't retail any commerce as obviously folks that have mobile apps, but then even outside of that, that's opening up new use cases for us that we can start to address.

Andrew Bialecki: We're finding customers where, you know, that was a requirement for them. Now we're able to address that, and I expect over time, with the enterprise, there's a mix of folks that either have mobile, you know, mobile properties where they need that functionality, and then those that don't. I think we're finding that we can now address those, and, you know, within retail and e-commerce, there's obviously folks that have mobile apps, but then even outside of that, that's opening up new use cases for us that we can start to address.

Speaker Change: So, I think it's early for us. We're finding customers where, you know, that was a requirement for them. Now we're able to address that, and I expect over time, you know, we see the enterprise, there's a mix of folks that either have mobile, you know, mobile properties where they need that functionality.

Speaker Change: And then those that don't, I think we're finding that we can now address those and, you know, within retail and e-commerce, there's obviously folks that have mobile apps, but then even outside of that, that's opening up new use cases for us.

Andrew Bialecki: So, I think, you know, over the coming couple of quarters, we're making more investments there. All of this idea of any way you want to communicate with your customers, with your end consumers, you can do that with our products.

Operator: So I think, you know, over the coming couple quarters, you know, we're going to make, we're making more investments there. All of the idea of anyway, you want to communicate with your customers, with your end consumers, you can do that with our. All right, perfect.

Speaker Change: that we can start to address so i think over the coming couple quarters 'regoing to 're making more investments there all this idea of any way you want to communicate with your customers with your' end consumers you can do that with our products

Arjun Bhatia: All right, perfect. Thank you.

Derek Wood: Thank you. Our next question comes from Derek Wood from TD Killing. Your line is now open. Oh, great. Thanks.

Derek Wood: Our next question comes from Derek Wood from TD Killen. Your line is now open.

Derek Wood: Our next question comes from Derek Wood from TD Cohen. Your line is now open.

Speaker Change: All right, perfect. Thank you.

Speaker Change: Our next question comes from Derek Wood from TD Cohen. Your line is now open.

Derek Wood: Oh, great. Thanks. Congratulations on a great quarter. Andrew, there seems to be talk that the AI wave is starting to drive more companies to invest in personalization in the marketing and customer engagement space, and certainly, that sounds like what you're seeing with talking about AI driving new marketing strategies. But, you know, given that you've got this vertically oriented stack with a rich data layer to really help with personalization, how are you seeing, and how would you characterize demand and competitive positioning for Klaviyo today versus a few quarters ago, now that there's been a lot more focus on AI-related initiatives?

Andrew Bialecki: Congrats on a great quarter. Andrew, there seems to be talk that the AI wave is starting to drive more companies to invest in personalization in the marketing and customer engagement space. And certainly that sounds like what you're seeing with talking about AI driving new marketing strategies, but, you know, given that you've got this vertically oriented stack with the rich data layer to really help with personalization. How are you seeing, how would you characterize demand and competitive positioning for Klaviyo today versus a few quarters ago now that there's been a lot more focus on AI-related initiatives.

Derek Wood: Oh great, thanks. Congrats on a great quarter. Andrew, there seems to be talk that the AI wave is starting to drive more companies...

Derek Wood: to invest in personalization, in the marketing and customer engagement space.

Speaker Change: Certainly that sounds like what you're seeing with talking about AI driving new marketing strategies, but You know given that you've got this vertically oriented stack with a rich data layer to really help with personalization

Speaker Change: How would you characterize demand and competitive positioning for Klaviyo today versus a few quarters ago, now that there's been a lot more focus on AI-related initiatives?

Andrew Bialecki: Yeah, so I'll say two things. I mean, the first is the importance of having allowing businesses to take use the data asset, you know, the consumer data they have, the things they know about their end consumers, and put that to work and have that so tightly coupled with the, you know, applications where you actually take action on it. So marketing is one that integration between database and, you know, system of action is really important. So I think we're actually we've got a big like heads up, you know, bit of a lead on that. And then you can start to see that with some of the features that we're building.

Andrew Bialecki: Yeah, so I'll say two things. The first is the importance of having, allowing businesses to take, use the data asset, the consumer data they have, the things they know about their end consumers, and put that to work, and have that so tightly coupled with the applications where you actually take action on it. So marketing is one. That integration between the database and, you know, the system of action is really important. So I think we're actually, we've got a big, like, heads up, you know, bit of a lead on that.

Andrew Bialecki: Yeah, so I'll say two things. The first is the importance of allowing businesses to use the data asset, the consumer data they have, the things they know about their end consumers, and put that to work, and have that so tightly coupled with the applications where you actually take action on it. So marketing is one. The integration between the database and the system of action is really important. So I think we're actually, we've got a big head start, a bit of a lead on that.

Speaker Change: yes sowell i'll think you think i the first is the importance of having allowing benefit to take use the data asset you the consumer data they have the things they know about their consumers and put that to work

Speaker Change: and have that so tightly coupled with the applications where you actually take action on it. So marketing is one.

Speaker Change: That integration between database and, you know, system of action is really important. So I think we're actually, we've got a big, like, heads up, you know, a bit of a lead on that.

Andrew Bialecki: And then you can start to see that with some of the features that we're building. So, for example, we talked about productivity as a use case. We've now released email AI, segments AI, and this past quarter, we launched flows AI.

Andrew Bialecki: So, for example, we talked about the productivity of the use case. We've now released Email AI, Segment AI, the past quarter, we've lost Flow, the Eye, all of these are tools so that whether you're, you know, a small business, an entrepreneur just starting out or a large enterprise. You can build more marketing campaigns faster, and actually, those prompts can look into your data set and understand the kind of data you have to automatically create different segmentations or workloads for you. So, on a productivity front, we're making a lot of progress. We're also able to also release personalized campaigns.

Speaker Change: And then you can start to see that with some of the features that we're building. So, for example, we talked about productivity as a use case. We've now released email AI, segment AI, this past quarter we launched Flows AI. All of these are tools so that whether you're, you know, a small business, an entrepreneur just starting out, or a large enterprise, you can build more marketing campaigns faster. And actually, those prompts can look into your data set and understand the kind of data you have to automatically create different segmentations or workloads for you.

Andrew Bialecki: All of these are tools so that whether you're, you know, a small business, an entrepreneur just starting out, or a large enterprise, you can build more marketing campaigns faster. And actually, those prompts can look into your data set and understand the kind of data you have to automatically create different segmentations or workloads for you. So on the productivity front, we're making a lot of progress.

Andrew Bialecki: We're also able to release personalized campaigns. And so if you think about what that feature is all about, it's this idea of if you have multiple variations of a campaign, for some businesses, it could be dozens. You know, historically, what that meant was you just picked the best variants, the best version for everybody. What we're actually able to do, because we have all the data inside of our data platform, we can actually figure out, on a consumer level basis for each person, what's the right content for them.

Speaker Change: some the productiv fraud we're makinga lot of progress we're also able to also release personalized campaigns if youre getting about features all that 's this idea if you have multiple variations of a campaign for some businesses it could be doens

Andrew Bialecki: If you think about what that feature's all about, it's this idea of if you have multiple variations of a campaign for some businesses, it could be dozens. You know, historically what that meant was you just pick the best variance, the best version for everybody, but we're actually able to do because we have all the data inside of our data platform, we can actually figure out on a consumer level basis for each person. What's the right content for them? And there's an incremental list on that. So I think all this is, you know, the thesis that we've had of help people pull all their data together, then allow them to action it.

Speaker Change: Historically, what that meant was you just pick the best.

Speaker Change: variants, the best version for everybody. What we're actually able to do, because we have all the data inside of our data platform, we can actually figure out on a consumer level basis, for each person, what's the right content for them. And there's incremental lift on that.

Andrew Bialecki: And so if you think about what that feature is all about, it's this idea of if you have multiple variations of a campaign, for some businesses, it could be dozens. You know, historically, what that meant was you just picked the best variants, the best version for everybody.

Andrew Bialecki: And there's an incremental lift on that. So I think all of this is, you know, the thesis that we've had of helping people pull all their data together, then allow them to act on it. I think with artificial intelligence and machine learning, we're now able to help them accelerate actually doing that.

Speaker Change: So I think all of this is, you know, the thesis that we've had of help people pull all their data together, then allow them to action it. I think with artificial intelligence and machine learning, we're now able to help them accelerate actually doing that. And what I'm excited about is our ability to now, you know, suggest strategies, more optimizations. Thank you very much.

Andrew Bialecki: I think with artificial intelligence and machine learning, we're now able to help them accelerate actually doing that. And what I'm excited about is our ability to know, you know, suggest strategies, more optimization in folks to allow businesses to do that more autonomously. So, you know, we feel really good about where we are, and we're very much full speed ahead on brand to life. Because I think again, it's not just part of me for us. This is about driving incremental revenue, and that's even more important for these businesses. And that really is. It's important for customers of all sizes, and we're absolutely seeing it come through in why customers are coming to us.

Speaker Change: to allow businesses to do that more autonomously. So we feel really good about where we are and we're very much full speed ahead on bringing it to life because I think, again, it's not just productivity for us, this is about driving incremental revenue and that's even more important for these businesses.

Andrew Bialecki: And that really is, you know, building on what you just said.

Speaker Change: And that really is data building.

Speaker Change: It's important for customers of all sizes, and we're absolutely seeing it come through in why customers are coming to us. We had a win this quarter with a provider of spa-inspired hair products, and they were working with a legacy cloud provider. They wanted to be able to have really strong customer engagement, but what they were seeing was poor open rates.

Andrew Bialecki: We had a win this quarter with a provider of fine fired hair products, and they were working with a legacy cloud provider. They wanted to be able to have really strong customer engagement, but what they were seeing was poor open rates, ineffective segmentation, lack of insights. All of those brought them to Klaviyo. And they consolidate their email, their SMS, their CEP, and reviews with us. And now we're excited to work together so that they can use our platform and their customer data to really help drive that personalization and revenue.

Speaker Change: Ineffective Segmentation, Lack of Insights, all of those brought them to Klaviyo, and they consolidated their email, their SMS, their CDP, and reviews with us, and now we're excited to work together so that they can use our platform and their customer data to really help drive that personalization and revenue growth.

Terri Tillman: I have a question for you. Thank you. Our next question comes from Terri Tillman for the Trilist. Your line is now open. Yeah, thanks for taking my question. I guess I should say Bonjour with the ramp you're seeing in the French market. It's a single question. It's got two parts. I know you all have been evolving and kind of testing and learning with CDP, but what are you seeing after you've done some kind of packaging updates? Is that helping incrementally with adoption? And then the second part of this question is, I heard a lot, and you're also prepared remarks around deliverability.

Terry Tillman: Our next question comes from Terry Tillman from Truist. Your line is now open.

Speaker Change: Awesome, thank you.

Speaker Change: Our next question comes from Terry Tillman from Truist. Your line is now open.

Terry Tillman: Yeah, thanks for taking my question. I guess I should say bonjour with the ramp you're seeing in the French market. It's a single question, but it has two parts, though.

Terry Tillman: Thanks for taking my question. I guess I should say bonjour with the ramp you're seeing in the French market. It's a single question. It's got two parts, though. First, I know you all have been evolving and kind of testing and learning with CDP, but what are you seeing after you've done some kind of packaging updates?

Andrew Bialecki: First, I know you've all been evolving and kind of testing and learning with CDP, but what are you seeing after you've done some kind of packaging updates? Is that helping incrementally with adoption? And then the second part of this question is, I heard a lot in your prepared remarks around deliverability, as you're getting more of these kind of bigger customers in initially, and in this world around TCO and maybe with bulk sender changes, is deliverability creating kind of a new almost replacement cycle? Thank you. Hey everybody, thanks for joining us.

Terry Tillman: Is that helping incrementally with adoption? And then the second part of this question is, I heard a lot in y'all's prepared remarks around deliverability.

Andrew Bialecki: As you're getting more of these kind of bigger customers in initially, and kind of this world around TCO and maybe with bulk standard changes, is deliverability creating kind of a new almost replacement cycle. Thank you. Great. Thanks. Sorry.

Speaker Change: As you're getting more of these kind of bigger customers in initially and kind of this world around TCO and maybe with bulk sender changes, is deliverability creating kind of a new almost replacement cycle? Thank you.

Andrew Bialecki: Thanks, Terry. So first, I'll talk about CDP. So what we found with our customer data platform, our CDP product, there are really two use cases. The first is storing all that data, creating a system of record, governing it, and data hygiene. That's part one.

Andrew Bialecki: So first I'll talk about CDP. So what we found with our customer data platform, our CDP part, there's really two or use cases. The first is storing all that data, creating a system of record, governing it, data hygiene, stuff part one, and then part two is allowing folks to do analytics on top of it to figure out which customer segments they, you know, they should be marketing to. So what we've actually started to experiment a little bit with is different ways to think about packing that. Do you put both of those together? Do you separate those out?

Speaker Change: Hey Ray, thanks Terry. So first I'll talk about CDP. So what we found with our customer data platform, our CDP product, there's really two forward use cases.

Andrew Bialecki: And then part two is allowing folks to do analytics on top of it to figure out which customer segments they should be marketing to. So what we've actually started to experiment a little bit with is different ways to think about packaging that. Do you put both of those together? Do you separate those out?

Speaker Change: The first is storing all that data, creating a system of record, governing it, data hygiene. That's part one. And then part two is allowing folks to do analytics on top of it, to figure out which customer segments they should be marketing to.

Ray: So what we've actually started to experiment a little bit with is different ways to think about packaging that. Do you put both of those together or do you separate those out?

Andrew Bialecki: And I'm really excited about the progress we're making on the product side. On the data tooling side, we've done a lot of work to improve both the speed of ingesting data as well as getting it out to other systems. We talked about, at the beginning of the call, about how outbound connectors are a big part of the integrations to Klaviyo and speeding that up as well. And then on the analytics side, as an example, we launched a new feature within the CDP around product analytics. So we can actually help brands with lots of SKUs figure out where there are affinities between products, and it can instantly turn that into marketing campaigns that drive incremental revenue.

Andrew Bialecki: And I'm really excited about both the parts we're making on the product side and on the data tooling side. We've done a lot of work to improve, you know, both the speed of suggesting data as well as getting it out to other systems. We talked about, at the top of the call, how outbound connectors are a big part of the integrations to Klaviyo and speeding that up as well. And then on the analytics side, you know, as an example, we launched a new feature within the CDP around product analytics. So we can actually help brands with lots of SKUs, figure out where there's affinities between products, and they can instantly turn that into market campaigns that drive incremental revenue.

Speaker Change: And I'm really excited about both the progress we're making on the product side, on the data tooling side. We've done a lot of work to improve, you know, both the speed of ingesting data as well as getting it out to other systems. We talked about...

Andrew Bialecki: What we're actually able to do, because we have all the data inside of our data platform, is actually figure out on a consumer level basis for each person what the right content for them is, and there's an incremental lift from that. So I think all of this is, you know, the thesis that we've had of helping people pull all their data together, then allow them to act on it. I think with artificial intelligence and machine learning, we're now able to help them accelerate actually doing that.

Andrew Bialecki: And what I'm excited about is our ability to now, you know, suggest strategies, more optimization, and people to allow businesses to do that more autonomously. So I, you know, we feel really good about where we are, and we are very much full speed ahead on bringing it to life. Because I think, again, it's not just productivity for us; this is about driving incremental revenue, and that's even more important for these businesses. And that really is, you know, building a...

Andrew Bialecki: And that really is important for customers of all sizes, and we're absolutely seeing it come through in why customers are coming to us. We had a win this quarter with a provider of spa-inspired hair products, and they were working with a legacy cloud provider. They wanted to be able to have really strong customer engagement, but what they were seeing was poor open rates, ineffective segmentation, and lack of insights. All of those brought them to Klaviyo.

Andrew Bialecki: And they consolidated their email, their SMS, their CDP, and reviews with us. And now we're excited to work together so that they can use our platform and their customer data to really help drive that personalization and revenue growth.

Speaker Change: at the top of the call about how outbound connectors are big party integrations to cllav and feeding that up as well

Terry Tillman: Our next question comes from Terry Tillman from Truist. Your line is now open.

Speaker Change: And then on the analytics side, you know, as an example, we launched a new feature within the CDP around product analytics. So we can actually help brands with lots of SKUs figure out where there's affinities between products, and it can instantly turn that into marketing campaigns that drive incremental revenue.

Andrew Bialecki: So we're excited about the progress there.

Andrew Bialecki: So we're excited about the progress there. And then on deliverability, what I'd say is that's been at the core of, you know, it's been one of the things we've focused on since we started. It's obviously what Klaviyo stands for, personalization and getting the right person the right content. But you know, as we saw some of the changes roll through email service providers, those haven't had a material impact on us. In fact, we've seen some customers come to Klaviyo.

Andrew Bialecki: And then on deliverability. When I say it, that's been a core of, you know, it's been one of the things we folks on since we started. Obviously, what Klaviyo stands for is personalization and getting the right person the right content. You know, as we saw some of the changes rolled through email service providers, those haven't had a materially impact on it. In fact, we've seen some customers come to Klaviyo. They know the revenue engine; they know how important deliverability is, and they've chosen us because of our dedication to email and SMS literally. So we've got our corporate teams and our other teams have done a great job to ensure that, you know, deliverability is working for folks.

Speaker Change: so we're king about the progress there and then on deliverability

Speaker Change: What I'd say is, that's been at the core of, you know, it's been one of the things we focus on since we started. It's obviously what KLAVIYO stands for, personalization, and getting the right person the right content.

Speaker Change: As we saw some of the changes roll through email service providers, those haven't had a material impact on us. In fact, we've seen some customers...

Andrew Bialecki: They know there's a revenue engine. They know how important deliverability is, and they've chosen us because of our dedication to email and SMS deliverability. So both our customer teams and our engineering teams have done a great job to ensure that deliverability is working for folks. So I think delivery on the delivery front has become a big differentiator, and on the CDP front, we're very excited about the progress that's there. I think there's, we're starting to learn a lot about the use cases and potentially think about some packaging changes.

Speaker Change: We've come to Klaviyo. They know this is a revenue engine. They know how important deliverability is, and they've chosen us because of our dedication to email and SMS deliverability. So both our customer teams and our engineering teams have done a great job to ensure that deliverability is working for folks.

Andrew Bialecki: So I think both the delivery front has become a big differentiator. And on the CDP front, we're very excited about the progress that's there. I think we're starting to learn a lot about the use cases and potentially think about some, you know, some packing changes.

Speaker Change: So I think both the delivery front has become a big differentiator and on the CDP front we're very excited about the progress that's there. I think there's we're starting to learn a lot about the use cases and potentially you know think about some you know some packaging changes.

Ray Molenschow: Our next question comes from Ray Molenschow from Barclays. Your line is now open. Thank you.

Raimo Lenschow: Our next question comes from Raimo Lenschow from Barclays. Your line is now open.

Terry Tillman: Yeah, thanks for taking my question. I guess I should say bonjour with the ramp you're seeing in the French market.

Speaker Change: Our next question comes from Raimo Lenschow from Barclays. Your line is now open.

Terry Tillman: It's a single question; it's got two parts, though. First, I know you've been evolving and kind of testing and learning with CDP, but what are you seeing after you've done some kind of packaging updates? Is that helping incrementally with adoption? And then the second part of this question is, I heard a lot in your prepared remarks around deliverability, that you're getting more of these kind of bigger customers than initially, and in this world around TCO and maybe with bulk sender changes, is deliverability creating kind of a new, almost replacement cycle? Thank you. All right, thanks, Terry.

Andrew Bialecki: Thank you. I'm trying to go back to the health of the SMB, and Amanda, your comments as well. The question is, if you think about the behavior of an SMB, clearly, you guys seem to be seen as more strategic for them because if you don't market, you can't sell, which basically means you can't survive. But how do you see the customers stacking up in terms of fitting you in and seeing you as something that helps them versus something that is nice to be, like we see with other solutions? Just help us understand as well how that slightly more uncertain SMB market is playing into your thinking. Thank you.

Amanda Whalen: Could be, I'm trying to go, I'm trying to go back to the health of the SMB and Amanda, your comments as well. Question is, if you think about the behavior of an SMB, like, you know, clearly, you guys seem to be seen as more strategic for them because, you know, if you don't market, you can't sell or basically means you can't survive. But like, how do you see the customers stacking up in terms like, you know, fitting you in and seeing you as something that kind of helps them versus something that is nice to be like we see at other solutions.

Raimo Lenschow: thank youcould be i tri to go im trying to go back to the the health of the s m b and amanda your comments as well question is if you think about the behavior of an s and b like

Speaker Change: You know, like clearly, you know, you guys seem to be seen as more strategic for them because, you know, if you don't market, you can't sell, which basically means you can't survive.

Speaker Change: How do you see the customers stacking up in terms of fitting you in?

Speaker Change: and seeing you as something that kind of helps them versus something that is nice to be, like we see at other solutions. Just help us understand as well, like, you know, how that kind of slightly more uncertain SMB market is playing into your thinking. Thank you.

Andrew Bialecki: Just as I understand as well, like, you know, how that kind of slightly more uncertain and be market is playing into your thinking.

Andrew Bialecki: Thank you. Yeah, I'll add on top of what Amanda said a few minutes ago. So, the first is, we're a must-have revenue engine for these businesses. That's what makes us so essential. That's what we love to help our customers to grow their businesses.

Andrew Bialecki: Yeah, I'll add on top of what Amanda said a few minutes ago. So the first is that we're a must-have revenue engine for these businesses. That's what makes us so essential. That's why we love helping our customers to grow their businesses. I think within the SMB, it's a little nuanced. We actually divide SMBs into two groups. The first is entrepreneurs; you can think about businesses that are really just starting out, very small teams.

Speaker Change: yes loton top of what to manage that a few minutes ago so the person is where a must have revenue engine this thatswhat makes us so essential and' what we love helping our customers you rote benefit

Raimo Lenschow: Our next question comes from Raimo Lenschow from Barclays. Your line is now open.

Raimo Lenschow: Thank you. Could we, I'm trying to go back to the health of the SMB and Amanda, and your comments as well? The question is, if you think about the behavior of an SMB, like, Clearly, you guys seem to be seen as more strategic for them, because if you don't market, you can't sell, which basically means you can't survive. But how do you see the customers stacking up in terms of fitting you in and seeing you as something that helps them versus something that is nice to be like we see at other solutions? Just help us understand as well how that slightly more uncertain SMB market is playing into your thinking. Thank you. Yeah, I'll do it.

Andrew Bialecki: I think within the SMB, it's a little nuance. We actually divide, you know, SMB into two groupings. The first is entrepreneurs; you can think about businesses that are really just starting out, very small teams, and then we also think about larger SMBs. So, to speak to each of those two categories, you know, when we talked about some of the softness that Amanda mentioned, we've seen relatively fewer ads in that larger SMB space, and we think part of that contributed to slightly longer sales cycles. Now, we still find both are moving to us; you know, those sales cycles are a little bit longer. And, you know, just as a reminder, we measure our sales cycles with those larger SMBs.

Andrew Bialecki: Yeah, I'll add on top of what Amanda said a few minutes ago. So the first is that we're a must-have revenue engine for these businesses. That's what makes us so essential. That's what we love helping our customers do, grow their businesses. I think within the SMB, it's a little nuanced. We actually divide SMBs into two groups. The first is entrepreneurs; you can think about businesses that are really just starting out, very small teams.

Speaker Change: I think within the SMB it's a little nuanced. We actually divide, you know, SMBs into two groupings.

Raimo Lenschow: The first is entrepreneurs, you can think about businesses that are really just starting out, very small teams, and then we also think about larger SMBs.

Andrew Bialecki: And then we also think about larger SMBs. So to speak to each of those two categories, you know, when we talked about some of the softness, as Amanda mentioned, we've seen relatively fewer ads in that larger SMB space. And we think part of that's attributed to slightly longer sales cycles. Now we still find folks are moving to us, but, you know, those sales cycles are a little bit longer. And, you know, just as a reminder, we measure our sales cycles with those larger SMBs.

Speaker Change: so to speak each of those two categories when we talked about some of the some of the softnet as man to mentioned we've seen relatively fewer ads in that larger ssmb space

Speaker Change: And we think part of that's attributed to slightly longer sales cycles. Now, we still find folks are moving to us, but, you know, those sales cycles are a little bit longer. And, you know, just as a reminder, we measure our sales cycles with those larger SMBs. I mean, still in days and weeks, not months.

Amanda Whalen: I mean, it's still in days and weeks, not months. Now, for the smaller segment there, for those that are just more to starting out, that's where we did see a lot of strength broadly across that customer group from that new logos, and folks that are new to Klaviyo. So, I think that's, we think that's a really good sign that when businesses are starting out, and they're looking to grow their business, they're still choosing us and defaulting to Klaviyo as a place to store customer data, and then, you know, net sales customers, and ultimately, you know, grow their business.

Andrew Bialecki: I mean, it's still in days and weeks, not months. Now, for the smaller segment there, for the folks that are just more just starting out, that's where we did see a lot of strength broadly across that customer group from these new logos and new folks that are new to Klaviyo. So, I think that's – we think that's a really good sign that when businesses are starting out and they're looking to grow their business, they're still choosing us and defaulting to Klaviyo as the place to store customer data and then, you know, message those customers and ultimately, you know, grow their business.

Andrew Bialecki: Now, for the smaller segment there, for the folks that are just more just starting out, that's where we did see a lot of strength broadly across that customer group from these new logos and new folks that are new to Klaviyo. So, I think that's a really good sign that when businesses are starting out and they're looking to grow their business, they're still choosing us and defaulting to Klaviyo as a place to store customer data and then, you know, message those customers and ultimately, you know, grow their business. Okay, perfect. Thank you. Our next question comes from Scott Berg from Needham. Your line is now open. Hi everyone. I have a really nice quarter here.

Raimo Lenschow: Now, for the smaller segment there, for the folks that are just more starting out, that's where we did see a lot of strength broadly across that customer group from that new logo.

Raimo Lenschow: and new folks that are new to Klaviyo. So I think that's, we think that's a really good sign that when businesses are starting out.

Raimo Lenschow: and they're looking to grow their business, they're still choosing us and defaulting to Klaviyo as the place to store customer data and then message those customers and ultimately grow their business.

Operator: Okay, perfect. Thank you.

Scott Berg: When the next question comes from Scott Berg, from me, then your lines are now open. Hi, everyone. A really nice quarter here. I guess one question for me is on, you go to market and investments here kind of mid-year. SMB is a man that pointed out still a little on the softer side at the moment, but you both called out really good strength up market. Have you made any tweaks or changes to the investments that you're making across those different segments that might maybe favor some of those areas of strength up market that you're seeing today?

Scott Berg: Our next question comes from Scott Berg from Needham. Your line is now open.

Scott Berg: Okay, perfect. Thank you. Our next question comes from Scott Berg from Needham. Your line is now open. Hi, everyone. Really nice quarter here. I guess one question for me is

Scott Berg: Our next question comes from Scott Berg from Needham. Your line is now open.

Speaker Change: Okay, perfect. Thank you.

Speaker Change: Our next question comes from Scott Berg from Needham. Your line is now open.

Scott Berg: Hi everyone, a really nice quarter here. I guess one question for me is on your go-to-market investments here, kind of mid-year.

Scott Berg: S&B, as Amanda pointed out, still a little on the softer side at the moment, but you both called out a really good strength-up market. Have you made any tweaks or changes to the investments that you're making across those different segments that might maybe favor some of those areas of strength-up market that you're seeing today?

Amanda Whalen: Yeah, so we're very intentional about looking for where there's opportunities where we're seeing market hold and investing behind those. Maybe put a little bit of color, you know, on the, you know, on the failed side. We've been increasing capacity in the areas where we're seeing growth, and it mentioned international as well as mid-market. And then on the marketing side, we've seen, like the results we're seeing from some of the marketing programs, digital programs we're running to try to group drive growth, and we're also investing in building more awareness for Clavio and various markets. We're finding in some cases folks don't know about either Klaviyo, with large, or are in higher portfolio products.

Scott Berg: Yeah, so we're very intentional about looking for where there are opportunities where we're seeing markets pull, and investing behind those. Maybe add a little bit of color, you know, on the sales side, we've been increasing capacity in the areas where we're seeing growth. Amanda mentioned international as well as mid-market.

Andrew Bialecki: Yeah, so we're very intentional about looking for where there are opportunities where we're seeing markets pull, and investing behind those. Maybe add a little bit of color, you know, on the sales side, we've been increasing capacity in the areas where we're seeing growth. Amanda mentioned international as well as mid-market.

Speaker Change: Yeah, so we're very intentional about looking for where there's opportunities where we're seeing markets pull and investing behind those.

Speaker Change: Maybe add a little bit of color.

Speaker Change: on the on not a sales side we've beeninasing capacity theareaswherewe're seeing growthand mentioned international as well as midmarket and then on the marketing side we've seen likethe resultswe're seeing from from the marketing programs digil programs we're running to try to ack growth andwe're also investing in building more awareness

Andrew Bialecki: And then on the marketing side, we've seen the results we're seeing from some of the marketing programs, digital programs we're running to try to drive growth. And we're also investing in building more awareness for Klaviyo in various markets. We're finding in some cases folks don't know about either Klaviyo writ large or our entire portfolio of products. So, as Amanda said, we're very intentional about investing in things where we see great new economics, but we do see a number of opportunities to invest.

Speaker Change: for cladio on arious markets we're finding some pcases post 't know about either playio wr large or our higher portfolio products so as a managis that we're very intention about like destingbeind things where we see great economics but would do see a number of opportunity to invest

Amanda Whalen: So, as a matter of fact, we're very intentional about like investing behind things where we see great unit economics, but we do see a number of opportunities to invest.

Operator: Excellent, thanks. Congrats again.

Rob Oliver: Our next question comes from Rob Oliver from Baird. Your line is now open. Great. Thanks. Good afternoon, guys. I guess it's kind of a two-part question about SMS traction. A.B., you talked about some of the consolidation wins you guys have seen, and I know that it sounds as if you're getting pretty solid traction quickly, and some of your rollouts internationally with SMS. I just would love to hear. I know you don't break out on a quarterly basis. What percentage of your customers are on SMS, but we'd love to get a flavor for how that's, how that's progressing broadly for you relative to your expectations.

Rob Oliver: Our next question comes from Rob Oliver from Baird. Your line is now open.

Speaker Change: Excellent, thanks, congrats again.

Speaker Change: Our next question comes from Rob Oliver from Baird. Your line is now open.

Rob Oliver: Great. Thanks.

Rob Oliver: Great, thanks. Good afternoon, guys. I guess it's kind of a two-part question about SMS traction. AB, you talked about some of the consolidation wins you guys have seen and I know that it sounds as if you're getting pretty solid traction quickly in some of your rollouts internationally with SMS. Just would love to hear, I know you don't break out on a quarterly basis, what percentage of your customers are on SMS, but we'd love to get a flavor for how that's progressing broadly for you relative to your expectations. And then, I guess, Amanda, a side part to that would be, you know, we haven't seen the impact on gross margins that we might have expected with commensurate rampant SMS. I know there's other things driving that, but just wanted to reconcile those two things.

Rob Oliver: Good afternoon, guys. I guess it's kind of a two-part question about SMS traction. A.B., you talked about some of the consolidation wins you guys have seen, and I know that it sounds as if you're getting pretty solid traction quickly in some of your rollouts internationally with SMS, which we'd love to hear. I know you don't break out on a quarterly basis what percentage of your customers are on SMS, but we'd love to get a flavor for how that's progressing broadly for you relative to your

Rob Oliver: Good afternoon, guys. I guess it's kind of a two-part question about SMS traction. AB, you talked about some of the consolidation wins you guys have seen, and I know that it sounds as if you're getting pretty solid traction quickly in some of your rollouts internationally with SMS. I just would love to hear – I know you don't break out on a quarterly basis what percentage of your customers are on SMS, but we'd love to get a flavor for how that's progressing broadly for you relative to your expectations.

Rob Oliver: And then I guess, Amanda, a side part to that would be we haven't seen the impact on gross margins that we might have expected with commensurate ramp and SMS. I know there's other things driving that, but just wanted to reconcile those two things.

Rob Oliver: And then, I guess, Amanda, a side part to that would be, you know, we haven't seen the impact on gross margins that we might have expected with commensurate rampant SMS. I know there's other things driving that, but just wanted to reconcile those two things.

Amanda Whalen: And then, I guess, Amanda, a side part to that would be, you know, we haven't seen the impact on gross margins that we might have expected with a commensurate ramp in SMS. I know there's other things driving that, but just wanted to reconcile those two things. Thank you very much.

Andrew Bialecki: Thank you very much.

Amanda Whalen: Jeffrey, I'll speak to you as far as I'm mannequin to talk about Bruce Margin. Yeah, so while we're not disclosing like penetration, we'll continue; we're seeing a good adoption, and we'll share some milestones as we hit those. We're seeing good traction, like you mentioned. I think the international expansion, you know, adding Spain, Austria, Switzerland for SMS as well, as well as adding multi-medium messaging in Australia. What we think about our international strategy, a big part of it is making sure that SMS is available in those regions as well. And we are seeing good adoption there.

Andrew Bialecki: Yeah, great. I'll speak to that as far as Amanda can talk about gross margin. Yeah, so while we're not disclosing penetration, we're seeing good adoption, and we'll share some milestones as we hit those. We are seeing good traction, as you mentioned. I think the international expansion, adding Spain, Austria, and Switzerland for SMS, as well as adding multimedia messaging in Australia. As we think about our international strategy, a big part of it is making sure that SMS is available in those regions as well. And we are seeing good adoption there.

Amanda Whalen: Yeah, great. I'll speak to that as far as Amanda can talk about gross margin. Yeah, so while we're not disclosing penetration, we're seeing good adoption, and we'll share some milestones as we hit those. We are seeing good traction, as you mentioned. I think the international expansion, you know, adding Spain, Austria, and Switzerland for SMS, as well as adding multimedia messaging in Australia. You know, as we think about our international strategy, a big part of it is making sure that SMS is available in those regions as well, and we are seeing good adoption there.

Speaker Change: Thanks. Thank you very much.

Speaker Change: Great, I'll speak to FFS products and Amanda can talk about gross margin.

Speaker Change: Yeah, so while we're not disclosing penetration, we're seeing good adoption and we'll share some milestones as we hit those.

Amanda: We are seeing good traction, like you mentioned. I think the international expansion, you know, adding Spain, Austria, Switzerland for SMS, as well as adding multimedia messaging in Australia.

Andrew Bialecki: A quick example of that is there's a mattress manufacturer who started using us for SMS, adopted or started using us for email, adopted us for SMS, and then because of some of the things, not just the international features, but also some of the SMS-specific functionality we're building. We built a feature called SMS Smart Opt-in that makes it easier to gain consent so that customers and consumers have to do less clicking to subscribe to an SMS list.

Speaker Change: As we think about our international strategy, a big part of it is making sure that SMS is available in those regions as well, and we are seeing good adoption there. A quick example of that is there's a mattress manufacturer

Amanda Whalen: You know, a quick example of that is there's a mattress manufacturer who, you know, was using our, you know, started using us for SMS, adopted, or started using us for email, adopted us for SMS, and then because of some of the things, not just the international features, but also some of the SMS-specific functionality we're building. We built a feature around SMS smart opt-in that makes it easier to gain consent so that customers and consumers have to do less clicking to subscribe to an SMS list.

Andrew Bialecki: You know, a quick example of that is there's a mattress manufacturer who was using our, you know, start using us for SMS, adopted us for SMS. And then because of some of the things, not just the international features, but also some of the SMS specific functionality we're building. We built a feature on SMS smart-opt and that makes it easier to gain consent so that customers and consumers have to do less clicking to subscribe to an SMS list. That has dramatically increased their ability to grow their SMS program. And that's a feature that we launched in the last few months that now will be available to us.

Speaker Change: who started using us for SMS, started using us for email, adopted us for SMS.

Speaker Change: And then because of some of the things, not just the international features, but also some of the SMS-specific functionality we're building. We built a feature around SMS Smart Opt-in that makes it easier to gain consent.

Andrew Bialecki: That has dramatically increased their ability to grow their SMS program, and that's a feature that we launched in the last few months that's now available to everybody. So we're very excited about the progress we're seeing in SMS, and I think there's still a long way to go in terms of penetration.

Speaker Change: So that customers and consumers have to do less clicking to subscribe to an SMS list.

Amanda Whalen: That has dramatically increased their ability to grow their SMS program, and that's a feature that we launched in the last few months that's now available to everybody. So we're very excited about the progress we're seeing in SMS, and I think there's, you know, still a long way to go in terms of penetration.

Speaker Change: That has dramatically increased their ability to grow their SMS program, and that's a feature that we launched in the last few months that's now available to everybody. So, we're very excited about the progress we're seeing in SMS, and I think there's still a long way to go in terms of penetration.

Amanda Whalen: So we're very excited about the progress we're seeing in SMS. I think there's still a long way to go in terms of penetration. Yeah. And to your question on the gross margin front, on gross margin, it did come in slightly better than what we had expected. And that was primarily because we continue to see the benefits of the progress that we're making in infrastructure and support efficiencies. And those are offsetting the continued progress that we're seeing in the growth that we're seeing in the SMS business.

Amanda Whalen: Yeah. And to your question on the gross margin front, gross margin, it did come in slightly better than we had expected. And that was primarily because we continue to see the benefits of the progress that we're making in infrastructure and support efficiencies, and those are offsetting the continued progress that we're seeing and the growth that we're seeing in the SMS business. So one of those infrastructure efficiencies that I would love to highlight is our KMTA, Klaviyo's mail transfer agent.

Rob Oliver: Yeah, and to your question on the gross margin front, gross margin did come in slightly better than we had expected, and that was primarily because we continue to see the benefits of the progress that we're making in infrastructure and support efficiencies, and those are offsetting the continued progress that we're seeing in the growth that we're seeing in the SMS business. So one of those infrastructure efficiencies that I would love to highlight is our KMTA, Klaviyo's mail transfer agent.

Speaker Change: Yeah, and to your question on the gross margin front, on gross margin it did come in slightly better than what we had expected, and that was primarily because we continue to see the benefits of the progress that we're making in infrastructure and support efficiencies.

Speaker Change: And those are offsetting the continued progress that we're seeing and the growth that we're seeing in the SMS business. So one of those infrastructure efficiencies that I would love to highlight is our KMTA, Klaviyo Mail Transfer Agent.

Amanda Whalen: So one of those infrastructure efficiencies that I would love to highlight is our KMTA, Klavio Mail Transfer Agent. We expect to continue to get further leverage in COBS over the coming quarters as we transfer more of our mail volume onto our own mail transfer agent. SMS, you know, as Andrew said, continues to grow very well. And so we do expect that as it continues to grow, it's going to become a bigger portion of our business that will create some pressure on our gross margins. You know, we're proud of the fact that we've been able to largely offset that to this point and deliver what we see as some pretty best-in-class gross margins given our product and customer mix.

Rob Oliver: We expect to continue to get further leverage in COGS over the coming quarters as we transfer more of our mail volume onto our own mail transfer agent. SMS, you know, as Andrew said, continues to grow very well, and so we do expect that as it continues to grow, it's going to become a bigger portion of our business, which will create some pressure on our gross margins. You know, we're proud of the fact that we've been able to largely offset that to this point and deliver what we see as some pretty best-in-class gross margins given our product and customer.

Amanda Whalen: We expect to continue to get further leverage in COGS over the coming quarters as we transfer more of our mail volume onto our own mail transfer agent. SMS, as Andrew said, continues to grow very well. And so we do expect that as it continues to grow, it's going to become a bigger portion of our business that will create some pressure on our gross margins. But we're proud of the fact that we've been able to largely offset that to this point and deliver what we see as some pretty best-in-class gross margins given our product and customer.

Speaker Change: We expect to continue to get further leverage in COGS over the coming quarters as we transfer more of our mail volume on to our own mail transfer agents.

Speaker Change: SMS, as Andrew said, continues to grow very well, and so we do expect that as it continues to grow, it's going to become a bigger portion of our business. That will create some pressure on our gross margins.

Andrew: You know, we're proud of the fact that we've been able to largely offset that to this point and deliver what we see as some pretty best-in-class gross margins given our product and customer mix.

Tyler Radke: Indeed. Great. Thanks, Amanda. Andrew, thank you.

Rob Oliver: Indeed. Great. Thanks, Amanda. Andrew, thank you.

Operator: Indeed, great. Thanks, Amanda. Andrew, thank you.

Speaker Change: Indeed. Great. Thanks, Amanda. Andrew, thank you.

Tyler Radke: Our next question comes from Tyler Redke from City. Your line is not open. Thank you for taking the question. Follow up this question just on the, the SMB side. I wanted to ask it more just if we think about behavioral. You know, a habit of some of your SMB customers. I'm curious what you observed in the quarter as it relates to, you know, utilization rates of email volumes, message volumes and contact list that, you know, that go up or down in relation to the SMB environment. Secondly, is it relates to, you know, if those SMB customers are seeing weakness in their, you know, consumer purchasing.

Tyler Radke: Our next question comes from Tyler Radke from Citi. Your line is now open.

Speaker Change: Our next question comes from Tyler Radke from Citi. Your line is now open.

Tyler Radke: Follow-up question just on the SMB side. I wanted to ask it more about the behavioral, you know, habits of some of your SMB customers. I'm curious what you observed in the quarter as it relates to utilization rates of email volumes, message volumes, and contact lists. Did that, you know, go up or down in relation to the SMB environment?

Tyler Radke: Thank you for taking the question. Follow-up question just on the SMB side. I wanted to ask it more just if we think about the behavioral habits of some of your SMB customers. I'm curious what you observed in the quarter as it relates to utilization rates of email volumes, message volumes, and contact lists. Did that go up or down in relation to the SMB environment? Secondly, is it relates to, you know, if those F&B customers are seeing weakness in their, you know, consumer?

Tyler Radke: Thank you for taking the question.

Tyler Radke: follow-up question just on the the SMB side I wanted to ask it more just

Tyler Radke: As we think about behavioral...

Speaker Change: You know habits of some of your S&B customers

Speaker Change: I'm curious what you observed in the quarter as it relates to, you know, utilization rates of email volumes, message volumes, and contacts lists. Did that...

Speaker Change: Did that go up or down in relation to the SMB environment?

Tyler Radke: Secondly, is it related to, you know, if those S&B customers are seeing weakness in their, you know, consumer purchasing, do you find that that translates to higher email and message volumes in order to backfill that demand? If you could just kind of help us understand behaviorally what you're seeing on the S&B side, thank you.

Speaker Change: is it relates to, you know, if those F&B customers are seeing weakness.

Amanda Whalen: Do you find that that translates to higher email and message volumes in order to backsell that man? If you could just kind of help us understand behaviorally what you're seeing on SMB site. Thank you.

Speaker Change: and their, you know, consumer purchasing. Do you find that that translates to higher email and message volumes in order to backfill that demand? If you could just kind of help us understand behaviorally what you're seeing on the SMB side. Thank you.

Amanda Whalen: Stuart, thanks so much for the question. And overall, I would say that what we saw in terms of behavior in the quarter was pretty consistent with what we've spoken about on our prior earnings calls. We continue hearing from customers about macro pressures. They remain very focused on the value that they're getting from their software. In general, in terms of the macro and the changes in the behavior, where you're not seeing it get materially better, we are also not seeing it get materially worse. And we think that we're continuing to perform strong through this environment because, as Andrew mentioned earlier, we are a must have for these customers.

Tyler Radke: Do you find that that translates to higher...

Amanda Whalen: Sure, Tyler, thanks so much for the question. And overall, I would say that what we saw in terms of behavior in the quarter was pretty consistent with what we've spoken about on our prior earnings calls. We continue hearing from customers about macro pressures, but they remain very focused on the value that they're getting from their software. In terms of the macro and the changes in behavior, we are not seeing it get materially better. We are also not seeing it get materially worse.

Tyler Radke: Gopalakrishnan. Thank you so much. Thank you. Thank you. Thank you.

Speaker Change: Sure, Tyler. Thanks so much for the question. And overall, I would say that what we saw in terms of behavior in the quarter was pretty consistent with what we've spoken about on our prior earnings calls.

Speaker Change: We continue hearing from customers about macro pressures. They remain very focused on the value that they're getting from their software. In general, in terms of the macro and the changes in the behavior, we are not seeing it get materially better. We are also not seeing it get materially worse.

Amanda Whalen: And we think that we're continuing to perform strongly in this environment because, as Andrew mentioned earlier, we are a must-have for these customers. We are a core part of how they drive revenue. We're a revenue engine for them, and being a revenue engine means that when they're thinking about their business and thinking about the pressures that they're facing, they're thinking about how I can efficiently drive that growth, and Klaviyo is a really important part of that.

Speaker Change: And we think that we're continuing to perform strong through this environment because, as Andrew mentioned earlier, we are a must-have for these customers. We are a core part of how they drive revenue. We're a revenue engine for them, and being a revenue engine means that when they're thinking about their business and thinking about the pressures that they're facing, they're thinking about, how do I efficiently drive that growth? And Klaviyo is a really important part of that.

Amanda Whalen: We are a core part of how they drive revenue. We're revenue engines for them, and being a revenue engine means that when they're thinking about their business and thinking about the pressures that they're facing, they're thinking about how do I efficiently drive that growth, and Klaviyo is a really important part of that.

Amanda Whalen: Maybe I have one more comment on top of that. I think the other thing that we watch is the percentage of revenue that comes from Klaviyo. We've seen a number of customers where that percentage is increasing. And so they're looking to kind of double down on the set of where revenue engine. And I think folks are looking at, hey, existing customers are great. They've already got into some relationships. That's a great source of demand when there's more uncertainty. Thank you.

Amanda Whalen: And maybe I'll have one more too.

Andrew Bialecki: Maybe I'll have one more comment on top of that. I think the other thing that we should watch is the percentage of revenue that comes from Klaviyo. And we've seen a number of customers where that percentage is increasing. And so they're looking, it kind of doubles down on Amanda's data that we're a revenue engine. And I think folks are looking at, hey, existing customers are great. They've already got existing relationships. That's a great source of demand, you know, when there's more uncertainty.

Speaker Change: And maybe I'll have one more comment on top of Amanda. The other thing that we watch is the percentage of revenue that comes from Klaviyo. And we've seen a number of customers where that percentage is increasing.

Speaker Change: And so they're looking, it kind of doubles down on what Amanda said, we're a revenue engine, and I think folks are looking at, hey, existing customers are great, they've already got existing relationships, that's a great source of demand, you know, when there's more uncertainty.

Nick Altmann: For the next question, comes from Nick Altman from Scotia Bank. Your line is now open. Awesome. Thanks, guys. I wanted to ask another question on the international side of the equation, just given the strength there. But you guys added three new countries on the SMS side and spoke to the growth acceleration in the media and kind of building off of Rob's question earlier.

Tyler Radke: Just kind of help us understand behaviorally what you're seeing on the SMB side. Thank you.

Nick Altman: Our next question comes from Nick Altman from Scotiabank. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Nick Altman from Scotiabank. Your line is now open.

Nick Altman: Awesome. Thanks, guys.

Nick Altman: Awesome, thanks guys. I wanted to ask another question on the the international side of the equation, just given the strength there.

Andrew Bialecki: I wanted to ask another question on the international side of the equation, just given the strength there. But so you guys added three new countries on the SMS side, you spoke about growth, acceleration, and EMEA, kind of building off of Rob's question earlier, but could you talk about how much of an unlock some of these international editions have been on the SMS side and how much pent-up demand you're seeing from some of these geos as you look to add SMS in new countries?

Nick Altman: So you guys added three new countries on the SMS side, you spoke to the growth, acceleration, and EMEA. And kind of building off of Rob's question earlier, but can you just talk about how much of an unlock some of these...

Andrew Bialecki: But do you talk about how much of an unlock some of these international editions have been on the SMS side and how much pent-up demand you're seeing from some of these geos as you look to add SMS in new countries. And then just as a follow-up, just given the outside strength on the international side, how do you think about, you know, potentially accelerating those international efforts and investments, just given the strength you're seeing. Thanks. So when we talk about international and mention a couple of things that we're doing, you know, both from a product in a go to market.

Nick Altman: international editions have been on the SMS side and how much pent-up demand you're seeing from some of these geos as you look to add SMS in new countries and then just as a follow-up

Andrew Bialecki: And then, just as a follow-up, just given the outside strength on the international side, how do you think about potentially accelerating those international efforts and investments, just given the strength you're seeing? Thanks. Yeah, I'm happy to talk about it too.

Speaker Change: Just given the outside strength on the international side, how do you think about, you know, potentially accelerating those international efforts and investments, just given the strength you're seeing?

Andrew Bialecki: Yeah, I'm happy to talk about it. So when we talk about international, we mentioned a couple things that we're doing, you know, both from a product and a go-to-market side. So we talked about localizing in terms of language. We also talked about localizing some of the marketing and content we're putting into the region. And as we build up a larger customer base and more partners, that's becoming a bit of a flywheel. In addition to that, it's making sure all of our products are available. So obviously, with SMS, that's very important.

Amanda Whalen: Sure, Tyler, thanks so much for the question. And overall, I would say that what we saw in terms of behavior in the quarter was pretty consistent with what we've spoken about on our prior earnings calls. We continue hearing from customers about macro pressures. They remain very focused on the value that they're getting from their software in general terms of macro and changes in behavior. We are not seeing it get materially better.

Speaker Change: Yeah, I'm happy to talk about it. So when we talk about international, we mentioned a couple things that we're doing, you know, both from a product and a go-to-market side. So we talked about localizing in terms of language. We also talked about localizing some of the marketing and content.

Andrew Bialecki: So we talked about localizing in terms of language. We also talked about localizing some of the marketing and content. We're putting in region, and as we build up a larger customer base, more partners, that's becoming a bit of a flywheel. In addition to that, it's making sure all of our products are available. So obviously, with SMS, that's very important. And so we're going to continue to invest on both of those fronts, both languages, as well as, you know, SMS and channel availability. That's why we're also investing, you know, thinking about what's happened, and all that plays in some markets outside of, you know, outside the Americas.

Speaker Change: We're putting in region, and as we build up a larger customer base, more partners, that's becoming a bit of a flywheel.

Andrew Bialecki: And so we're going to continue to invest in both of those fronts, both languages as well as, you know, SMS and channel availability. That's why we're also investing in, you know, thinking about WhatsApp and the role that that plays in some markets outside of, you know, outside of the Americas. The other thing I'll say, and the last thing I'll say too, is that when we think about going to market with partners, we really like to make sure that we're tightly integrated with them and folks that really serve international markets well. So, for example, you know, Shopify talks about their products in their markets. That's something that we've built out a really tight integration with, so we work really well together.

Speaker Change: and it addition that ' that'sma sure all of our parts are available so i'd with ssms that's very important

Speaker Change: And so we're going to continue to invest on both of those fronts, both languages, as well as, you know, SMS and channel availability. That's why we're also investing, you know, thinking about WhatsApp and the role that plays in some markets outside of, you know, outside the Americas.

Andrew Bialecki: And so we've worked with a lot of other tech platforms, software platforms that are more prevalent in Europe and Asia. That's helping drive a lot of, you know, that's driving a lot of demand and a good product-market fit. And in terms of investment, you know, we continue to invest in countries and regions where we're seeing good, you know, good growth. You know, and I think what we're finding with France and what the programs we've been able to run there, you know, through, you know, digital demand generation and through our go-to-market team, I think that's going to become a bit of a template for us and how we approach other markets.

Andrew Bialecki: The other thing I'll say, the last thing I'll say too, is, I think, you know, when we think about going to market with partners, we really like to make sure that we're tightly integrated with that. And folks that really serve in our national market as well. So, for example, you know, shop by talked about their markets products. That's something that we've built out a really tight integration with. So we work really well together. And so we've worked with a lot of other, you know, tech platforms, software platforms; there are more prevalence, you know, in Europe and Asia.

Speaker Change: The other thing I'll say, the last thing I'll say too is, I think, you know, when we think about going to market with partners...

Speaker Change: We really like to make sure that we're tightly integrated with them and folks that really serve international markets well. So, for example, you know, Shopify talked about their markets products. That's something that we've built out a really tight integration with.

Speaker Change: So we work really well together, and so we've worked with a lot of other, you know, tech platforms, software platforms that are more prevalent.

Andrew Bialecki: That's helping drive a lot of, you know, that's driving a lot of demand and good product market fit. And in terms of investment, you know, we continue to invest in like in countries and regions where we're seeing good, you know, good growth. You know, I think what we're finding with France and what we've been able to run there, you know, through, you know, digital demand, Jen, and throughout go to market teams. I think that's going to become a bit of a template for us and how we approach other markets. And so where we're seeing strength there, we're going to invest behind that.

Speaker Change: in Europe and Asia.

Speaker Change: That's driving a lot of demand and good product market fit.

Speaker Change: In terms of investment, we continue to invest in countries and regions where we're seeing good growth.

Speaker Change: I think what we're finding with France and the programs we've been able to run there through digital demand gen and through our go-to-market teams, I think that's going to become a bit of a template for us in how we approach other markets.

Andrew Bialecki: And I expect a lot of our customers, you know, they'll increasingly, they may adopt us for email first. But then we'll be able to address them, you know, add on SMS, CDP, and reviews. James.

Speaker Change: And so where we're seeing strength there, we're going to invest behind that. And I expect a lot of our customers, they'll increasingly, they may adopt us for email first, but then we'll be able to address them, add on SMS, CDP, and reviews.

Operator: Great. Thank you.

Kyle Diehl: Our next question comes from Jackson Aether from Keith Bank Capital, Markets. Your alliance now open. Great. Thanks.

Jackson Ader: Our next question comes from Jackson Ader from Key Bank Capital Markets. Your line is now open. Great, thanks.

Andrew Bialecki: Maybe I'll have one more comment on top of that. I think the other thing that we should watch is the percentage of revenue that comes from Klaviyo. And we've seen a number of customers where that percentage is increasing, and so they're looking to kind of double down on that instead of saying, we're a revenue engine. And I think folks are looking at, hey, existing customers are great. They've already got existing relationships. That's a great source of demand, you know, when there's more uncertainty.

Andrew Bialecki: And so where we're seeing strength there, we're going to invest in that. And I expect a lot of our customers will increasingly adopt us for email first, but then we'll be able to address them, you know, add on SMS, CDP, and reviews. Great, thank you. Our next question comes from Jackson Ader from Key Bank Capital Markets. Your line is now open. Great, thanks. This is Kyle Diehl on for Jaxnator.

Amanda Whalen: We are also not seeing it get materially worse, and we think that we're continuing to perform strongly in this environment because, as Andrew mentioned earlier, we are a must-have for these customers. We are a core part of how they drive revenue. We're a revenue engine for them, and being a revenue engine means that when they're thinking about their business and thinking about the pressures that they're facing, they're thinking about how do I efficiently drive that growth, and Klaviyo is a really important part of that.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Jackson Ader from Key Bank Capital Markets. Your line is now open.

Nick Altman: Our next question comes from Nick Altman from Scotiabank. Your line is now open.

Andrew Bialecki: Maybe I'll have one more.

Amanda Whalen: This is Kyle Diehl on for Jackson Aether. Maybe just squaring some of the headcount comment here, I think Amanda, you might have alluded to. Some of the increased margin this period is coming from a little bit lower headcount. Can you kind of help us think about that in terms of self capacity and where you guys currently are, you know, in terms of your plans for the year. And then also on that same note, how quickly you can ramp some of the new folks given, you know, the quickly approaching holiday season here. Thanks. Yeah, I'll take that.

Kyle Dealon: Great, thanks. This is Kyle Dealon for Jaxnator. Maybe just squaring some of the head count commentary. I think Amanda, you might have alluded to some of the increased margin this period just coming from a little bit lower head count.

Kyle Dealon: Can you kind of help us think about that in terms of self-capacity and where you guys currently are, you know, in terms of your plan for the year? And then also on that same note, how quickly you can ramp some of the new folks given, you know, the quickly approaching holiday season here. Thanks.

Jackson Ader: Yeah, I'll take that. And so on the hiring front, you know, I'll say a couple things. One, we've always been very intentional since we started out in the business about hiring and making sure that headcount was proportionate to the demand and the products that we want to build. So headcount grew slightly from the end of Q1 to the end of Q2. Specifically on the sales side, we think we've got the right amount of capacity, and we're also prepared to scale that as we see more demand.

Amanda Whalen: And so on the hiring fronts, you know, I'll say a couple of things. One, we've always been very intentional since we started out of the business about hiring and making sure that headcount was proportionate to the demand and the products that we want to build. So headcount grew slightly from the end of Q1 to the end of Q2. Specifically on the, you know, sales side, we think we've got the right amount of capacity, and we're also prepared to scale that as we see more demands. And then to the last comment on the holiday season, one of the great things is we do actually see an upkick in, you know, customers that come to us, you know, that want, want to use Claudio over the holiday season.

Speaker Change: Yeah, I'll take that. On the hiring front, I'll say a couple things. One, we've always been very intentional since we started out in the business about hiring and making sure that headcount was proportionate to the demand and the product that we want to build.

Speaker Change: So headcount grew slightly from the end of Q1 to the end of Q2.

Speaker Change: Specifically on the sales side, we think we've got the right amount of capacity and we're also prepared to scale that as we see more demand. And then to the last comment on the holiday season, one of the great things is we do actually see an uptick in customers that come to us.

Jackson Ader: And then to the last comment on the holiday season, one of the great things is that we do actually see an uptick in customers that come to us that want to use Klaviyo over the holiday season. But actually, a lot of that growth is coming from our existing customers using more Klaviyo over the holiday season. So, in that case, we think we're very well staffed across all of our customer teams to meet that demand.

Amanda Whalen: But actually, a lot of that growth is coming from our existing customers using more Claudio over the holiday season. So, in that case, you know, we think we're very well staffed across all of our customer teams to meet that demand when folks say want to increase their usage. You know, one of our product, product, email, or SMS, we think we'll have to cover that demand.

Speaker Change: that want want to use play overthe holly season ve a lot of that growth is coming from our existing customers

Speaker Change: using more Klaviyo over the holiday season. So, in that case, you know, we think we're very well staffed across all of our customer teams to meet that demand. When folks, say, want to, you know, increase their usage, you know, one of our core products, email or SMS, we think we're well staffed to cover that demand.

Jackson Ader: When folks, say, want to increase their usage of one of our core products, email or SMS, we think we're well staffed to cover that. Our next question comes from Gabriela Borges from Goldman Sachs. Your line is now open.

Gabriela Borges: Our next question comes from Gabriella Borges from Old Insects. Your line is now.

Nick Altman: I wanted to ask another question on the international side of the equation, just given the strength there. But so you guys added three new countries on the SMS side, you spoke about growth, acceleration, and EMEA, and kind of building off of Rob's question earlier, but can you talk about how much of an unlock some of these international additions have been on the SMS side and how much pent-up demand you're seeing from some of these geos as you look to add SMS in new countries. And then, just as a follow-up, just given the outside strength on the international side, how do you think about, you know, potentially accelerating those international efforts and investments?

Nick Altman: Awesome. Thanks, guys.

Speaker Change: Our next question comes from Gabriela Borges from Goldman Sachs. Your line is now open.

Gabriela Borges: Hi, this is Cali Valente on for Gabriella. Thanks for taking my question, and congrats on the quarter. I wanted to ask on the mid market, how much of the momentum that you're seeing do you think is attributable to the broadening of your products set with, you know, CDP reviews and any incremental AI functionality. And then also to what extent are you seeing customer lands today that probably would not have closed without these new features. Thank you. Yeah, thanks for the question. I think it's a bit of a mixture of both. I think it's a testament to the product that we built, the fact that Claudio is a data platform.

Callie Valenti: Hi, this is Callie Valenti on for Gabriela. Thanks for taking my question and congrats on the quarter. I wanted to ask on the mid-market, how much of the momentum that you're seeing do you think is attributable to the broadening of your product set with, you know, CDP reviews and any incremental AI functionality? And then also, to what extent are you seeing customer lands today that probably would not have closed without these new features? Thank you.

Andrew Bialecki: Yeah, thanks for the question. I think it's a bit of a mixture of both. I think it's a testament to the product that we built, the fact that Klaviyo is a data platform, and that we can store all that data and help you put it to work. I think we talked about artificial intelligence and its ability to allow you to do more personalization, to better attribute that, and then automatically optimize.

Andrew Bialecki: for giving you the strength you're seeing. Thanks. Yeah, I'm happy to talk about it.

Speaker Change: Yeah, thanks for the question. I think it's a mixture of both. I think it's a testament to the product that we've built, the fact that Klaviyo is a data platform, and that we can store all that data and help you put it to work. I think we talked about artificial intelligence and its ability to allow you to do more personalization, to better attribute that, and then automatically optimize.

Amanda Whalen: And then we can store all that data and help you put it to work. I think we talked about artificial intelligence and its ability to allow you to do more personalization, to better attribute that, and then automatically optimize. One area that we talked about was related to SMS, availability, and mobile. As we have more of these channels all in one place, you know, with our CDP and some of its analytic capabilities, I think we're finding really resonates with larger customers. This idea that all of those features, all of those applications, all work together. But as we continue to invest in our product roadmap and build up those capabilities, I think we're finding the best. I think it's an even better fit, you know, for larger enterprises.

Nick Altman: And so we've worked with a lot of other tech platforms, software platforms that are more prevalent in Europe and Asia. That's helping drive a lot of, you know, that's driving a lot of demand and good product market fit. And in terms of investment, you know, we continue to invest in countries and regions where we're seeing good, you know, good growth. You know, and I think what we're finding with France and what we've been able to run there, you know, through, you know, digital demand generation and through our go-to-market team, I think that's going to become a bit of a template for us and how we approach other markets.

Speaker Change: One area that we talked about was related to SMS availability and mobile is as we have more of these channels

Andrew Bialecki: One area that we talked about was related to SMS availability and mobile. As we have more of these channels all in one place, with our CDP and some of its analytic capabilities, I think what we're finding really resonates with larger customers is this idea that all of those features, all those applications, all work together. But as we continue to invest in that product roadmap and build out those capabilities, I think we're finding that that's an even better fit for larger enterprises.

Nick Altman: And so where we're seeing strength there, we're going to invest in that. And I expect a lot of our customers, you know, they'll increasingly adopt us for email first, but then we'll be able to address them, you know, add on SMS, CDP, and reviews. Great, thank you. Our next question comes from Jackson Ader from Key Bank Capital Markets. Your line is now open. Great, thanks. This is Kyle Diehl on for Jaxnator.

Speaker Change: All in one place, you know, with our CDP and some of the analytic capabilities.

Speaker Change: I think what we're finding really resonates with larger customers is this idea that all of those features, all those applications, all work together. So as we continue to invest in that product roadmap and build out those capabilities, I think we're finding that that's an even better fit for larger enterprises.

Jackson Ader: Our next question comes from Jackson Ader from Key Bank Capital Markets. Your line is now open. Great, thanks.

Andrew Bialecki: You know, one example we had in the quarter, and I think of some of the questions that you're asking was an organic food and home goods company who came to us this quarter. They wanted to consolidate their multiple brands onto one single platform so that they could optimize their strategy and have unified multi-channel reporting. And they chose Klaviyo in part because of our portfolio offerings. So that portfolio feature that we recently launched allowed them to easily do high-level reporting across accounts to drive better insights, and they were really excited to get launched with Klaviyo.

Andrew Bialecki: One example who we had in the quarter, I think of some of the questions that you're asking, was an organic food and home goods company who came to us this quarter. They wanted to consolidate their multiple brands onto one single platform so they could optimize their strategy and have a unified multi-channel reporting. And they chose Claudio in part because of our portfolio offering. So that portfolio feature that we recently launched allowed them to easily do high-level reporting across accounts to drive better insights, and they are really excited to get launched with Playbio. Okay, thank you.

Andrew Bialecki: One example...

Speaker Change: You know one example who we had in the quarter I think of some of the questions that you're asking was a an organic food and home goods company who came to us this quarter. They wanted to consolidate their multiple brands onto one single platform so that they could optimize their strategy and have unified multi-channel reporting. And they chose Klaviyo in part because of our portfolio offering. So that portfolio feature that we recently launched allowed them to easily do high-level reporting across accounts to drive better insights and they're really excited to get launched with Klaviyo.

Kyle Diehl: Yeah, I'll take that. And so on the hiring front, you know, I'll say a couple things. One, we've always been very intentional since we started out in the business about hiring and making sure that headcount was proportionate to the demand and the products that we want to build. So headcount grew slightly from the end of Q1 to the end of Q2. Specifically on the sales side, we think we've got the right amount of capacity, and we're also prepared to scale that as we see more demand.

Kyle Diehl: And then to the last comment on the holiday season, one of the great things is that we do actually see an uptick in customers that come to us that want to use Klaviyo over the holiday season. But actually, a lot of that growth is coming from our existing customers using more Klaviyo over the holiday season. So, in that case, you know, we think we're very well staffed across all of our customer teams to meet that demand.

Operator: Before we proceed, again, if you'd like to ask a question, please press star one. Again, that star one on your telephone keypad.

Yun Kim: Before we proceed, again, if you'd like to ask a question, please press star 1, again that's star 1 on your telephone keypad. Our next question comes from Yun Kim from Booth Capital. Your line is now open.

Kyle Diehl: When folks, say, want to, you know, increase their usage of one of our core products, email or SMS, we think we're well staffed to cover that. Our next question comes from Gabriela Borges from Goldman Sachs. Your line is now open.

Speaker Change: Great, thank you.

Speaker Change: Before we proceed, again, if you'd like to ask a question, please press star 1, again that's star 1 on your telephone keypad. Our next question comes from Yoon Kim from Booth Capital. Your line is now open.

Operator: Our next question comes from Yun Kim from Boot Capital.

Yun Kim: Your line is now open. All right, congrats on the strong quarter. Question around go to market motion around new customer acquisition for meat market and enterprise customers, which I think you mentioned with a record quarter. So just curious on where it's the biggest source of these new 50k plus customers. You know, you just still Shopify Plus merchants, or are you specifically going after legacy displacement opportunities outside of the platform, Shopify platform? And also, how much of your incremental sales and marketing investments are focused on going after these large customers outside of the Shopify platform.

Andrew Bialecki: All right, congratulations on the strong quarter. Question around go-to-market motion around new customer acquisitions for mid-market and enterprise customers, which I think you mentioned was a record quarter. So just curious about where the biggest source of these new 50K-plus customers is, and you know, is it still Shopify-plus merchants, or are you specifically going after legacy displacement opportunities outside of the Shopify platform? And also, how much of your incremental sales and marketing investments are focused on going after these large customers outside of the Shopify platform? Thanks.

Gabriela Borges: Yeah, thanks for the question. I think it's a bit of a mixture of both. I think it's a testament to the product that we built, the fact that Klaviyo is a data platform, and that we can store all that data and help you put it to work. I think we talked about artificial intelligence and its ability to allow you to do more personalization, to better attribute that, and then automatically optimize.

Yoon Kim: Alright, congrats on the strong quarter. Question around go-to-market motion around new customer acquisitions for mid-market and enterprise customers.

Gabriela Borges: One area that we talked about was related to SMS availability and mobile. As we have more of these channels all in one place, with our CDP and some of its analytic capabilities, I think what we're finding really resonates with larger customers is this idea that all of those features, all those applications, all work together. As we continue to invest in that product roadmap and build out those capabilities, I think we're finding that that's an even better fit for larger enterprises. Here's one example.

Andrew Bialecki: One example we had in the quarter, which I think of some of the questions that you're asking, was an organic food and home goods company who came to us this quarter. They wanted to consolidate their multiple brands onto one single platform so that they could optimize their strategy and have unified multi-channel reporting. And they chose Klaviyo in part because of our portfolio offering. So that portfolio feature that we recently launched allowed them to easily do high-level reporting across accounts to drive better insights, and they were really excited to get launched with Klaviyo.

Yoon Kim: which I think you mentioned was a record quarter. So just curious on where is the biggest source of these new 50K plus customers.

Yun Kim: All right, congratulations on the strong quarter. Question around go-to-market motion around new customer acquisitions for mid-market and enterprise customers, which I think you mentioned was a record quarter. So just curious about where the biggest source of these new 50K-plus customers is, and you know, is it still Shopify-plus merchants, or are you specifically going after legacy displacement opportunities outside of the Shopify platform? And also, how much of your incremental sales and marketing investments are focused on going after these large customers outside of the Shopify platform? Thanks.

Speaker Change: And, you know, is it still Shopify plus merchants, or are you specifically going after...

Yoon Kim: legacy displacement opportunities outside of the Shopify platform, and also how much of your incremental sales and marketing investments are focused on going after these large customers outside of the Shopify platform? Thanks.

Andrew Bialecki: Thanks. So again, there's a distribution. We've got a great partnership with Shopify. We have a lot of mutual customers, especially into that in marketing enterprise. And we have a number of customers that have grown up on other, you know, other tech stacks. So you don't break out the distribution, but like I think it's fairly varied. You know, those in the higher, you know, the larger customer sizes. And I think the reason we're winning across all of them is because of our tight integration with their commerce stacks and the ability to store all that data and then put it to work.

Andrew Bialecki: Sure, happy to answer that. So, again, there's a distribution. We've got a great partnership with Shopify. We have a lot of mutual customers, especially into that mid-market and enterprise. And we have a number of customers that have grown up on other tech stacks. So we don't break out the distribution, but I think it's fairly varied at those higher, larger customer sizes.

Andrew Bialecki: Sure, happy to answer that. So, again, there's a distribution. We've got a great partnership with Shopify. We have a lot of mutual customers, and especially into that mid-market and enterprise. And we have a number of customers that have grown up on other tech stacks. So we don't break out the distribution, but I think it's fairly varied at those higher, larger customer sizes.

Speaker Change: Sure, happy to answer that. So it's, again, there's a distribution. We've got a great partnership with Shopify. We have a lot of mutual customers, especially into that mid-market and enterprise. And we have a number of customers that have grown up on other tech stacks. So we don't break out the distribution, but I think it's fairly varied.

Speaker Change: those you of the higher the larger customer sizes

Andrew Bialecki: And I think the reason we're winning across all of them is because of our tight integration with their commerce stacks and our ability to store all that data and then put it to work. So, our partnership with Shopify is excellent, and then we're looking for ways that we can both help folks that are using other software platforms, as well as folks that have maybe homegrown solutions. How do we make sure that we can help them and their development teams integrate easily?

Andrew Bialecki: And I think the reason we're winning across all of them is because of our tight integration with their commerce stacks and our ability to store all that data and then put it to work. So our partnership with Shopify is excellent, and then we're looking for ways that we can both help folks that are using other software platforms, as well as folks that have maybe homegrown solutions. How do we make sure that we can help them and their development teams integrate easily?

Yoon Kim: And I think the reason we're winning across all of them is because of our tight integration with their commerce stacks.

Andrew Bialecki: So, you know, our partnership with Shopify is excellent. And then we're looking for ways that we can both help both are using other software platforms as well as those that have maybe homegrown solutions. How do you make sure that we can help them and their development teams integrate easily. So when we talk about the ease of use of radio, sometimes that means the ability for these larger enterprises to plug all their systems in. But inevitably we know that there's going to be some data sources that they need to use our developer API for. And we think we have a really, really strong product offering, a really strong functionality there as well.

Speaker Change: and the ability to store all that data and then put it to work.

Speaker Change: So our partnership with Shopify is excellent, and then we're looking for ways that we can both help folks that are using other software platforms, as well as folks that have maybe homegrown solutions, how do we make sure that we can help them and their development teams integrate easily? So when we talk about the ease of use of Klaviyo, sometimes that means the ability for these larger enterprises to plug all their systems in, but inevitably we know that there's going to be some data sources that they need to use our developer APIs for, and we think we have a really, really strong product offering, a really strong functionality there as well.

Andrew Bialecki: So, when we talk about the ease of use of Klaviyo, sometimes that means the ability for these larger enterprises to plug all their systems in. But inevitably, we know that there are going to be some data sources that they need to use our developer APIs for. And we think we have a really, really strong product offering, and really strong functionality there as well.

Andrew Bialecki: So when we talk about the ease of use of Klaviyo, sometimes that means the ability for these larger enterprises to plug all their systems in, but inevitably, we know that there are going to be some data sources that they need to use our developer APIs for. And we think we have a really, really strong product offering, and really strong functionality there as well.

Andrew Bialecki: Okay.

Yun Kim: Okay, great. Thank you so much.

Operator: Great.

Operator: Thank you so much.

Operator: We have reached our closing for the question and answer session. Thank you so much again, everyone, for attending Klaviyo's second quarter fiscal 2024 conference call. We hope you have a wonderful day. You may now disconnect.

Speaker Change: Okay, great. Thank you so much.

Operator: We have reached our closing for the question-answer session. Thank you so much. Again, everyone for attending Klaviyo's second quarter fiscal 2024 conference call.

Speaker Change: We have reached our closing for the question and answer session. Thank you so much again, everyone, for attending Klaviyo's second quarter fiscal 2024 conference call. We hope you have a wonderful day. You may now disconnect.

Operator: We hope you have a wonderful day.

Operator: You may now just get up.

Q2 2024 Klaviyo Inc Earnings Call

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