Klaviyo Q4 2025 Klaviyo Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Klaviyo Inc Earnings Call
Speaker #1: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Klaviyo's fourth quarter and full year 2025 earnings conference call.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to Klaviyo's Q4 and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press Star, followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press Star one. Thank you. I would now like to turn the conference over to Ryan Flynn, Director of, of Investor Relations. Ryan, please go ahead.
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #1: And if you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Ryan Flain, Director of Investor Relations. Ryan, please go ahead.
Speaker #1: And if you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Ryan Flain, Director of Investor Relations, Ryan, please go ahead.
Speaker #2: Thank you, and welcome, everyone. We appreciate you joining us. Joining me today are Klaviyo co-founder and co-CEO Andrew Bialecki, CFO Amanda Whalen, and, joining us for the first time, co-CEO Chano Fernandez.
Ryan Flynn: Thank you, and welcome, everyone. We appreciate you joining us. Joining me today are Klaviyo Co-founder and Co-CEO, Andrew Bialecki, CFO, Amanda Whalen, and joining us for the first time, Co-CEO, Chano Fernandez. Welcome, Chano. Andrew, Chano, and Amanda will share their views on the quarter and fiscal year, and then we'll open up the line for your questions. Our commentary today will include non-GAAP measures. Reconciliations 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. Additionally, some of our comments today 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 those forward-looking statements.
Speaker #2: Welcome, Chano. Andrew, Chano, and Amanda will share their views on the quarter and fiscal year, and then we'll open up the line for your questions.
Speaker #2: Our commentary today will include non-GAAP measures. Reconciliations 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.
Speaker #2: Additionally, some of our comments today 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 those forward-looking statements.
Speaker #2: A description of these risk factors uncertainties and assumptions and other factors that could affect our financial results are included in our filings with the SEC.
Ryan Flynn: A description of these risk factors, uncertainties, and assumptions, and other factors that could affect our financial results are included in our filings with the SEC. We do not undertake any responsibility to update these forward-looking statements except as required by law. Andrew, that concludes my intro. We're ready to begin. Over to you.
Speaker #2: We do not undertake any responsibility to update these forward-looking statements except as required by law. Andrew, that concludes my intro. We're ready to begin; over to you.
Speaker #3: Thanks, Ryan, and thank you all for joining us today. 2025 was a breakout year for Klaviyo. We grew revenue by 32% to $1.2 billion, and delivered a 14% non-GAAP operating margin.
Andrew Bialecki: Thanks, Ryan, and thank you all for joining us today. 2025 was a breakout year for Klaviyo. We grew revenue by 32% to $1.2 billion and delivered 14% non-GAAP operating margin. We're now serving more than 193,000 customers in over 100 countries, and we saw strong momentum across every part of the business, especially in our enterprise customer base and internationally. The future is autonomous customer experiences, where every interaction between a business or organization and its consumers will be defined and delivered by AI. Every marketing message, every customer service request, every web visitor, mobile session, and even in-person experiences will be designed for the individual consumer and delivered autonomously. To allow any business to deliver autonomous customer experiences, we've built the autonomous B2C CRM.
Speaker #3: We're now serving customers in more than 193,000 countries, and we saw strong momentum from customers in over 100 countries across every part of the business, especially in our enterprise customer base and internationally.
Speaker #3: The future is autonomous customer experiences, where every interaction between a business or organization and its consumers will be defined and delivered by AI. Every marketing message, every customer service request, every web visitor, mobile session, and even in-person experiences will be designed for the individual consumer and delivered autonomously.
Speaker #3: To allow any business to deliver autonomous customer, autonomous B2C CRM. Our technology marries the customer database we founded Klaviyo on, and our robust marketing messaging infrastructure, with agents for marketing and customer service that will autonomously create, deliver, and optimize customer experiences on behalf of a business.
Andrew Bialecki: Our technology marries the customer database we founded Klaviyo on and our robust marketing infrastructure with agents for marketing and customer service that will autonomously create, deliver, and optimize customer experiences on behalf of a business. And this agent layer that is designing and delivering experiences to billions of consumers is trained from our deep expertise and the trillions of experiences we've delivered for businesses already. Because of these two things, proven infrastructure for real-time customer data and personalized experiences, and now agents trained to execute marketing and customer service autonomously, we are powering the era of autonomous customer experiences, and our results are showing it. In a year defined by rapid transformation, we drove 32% revenue growth for Klaviyo, with every quarter growing 30% or more year-over-year.
Speaker #3: And this agent layer that is designing and delivering experiences to billions of consumers is trained from our deep expertise and the trillions of experiences we've delivered for businesses already.
Speaker #3: Because of these two things—proven infrastructure for real-time customer data and personalized experiences, and now agents trained to execute marketing and customer service autonomously—we are powering the era of autonomous customer experiences, and our results are showing it.
Speaker #3: In a year defined by rapid transformation, we drove 32% revenue growth for Klaviyo, with every quarter growing 30% or more year over year. Klaviyo customers are growing too, and in Q4 our 10,000 largest customers grew their revenue—also known as GMV—by 11% year on year, which was roughly twice as much as the broader market's growth.
Andrew Bialecki: Klaviyo customers are growing, too, and in Q4, our 10,000 largest customers grew their revenue, also known as GMV, by 11% year-over-year, which was roughly twice as much as the broader market's growth. Before I go deeper, three points to keep in mind. First, AI is making it easier to deliver high-quality experiences consumers want. Not generic experiences, but ones that delight and convert, and we'll share a few examples of this today. Second, AI is improving the quality of experiences via personalization and training on past performance to meet the ever-increasing bar to wow consumers. We've hit a point where content and experiences generated by humans alone are not enough. Using AI is required to keep consumers engaged. Third, AI is making experiences more accessible.
Speaker #3: Before I go deeper, three points to keep in mind. First, AI is making it easier to deliver high-quality experiences consumers want. Not generic experiences, but ones that delight and convert, and we'll share a few examples of this today.
Speaker #3: Second, AI is improving the quality of experiences via personalization and training on past performance to meet the ever-increasing bar to wow consumers. We've hit a point where content and experiences generated by humans alone are not enough.
Speaker #3: Using AI is required to keep consumers engaged. Third, AI is making experiences more accessible. AI has introduced new modalities like the chat and soon-to-be-available voice capabilities of our customer agent that offer new services for consumers and businesses to meet.
Andrew Bialecki: AI has introduced new modalities like the chat and soon to be available voice capabilities of our Customer Agent, that offer new services for consumers and businesses to meet. The upshot is that AI is an accelerant and opportunity for our customers and for us. Our customers' and our incentives are well aligned. We're an engagement and revenue engine for them, and we sell Klaviyo based on engaged consumer relationships and outcomes, not on seats. AI continues to improve the speed, quality, and places consumers and businesses meet. This means as our customers around the world look to use AI to meet that moment, we are scaling... Our ability to be the agent and the platform of choice finds its roots in how our platform was built. This is our durable advantage.
Speaker #3: The upshot is that AI is an accelerant and opportunity for our customers and for us. Our customers and our incentives are well-aligned. We're an engagement and revenue engine for them, and we sell Klaviyo based on engaged consumer relationships and outcomes.
Speaker #3: Not on seats. AI continues to improve the speed, quality, and places consumers and businesses meet. This means as our customers around the world look to use AI to meet that moment, we are scaling with them.
Speaker #3: Our ability to be the agents and the platform of choice finds its roots in how our platform was built. This is our durable advantage.
Speaker #3: At the core is the database and data infrastructure specifically built to handle the scale of consumer data, and indexing, enriching through machine learning, and serving hundreds of thousands of requests per second with millisecond latencies.
Andrew Bialecki: At the core is the database and data infrastructure, specifically built to handle the scale of consumer data and indexing, enriching through machine learning, and serving hundreds of thousands of requests per second with millisecond latencies. It allows Klaviyo to ingest, aggregate, and govern first-party data in real time, so every consumer behavior, transaction, preference, and consent is available to our users, and now to our agents, to deliver the best possible consumer experience. That foundation is coupled with our marketing platform, which not only provides high throughput, scalable systems to render messages, deliver them with excellent deliverability, and enforce compliance, but also integrates with our customer data infrastructure to make last mile personalization decisions on content, incentives, timing, and channels at the moment we deliver a message or experience to an end consumer. Speed and scale matter.
Speaker #3: It allows Klaviyo to ingest, aggregate, and govern first-party data in real-time so every consumer behavior, transaction, preference, and consent is available to our users and now to our agents to deliver the best possible consumer experience.
Speaker #3: That foundation is coupled with our marketing platform, which not only provides high-throughput, scalable systems to render messages, deliver them with excellent deliverability, and enforce compliance, but also integrates with our customer data infrastructure to make last-mile personalization decisions on content, incentives, timing, and channels at the moment we deliver a message or experience to an end consumer.
Speaker #3: Speed and scale matter. By keeping consumer profiles continuously updated and queryable, Klaviyo turns real-time consumer activity into tailored messages and experiences delivered instantly. This architecture enables a fundamentally different consumer experience.
Andrew Bialecki: By keeping consumer profiles continuously updated and queryable, Klaviyo turns real-time consumer activities into tailored messages and experiences delivered instantly. This architecture enables a fundamentally different consumer experience. Here's how it works in practice. When, say, a consumer browses their favorite restaurant's website, books a reservation, uses our chat agent to make a modification to that reservation, buys a gift card for a friend while they're there, and then leaves a review, Klaviyo is compiling richer context with every interaction. Who they are, what they browse, products and services they consume, and how they prefer to be contacted. All of this is stored in a single profile. We also expose that progressively built profile at each step, and our system uses that context to deliver the optimal experience.
Speaker #3: Here's how it works in practice. When say a consumer browses their favorite restaurant's website, books a reservation, uses our chat agent to make a modification to that reservation, buys a gift card for a friend while they're there, and then leaves a review, Klaviyo is compiling richer context with every interaction.
Speaker #3: Who they are, what they browse, products and services they consume, and how they prefer to be contacted. All of this is stored in a single profile.
Speaker #3: We also expose that progressively built profile at each step, and our system uses that context to deliver the optimal experience. That live context is immediately available to the system, allowing an agentic customer representative to answer the question, recommend the right product, and follow up with a personalized message on any channel.
Andrew Bialecki: That live context is immediately available to the system, allowing an agentic customer representative to answer the question, recommend the right product, and follow up with a personalized message on any channel, all in real time and all without switching systems or losing context. This means the system is compounding its learning. The more our customers use our system, the smarter it gets for them, and the smarter it gets for the entire ecosystem of customers. Last year, Klaviyo processed half a trillion customer interactions across 8 billion consumer profiles, translating into 3.7 billion daily signals, all feeding decisions and actions that help our customers engage more precisely and drive stronger outcomes. That same foundation fuels the agent layer. We have launched agents, including our Marketing Agent and Customer Agent.
Speaker #3: All in real time, and all without switching systems or losing context. This means the system is compounding its learning. The more our customers use our system, the smarter it gets for them, and the smarter it gets for the entire ecosystem of customers.
Speaker #3: Last year, Klaviyo processed half a trillion customer interactions across 8 billion consumer profiles, translating into 3.7 billion daily signals—all feeding decisions and actions that help our customers engage more precisely and drive stronger outcomes.
Speaker #3: That same foundation fuels the agent layer. We have launched agents, including our marketing agent and customer agent. We've also designed the platform to be open, meaning that customers can use the agent's Klaviyo builds or bring their own.
Andrew Bialecki: We've also designed the platform to be open, meaning that customers can use the agents Klaviyo builds or bring their own. Whether it's external models like Claude interacting through an MCP server or ChatGPT through the Klaviyo app, any agent, any model with all the context from one platform. Our own agents are deeply grounded in domain expertise earned from hundreds of thousands of customers and trillions of data points that generate highly specific revenue-driving output. That combination ensures they don't generate generic output; they make impactful decisions that are trained from relevant, compliant, and effective customer experiences. Bringing this all together, Klaviyo's autonomous B2C CRM is like the central nervous system for AI-driven consumer engagement, connecting reasoning to real customer context and turning it into actions across channels. The result is clear customer impact.
Speaker #3: Whether it's external models like Claude interacting through an MCP server, or ChatGPT through the Klaviyo app, any agent, any model, with all the context from one platform.
Speaker #3: Our own agents are deeply grounded in domain expertise earned from hundreds of thousands of customers and trillions of data points that generate highly specific, revenue-driving output.
Speaker #3: That combination ensures they don't generate generic output. They make impactful decisions that are trained from relevant, compliant, and effective customer experiences. Bringing this all together, Klaviyo's autonomous B2C CRM is like the central nervous system for AI-driven consumer engagement.
Speaker #3: Connecting reasoning to real customer context, and turning it into actions across channels. The result is clear customer impact. Consumer interactions running through Klaviyo generate measurable revenue for our customers.
Andrew Bialecki: Consumer interactions running through Klaviyo generate measurable revenue for our customers, what we call Klaviyo Attributed Value, or KAV. In Q4, KAV continued to outpace business revenue, underscoring the value of running consumer engagement on one unified platform. Customers around the world are already putting the autonomous capabilities built into Klaviyo to work. Marketing Agent is a clear example. More than half of the campaigns created by customers using Marketing Agent are now generated by AI, with many of our customers' agent-generated campaigns performing as well as, and often better than, campaigns created manually, while taking significantly less time to launch. A great example is Adelson. They're an online skincare and beauty store where growth depends on frequent, relevant communication. Using Marketing Agent, a small team can create and send fully on-brand campaigns in minutes instead of hours. The results have been remarkable.
Speaker #3: What we call Klaviyo-attributed value, or KAV. In Q4, KAV continued to outpace business revenue, underscoring the value of running consumer engagement on one unified platform.
Speaker #3: Customers around the world are already putting the autonomous capabilities built into Klaviyo to work. Marketing Agent is a clear example. More than half of the campaigns created by customers using Marketing Agent are now generated by AI.
Speaker #3: With many of our customers' agent-generated campaigns performing as well as, and often better than, campaigns created manually—while taking significantly less time to launch.
Speaker #3: A great example is Atelphone. They're an online skincare and beauty store where growth depends on frequent, relevant communication. Using Marketing Agent, a small team can create and send fully on-brand campaigns in minutes instead of hours.
Speaker #3: The results have been remarkable. Open rates increased by 50%, and revenue per campaign grew by 40%, while allowing the team to run more campaigns without adding additional headcount.
Andrew Bialecki: Open rates increased by 50%, and revenue per campaign grew by 40%, while allowing the team to run more campaigns without adding additional headcount. We see the same positive patterns in service. Customer Agent is live and handling real customer conversations, answering questions, resolving issues, recommending products, and increasingly supporting transactions, all using the same integrated data model as marketing. Since launch, resolution rates have increased by 20 points, with monthly resolution volume increasing by more than 50% since Black Friday, Cyber Monday. LifeStraw is a great example. Using Customer Agent to resolve customer queries with real-time customer and product data, LifeStraw achieved a 111% increase in AI-generated sales from agent recommendations, and an over 100% increase in average order value, and a 75% resolution rate over the last 90 days.
Speaker #3: We see the same positive patterns in service. Customer agent is live and handling real customer conversations. Answering questions, resolving issues, recommending products, and increasingly supporting transactions.
Speaker #3: All using the same integrated data model as marketing. Since launch, resolution rates have increased by 20 points, with monthly resolution volume increasing by more than 50% since Black Friday Cyber Monday.
Speaker #3: Lifestraw is a great example. Using customer agent to resolve customer queries with real-time customer and product data Lifestraw achieved a 111% increase in AI-generated sales from agent recommendations and an over 100% increase in average order value and a 75% resolution rate over the last 90 days.
Speaker #3: Many of these interactions involve technical questions that can't be handled with scripted responses and require deep contextual understanding of their product catalog. Next, we're expanding what these agents can do and where they operate.
Andrew Bialecki: Many of these interactions involve technical questions that can't be handled with scripted responses and require deep contextual understanding of their product catalog. Next, we're expanding what these agents can do and where they operate, adding more channels, with email and WhatsApp in beta and voice coming soon, along with more skills and more control, while keeping everything grounded in the same data, delivery, and measurement infrastructure. Marketing Agent and Customer Agent reinforce one another. Service interactions improve marketing decisions, and marketing activity improves service outcomes. As usage grows, that feedback loop is strengthened. This is the foundation we're building on, a system that scales globally, improves with use, and delivers measurable outcomes for our customers. When people think about AI at Klaviyo, they should think about it in three ways. First, AI is embedded directly into our infrastructure.
Speaker #3: Adding more channels, with email and WhatsApp in beta and voice coming soon. Along with more skills and more control, while keeping everything grounded in the same data, delivery, and measurement infrastructure.
Speaker #3: The marketing agent and customer agent reinforce one another. Service interactions improve marketing decisions, and marketing activity improves service outcomes. As usage grows, that feedback loop is strengthened.
Speaker #3: This is the foundation we're building on—a system that scales globally, improves with use, and delivers measurable outcomes for our customers. When people think about AI at Klaviyo, they should think about it in three ways.
Speaker #3: First, AI is embedded directly into our infrastructure. It uses first-party customer data like behaviors, purchases, and engagement to predict how customers are likely to act, and makes those insights immediately usable across marketing, service, and other customer interactions.
Andrew Bialecki: It uses first-party customer data, like behaviors, purchases, and engagement, to predict how customers are likely to act, and makes those insights immediately usable across marketing, service, and other customer interactions. Second, AI sits on top of that infrastructure in the form of agents that do the work of marketing and customer service, creating campaigns, answering questions, resolving issues, and driving transactions using the same underlying data and execution system. Third, Klaviyo is an open platform embedded in the broader AI ecosystem, providing the real-time customer context and infrastructure LLMs require. Taken together, this gives us a clear view of where customer engagement is headed. Businesses are moving towards more autonomous experiences. As they do, interaction volume and complexity increase, driving demand for infrastructure that can unify, execute decisions, and measure outcomes in one place. That's the role that Klaviyo plays.
Speaker #3: Second, AI sits on top of that infrastructure in the form of agents that do the work of marketing and customer service: creating campaigns, answering questions, resolving issues, and driving transactions using the same underlying data and execution system.
Speaker #3: Third, Klaviyo is an open platform embedded in the broader AI ecosystem. Providing the real-time customer context and infrastructure LLMs require. Taken together, this gives us a clear view of where customer engagement is headed.
Speaker #3: Businesses are moving towards more autonomous experiences. As they do, interaction volume and complexity increase. Driving demand for infrastructure that can unify, execute decisions, and measure outcomes in one place.
Speaker #3: That's the role that Klaviyo plays. We've built the platform that coordinates data, decisions, and execution across the entire customer lifecycle, making autonomous engagement practical, measurable, and scalable for businesses of all sizes.
Andrew Bialecki: We've built a platform that coordinates data, decisions, and execution across the entire customer lifecycle, making autonomous engagement practical, measurable, and scalable for businesses of all sizes. The next era of customer experience will be autonomous, powered by unified data and real-time action. We are making that future accessible to the world's leading consumer brands. I want to thank our customers and our partners for their trust, and I, and I want to thank Klaviyos around the world for their dedication to our customers. We're excited to continue building, investing, and leading as we bring our autonomous B2C CRM platform to businesses of every size. And with that, I'll turn it over to Chano.
Speaker #3: The next era of customer experience will be autonomous, powered by unified data and real-time action. We are making that future accessible to the world's leading consumer brands.
Speaker #3: I want to thank our customers and our partners for their trust. And I want to thank Klaviyos around the world for their dedication to our customers.
Speaker #3: We're excited to continue building and investing in leading as we bring our autonomous B2C CRM platform to businesses of every size. And with that, I'll turn it over to Chana.
Speaker #2: Thanks, Sabi. I'm excited to join you, and thank you all for being with us today. One month into the role, it is clear to me that Klaviyo is built for where the market is going.
Chano Fernandez: Thanks, AB. I'm excited to join you, and thank you all for being with us today. One month into the role, it is clear to me that Klaviyo is built for where the market is going. Real-time data, intelligence that learns from outcomes, and actions across marketing and service that's increasingly autonomous. I've spent my career scaling enterprise technology businesses, and I joined Klaviyo because I see a B2C CRM category transition happening, and a team that knows how to win it. Let me start with enterprise. Enterprises are rethinking how they run customer engagement because their old customers' expectations have changed. They want personalization, immediacy, and experiences that feel seamless as they move across channels. When I talk to these companies, I hear a consistent need. They want one platform that can power the entire customer relationship.
Speaker #2: Real-time data intelligence that learns from outcomes and actions across marketing and service that's increasingly autonomous. I've spent my career scaling enterprise technology businesses, and I joined Klaviyo because I see a B2C CRM category transition happening and a team that knows how to win it.
Speaker #2: Let me start with enterprise. Enterprises are rethinking how they run customer engagement because their customers’ expectations have changed. They want personalization, immediacy, and experiences that feel seamless as they move across channels.
Speaker #2: When I talk to these companies, I hear a consistent need. They want one platform that can power the entire customer relationship. What they have instead are separate databases, separate customer-facing tools, and separate decision engines that weren't designed to work together.
Chano Fernandez: What they have instead are separate databases, separate customer-facing tools, and separate decision engines that weren't designed to work together. The result is slower decisions, inconsistency, and personalization that breaks down as their customers move across channels. The real cause of that fragmentation is yield. When data, decisions, and executions are disconnected, companies leave revenue on the table. This is a massive opportunity for Klaviyo, one we're already capturing and are laser focused on expanding by proving that consolidation produces results. A great example is Cymbiotika, a natural supplement brand. They leveraged segmentation tools during the holiday season to focus on their most engaged audiences. Using Klaviyo, they reduced their email volume by 31% year-over-year, while increasing total revenue by 44%. This strategy nearly doubled their revenue per recipient.
Speaker #2: The result is slower decisions, inconsistency, and personalization that breaks down as their customers move across channels. The real cause of that fragmentation is yield.
Speaker #2: When data decisions and executions are disconnected, companies leave revenue on the table. This is a massive opportunity for Klaviyo. When we're already capturing and are laser-focused on expanding by proving that consolidation produces results.
Speaker #2: A great example is Symbiotica, a natural supplement brand. They leverage segmentation tools during the holiday season to focus on their most engaged audiences. Using Klaviyo, they reduce their email volume by 31% year over year, while increasing total revenue by 44%.
Speaker #2: This strategy nearly doubled their revenue per recipient. Another great example is Proper Hotels, which selected Klaviyo as its scaling luxury hospitality portfolio to gain deeper visibility into its guest database.
Chano Fernandez: Another great example is Proper Hotels, which selected Klaviyo as it scales its luxury hospitality portfolio to gain deeper visibility into its guest database, a stronger attribution across channels, a more robust reporting than traditional hospitality CRMs could provide. Since migrating to Klaviyo in October, Proper has seen overall CRM revenue grow by more than 200% year-over-year. Stories like these illustrate why momentum is building and why large consumer businesses are relying on Klaviyo data, intelligence, and action. Klaviyo's continued investment in AI-driven capabilities, our MCP server, and integrations with LLMs further reinforce our role as a long-term infrastructure partner, enabling more dynamic segmentation, faster experimentation, and increasingly personalized lifecycle messaging. We have our largest enterprise pipeline ever, and it's across verticals and geographies.
Speaker #2: The stronger attribution across channels—a more robust reporting than traditional hospitality CRMs could provide. Since migrating to Klaviyo in October, Proper has seen overall CRM revenue grow by more than 200% year on year.
Speaker #2: Stories like these illustrate why momentum is building and why large consumer businesses are relying on Klaviyo data, intelligence, and action. Klaviyo's continued investment in AI-driven capabilities.
Speaker #2: Our MCP server and integrations with LLMs further reinforce our role as a long-term infrastructure partner, enabling more dynamic segmentation, faster experimentation, and increasingly personalized lifecycle messaging.
Speaker #2: We have our largest enterprise pipeline ever, and it's across verticals and geographies. Importantly, we're seeing this pipeline convert to a more repeatable motion: clearer stage gates, tighter product alignment, and faster time-to-value proofs.
Chano Fernandez: Importantly, we're seeing this pipeline convert to a more repeatable motion, clearer stage gate, tighter product alignment, and faster time to value proofs. In fact, the number of customers generating at least $1 million of ARR doubled last year. Inside Klaviyo, our team is ready for this demand. Over the last several months, we have put more structure into how we work larger opportunities. We're aligning product, sales, and engineering earlier in the process. This approach is allowing us to scale our motion in a repeatable way. We're also continuing to expand our partner network. This includes an exciting new partnership with Accenture, where we're combining Klaviyo's autonomous B2C CRM with their services to drive faster and more integrated customer outcomes for some of the largest brands in the world, like Stanley 1913. We're also strengthening leadership across our go-to-market team.
Speaker #2: In fact, the number of customers generating at least $1 million of ARR doubled last year. Inside Klaviyo, our team is ready for this demand.
Speaker #2: Over the last several months, we have put more structure into how we work larger opportunities. We're aligning product, sales, and engineering earlier in the process.
Speaker #2: This approach is allowing us to scale our motion in a repeatable way. We're also continuing to expand our partner network. This includes an exciting new partnership with Accenture, where we're combining Klaviyo's autonomous B2C CRM with their services to drive faster and more integrated customer outcomes for some of the largest brands in the world, like Stanley, 1913.
Speaker #2: We're also strengthening leadership across our go-to-market team. We hired a new global chief revenue officer, Eric Ferdy, whom I know well and who brings significant experience in enterprise deals.
Chano Fernandez: We hired a new Global Chief Revenue Officer, Eric Fearday, who I know well, and who brings significant experience in enterprise deals. Several key sales roles are also now held by sales leadership with deep enterprise experience. At the same time, we are preserving what makes Klaviyo unique, which is a product-led culture and an engineering mindset that moves fast and solves customer problems. We tell prospective customers, "You can dream it, you can build it on Klaviyo." Internationally is another area where we're seeing increased momentum. Revenue outside the Americas now represents more than 1/3 of the business at the end of Q4. During the last quarter, Klaviyo partnered with Kiko Milano, Italy's number one makeup brand, operating more than 1,300 retail stores across over 70 markets worldwide. Service is becoming a meaningful contributor in these markets as well.
Speaker #2: Several key sales roles are also now held by sales leadership with deep enterprise experience. At the same time, we are preserving what makes Klaviyo unique.
Speaker #2: We have a product-led culture and an engineering mindset that moves fast and solves customer problems. We tell prospective customers: if you can dream it, you can build it on Klaviyo.
Speaker #2: Internationally, it's another area where we're seeing increased momentum. Revenue from the Americas now represents more than one-third of the business at the end of Q4.
Speaker #2: During the last quarter, Klaviyo partnered with KIKO Milano, Italy's number one makeup brand, operating more than 1,300 retail stores across over 70 markets worldwide.
Speaker #2: Service is becoming a meaningful contributor in these markets as well. All of these ties to where customer engagement is going. The shift towards autonomous conversational and agent-driven experiences is happening faster than we could have anticipated just a few years ago.
Chano Fernandez: All of this ties to where customer engagement is going. The shift towards autonomous, conversational, and agent-driven experiences is happening faster than we could have anticipated just a few years ago, and the opportunity that lies ahead, large and exciting. Everything I've seen since joining reinforces my belief that the opportunity ahead is great, and that we're still in the earliest stages. We're building to win. Now, I'll turn it over to Amanda to walk through our financial performance.
Speaker #2: And the opportunity that lies ahead is large and exciting. Everything I've seen since joining reinforces my belief that the opportunity ahead is great, and that we're still in the early stages.
Speaker #2: We're building to win. Now I'll turn it over to Amanda to walk through our financials.
Speaker #2: performance. Thank you, Tono and
Amanda Whalen: Thank you, Chano and AB. 2025 was a defining year for Klaviyo and a clear reinforcement of our position as the autonomous B2C CRM that powers more valuable customer experiences. We delivered strong growth, expanding profitability, and record free cash flow. Our peak season performance demonstrates that businesses rely on Klaviyo to understand their customers in real time and act instantly across channels. For the full year, revenue reached $1.234 billion, up 32% year-over-year. International revenue growth accelerated to 42%. Our largest customers, those contributing more than $50,000 of ARR, grew over 37%. Our new service category is the fastest growing product launch in our history, and this broad-based strength drove NRR to 110%, a year-over-year expansion of more than 200 basis points. Q4 was a standout quarter.
Speaker #1: 2025 was a defining year for Klaviyo, and a clear reinforcement of our position as the autonomous B2C CRM that powers more valuable customer experiences.
Speaker #1: We delivered strong growth, expanding profitability, and record free cash flow. Our peak season performance demonstrates that businesses rely on Klaviyo to understand their customers in real time and act instantly across channels.
Speaker #1: For the full year, revenue reached $1.234 billion, up 32% year over year. International revenue growth accelerated to 42%. Our largest customers, those contributing more than $50,000 of ARR, grew over 37%.
Speaker #1: Our new service category is the fastest-growing product launch in our history. And this broad-based strength drove NRR to 110%, a year-over-year expansion of more than 200 basis points.
Speaker #1: Q4 was a standout quarter. We delivered revenue of $350 million, up 30% year over year, driving our annualized revenue run rate to $1.4 billion.
Amanda Whalen: We delivered revenue of $350 million, up 30% year-over-year, driving our annualized revenue run rate to $1.4 billion. Q4 was defined by the shift toward autonomy and a validation of our model. Customers increase spend with us because we are the engine of their growth. Customers are leveraging data and AI to move from broad-based volume to precision targeting, focusing on smaller, higher intent audiences. This shift drove superior outcomes for our customers, because an automated flow drives, on average, over 10 times more revenue per message than a static campaign. We saw particular momentum in mobile, with over 29% of SMB plus customers now utilizing Text and WhatsApp. Let's look at our growth engines. We are successfully delivering on our growth strategy by adding more products and channels, more countries, and larger customers.
Speaker #1: Q4 was defined by the shift toward autonomy and a validation of our model. Customers increased spend with us because we are the engine of their growth.
Speaker #1: Customers are leveraging data and AI to move from broad-based volume to precision targeting, focusing on smaller, higher-intent audiences. This shift drove superior outcomes for our customers.
Speaker #1: Because an automated flow drives on average over 10 times more revenue per message than a static campaign. We saw particular momentum in mobile, with over 29% of SMB plus customers now utilizing text and WhatsApp.
Speaker #1: Let's look at our growth engines. We are successfully delivering on our growth strategy by adding more products and channels, more countries, and larger customers.
Speaker #1: AI acts as a multiplier, accelerating our momentum. In Q4, each of our growth engines delivered meaningful progress. This dynamic accelerated our NRR to 110%.
Amanda Whalen: AI acts as a multiplier, accelerating our momentum. In Q4, each of our growth engines delivered meaningful progress. This dynamic accelerated our NRR to 110%. NRR strength was driven by expanded usage of our email and text products, cross-sell of text messaging and WhatsApp, and the scaling of marketing, analytics, and service. There was also contribution from the profile enforcement change we made in February. Service is on the steepest adoption curve in our company's history. From $1 million businesses to $100 million enterprises, high ROI personalization and real-time action resonates at every scale. The data confirms the success of our multi-product strategy. 60% of our ARR now comes from multi-product customers. With consolidation accelerating, over 15% of our ARR now comes from customers adopting at least three products.
Speaker #1: NRR strength was driven by expanded usage of our email and text products, cross-sell of text messaging and WhatsApp, and the scaling of marketing analytics and service.
Speaker #1: There was also contribution from the profile enforcement change we made in February. Service is on the steepest curve in our adoption company's history.
Speaker #1: From $1 million businesses to $100 million enterprises, high ROI, personalization, and real-time action resonates at every scale. Personalization history from $1 million businesses to $100 million enterprises—high ROI, personalization, and real-time action resonates at every scale.
Speaker #1: The data confirms the success of our multi-product strategy . 60% of our IRR now comes from multi-product customers , with consolidation accelerating 15% of our IRR , over customers mix least three products .
Amanda Whalen: This mix continues to shift upwards as brands recognize the strategic value of unifying on a single platform. Half Magic demonstrates this value. By consolidating marketing, service, and analytics on Klaviyo, this fast-growing beauty brand drove a 5 times increase in repeat purchasers and 110% growth in automation revenue over 12 months, plus 2 times higher average order value from orders attributed to our customer. We are aggressively expanding our addressable market. Q4 was a standout period for mid-market and enterprise momentum, highlighted by wins, including Kiko Milano and Bayer, and expansions like TaylorMade and Nine West. Our customers with greater than $50,000 in ARR increased by 37% year-on-year to 3,912. We added 349 net new 50K customers in the cohort, beating our previous record by over 25%.
Speaker #1: from This now comes continues to shift upwards as brands recognize the a single value of unifying on platform . Half magic demonstrates this value by consolidating marketing , service analytics on Klaviyo .
Speaker #1: This growing beauty brand drove a five-times increase. You saw that attributed to orders, customer, our... We are aggressively expanding our addressable market.
Speaker #1: Q4 was a standout period for mid-market and enterprise momentum, highlighted by wins including Kiko Milano and Bayer, and expansions like TaylorMade and Nine West.
Speaker #1: Our customers with greater than $50,000 in RR increased by 37% year on year to 3912 . We added 349 new net new 50 K customers in the cohort , beating our previous by record over 25% .
Amanda Whalen: International is strong, with revenue outside the Americas growing 41% year-over-year in Q4, led by strength in Italy, Spain, and Portugal, alongside traction with global brands like Bayer and Kiko Milano. Our business model is fundamentally aligned with customer success. Because we price based on the number of active profiles and usage rather than seats, our revenue scales naturally as customers use more data, adopt more tools, and drive more value. As customers integrate AI-driven workflows, interaction volume increases, flowing through our platform and deepening the alignment between customer value creation and our long-term growth. Turning to our financial performance. Non-GAAP operating income for the quarter was $51 million, representing a 15% non-GAAP operating margin. This reflects a 900 basis point expansion year-over-year, or 400 basis points, excluding the impact of last year's bonus implementation.
Speaker #1: International is strong , with revenue outside the Americas growing 41% year over year in Q4 , led by strength in Italy , Spain and Portugal , alongside traction with global brands like Bear and Kiko Milano .
Speaker #1: Our business model is fundamentally aligned with customer success because we price based on the number of active profiles and usage, rather than seats.
Speaker #1: Our revenue scales naturally as customers use more data, adopt more tools, and drive more value. As customers integrate AI-driven workflows, volume increases.
Speaker #1: Interaction increases , flowing platform deepening and through our the alignment between customer value creation and our long term growth . Turning to our financial performance , non-GAAP operating income for the quarter was $51 million , representing a 15% non-GAAP operating margin .
Speaker #1: This reflects a 900 basis point expansion year over year , or 400 basis points , excluding the impact of last year's bonus implementation .
Amanda Whalen: We delivered a non-GAAP gross margin of 73% in Q4, consistent with the anticipated seasonal mix shift toward higher text messaging and WhatsApp volumes. Our underlying infrastructure efficiency is providing increasing leverage. This operational scale significantly mitigated the margin impact of text messaging and WhatsApp, resulting in a sequential improvement in the year-over-year gross margin trajectory throughout the fiscal year. Operating discipline remains a priority. Non-GAAP operating expenses were 58% of revenue, our lowest level since the IPO. AI is driving meaningful internal productivity, enabling faster development cycles without commensurate headcount growth. Free cash flow surged 61% year-over-year to $87 million. This was driven by strong flow-through from operating income and record collections, highlighting the high quality of our earnings. For the full year, the strength of our business model is clear.
Speaker #1: We delivered a non-GAAP gross margin of 73% in the fourth quarter , consistent with the anticipated seasonal mix shift toward higher text messaging and WhatsApp volumes .
Speaker #1: Our underlying infrastructure efficiency is providing increasing leverage . This operational scale significantly mitigated the margin impact of text messaging and WhatsApp , resulting in a sequential improvement in the year over year gross margin trajectory throughout the fiscal year .
Speaker #1: Operating priority discipline remains a . non-GAAP operating expenses were 58% of revenue . Our lowest level since the IPO . AI is driving meaningful internal productivity , enabling faster development cycles without commensurate headcount growth .
Speaker #1: Free cash flow surged 61% year over year to $87 million. This was driven by strong flow-through from operating income and record collections, highlighting the high quality of our earnings.
Amanda Whalen: Non-GAAP operating income was $169 million, a 14% non-GAAP operating margin, which was up 170 basis points year-over-year. We delivered a free cash flow margin of 16%, continuing to outpace operating margins, and we surpassed $1 billion in cash on hand for the first time. Momentum heading into 2026 is strong, and we are raising our full-year 2026 guidance. We now project revenue between $1.501 billion and 1.509 billion, representing 21.5% to 22.5% year-on-year growth. This is driven by high quality expansion within our install base and the continued scaling of new products. Importantly, our 2026 outlook is de-risked. It assumes minimal revenue contribution from our newest AI and service products.
Speaker #1: For the full year , the strength of our business model is clear . non-GAAP operating income was $169 million , a 14% non-GAAP operating margin , which was up 170 basis points year over year .
Speaker #1: We delivered a free cash flow margin of 16%, continuing to outpace margins, and we surpassed $1 billion in cash on hand for the first time.
Speaker #1: Momentum heading into 2026 is strong, and we are raising our full year 2025 guidance. We now project revenue between $1.5 billion and $1.6 billion.
Speaker #1: $9 billion , representing 21.5 to 22.5% year on year growth . This is driven by high quality expansion within our install base and the continued scaling of new products .
Speaker #1: Importantly, our 2026 outlook is de-risked. It assumes minimal revenue contribution from our newest AI and service products. We view these innovations as embedded upside that reinforce the durability of our growth runway.
Amanda Whalen: We view these innovations as embedded upside that reinforce the durability of our growth runway. We expect continued operating margin expansion. For 2026, we project non-GAAP operating income of $218 to 224 million, a non-GAAP operating margin of approximately 14.5% to 15%. Our business model enables us to reinvest in growth while simultaneously delivering profitability. We are a growth company who remains disciplined in striking the right balance, leveraging our operational rigor to fuel reinvestment, ensuring we capture the opportunity ahead and deliver growth over the long term. For Q1, we expect revenue of $346 to 350 million, representing growth of 23.5% to 25%, and non-GAAP operating income of $50 to 53 million, or a non-GAAP operating margin of 14.5% to 15%.
Speaker #1: We expect continued operating margin expansion for 2026. We project non-GAAP operating income of $218 to $224 million, operating at a non-GAAP margin of approximately 14.5% to 15%.
Speaker #1: Our business model enables us to reinvest in growth while simultaneously delivering profitability . We are a growth company who remains disciplined in striking the right balance , leveraging our operational rigor to fuel reinvestment , ensuring we capture the opportunity ahead and deliver growth over the long term .
Speaker #1: For Q1, we expect revenue of $346 to $350 million, representing growth of 23.5% to 25%, and non-GAAP operating income of $50 to $53 million, or non-GAAP operating margin of 14.5% to 15%.
Amanda Whalen: On linearity, we expect revenue similar to 2025, weighted towards the second half due to seasonality and product ramps. Operating income will also follow a similar first half and second half cadence as 2025. As our business continues to grow and our scale increases, our visibility into the core has sharpened. Our outlook reflects high confidence in the baseline while maintaining a prudent approach regarding the timing of upside from new initiatives. In summary, Klaviyo is ushering in the era of autonomous consumer experiences with our market-leading B2C CRM. We are the engine helping businesses turn real-time data into intelligence and action. Customer experience is already becoming autonomous, unified, and real time, and Klaviyo is the actionable infrastructure powering that shift at scale. Before I open it up to questions, I want to leave you with three key takeaways.
Speaker #1: On linearity, we expect revenue similar to 2025, weighted towards the second half due to seasonality, product, and ramps. Operating income will also follow a similar first half and second half cadence as 2025.
Speaker #1: As our business continues to grow and our increases, scale, our visibility into the core has sharpened. Our outlook reflects high confidence in the baseline.
Speaker #1: While maintaining a prudent approach regarding the timing of upside from new initiatives . In summary , Klaviyo, Inc. is ushering in the era of autonomous consumer experiences with our market leading B2C , CRM .
Speaker #1: We are the engine helping businesses turn real time data into intelligence and action . Customer experience is already becoming autonomous , unified , and real time and Klaviyo is the actionable infrastructure powering that shift at scale .
Amanda Whalen: First, AI increases the speed, quality, and reach of consumer engagement, and customers are relying on Klaviyo to deliver that engagement. Second, our advantage is structural. Our infrastructure is what allows agents and AI tools to operate consistently as volume and complexity increase. And third, our model is built for this moment. Klaviyo is a revenue yield engine. As AI increases the volume and sophistication of consumer engagement, value creation, and our growth scale together. With that, we'll open it up to call for questions.
Speaker #1: Before I open it up to I want to questions , leave you with three key takeaways . First , AI increases the speed , quality , and reach of consumer engagement and customers are relying on Klaviyo to deliver that engagement .
Speaker #1: Second , our advantage is structural . Our infrastructure is what allows agents and AI tools to operate consistently as volume and complexity increase .
Speaker #1: And third , our model is built for this moment . Klaviyo is a revenue yield engine as AI increases the volume and sophistication of consumer engagement , value creation , and our growth scale together .
Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question. For any additional questions, please requeue. And your first question comes from Ryan McWilliams with Wells Fargo. Please go ahead.
Speaker #1: With that , we'll open it up . The call for questions .
Speaker #2: Thank you . We will now begin the question and answer session . To ask a question , please press star one on your telephone keypad to raise your hand and join the queue .
Speaker #2: And if you'd like to withdraw that question again, press star one. We also ask that you limit yourself to one question.
Speaker #2: For any additional questions , please requeue . And your first question comes from Ryan Wells with McWilliams Fargo . ahead Please go .
Michael Berg: Hey, this is Cyrus on for Ryan. Thank you for taking my question. What was the impact from the portfolio enforcement change in the quarter? I just have one quick follow-up on SMS.
Speaker #3: Hey, this is Cyrus on for Ryan. Thank you for taking my question. What was the impact from the portfolio enforcement change in the quarter?
Andrew Bialecki: Sure. Could you ask the question, the portfolio change?
Speaker #3: And I just have one quick follow-up on SMBs.
Amanda Whalen: Sure.
Andrew Bialecki: The portfolio enforcement change, yeah.
Amanda Whalen: Yeah. In NRR, if we take a step back, there's three big impacts or three big drivers of NRR. The first and largest is the impact of growing usage of our platform and across our email and SMS products. The second is increasing cross-sell of our text messaging and newer products, including marketing, analytics, and service. And then we did have impact on, of, or, contribution from portfolio or the profile enforcement that happened in February, but that was the smallest of the three. What we're really proudest of this quarter is the way that our customers are using Klaviyo to drive higher quality outcomes.
Speaker #4: Could you Sure . ask the question of portfolio change ?
Speaker #1: In RR , if we take a step back , there's three big impacts or three big drivers of Gnrh-r . The first and largest is the impact of growing usage of our platform across our email and SMS products .
Speaker #1: The second is increasing cross-sell of our text messaging and newer products , including marketing , analytics and service . And then we did have impact on of or contribution from portfolio or the profile enforcement that happened February , the in smallest of the three .
Speaker #1: What we're really proudest of this quarter is the way that our customers are using Klaviyo to drive higher quality outcomes. They're seeing increases in the returns that they're seeing on each message because they're doubling down on automation and doubling down on high-value messages. Those automated flows are driving up to 10 times more revenue per message compared to a more static campaign.
Amanda Whalen: They're seeing increases in their returns that they're seeing on each message because they're doubling down on automation and doubling down on high value messages that drive with those automated flows, up to 10 times more revenue per message compared to a more static campaign. We're also seeing strong success in that cross-sell, with over 29% now of our customers in the SMB plus category, using SMS and our text messaging products. Service, as we've said, is off to a really strong start. So multiple levers contributing there to NRR over the coming year.
Speaker #1: We're also seeing strong success in that , with over 29% now of our customers and SMB plus category using SMS and our text messaging products and service .
Speaker #1: As we've said , is off to a really strong start . So multiple levers contributing there to Gnrh-r over the coming year .
Michael Berg: Perfect. Thank you. And on SMS, how did SMS perform in the quarter versus expectations? I know the Black Friday, Cyber Monday statistics you guys put out were very strong, so how did that compare with your internal expectations, and how can we think about that going into 2026?
Speaker #3: Thank you . And Perfect . on SMBs , versus how did SMBs quarter in the perform expectations ? I know the Black Friday , Cyber Monday statistics .
Speaker #3: You guys put out were very strong. So how did that compare with your internal, can we say, expectations, and how do you think about that going into 2026?
Andrew Bialecki: Yeah, I could take that. So, you know, as Amanda said, people are getting more out of the profiles. They're building better relationships, you know, so that's, that's causing them to store more profiles. But SMS, very strong. It's some of the things you cited. You know, one thing that's happening with text messaging is we're undergoing a real transition here from SMS to RCS, which allows for much better experiences. So you can think about branded accounts, the ability to embed richer media, carousel, even take actions directly from within a text message. So we look at that as there's a lot of upside there.
Speaker #4: Yeah , I can take that . So , you know , as Amanda said , people are getting more out of the profiles of building better relationships .
Speaker #4: And so that's that's causing them to store more SMBs . Very strong . It's some of the things you cited . You know , one thing that's happening with text messaging is we're undergoing a real transition here from SMBs to RCS , which allows for much better experiences .
Speaker #4: You can think about branded accounts, the ability to embed richer media carousels, and even take actions directly from a text message.
Andrew Bialecki: One thing I'm very proud of our team is we've gotten close to customers, and we've really designed some really compelling experiences, where text messaging, I mean, not only can you now even, say, browse an entire, almost website, a whole catalog, we're getting close to where you can even almost make buying decisions directly from RCS and text messaging. So I think there's a lot of upside to that channel. And I, in parallel, you know, we launched WhatsApp generally in the last few months, and similarly, while WhatsApp is used more internationally, we're seeing a very similar pattern. The types of experiences that you can build, again, with richer media, you know, allowing people to browse more of, say, products and services directly from a message or from a thread, that's working really well.
Speaker #4: So we look at that as there's a lot of upside there . One thing I'm very proud of our team is we've gotten close to customers and we've really designed some really compelling experiences for text messaging .
Speaker #4: I mean , not you now even only can say , browse an entire , website , a whole catalog , we're getting close to where you can even almost buying decisions directly from RCS and text messaging .
Speaker #4: So I think there's a lot of upside to that channel . And I , in parallel . You know , we launched WhatsApp generally in the last few months .
Speaker #4: And similarly , while WhatsApp is used more internationally , we're seeing a very similar pattern . The types of can experiences that you build again , with richer media , you know , allowing people to browse more of , say , products and services directly from a message or from a thread that's working really well .
Andrew Bialecki: And then the last thing, you know, we talked about Customer Agent and this idea of having this helpful assistant that's always on, that's powered by Klaviyo. Those now integrate directly into text messaging and WhatsApp. So we're also seeing a lot of consumers are asking follow-up questions, and that's, you know, that's driving usage of both our Customer Agents as well as more adoption of those channels. And obviously, consumers are going to go where they can get the best experience. So they're. We're kind of normalizing this idea that you can have a conversation with a business, not just over a chat interface, but also in your text messages, or inside of WhatsApp.
Speaker #4: And last then the thing you know , we talked about customer agent and this idea of having this helpful assistant that's always on , that's powered by Klaviyo, Inc. those now integrate directly into text messaging and WhatsApp .
Speaker #4: So we're also seeing a lot of consumers are asking follow up questions . And that's you know , that's driving usage of both our customer agent as as more adoption of those channels .
Speaker #4: And obviously consumers are going to go where they can get the best experience . So we're kind normalizing of this idea that you can have a conversation with business , a not just chat interface , but also in in your text messages or inside of WhatsApp .
Operator: Your next question comes from the line of Elizabeth Porter with Morgan Stanley. Please go ahead.
Katie Keyser: Awesome. Thanks. This is Katie Keezer on for Elizabeth. Maybe on the service opportunity, can you give us a little bit more visibility into adoption and engagement trends by cohorts, specifically when we're thinking SMB versus mid-market versus enterprise? Is adoption there skewing more towards the agent side relative to the help desk in any of those cohorts? And then maybe just translating that into the model. Amanda, definitely heard you that the guidance is de-risk, but just any color you can provide on what level of service contribution is actually embedded within the $26 guide would be great. Thanks so much.
Speaker #2: Your next question comes from the line of Elizabeth Porter with Morgan Stanley . Please go ahead .
Speaker #5: Awesome . Thanks . This is Katie Kizer on for Elizabeth . Maybe maybe on the service opportunity . Can you give us a little bit more visibility into adoption and engagement trends by cohorts .
Speaker #5: Specifically when we're thinking SMB versus mid-market versus enterprise is there adoption skewing more towards the agent side relative to the help desk in any of those cohorts ?
Speaker #5: And then maybe just translating that into the model. Amanda, definitely heard you that it is de-risked, but just any color you can provide on what level of service contribution is actually embedded within the '26 guide would be great.
Andrew Bialecki: Okay, so I'll tell you a little bit of what I'm hearing from customers, and I'll let Amanda comment on, you know, the, embedding into our model. So the first with service, we talked about Customer Agent. Our belief is that every business is going to have this digital representative, this Customer Agent, and we think Klaviyo is very well positioned to offer that. Because of the data set that we have around who your customers are for the businesses that we work with, and our ability to store that data and access it in real time, and also just the broad set of customer experiences that we've already powered, and using that to train, and make our Customer Agent better for each of the businesses that we serve.
Speaker #5: Thanks so much .
Speaker #4: Okay, I'll take you through a little bit of what I'm hearing from customers, and I'll touch on the embedding into our model, the service we talked about. So, the first is with customer agent.
Speaker #4: I our that belief is business is going this digital representative , this customer think agent . And we is very well positioned to offer that because of the data set that we have around who your customers are , for the businesses that we work with and our ability to store that data and access it in real time .
Speaker #4: And also just the broad set of customer experiences that we've already powered . And using that to train and make our customer agent better for each of the businesses that we serve .
Andrew Bialecki: So we mentioned some examples, you know, of businesses that are already adopting Customer Agent. We're seeing adoption from our entrepreneurs and SMB customers all the way up into our mid-market enterprise customers. You know, just as an example, I was talking with a customer the other day, it was a high-end, you know, fashion brand, and they were telling me a story about how their Customer Agent closed a sale for an $800 dress, without anybody, you know, any, any interaction from anybody on their team. And they're, they're starting to see that as the new normal. So we're very excited about this. I think, you know, adoption, when I talk to customers, there's really two rate limiters, and we're working on both of these.
Speaker #4: So we mentioned some examples . Of businesses that are already adopting customer agent . We're seeing adoption from our entrepreneurs and SMB customers all into our the way up mid-market enterprise customers .
Speaker #4: Just as an example , I was talking with a customer the other day . It was a high end , fashion brand , and they were telling me a story about how their customer agent closed the sale an for $800 dress without anybody , you know , any interaction from anybody on their team .
Speaker #4: And they're starting to see that as the new normal . So we're very excited about this . think I adoption , when I talk to customers , there's really two rate limiters .
Andrew Bialecki: The first is they say, "Hey, they're not sure how to train up an agent." So, you know, when you think of a lot of companies are understanding how to do that, we're actually building technology that, one, will teach you how to do that, but also will automatically do it. So out of the box, you know, our agents are already really, really good. That's especially important, you can think about for entrepreneur and SMB customers and gives us a good platform, you know, for our mid-market enterprise customers, where they can get a really high-quality agent, you know, in a very short amount of time. And the second one is that they're nervous about, like, hey, the quality of the responses.
Speaker #4: And we're working on both of these. The first is, they say, hey, they're not sure how to train up an agent.
Speaker #4: So , you know , we think of a lot of companies are understanding how to do that . We're technology that one will teach you how to do that , but also will automatically do it .
Speaker #4: So out of the box , you know , our agents are already really , really good . That's especially important . You can think about for entrepreneur and SMB customers and gives us a good platform for our mid-market enterprise customers where they can get a really high quality agent in a very short amount of time .
Andrew Bialecki: So again, product that we're building in is the ability to, frankly, generate a bunch of, you know, simulated conversations and show those to our customers, so they can get comfortable that the quality is really high. So as we continue to push on the product and our ability to deliver that, I think we're gonna find that everybody's gonna have a Customer Agent, and, you know, obviously, we want it to run on top of Klaviyo. Mandy, more comments on the guide?
Speaker #4: And the second one is that they're nervous about, like, hey, the quality of the responses. So again, the product that we're building in is the ability to, frankly, generate a bunch of simulated conversations and show those to our customers so that they can get comfortable with it.
Speaker #4: The quality is really high . So as we continue to push on the product and our ability to deliver that , I think we're going to find everybody's going to have a customer agent .
Amanda Whalen: Yeah. In terms of the guide, there is minimal contribution from service built in. The way that we think about it is it's embedded upside in the model. We're seeing the strong traction and the strong customer response that AB just talked about. But we'll build that in over the course of the year as we see the results there continue to build and grow. We're just early in that product adoption cycle. So if you take a step back and think about our guide for next year, we're going into fiscal 2026 from a position of strength. Our guide is a strong baseline that reflects the momentum that we're seeing across our core business, in international, in mid-market, and enterprise, and with new products that we're continuing to introduce.
Speaker #4: And obviously, we want it to run on top of Klaviyo, Inc. Do you want to comment on the guide?
Speaker #1: Yeah . In terms guide of the minimal , there is contribution from service built in that we think the way about it is it's embedded upside in the model .
Speaker #1: We're seeing the strong traction and the strong customer response that Abby just talked about. But we'll build that in over the course of the year.
Speaker #1: As we see the results there continue to and grow . build We're just early in that product adoption cycle . So if you take a step back and think about our guide for next year , we're going into fiscal 2026 from a position of strength .
Speaker #1: Our guide is a strong baseline that reflects the momentum that we're seeing across our core business . In international . In mid-market and enterprise , and with new products that we're continuing to introduce .
Amanda Whalen: That has the opportunity to only continue to accelerate as we gain momentum from not only our new service products, but also the new AI products that we're introducing as well.
Speaker #1: that has And the opportunity to only continue to accelerate as we gain momentum from not only our new service products , but also the new AI products that we're introducing as well .
Operator: Your next question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.
Gabriela Borges: Hey, good afternoon. Thank you. AB, I noticed throughout your prepared remarks, there's this theme about context and some of the proprietary context that Klaviyo has. My question to you is, what is the limiting factor to an LLM or an AI native company spinning up alongside of you and somehow replicating or otherwise accessing that co-context through API, such that it diminishes your moats or your barrier over time? Maybe just a little bit on the limiting factor to someone else abstracting your context. Thank you.
Speaker #2: Next, your question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.
Speaker #6: Hey , good afternoon . Thank you . Abby , I noticed throughout your prepared remarks there's this theme about context and some of the proprietary context that Klaviyo has .
Speaker #6: My question for you is , what is the limiting factor to an LLM or an AI native company spinning up alongside of you and somehow replicating or otherwise accessing that context through API such that it diminishes your barrier over time ?
Andrew Bialecki: Yeah, thanks for the question, Gabriela. So I get this a lot of, Hey, you know, how easy is it to rebuild Klaviyo or what, you know, what gives you that advantage? So let me say this, like, we've looked at we've designed Klaviyo to be ready for this agentic era, or as we talk about this, you know, everybody's building agents and this autonomy, that's gonna sit on top of the, you know, infrastructure that exists. There's two things that give us a lot of confidence here. The first is, we already have this great data set. We talked about half a trillion data points just last year, trillions over the course of Klaviyo's history, and obviously, it's expanding every single day. You know, we said almost 4 billion new signals that we get every single day.
Speaker #6: Maybe just a little bit on the limiting factors of someone else abstracting your context . Thank you .
Speaker #4: Yeah , thanks for the question , Gabriel . So I get this . A lot of hey , you know , how easy is it to rebuild Klaviyo or what ?
Speaker #4: know You , what gives you that advantage ? So let me say this . We've looked at we've designed klaviyo to be ready for this Agentic era .
Speaker #4: Or as we talk about this , you know , building everybody's this agents and autonomy that's going to sit on top of , you know , infrastructure that exists .
Speaker #4: There's two things that give us a lot of confidence here . The first is we already have this great data set . We talked about half a trillion data points just last year , trillions over the course of history .
Andrew Bialecki: The signals for us are really, it's not just data points about what customers are doing, but it's also how they're interacting with the experiences that Klaviyo powers. So you can think about every message, whether it's an email, a text message, a WhatsApp, a mobile notification, every experience with our Customer Agent. Not only do we have AI that's designing that and tuning it, but it's also learning from that data set about what works best, and then using, you know, reinforcement learning and other techniques to improve itself. So first is the data. The second is, frankly, our infrastructure. You know, when you think about our database, we designed it specifically for these real-time use cases.
Speaker #4: And obviously expanding every single day . You know , we said almost 4 billion new signals that we get every single day . And and the signals for us are really it's not just data points about what customers are doing , but it's also how they're interacting with the experiences that klaviyo powers .
Speaker #4: So you can think about every message , whether it's an email , a text message , a WhatsApp , a mobile notification , every experience with our customer agent .
Speaker #4: Not only do we have AI , that's designing that and tuning it , but it's also learning that data from set about what works best and then using reinforcement learning and other techniques to improve itself .
Speaker #4: So first is the data . The second is frankly , our infrastructure . You know , when you think about our database , we designed it specifically for these real time use very It's cases .
Andrew Bialecki: It's very hard not only to store data, but to index it and serve it, such that every time a page loads, every time a message needs to be sent, you can query specific attributes about a person or specific things that they've done, and make decisions in real time, in milliseconds, and integrate that into the experience. That combined, that data infrastructure, combined within our messaging infrastructure, its ability to make sure you're compliant, pick the right channel, embed that personalization all in real time, I think those two bits, the data plus the infrastructure, are really what set us apart.
Speaker #4: hard not only to store data but to index it . serve And it such that every time a loads , every time a page message needs to be sent , you can query specific attributes about a person or specific things that they've done and make decisions in real time in milliseconds .
Speaker #4: And integrate that into the experience that combine that data infrastructure combined with our messaging infrastructure , its ability to make sure you're compliant , pick the right channel , embed that personalization all in real time .
Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead.
Speaker #4: I think those two bits, the data plus the infrastructure, are really what set us apart.
Raimo Lenschow: Perfect. Thank you. I'll stick to the one question. Chano, it's good to connect again. The one question I got from investors, though, was that, you know, we all know you as kind of co-CEO of Workday, et cetera, which is kind of more upmarket enterprise. Can you talk a little bit about, you know, how that fits in here at Klaviyo, which is kind of more slightly lower end, not lower end, but you know what I mean, like, more SMB space? Like, you know, how, how is the, the skill set that you bring kind of help here? Thank you.
Speaker #2: You next question comes from the line of Raimo Lenschow with Barclays . Please go ahead .
Speaker #7: Perfect . Thank you . I stick to the one question channel . It's good to connect again . The one question I got from investors though was that , you know , we all know you as kind of co-CEO kind of , workday , etc.
Speaker #7: , which is more up market enterprise . Can you talk a little bit about , you know , how that fits in here at Klaviyo , which is kind of more slightly lower end , not low end , but you know what I mean ?
Speaker #7: Like more SMB space , like , you know how the skill set that you bring kind of help here . Thank you .
Chano Fernandez: Thank you, Raimo. It's great talking to you again and connecting again, right? I guess there would be two dimensions, right? One is, obviously, my background is more scaling up enterprise businesses. The second one, I would say, is operational strength and how we're bringing some better operational cadence in terms of scaling a more predictable, more predictable the business as a whole, right? So I would say my focus is on both, right? We've commented that on the enterprise, we are really excited about the opportunity. We talk about, you know, our best pipeline ever, and also last year we doubled the number of customers over 1 million ARR, and we're putting the experience in terms of the go-to-market leadership. We're investing on the compliance and the governance to serve, and I believe the momentum is, is very clear, right?
Speaker #8: Thank you . Raimo , it's great talking to you again . And connecting again . Right . I guess there would be two dimensions , right ?
Speaker #8: One is obviously my background is more scaling up enterprise businesses . And the second one , I would say is operational strength and how we're bringing some better operational cadence in terms of scaling up more predictable , more predictable .
Speaker #8: The business as a whole , right . So I would say my focus is on both , right . We commented that on the enterprise , we are really excited about the opportunity .
Speaker #8: We talk about , you know , our best pipeline ever . And also last year we doubled the number of customers over 1 million IRR .
Speaker #8: And we are putting the experience in terms of the market go to the leadership . We're investing on compliance and the governance to serve .
Chano Fernandez: In terms, more on the experience itself, on the operational side, I would say first, you know, we're focusing on using AI internally as much as we use externally, and there is some amazing productivity gains that are already seen in some of our numbers. We are focusing on creating much better operational alignment across product engineering and go-to-market, so we keep decisions going fast and execution going at the speed of light these days, right? And as I just mentioned as well, getting up to that enterprise readiness. So all that, hopefully, that contributes, drawing on my previous co-CEO experience. I'm clearly very excited to be part of the journey here, at a company that I've been familiar with now from the board for the last few years as well.
Speaker #8: And I believe the momentum is is very clear , right . In terms more on the on the experience itself , on the operational would side , I say first , you know , we're focusing on using AI internally as much as we use externally .
Speaker #8: And there are some amazing productivity gains that are already seeing in some of our numbers . We are focusing on creating much better operational alignment across product engineering and go to market .
Speaker #8: So we keep decisions going fast and execution going at the speed of light . At these days , right . And as I mentioned as well , getting up to that enterprise readiness .
Speaker #8: So all that hopefully that contributes . Seeing as my previous , you know , co-CEO experience , I'm clearly very excited to be part of the journey here .
Operator: Your next question comes from the line of DJ Hynes with Canaccord. Please go ahead.
Speaker #8: And a company that I've been familiar with now from the board for the last few years as well .
Andrew Bialecki: Go ahead.
DJ Hynes: Hey, thank you, guys. Congrats on the really strong results, and appreciate all the comments around kind of the infrastructure advantages that you have. AB, I was hoping maybe you could talk a little bit about the Accenture partnership and kind of what they see in Klaviyo. I mean, when I hear of these GSI relationships, I think, you know, their services work, that seems a little bit at odds with kinda your core model. So just talk about kinda what they see in Klaviyo and how you can leverage their reach to help build the business.
Speaker #2: line of from the Your next DJ with go Hynes Go ahead . Please Canaccord . ahead .
Speaker #9: Hey, thank you, guys. Congrats on the really strong results, and I appreciate all the comments around kind of the infrastructure advantages that you have.
Speaker #9: I was hoping maybe you could talk a little bit about the Accenture partnership and kind of what they see in Klaviyo . I mean , when I , when I hear of these GSI relationships , I think , you know , other services work that seems a little bit at odds with kind of your , your core model .
Speaker #9: So just talk about kind of what they see in Klaviyo and kind of how you can leverage their reach to help build the business .
Andrew Bialecki: Yeah, let me make a couple comments about with Accenture. Oh, that was...
Speaker #4: Yeah. Let me make a couple comments about what we see with venture. That...
Raimo Lenschow: Okay.
Ryan Flynn: DJ, could you just mute your line? I think there's some echo. Okay, go ahead, AB.
Andrew Bialecki: Okay, I'll try. So with Accenture and how we're thinking about partners generally, look, this AI era and this building, you know, building out customer experiences that are designed and delivered by AI, we think it's gonna require a whole bunch of new skills and new services that tens of millions of businesses around the world, and certainly the largest enterprises in the world, are gonna need help adopting. So I'm very excited with, you know, the work that, the conversations I've had with Accenture about what these new practices will be.
Speaker #1: DJ could you just mute your line ? think there's I some echo . Okay . Go ahead .
Speaker #4: Okay . I'll try . So with Accenture and how we're thinking about partners generally , this look this AI this era and building building out experiences that customer are designed and delivered by AI .
Speaker #4: We think it's going to require a whole bunch of new skills and new services that tens of millions of businesses around the world , and certainly the largest enterprises in the world , are going to need help adopting .
Andrew Bialecki: And I think it's, you know, when it comes to our Marketing Agent and designing, you know, sub-agents within that, that will help look through your marketing, define gaps, help surface those, then create the right creative, all the way to our Customer Agent, helping that, you know, tune various experiences, you know, maybe based on what's worked in the past. We think there's a ton of new work for all of our agencies and SI partners. Anyways, Chano's been working closely with Accenture. Chano, anything you wanna add?
Speaker #4: So I'm very excited with the work that the conversations I've had with Accenture about what these new practices will be . And I think it's , you know , when it comes to our marketing agent and designing subagents within that , that will help look through your marketing to find gaps , help surface those , then create the right creative all the way to our customer agent , helping that , you know , tune various experiences .
Speaker #4: You know , maybe based on what's worked in the past , we think there's a ton of new work for all of our agencies and see partners .
Chano Fernandez: Yeah. DJ, great talking to you again. So I would say, clearly Accenture is starting to provide services around marketing reinvention and service reinvention. Some of those services, they need, you know, a good powering on AI solutions, and they see us, you know, as a great partner to bring that to market. They see a great opportunity for companies that are looking, you know, to solve more for data fragmentation, I was talking on MyScript, in terms of closing the loop for the entire customer relationship experience, and they see Klaviyo as a great solution to provide that one.
Speaker #4: John has been working closely with Accenture. Is there anything you want to add?
Speaker #8: Yeah, great talking to you again. So, I would say, clearly, Accenture is starting to provide services around marketing reinvention and service reinvention.
Speaker #8: Some of those services know , you need , a they good powering on AI solutions . And they see us , you know , as a great partner to bring that to market .
Speaker #8: They see a great opportunity for companies that are looking to solve more fragmentation. I was talking with my script in terms of closing the loop for the entire customer relationship experience, and they see you as a great solution to provide that one.
Chano Fernandez: Clearly, as I mentioned before, you know, we moving up more towards the enterprise, though, to be clear, we still are fully convinced that, you know, it's gonna be our core business and our more SMB business is a great cornerstone for us, and it's gonna keep thriving. But obviously, enterprise opening has completely new opportunity. We're partnering with the likes of Accenture is gonna be instrumental for both of us. So yes, tons of excitement, you know, stay tuned. I guess we have much more to share over the coming months.
Speaker #8: And clearly , as I mentioned before , you know , we're moving up more towards the enterprise , though to be clear , we still are fully convinced that , you know , it's going to be our core business and and our more SMB business is a great cornerstone for us , and it's going to keep thriving .
Speaker #8: But obviously , enterprise open has completely opportunity . We're partnering with the likes of Accenture . It's going to be instrumental of us .
Speaker #8: for both So yeah , in terms of timing , you know , stay tuned . I guess we'll have much more to share over the coming months .
Operator: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.
Raimo Lenschow: Hi, good evening, and thanks for taking my questions. I guess, AB, I wanna maybe revisit Gabriela's question a little bit, because I think part of what we're all trying to figure out is if the marketer starts increasingly interfacing with Klaviyo via ChatGPT or another interface as maybe making a tool call, and just how the value will still ultimately be provided by Klaviyo. But I guess the perceived value question of what the marketer thinks is creating the value for them, how do you contend with that and make sure that the user knows that it's actually Klaviyo, and that you make sure that the economic benefit also accrues to you? And then I have one follow-up.
Speaker #2: Your next question comes from the line of Samad Samana with Jefferies . Please go ahead .
Speaker #10: Good Hi . evening and thanks for taking my questions . I guess , AB , I want to maybe revisit Gabriel's question a little bit because I think part of what we're all trying to figure out is if the if the marketer starts increasingly interfacing with Klaviyo via ChatGPT or another interface , maybe making a tool call , and just how the value will still ultimately be being provided by Klaviyo .
Speaker #10: But I guess the perceived value question of what the marketer thinks is , is creating the value for them . How do you contend with that and make sure that the that the user knows that it's actually klaviyo , and that you make sure that the economic benefit also accrues to you .
Andrew Bialecki: ... Yeah, sure. So an analogy that, you know, we've been using internally and Chano has been using, is when we think about our infrastructure, it's kind of like, you know, how good is the engine underneath? That it's both understanding who your customers are and actually providing those experiences, whether it's messaging or some of the conversational architecture that we have now with our Customer Agent, and obviously marrying those two together. And I think, you know, we look at our infrastructure. I mentioned how tuned it is to the scale and really the real-time nature of consumer interactions. We just look at it like, we have the engine of, like, an F1 car, and you can't just go, you can't just take any old engine and, like, plug it into something, make it look shiny, and have it work.
Speaker #10: And then I have one follow-up.
Speaker #4: Yeah , sure . So analogy that , you know , we've been using internally and I've been using is when we think about our infrastructure , it's kind of like how good is the engine underneath .
Speaker #4: That is both understanding who your customers are and actually providing those experiences , whether it's messaging or some of the conversational architecture that we have now with our And agent .
Speaker #4: customer , obviously marrying those think , you know , we look at our infrastructure , I mentioned how tuned it is for the scale and really the real time nature of consumer interactions .
Andrew Bialecki: So, you know, with, with-- on top of that. And then the other thing I didn't share with Gabriela is, like, look, we talk to customers and say, like, "Would you wanna swap out Klaviyo's system for something that would maybe cheaper to run?" And the answer for all of them is no. And the reason is because the ROI for Klaviyo is so good, people don't wanna miss out on stunning customer experiences and consumer experiences, and they don't wanna miss out on the increased engagement and increased revenue that that comes with. That's been a very durable pattern, durable thing that I've seen when I talk to our customers.
Speaker #4: We just looked like we have the engine of like an F1 car , and you can't just go , you can't just take any old engine and plug it into something , make it look shiny and have it work .
Speaker #4: So , you know , with with on top of that . And then the other thing I didn't share with Gabriel is like , look , we talk to customers and say like , would you want to swap out your system for something that was maybe cheaper to run ?
Speaker #4: And the answer for all of them is no. And the reason is because the ROI for Klaviyo is good, so people don't want to miss out on stunning customer experiences and consumer experiences, and they don't want to miss out on the increased engagement and increased revenue that comes with it.
Andrew Bialecki: So if you pull it back then, like, you know, I put this in the prepared remarks, but we actually look at AI as if it's sort of the driver of that car, well, gosh, I mean, how do we get, you know, our agents and potentially other agents using more of, you know, Klaviyo's, you know, underlying engine and infrastructure? And that's where we come back to what we found with AI is, and our agents, is it's making it cheaper to execute. We're finding a lot of customers who now, because of AI, you know, they have the time... Where they didn't have the time and the space, now they can get to things, because they can take an idea and turn it into marketing much faster. And it's also increasing the quality.
Speaker #4: That's been a very durable pattern that I've seen . When I talk to our customers . So if you flip it back , then , like , you know , put this in the prepared remarks .
Speaker #4: But we actually look at AI as if it's sort of the driver of that car . Well , gosh , I mean , how do we get , you know , our and potentially agents other agents using more of , you know , you know , underlying engine infrastructure .
Speaker #4: And that's where we come back to what we found with AI is in our agents is it's making it cheaper to execute . We're finding a lot of customers who now because of AI , they have the time where they didn't have the time in the space .
Speaker #4: Now they can get to things because they can take an idea and turn it into marketing much faster. And it's also increasing the quality.
Andrew Bialecki: You know, I mentioned how our database, our underlying customer data infrastructure, is married with the marketing messaging, and we can see what's working. We're able to hint back to agents, both Klaviyo's agents and then in the future, potentially other agents, what's gonna work best for each consumer. So we're able to inject that personalization, that context, in at the last moment, and that's having tremendous uplifts. We're seeing that have tremendous uplifts. I mean, we talked about these results. The fact that we're seeing open rate increase, not by a little bit, by 50%, revenue increasing by a similar amount, this is, I think, the future. I think the idea that you would run either marketing or customer service agents, and you wouldn't run them on the best possible infrastructure, just doesn't make sense.
Speaker #4: You know , I mentioned how our because our database , our underlying customer data infrastructure is married with the marketing , messaging and we can see what's working .
Speaker #4: We're able to hint back to agents both Klaviyo, Inc. agents . And then in the future , potentially other agents . What's going to best for work each consumer .
Speaker #4: So we're able to inject that personalization , that context in at the last moment . that's And having we're seeing that have tremendous uplifts .
Speaker #4: I mean , we talked about these results . The fact that we're seeing open rates increase , not by a little bit by 50% , revenue increasing by a similar amount .
Speaker #4: I think , the This is , the idea that you would future I think run either marketing agents and service or you wouldn't customer on the best possible infrastructure , just doesn't make sense because at the end of the day , we're trying to help drive great customer experiences that translate directly to into dollars , you know , in revenue for the businesses that we serve .
Andrew Bialecki: Because at the end of the day, like, you know, we're trying to help drive, you know, great customer experiences that translate directly to, you know, into dollars, and revenue for the businesses that we serve.
Samad Samana: Very helpful. And then maybe, Amanda, just to follow up for you on the OpEx growth, it slowed quite a bit, it was just especially R&D. Is that mostly, like, internal efficiencies, or is there anything timing related in terms of the timing of hiring? Just how should we think about that, both in the quarter, what, what led to that slowdown, and then how we should think about it going forward? Thank you again.
Speaker #10: Very helpful . And then maybe , Amanda , just to follow up for you on on the opex growth , it slowed quite a bit .
Speaker #10: I was just especially R&D is that mostly like internal efficiencies ? Was there anything timing related in terms of the timing of hiring how should we ?
Speaker #10: think Just about that ? Both in the quarter ? What led to that slowdown ? And then how should how we should think about it going forward ?
Andrew Bialecki: Yeah, let me, let me take that just to start qualitatively, so, and Amanda will get to the numbers. You know, look, we've had an initiative internally about working, you know, AI first since last fall. I'll tell you, like, I, I myself, like, just, you know, building products, coding, I mean, the amount that you can do now with AI on two fronts. The first is, you know, the things we, you know, Ed and I, in the early days, we moved very fast. We were great builders, but we're able to go much faster, and not 20% faster, I'm, you know, talking 5, 10, 20x faster than the early days. You know, it's fun. I can sit down now and build whole features, whole prototypes, in an evening that used to take us weeks.
Speaker #10: Thank you again .
Speaker #4: Yeah . Let me let me take that . Just to start qualitatively . So and Amanda , we'll get to the numbers . You know , look we've had an initiative internally about working AI first since last fall .
Speaker #4: I'll tell you, like, I myself just like building products, coding. I mean, the amount that you can do now with AI on two fronts.
Speaker #4: , you know , the The first is thing we , you know , and I in the early fast . very builders great We were days , we moved .
Speaker #4: we're But able to go much faster and not 20% faster . I'm talking five , ten , 20 x faster than the early days .
Andrew Bialecki: And that's an advantage that our entire product and engineering team is embracing. The second thing I'd say is, everybody now gets to act as a developer. We have a number of internal systems that, you know, thousands of Klaviyo rely upon, that weren't built by engineers. Or they were built by engineers, but maybe not in the traditional sense. There are other folks at Klaviyo that are now doing engineering, thanks to the progress that we've seen with, you know, some of the, you know, the coding agents. So look, we just said that, hey, all of that is stuff that we're really gonna push on.
Speaker #4: You know , it's fun . I can sit down now and whole build features , whole prototypes in an evening that used to take us weeks .
Speaker #4: And that's an advantage that our entire product and engineering team is embracing. And the second thing I'd say is, everybody now gets to act as a developer.
Speaker #4: We have a number of internal systems that , you know , thousands of Klaviyo, Inc. rely upon that are that weren't built by engineers or they were built by engineers , but maybe not in the traditional sense .
Speaker #4: There are other folks at Klaviyo that are now doing engineering , thanks to the progress that we've seen with some of the , you , the agents .
Andrew Bialecki: And, you know, Amanda knows, like our roots were, we were, you know, a small handful of folks that had great unit economics, great efficiencies in our early days, and now we're benchmarking ourselves against what the best AI companies are doing and looking at that as the new normal. But Amanda, anything else you wanna add?
Speaker #4: So look , we just said that , hey , all of that is stuff that we're really going to push on . And , you know , Amanda knows our where we roots were , you know , a handful , a small handful of folks that had great unit economics , great early in our efficiencies days .
Amanda Whalen: Yeah. The only thing that I would add there is, we look forward into next year. We're really pleased with the trajectory that we're seeing on our overall operating margin. And I think that is because we are a high-growth company who's delivering expanding profitability-
Speaker #4: And now we're benchmarking ourselves against best AI doing companies are what the . looking at And that as the new , Amanda , normal .
Speaker #4: But Yeah .
Speaker #4: you want to add ?
Speaker #1: The only thing that I would add there is we look forward into next year . We're really pleased with the trajectory that we're seeing on our overall operating margin .
Andrew Bialecki: Yeah
Amanda Whalen: ... while making high return investments. And the great thing about where we are right now as an era and as an industry is, as AB said, we can make those high return investments and be so much more efficient in how we're building and how we're scaling. So we are, you know, bullish about the ability that we have to continue to drive that profitability while continuing to expand our margins 100 basis points or more over the coming year.
Speaker #1: And I think that is because we are a high growth company who's delivering expanding profitability while making high return investments . And the great thing about where we are right now as an era and as an industry is as AB said , we can make those high return investments and be so much more efficient in how we're building and how we're scaling .
Speaker #1: So we are bullish about the ability that we have to continue to drive that profitability while continuing to expand our margins . 100 basis points or more over the coming year .
Operator: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.
Tyler Radke: Yeah, thank you for taking the question. And, Chano, congrats on the co-CEO role. Nice to see you again. Question on go-to-market. Just given, you know, some of the leadership changes and go-to-market changes, how are you, you know, structuring and incentivizing go-to-market this year? Any other changes we should be thinking about? And, you know, I guess, Amanda, are you building in any conservatism, just given the moving pieces on that front? Thank you.
Speaker #2: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.
Speaker #9: for taking Yeah . Thank you the question . And on congrats Chano , the co-CEO role . Nice . Nice to see you again .
Speaker #9: Question on go to market . Just just given some of the leadership changes and go to market changes , how are you structuring and Go to market this Any year ?
Speaker #9: other changes ? We should be thinking about ? And I guess Amanda , are you building any conservatism ? Just given the the moving pieces on that front ?
Chano Fernandez: Yeah. Thank you, Tyler. Great catching up. I mean, well, first of all, I'm lucky I found a great foundation here, both in terms of, you know, product innovation, customer satisfaction, and I would say, talent. Obviously, as in any place, there are usually opportunities for improvement. I think we saw an opportunity for, you know, improving in terms of the go-to-market, mainly across, you know, tidying up execution, rigor, and discipline. At the same time, potentially, as we say, there are many disjointed experiences that don't provide that full overview in CRM legacy systems that I think are ready to be ripped out, and we wanna capture that opportunity, and we're greatly positioned to doing so. So that's why we're doing some of these changes from a go-to-market perspective.
Speaker #9: Thank you .
Speaker #8: Yeah . Thank you Tyler . Great catching up . I mean , well , first of all , I'm lucky I found a great foundation here .
Speaker #8: Both in terms of , you know , product innovation , customer satisfaction . And I would say talent . Obviously , as in any place , there are usually opportunities for improvement .
Speaker #8: And I think we saw an opportunity for , you know , improving in terms of the go to market , mainly across , you know , tidying up execution and rigor and discipline and at the same time , potentially , as we say , there are many experiences that disjointed don't provide that full overview in CRM legacy systems that I think are ready to be ripped out .
Speaker #8: And we want to capture that opportunity, and we're ready to do so. So that's why we're doing some of these changes from a go-to-market and perspective.
Chano Fernandez: You know, me being right, that should show up over the next few quarters in terms of increased win ratios and clearly reacceleration. That is my expectation, yet to be proved, right? Clearly, you know, in terms of how we are relying on incentives, I mean, at the end of the day, we try to align to, you know, what it makes sense for how our customers are seeing the benefits that we're bringing. So obviously, as we said before, we're more a consumption and we're more an outcome-based. So that is as well how our teams are incentivized. So we're very focused on Klaviyo Attributed Value, attributed revenue, that last year came out to close to $80 billion.
Speaker #8: And you know me being should show right , that up over the next few quarters in terms of increased win ratios . And clearly acceleration .
Speaker #8: And that is my expectation that yet to be that yet to be proved right . Clearly , you know , in terms of how we are aligning and incentives , I mean , at the end of the day , we try to align to , you know , what it makes sense for ?
Speaker #8: Our customers are seeing the benefits that we're bringing . So obviously , as we said before , we're more a consumption and we're more an outcome based .
Speaker #8: So that is as well how our how our teams are incentivized . So we're very focused on this attributed value . Can be attributed revenue that last year came up to close to 80 billion .
Chano Fernandez: You know that we're driving to our customers and very focused on producing those out- outcomes. You know, that is what matters, right? Clearly, that as well should manifest, if we're doing our homework, that even the ratios being okay today in terms of having 60% of our AR becoming multi-product, in that case, it is two or more products. I believe that the opportunity for ourselves and cross sell, we're doing our homework, is much better than that one, and I think we're having the right thing to execute on it.
Speaker #8: You know that we're driving to our customers and very focused on producing those outcomes. Know that you is what matters, right?
Speaker #8: Clearly , that as should manifest if we're doing our homework , that even the ratios being okay today in terms of having 60% of our AR becoming multi-product , in that case , it is two or more products , I believe that the opportunity for and cross-sell , we're doing our homework is much better than that one .
Amanda Whalen: Thanks. And, Tyler, as it regards to the model, we have the benefit that Chano has been involved in the business, both on the board side as well as, you know, getting ramped up to speed as, as supporting us on an interim basis last fall. So he is coming in as a strong leader with clear plans, and we have strong visibility into the places where we're gonna be, you know, making those changes and, you know, continuing to improve over the course of the coming year. So the main thing that I would point to as you think about the investments that we're making in go-to-market over the coming year, is that they're going to be, continue to be with the strong focus on unit economics that we've always had as a business, right? It goes back to AB and Ed.
Speaker #8: And I think we're having the right team to execute on it.
Speaker #1: Thanks . And Tyler , as regards the model , we have the benefit that has been involved in the both business , on the board side as well as , you know , getting ramped up to speed as supporting us on our interim basis last fall .
Speaker #1: So, he is coming in as a strong leader with clear plans, and we have strong visibility into the places where we're going to be, you know, making those changes and continuing to improve over the course of the coming year.
Speaker #1: So the main thing that I would point to , you as think about the investments that we're making in go to market over the coming year , they're is that going to be focus on strong continue with the to be unit economics that we've always had as a business , right .
Amanda Whalen: We tend to look at our CAC payback now as we're expanding into the mid-market and enterprise. We look at the LTV to CAC, but we see great opportunities ahead, and we see strong returns from those investments that we're making, and they're baked into the outlook that we have for the year of continuing to expand our operating margins.
Speaker #1: It goes back to A , be an edge . We tend to look at our payback now is we're expanding into the mid-market and enterprise .
Speaker #1: We look at the LTV to kak , but we see great opportunities ahead and we see strong returns from those investments that we're making .
Operator: Your next question comes from the line of Matthew VanVliet with Cantor Fitzgerald. Please go ahead.
Speaker #1: And they're baked into the outlook that we have for the year of continuing to expand our operating margins .
Matthew VanVliet: Yeah, good afternoon. Thanks for taking the question. I guess as we look towards what the Customer and Marketing Agents that you're offering could feed into the model, whether it's this year or into the next several years, curious if you can share any sort of metrics around adoption by your customers? Just, you know, how many are using it in any capacity? Where do you expect that sort of percentage of your customers to at least be piloting and testing it out to be over the next several quarters?
Speaker #2: You our next question comes from the line of Matthew Vanvliet with Cantor Fitzgerald . Please go ahead .
Speaker #11: Hi . Good afternoon . Thanks for taking the question . I guess as we look towards what the customer and marketing agents that offering could , could feed into the model , whether it's this year or into the next several years .
Speaker #11: Curious if you can share any sort of metrics around adoption by your customers ? Just how many are in any using it capacity ?
Speaker #11: Where do you expect that sort of percentage of your customers to at least be piloting and testing it out to be over the next several quarters?
Andrew Bialecki: Yeah, awesome. I can take that. So, while we're not sharing the percentage of customers yet, I can tell you it's growing rapidly. I mentioned some of the things that we're solving, especially for our entrepreneur and SMB customers, to help them adopt faster. In a lot of cases, it boils down to, hey, you know, how do I train a model and how do I trust it? Again, these are things we're really, really good at. If you go back to Klaviyo's early days, you know, we had to teach people how to do, you know, more personalized messaging, marketing, and make that, you know, almost out of the box. And now we're doing the same thing, you know, with agentic capabilities.
Speaker #4: Yeah . Awesome . I can take that . So we're not sharing the percentage of customers yet . I can tell you it's growing And I rapidly .
Speaker #4: the mentioned some of things that we're solving , especially for our entrepreneur SMB customers , to help them adopt faster . And a lot of cases , it boils down to , hey , how do I train a model and how do I trust it ?
Speaker #4: But again , these are things we're really , really good at . If you go back to those early days . You know , we had to teach people how to do more personalized messaging , marketing and make that almost out of the box .
Andrew Bialecki: You know, I'll reference back to, you know, the, a data point we watch a lot, which is like, for people that are adopting our agent products, whether it's, you know, our Marketing Agent or our Customer Agent, how often are they coming back? And, you know, I'll go back to the, the data point we share around our Marketing Agent, where for folks that try it and adopt it, we're finding that they're using it repeatedly. And in fact, it's starting to really eat into their share of how they, you know, generate, and create marketing overall. So that's it very much leads me to believe that, like in the near future, we're gonna have a large percentage of our customers who aren't going through and pointing and clicking and, you know, sort of doing creative design all on their own.
Speaker #4: And now we're doing the same thing with Agentic capabilities . You know , I'll reference back to the A data point that we watch a lot , which is like for people that are adopting our agent products , whether it's , our marketing agent or our customer agent , how they coming back often are ?
Speaker #4: I'll go And , you know , back to the data marketing around our agent where for that try it folks and adopt it .
Speaker #4: We're finding that they're using it repeatedly. And, in fact, it's starting to really eat into their share they, you know, generate and create in marketing overall.
Speaker #4: So that very much leads me to believe that , like in the near future , we're going to have a large percentage of our customers who aren't going through and pointing and clicking and sort of doing creative design all on their own .
Andrew Bialecki: They're going to do it in large part with AI. You know, just an example from, you know, just this week, you know, talking to a customer that's playing with our Marketing Agent, you know, product. And, you know, he was telling me about how he was designing a campaign, and his, his brand has a big, you know, Spanish-speaking, you know, audience. And the Marketing Agent actually understood that and generated versions that were not in, in just in English, but in other languages as well. I mean, these are the kinds of things that are now happening with agents that are running on top of our platform.
Speaker #4: They're going to do it in large part with AI , you know , just an example from , you know , just this week , you know , talking to a customer that's playing with our marketing agent , you know , product and , you know , he's how he was designing a campaign in his his brand has a big , you know , Spanish speaking , you know , audience .
Speaker #4: And the marketing actually understood that in generated versions that were not just in English but in other languages as well . I mean , these are the kinds of things that are now happening with agents that are running on top of our platform .
Andrew Bialecki: Because we have the customer context to say, you know, what geography or locale somebody's in, their preferences, maybe, you know, things that they told us, you know, in this case about language, we're able to just automatically inject those, and our agents are able to pick up on that. So I think you're gonna see a increasing percentage of our customers are starting to really rely, even for the majority of their usage of Klaviyo, on our agents. And then also, we're gonna see, just a growing percentage, even give it a shot and, you know, become full-time adopters.
Speaker #4: And because we have the customer context that say , you know , what geography or locale . Somebody in , you , their preferences , maybe you know , things that they told us , you know , in this case about language , we're able to just automatically inject those and our agents are able to pick up on that .
Speaker #4: So I think you're going to see an increasing percentage of our customers are starting to really rely , even for the majority of their usage of klaviyo on our agents .
Chano Fernandez: Yeah, I think just to add on that one, we provided a couple of data points, like, you know, customers that have taken or adopted Marketing Agent, 50% of their campaigns, they're already doing it with the Marketing Agent and seeing better results. Some examples back on, you know, the autonomous resolutions on service for customers like LifeStraw, 74% of those coming up, or Harney & Sons, like 77% of autonomous resolutions within 60 days of adopting service agents. So there are also some great data points that of course, you know, as product keeps maturing, our go-to-market teams keep cranking on it. You know, very exciting what's coming ahead.
Speaker #4: And then also we're going to see just a growing percentage even give it a shot and , you know , become full time adopters .
Speaker #8: Yeah , I think just to add on that one , we provided a couple of data points like customers that have taken or adopted marketing agent , 50% of their campaigns , they're already doing it with the marketing agent and seeing better results .
Speaker #8: And some examples back on the autonomous resolutions on surveys for customers, like live, 74% of those coming up, or Harvey, and so on.
Speaker #8: Like 77% of autonomous resolutions . We 60 days of adopting service agents . So there are already some great data points that of course , you know , as product maturing .
Operator: We have time for one more question, and that question comes from Derek Wood with TD Cowen. Please go ahead.
Speaker #8: And I will go to market teams keep cranking on it , you know , very exciting . What's coming ahead .
Derrick Wood: Hi, this is Cole on for Derek. Thanks for taking our question. You know, large customer adds was super strong. Could you just talk a little bit more about the strength there? And then specifically, you know, how much of this is cross-sell versus actually going and landing new customers of this size? Thanks.
Speaker #2: We have time for one more question . And that question comes from Derrick Wood with TD Cowan . Please go ahead .
Speaker #12: Hi . This is Cole on for Derrick . Thanks for taking my question . The you know large customer ads was super strong .
Speaker #12: Could you talk a little bit more about the strength there? And then specifically, you know, how much of this is cross-sell versus actually going and landing new customers of this size?
Chano Fernandez: Yeah, great question. Most of those customers tend to be net new lands in terms of the large-sized customers, and they, you know, clearly they expand over time, but it's more on the net new logo. I think it comes to two points, right? It's clearly how we're changing some of the practices in terms of focus more on the leading indicators like pipeline, qualification, and strength of that pipeline. Same as I said before, how we're tidying up those cadences as well with the, you know, beyond sales themselves, with articulating the value proposition, with product and engineering teams all together, getting onto it. And clearly, I would say it's the, you know, it's the teams that know to and to understand how to liaise and land these customers in terms of the complexity of the, of the sales cycles.
Speaker #12: Thanks .
Speaker #8: Yeah . Great question . Most of those customers tend to be net new lands in terms of the large size customers . And they you know , clearly they expand over time .
Speaker #8: But it's more on the net . New logo I think it comes to two It's points right . clearly how we're changing some of the practices in terms more on of the leading indicators and qualification pipeline strength of that pipeline .
Speaker #8: said As I before , how we're tidying up those as well cadences with the , you know , beyond sales and cells , with articulating the value proposition , with product and engineering teams all together getting onto it .
Speaker #8: And clearly I would say the , you know , it's the teams that no . Two and to understand how to liaise and land these customers in terms of the complexity of the of the cell cycle .
Chano Fernandez: But I think, you know, as I said before, qualifying the cycles is very important. I think that we are on the right opportunities, and we understand those that we are into, and we are winning, and we're just creating the sales place, increasing the activity, and certainly as well as starting to come with partners, like we mentioned before, Accenture and some others, which are great, right? I think it's important to highlight as well that that is becoming across multi-verticals, and we're seeing customers now in Europe, like Bayer or Linde, so it's very international as well, TaylorMade and some others that are, you know, tremendous marquee names that are starting trusting us. And I think that will hopefully create a, you know, flywheel effect in terms of we building our brand as we are ready now for enterprise.
Speaker #8: But I think , you know , as I said before qualifying , the cycles is very important . think that I we are on the right opportunities and we understand those that we are into , and we we are winning and we're just creating the sales plays , increasing the activity .
Speaker #8: And certainly, as well as starting to come with partners like we mentioned before, Accenture and some others, which are great, right?
Speaker #8: I think it's important to highlight as well that that is becoming common across multiple verticals. And we're seeing customers now in Europe, like Bayer or Lint.
Speaker #8: So it's very international as well , tailor made and that some that others are you know , tremendous names marquis are that starting to trusting us .
Speaker #8: And I think that will create hopefully create a , flywheel effect in terms of we're building our our brand as we are ready now for enterprise .
Chano Fernandez: With the investments we're doing in compliance and governance, plus, you know, some data centers for some of the international customers, feel very strong about the value proposition and where we're going. So yeah.
Speaker #8: And with the investments we're doing in compliance and governance, plus, you know, some data centers for some of the international customers, we feel very strong about the value proposition of what we're going.
Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.
