KVYO - Earnings call 3 2023

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Operator

Good afternoon, and welcome to Klaviyo's Third Quarter of Fiscal 2023 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. With that, I'd like to turn the call over to Jack Grant, Senior Director of Investor Relations and Strategic Finance.

Jack Grant

Thanks, operator. you third welcome call. XXXX to excited to quarter Klaviyo’s earnings I'm

our at and will announced a me closed the Chief the to results discussing supplemental and today. Bialecki, Co-Founder call Whalen, Relations our press refer We Chief today's the Financial on after presentation in related be earnings information for Officer. investors.klaviyo.com more release Amanda to issued Please today Officer; Investor and Andrew website announcement. With Executive market are

guidance customers, financial of marketing our and our new customers, and fiscal the retain are our new outlook, of ending make strategy, relationships statements current These considered as statements in growth difficult are year will growth Litigation outside and revenue from our business and existing securities attract During to and and quarter with of our parties, our fiscal our successfully outlook full circumstances be we today's expectations, including include, of among Harbor control. These year customers, which success amended, beliefs, Securities regarding inherently XXXX. from and that growth may risks, concerning are XXXX others, achieve sales our our future and the year XX, for sustain forward-looking reflect increase subject forward-looking laws many and rate, December to and XXXX, events, presentation, our management's fourth statements Reform changes Act ability Private ability sales assumptions that applicable fiscal the the existing of both about future business under risks business and including uncertainties, provisions which predict and fourth quarter ability execute the to strategies of to third for XXXX. our Safe to full of

our available please our discussion to today's filings, actual both release the that risks and press affect Relations and SEC material website. identified Investor the uncertainties risks For on results, could refer a of in our

a and of measures call earnings a most to posted found market Reconciliations for supplement GAAP our be substitute non-GAAP materials addition, today's measures can the after Investor considered to the press turn Relations financial on presentation measures. includes measures. These today's over a Relations not earnings distributed release I'll to In available our Investor and comparable directly now financial certain which SEC it are as should today be website, closed in supplemental release, and website. With or on our Andrew. that, also filings, GAAP

Andrew Bialecki

company. earnings you Thanks, a Jack. public first today as our Thank for on call joining us

as and all thanking like and quarter long-term to We customers our third line. best I for want business. on both customers partners also get of an mission. work there. quarter our Klaviyos believe well are customers, out experience customers our raise deliver by excited We That's their as as bottom the up. our all the what day. the our extend for every both with built results as who We products a to shareholders start supporting to special in share call Klaviyo employees I'd top and to a well the deliver thank our overview new delivered hard businesses who to weeds teams we of strong by are you and

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Amanda Whalen

Andrew. Today, and brief third results Thanks, of our XXXX guidance I year. and overview provide fiscal full fourth quarter our discuss for will a quarter financial

measures. tables non-GAAP discussion in release reminder, quick the earnings a refer of financial directly includes financial As Please our today's non-GAAP for measures. GAAP reconciliation to the a most to comparable

growth QX again we noted, are with with pleased an Consistent financial at efficient financial our in scale we solid manner. Andrew performance. As framework, our saw rapid

through us, on into of details let send. of email our go reflects are quarter, subscription you of business storing which platform, SMS the data number with consumer plans number model. me based that walk store the I and our they our Before third of and through We tiered the on messages profiles active generate that they're amount that revenue customers the

push monthly. the notifications also our We are unlimited for plans. allow as Today, subscriptions currently subscription our of majority part email of vast

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to Our align customers' business success. our success designed model with our was

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Our growth vectors: X those adding expanding is powered by with customers, growing the main growing new in customers, and internationally. mid-market,

over XXX,XXX these revenue retention over XX% We up Those resulting Our vectors. strong QX of of in on continue QX. year-over-year. customers, customers with performance their serve to XXX% was net in each business expand us, now

and growth finished ARR, XX% $XX,XXX strong X,XXX the drive year-over-year. quarter generating customers in up to the over mid-market in continue We with

Finally, international business. our QX up the last APAC QX, of in outpacing overall represented year. In growth and of XX% XX% is from EMEA revenue,

QX, contributed benefit as of reminder, top-line, be remains X strong. the price customer of dollars overall a our in the of quarters. price full the high last rolled On first late the quarter millions out QX we will a of This The increase. last the base increase. in lapping each single-digit health revenue

remains Our QX QX, from to customers. we consistent gross to the provide to view retention we a value which as our testament

compared on associated expenses I margin quarter gross million, Moving non-cash XXXX. non-GAAP marketing XX%. excludes a stock-based a improvement prepaid amortization unless basis, of of down discussing was will with point marks income compensation the otherwise expense representing to Shopify to of and Gross QX our restructuring be X expense, noted. $XXX.X statement. which profit This the results partnership, for

and experiences reliability but for In and This migrated our our provides better only engineering have provide offerings, our increases quarters, not onto customer efficiency. We enhanced customers. of also some continue we optimization. to recent scalability efforts infrastructure system for around our cloud see the of which benefits updated

of quarter. marketing the for million or expense Sales $XX.X XX% expenses. operating and was revenue to Turning

in As IPO and particularly We're the sales we to ramp in growth. mid-market. will marketing drive and spend sales add expecting marketing in we be discussed our capacity, durable to investing roadshow, up

As number we revenue. of capabilities, and initiatives such as do efficient AI focused of our unit committed economics. $XX a or products here, so, in to new on for We're further improvement CDP. we will launching expense R&D continue developing million including our customers, to XX% was be ongoing of investing products

Finally, revenue. $XX.X million of G&A or XX% was expense

During the related one-time expenses quarter, the had million $X IPO. in we roughly to

of $XX.X For XX%. QX, margin our income operating an million, was operating representing

the of positive flow We also and that do operating cash both our consecutive free between our choose generating during belief profitability. quarter further non-GAAP we income This generated free fourth and cash marks million. of quarter growth to $XX.X not flow. This need supports

Finally, turning and with equivalents, quarter $XXX debt. sheet. in finished to the restricted no cash million balance cash with We cash, the

Turning fourth to both our outlook full the XXXX. year the for and fiscal quarter

fourth revenue the to the million, $XXX For growth quarter, to XX% we of range to in year-over-year. $XXX million be of representing expect XX%

the As I of the a moving as to price end discussed of X prior face at 'XX due reminder, year-over-year the earlier, increase top-line quarters. growth rate forward to QX our our lapping will headwinds that compared natural

non-GAAP X% We to income $XX range in X%. to of million, representing the of $XX operating to margin expect operating million be

sales due During QX, cloud with outbound increased and higher usage cost sending I in to investments sold to higher of addition of go-to-market to both the our computing and previously platform, marketing we costs mentioned. costs due to see expect goods costs

$XXX.X XX% For XX% million growth we to range million, to of guiding representing the are to of in revenue $XXX.X full-year, the year-over-year. be

million, to non-GAAP income operating representing represents margin $XX.X the At improvement to points operating margin. the to million of our operating range in XX of compared be midpoint, non-GAAP expect this XX%. $XX.X 'XX an fiscal We over of

and Rowland large Steve keep due now share that the to a to we Domenici our us. market ahead disciplined in grow on have of investing we're Jamie manner going market board, opportunity with Lastly, to

an ahead expect not our see operating with we XXXX, Looking and basis, meaningful margins you XXXX, non-GAAP will on leverage. expect consistent into annual remain relatively that should to

go-to-market As investments the year progresses, incremental we will evaluate also opportunistically.

with to models. other a Before your I'd like to out, we help close notes few share

the an the with quarter. of expense million connection RSUs acceleration resulted a during compensation vesting we IPO. the in of $XXX in stock-based quarter, This had related During our of to charge

low $XX quarter, million fourth range. compensation to the stock-based we anticipate in For be the

Lastly, to in expect our QX year. approximately from we basic full share perspective, outstanding fiscal a average count the for shares XXX million million be and weighted XXX

the increments unvested focused diluted which in does weighted issued and ensuring total connection remaining shows important with issuances We of The we XX.X million are have XXXX. vested top-line third a in expect and securities. the a be we and for that but equal press table warrants the include not XXX,XXX a the a of million share diluted X.X outstanding and through shares during levels unvested. issued provided average rapid the on is the million agreement, we approximately this new to July XX.X In maintain healthy our our XXX summarize, full strong Shopify impact are million fully basis of of dilution. To quarterly release warrants, fiscal million XXX outstanding reconciliation We of growth shares our million. this and Shopify vest We've It and approximately full XXX currently to monitor with on note closely year. QX quarter results line. delivered low on bottom of that

including core in investing We mid-market. initiatives and strategically share growth market the our in are growing market our in our products, internationally investing our behind key

ahead of focused executing opportunity on against long-term are the about excited shareholders. us we and for are We our it

comments. it turn some over back closing to for I'll Now, Andrew

Andrew Bialecki

their final proud to delivering focus again and before Amanda. comments for we customers. their Thanks, want on A open thank dedicated I of entire for team. Q&A. work the our it few I'm up Klaviyo

We that are destiny. And please mission prepared the for questions. concludes creators of to line our empowering our executing against remarks. open Operator, own their

Operator

question Your comes the Instructions] first line Sachs. Goldman from Gabriela Borges of [Operator with

Gabriela Borges

the of overall now underpins overall geography the health that or I'd the amount community the strong. you're a consumer ecosystem. color health of of the about investor in any hear the love the any ecosystem about public overall. health your debate on customer being spending base nuances or to environment you a seeing that SMB in size to the commentary data, of right comment and vertical the fair There's made market. Welcome customer the on Amanda, about

Andrew Bialecki

spend So we Klaviyo very I'll verticals. work a said, set of healthy our Overall, touch is of net right, We business from quarter key on time strong. We a of Generally of of of for and and looking businesses, a and at drivers reason trends shared retention customers. like growing. was There with across lot customers -- I what obviously would that we're we're speaking, stages that. and are drivers diverse of some across there that. hearing and out happy the so the across, NRR that their XXX% are couple seeing increasingly that geographies, with across variety point to you are that usage that's

They with The And are have of that is growing tend the one increase the is of the product looking themes like relationships just profiles, digital to consistent businesses consolidate. first proliferation to spend software based number that our out they most more. And over the price on a as customer talk tools number that increases, then I This that tends email time, they they're there. to we of to customers hear is customers. with; because second I and don't our of lot talking consumers. of

also choose That simplifies down consolidate their to we're lot those us. folks seeing a of life. So to

to may reviews increasingly, then typically, and that SMS, CDP so and they they'll are with our starting experimenting we're And with start products is customers adopting those. what then means add see email,

spend it our to Klaviyo, do is them they're making moving to those So for folks products. their for easier one with it's of as of start actually any trying things to of we're more the

not just necessarily So just email.

amongst are think I big our X drivers So of what customers. we're those seeing

Operator

question next Morgan Your with from the Stanley. line Keith comes of Weiss

Keith Weiss

is quarter. of Congratulations to solid actually X I strong. it out metric stuck really or dig kind that that one really into really metrics wanted as on a --

customer guys. of them up that, you of and we've that's history the been cohort we've from new By of that the following my really indicative what seen is customers of It a being added And that One additions math, XXX up $XX,XXX. seen that in biggest move above like sort increase in you lot historically. the you've market. kind

CDP but a early you results. could little starting it a consolidation perhaps like what the to more a I for really overall So positive the driving impact wondering bit little was into seems of that. It if dig be drove bit have on to is

going percentage is outstanding those margins X the we about of becoming #X question points. go what's to With part other way. in a as durable the little messaging can from metric how So gross driving to in incremental particularly SMS, #X, a were there. Can bit other QX Should you gain about a expecting Question that thought be is? dig bigger us be to mix, margin you little a still going was gross we pressures SMS talk which I be bit into the heavier quarter. of

Andrew Bialecki

I'll then a in about bit talk little growth our the gross margins. mid-market and we'll talk about

over number. we're Almost spending yes, of year that it. number customers us, really driving $XX,XXX that a couple a We're happy very number, with share the XX%. there's with of side, And reason On things the of we mid-market that. proud

that got are There us. you've are with I right. it think smaller more spend businesses some consolidating

part SMS, using that have right? peak built over just that updates emails, on higher XXX landing every X Klaviyo billion more queries. and reason processing we're -- of They're that's built a is But big We're -- we're sending analyses events just to XXX billions various larger of we're than think updating they're single of a share foremost, top and is they're a for think folks during we're a of using greater flexible getting scales. million They're day. And of the larger lots enterprises. that customers, larger that first so with I We're tens to Klaviyo run also even seeing data, product of million. notifications. wallet. those messages, the companies then and So mobile and choose And we've day periods. obviously actioning

Sometimes peak just hours. during

their combined built, on We they they that we customers; pretty flexible. underlying larger for any with can the treat that cut that's want cover I businesses. we scale much definitely can customer how these we we to data it. do store idea So have can very mean

So and in the they that the you That's idea seeing to measure really can data scale matters. enterprise. means the integration we've you like the this get hey, algorithms layer what's out what's personalization, direction happening of in more intelligence of means can larger designed really of entire We're It critical and the folks; action. like, lot more help of you better marketing point layer. of the your that a together working flexibility next actually is stack which do best you artificial and tech the can

are seeing So of that. and proud we're good in for that things of the the number very some market anyway, so those we're is why

Amanda Whalen

your question The gross to providers. efforts during biggest on gross ongoing the of margin optimization volume-based negotiating with were infrastructure quarter some and of discounts drivers margin. system And our X

finished product. we really onto And finished project last cost moving the to also increase in updated in goods over data did It we of So that our that segmentation QX, the our sold. the an segmentation speeds infrastructure. of helped

we renegotiations. discounts first happening saw hosting we was the able The volume-based as other in our sending costs. we've our quarter full cloud grown, to infrastructure providers where negotiate is both and have of with this those recent additionally been thing that benefit in And

there that to As as is a are you channel associated SMS mentioned, SMS a that to as and mix costs grow continues in the higher counter channel. with

SMS as well So we're it QX we term. we in to for guidance have into QX see our over where so as long of built the usage both tend higher that cognizant

we do like to business We we of the long-term assumed channel unit IPO about model said, being continue be the continued or That comes away can really at as if SMS. provided that the penetration it the and disciplined to that we grow economics. margin walk don't profile that from economics with. in unit we're going So

we're long customers, continue term, for the over economics to the sure really we and businesses them. where So that we're happy just channels are going with of growing consolidate them making solving to helping

Operator

line question next Radke comes with Tyler Citi. the Your of from

Tyler Radke

rank which next stack has of new kind driving key net Checking recent CDP think been on order months, look if the over more the here wondering out one could or held of the Obviously, you XXX%. some But of that if at rate retention the I you is drivers products. out products. that XX was see I rank in probably you there,

Andrew Bialecki

our -- second to drivers provider. expansion mobile notifications but to continue there's on and of think software to products. So them. channels are all I'll and be we're those I I'll get we're businesses focused. We retention. Those of of products more adopting -- net on talk And about CDP in a the a to are our big very trend more then front, very think SMS down using big one still improving email, of going consolidating customers product marketing focused

So focused on we're that. very

and I'm really Now, CDP Reviews. about excited

about. data systems. So want out I I'll little a to start publish are bit to They excited are other folks with during us. remarks, to want there govern opening that data mentioned things CDP. X the They with

example how ecosystem. of And a using finally, of for it idea plus enterprises. same that's then that example, inside for advertising campaign down you For We're being then of action that our customer the is break buy, are huge. excited going away. small who believers to a using walls often the to and that. that big the do this stack to businesses exploring very huge able software, your and out one, customers to of to those they're automation we kind figuring business, have end a right really I And then is data lapsed, the last inside about folks large to CDP, and it out their their better for within consumers. And critically, They're and this I'm within customers marketing data. data analyzing between that. and exist networks, experience marketing It's that explore Klaviyo. how publishing our mentioned create Klaviyo, of provide service or all an like analyze analysis

It's So an Reviews use we're that their with from and for opportunity. our where reviews, to well it's really tightening products. to it's works those then then consumers are really opportunity data. our about an more a working CDP, again, insight learn that of cycle on, marketing for with action. And business things one it

is review be software what's So to reviews. then used you then platform personalize to Klaviyo's really data And that great marketing. use can marketing can collect

viral like that's this loop real there. of there's So kind

kind folks retail added our and think the products about out we're product, product another we as any like and And that mobile We've I now that think infrastructure it, building data buy. added of grow we've So can build think we was now CDP. push first went marketing from we SMS, mean, set consumer business top on we of just you email, which reviews, notifications. added of.

a that's for to tailwind to NRR come. time long So for a going be we think

Operator

question the Lenschow Barclays. of comes Raimo next from Your with line

Raimo Lenschow

high -- But options here. Great from is about quite the a at base. the do to a have kind product of the me moment, it bit you term. because in yes, higher talk overlap of very of still The obviously What potentially that little and Obviously how But would longer congrats how of -- we think very you this Shopify large terms on some remarks, talked what's at the needed natural that moment, you that kind the of well. the At mentioned move more great the seems on like you are first have limits? that you that bit the a as go? be Can can how opportunity is one on think interesting should setup? you marketing or you it prepared about quarter. moving mid-market Like customers. customer achieve a about with

Andrew Bialecki

Yes, sure.

winning data front a the competitive. their X combining we product is when got we we're side, platform the to product larger a with on work we fact that's think together. that so software marketing with That we've So back-end of mid-market, want these about And really that combination. as applications, mentioned, like talked office feel things, enterprises I

with say, we been mean, I started so amazing And we've we as to up an worked now, Shopify, since We've thanks, got to they've move I first them with Klaviyo. market, partner grown as started more us Klaviyo to All system are using folks up also partners, into other We've integrators. help can agencies. like connect the do We to with work that other found mid-market. move customers.

as both So we're ecosystem-led be growth. going grown. And a love I others, able over with efficient that carry reason been we big model with to Shopify then we to the there's we've that we've as today, of so we're and think why been enterprise. the And into stairstep mid-market up this and definitely our have we while to mean, ambition the move up mid-market into really I focused into the enterprise. no the That's way on --

Operator

comes line Siti Your next of Panigrahi question Mizuho. at from the

Sitikantha Panigrahi

As sort your of seeing sort of sort guidance that's this conservatism about and what baked into and are But guidance trend? to you have? visibility you What strong what how have are of you now? season, right your into talked implies, price you heading holiday trends Amanda, the what visibility strong -- quarter much seasonally also you heading lap and deceleration. is holiday

Andrew Bialecki

mentioned, set of bit from guidance. of And diverse you give customers. about what I a kind We Amanda will as I'm So quality with I'll hearing our businesses. work the little of a speak

to of for a holiday And for the on quarter them. working focused so many obviously, them. build data get a revenue and variation And this good have trends. matter and very customers, and are is believers X industry. stacks that Since help engine these most. very This Businesses, are in that retail closer are of direct and support season. to they're months important We're we're then customers those also very And the in doing is of some consolidation, relationships backs hard with long-term consumer hearing still marketing the businesses be across them stage, wanting geographies, about to variables, we what that, our how their there's we're in great ability then their even our this to various businesses holiday. And stacks. them and grow so big on e-commerce, merging feeling

a Amanda, we're about little field. And bit do on you the what that? that's seeing So talk want to

Amanda Whalen

our think a things. few would to regards guidance, as I about And

is mentioned, at that X price the millions of looking first it's increase to single-digit our just which dollars last as we you that, lapping of the contributed, QX important each year, from as last remember quarters. when high The we're said, in

business. said, our that absolutely It increase you headwinds on top-line, guide, QX you Also bottom on as It's important see the the guidance where the with their for the So weeks which with is. And still and at we comfortable big now, also of usage natural really the are mentioned, us, that as for higher we for few is that we're you growth. very in we're business creates a when from then based look we Cyber important in increased as price critical are top-line for our costs business. away the seeing holiday the a associated reflects lapping it's year-on-year for trends it exactly platform. our big Monday, the our is is our on And quarter quarter the customers. on line, and mindful, But Friday Black right a quarter. of

we're We guidance those sales marketing well. are of that costs the the have in all and and some of and the QX, in investments making reflected as

Operator

of with Your comes Bhatia line Arjun William from next Blair. the question

Arjun Bhatia

have playing an out that? here. strong quarter replacing the CDP but can you to existing envision back I how Do you base, terms a a type first in go-to-market for on see is looking Andrew, near are customer if and that just Congrats you also And you're greenfield targeting the opportunity? of that customers really to drive go when of product that what customer your term, the across maybe that CDP more or of solution? solution profile more adoption your initial of

Andrew Bialecki

launched having. our conversations It's we've traction in about we're the from seeing customers So the I'm market. CDP. excited and very we're

And working building and CDP so out and feature we're we're broadening on out really the -- set. really

I my they're gosh, with what we mean might think have different well, in greenfield systems, really have customer that data data can -- both if of thinking And of improve the how smaller does about, terms of many customers, both. I some spot, all In improve working first that, our I it Klaviyo, in it's businesses be the terms one I There's in time to place? fields can one experience.

they see thing us, with folks So products. we marketing to common very coming a may our is start

just using data, the we're inside seeing, able other I very Klaviyo, can integrations CDP, adopt to also And to out other the it. being centralize use I to for use realize, of data. they it I it they As do like gosh, other systems. And of some mentioned, they're with And analysis phases marketing with mentioned, marketing I customer on all eager publish platforms. to can this that more then, my say but not experience. like then

So for for instance, support. like when somebody reaches out

So the first and thought educate maybe -- them. about able somebody's we're in really time we're that it's really to case, this

that's to be data existing think may real we CDP, warehouse honestly, customers, making over a So larger about that our but then opportunity. for copying that spend. there, And of into faster our be about it about, action. data it's it less I replacing think making it's more some may And you

a that's there, data fact -- of we're this something want want is analysis sets various they then killer folks really the the up about into lot loop data they sources it, to have bring from feature. we And and finding to what between so that can tighten like doing And Klaviyo.

So that of rest the I spend. in case, more their think augmentation it's of an data

Operator

of line Your with Bracelin Brent next from Piper the question comes Sandler.

Brent Bracelin

demand environment a the SMB challenging to I to wanted clearly back go in seeing more We're drivers. software.

are data into the here next but should strong and it sensitivity know selling numbers GMV season Black BXB messages, business? selling from Cyber in strong we strong holiday far, that how when of through. the in Friday get remind read business walk the to into subscription -- less us through on much model next We're I here as than of sell So the bundles numbers I challenging the numbers into? we investors How those based the tied few vertical season. and BXC retail to holiday go much Shopify. going around hoping visibility might here to more business weeks. should your September get us and volumes through you could in feels or how we interpret Monday Whether and a that you're how October, weak and tied and model in and little was impact more sell into your month just

Amanda Whalen

Yes.

coming one As with I really said seeing most in them closely trends customers important times the business for we where that of we're we're as in before, the these watching based day. the today, on Cyber of of Friday, feel Monday year. And the of Black comfortable and trends with are many every looking is we our at our guidance.

some send have to half during communications who this of of We period. customer up their QX customers our

you to the impact this customers digital So that has the index relationships our consumers. Andrew our earlier, and digital really about their think as it's building we mentioned But important to that GMV. We them. relationships business, to not in really, as index are with

are relationships the So think customer think about building about they we quarter, how communication when we and frequency with many the of them.

focused deliver we that. entirely are our we our certainly, to there very team during for focused for And So important now, right them. on time for that on this customers are really making sure

Operator

comes question from next the Terrell Your line Truist of Tillman with Securities.

Terrell Tillman

might Congrats on may a one it the it couple parts. it to ramble question, post but of Jack, the keep will first I and IPO. quarter have

just up. heads that's a So

success and history with this inbound and have self-service guys You motions.

$XX,XXX how new see traction attached? evolve these it also motions, this see in as outbound we in part a just experience. customer in Steve brought of or in kind you some productivity could of customers, can it's Just still it new-go-to-market anything start enterprise maybe investments be or would Just as anything of a days, of adds? we what of hopefully greater you motion. kind of numbers? sure I the sales starting early CDP this any up outbound share to curious to I'd market guess And share You those second but in is early the motions overall I'm selling we see else about with would definitely are manifest maybe Rowland who terms some in lot capacity some in has of

Andrew Bialecki

really and really with yes, invest everybody, And a join. across Jamie So, of segments. we and with they're mean, I'm spending now like mandate excited time to is do that mention I both partners. customers I lot for right their Terrell, because to Steve And our

very as So as on smaller much market to our well they're businesses grow enterprises. continuing within larger share focused

really in we're economics. to to continue also going to Amanda we're going And -- going mentioned, to with unit invest continue then, discipline continue invest we're to as strong around both. So We're philosophically aligned.

that really that we thinking a excited about that as as things couple about mid-market Now, segment, enterprise I'm on. we're we working larger, that can start there's -- of

products is out customers, our on we're we're to, new have towards more The the products first letting have we're to The and rolling they're the way marketing. in know customers but the them is and that that aren't talked also also growing. we And campaigns today, geared Klaviyo starting market than others and that yet, educating that. that marketing excited talked some I Steve that run really about but Jamie customers messaging adding just to, both

in about So about some reviews, think of CDP, may we specifically, think the future. build you and you the things

good. They've We enterprises. work for of we're things What's understand with motion work larger So deeper we is keep one that's we there's also with we that sales up well capacity. have. And really partners to means unit smaller software us it's deeper with, in we going more equally think they're the prospects. think trust. helps on model. partners sales-driven talk a that we're And customers very going growing the economics as of messaging. of businesses, invested about this of platforms us with part is from we worked getting to agencies relationships a our And heard we the then going we move our there, those software the think and that already part using. system integration they've market. that but And get And when I tailwind there's working this heard about ecosystem-led strategy. they be from big relationships But with to to how or us be big That other

-- that's And of in yes, can this like, that. Amanda, And numbers, about to you'd really continuing, of big our terms to going think that's add? part in So adds. we grow a that. $XX,XXX like we're really how that you watch anything how

Amanda Whalen

Andrew of reviews, Andrew And reflects revenue think expansion, and about, SMS, as also at. products. $XX,XXX the is into now in adding on average Yes. new adds That group. a speaking of both as $XX,XXX was full I CDP in the suite the you'll customer. story increasingly are great would. the have adding we products growth metric said, we we starting telling Klaviyo Building the look that reflects new per expanding with add I that mid-market, that out I think what to just like see It lands

metrics So those are look that the X I main at. would

Operator

comes line Baird. question the next from Your Oliver with Rob of

Robert Oliver

question my for A.B., is you.

looking talk of maybe is kind the for excite those company pretty environment verticals history call, Can mentioned of I beginning at of the what then you that opportunities most, articulated and San you and Francisco might core about e-commerce think the and for Marathon do what how beyond the don't those about helpful one. you opportunities? the go Just retail But know. deal which interesting was who are resourcing prioritizing a you there, you the maybe

Andrew Bialecki

that. interesting one the shared seeing Francisco finding customers shared things, we really of good actually, growing. Marathon example. so We It's a revenue, a it's Yes, a we still retail have but retail. of really sure. percentage small also expanding an component. lot Yes, San businesses, We're they the as that momentum service we're And beyond really tend like way of to and

they also example, for So may tickets, but sell events an may sell business merchandise.

really across Klaviyo using interesting. actually business models. they're And multiple that's So

the enterprise, in, what they platform work finding I'm component. And that with service to frankly, long part have is excited other a software this us trying Klaviyo then with verticals retail motion? as they're use we of we're businesses oh, can and applicable totally There's parts the smaller for that platforms we've lot because then, retail, that So used a hand actually, not working service customers power our mid-market And actually folks the how should in worked that terms because of raising and the that into on. gosh, heavier they're their of, pure at to I as So lot that we're that. that their businesses up we we're for really this finding have are move with the my strategy and lot our businesses, straight are that data well of of then expanding a even retailers, of our looking we as combined partnerships in we've with just have can then sector. can landing some business. tail though are of just use business that beyond smaller this retail interested And in some recognizing come we're industries just well, footprint up of saying, that retail, businesses, okay, we're expand same outside ecosystem-led we're on good software marketing a about really with standardize to of saying, partner retail

So we mid-market of just it outside more see a retail. our of skews lot pipeline, actually

about I'm excited as well. And those so customers

Operator

Your the next Hynes DJ Canaccord. line question comes from with of

David Hynes

sales-led start curious, a to talk set of a increase, how sales Congrats on Maybe a unit as through they direct question, to direct bigger comes that about nice the directly to stickier, sales the I little but that probably a compared are more. engagement dovetail I'm here. of can relationships off you economics Terrell's bit PLG? cost investments that also of guess customer and I to Klaviyo would mean, are

on some get to love the economics we'd compare. how kind of color So

Amanda Whalen

we marketing of strong we the at payback But certainly, the channel. direct, economics. at it focus CAC have for We of channels as sales that we're direct when cost investments. a ones still other are who And would And includes at of looking include period, are And a them, Unit economics strong. on looking it, coming the look them across sales, folks coming more who at of for look are both and through look we at we're still which things. both couple economics. unit really

up more LTV a market, that that segment. longer, is little period to CAC but maybe we quite As bit payback gets attractive in mid-market CAC move the

thinking certainly about those. about So as we think we're investments,

Operator

next of & comes with Company. line Scott the question Your from Berg Needham

Scott Berg

the paying How And to? cycle I more you in X-plus knowing Shopify characteristics purely through little you a larger about agreement measure a over to from Congrats start weeks. or made we of that I've that is be Is think the how given grow cycle? that perpetual opportunity other channel we the customer of success investment larger bit couple this the you are, early receiving do your think the partnership, because more or it's today? attention in we opportunity company? will are or are early or some customers where question do is on then first the because late ask here. that a in year But last Shopify wanted great see how do the that been should still that there it we cohort late

Andrew Bialecki

What product-focused I got early. would Shopify -- enjoyed I've a very partners Shopify with working and out similar and more ethos. still is have say we it's we've and very our customer-obsessed Klaviyo,

we build and Shopify, yet. aren't products, that So product, ones merchants a building think opportunity I already to have customers, as expand to of their lot there's on big Shopify I business terms release be think there's we as well within that just as more both on fronts, a of customers growth more the had, are in

that that's much how businesses those metric So KAV. we around at drive? we measure I is, look helping think key we the So are what revenue

Email we products the increases, today, increases how that's our And may to it right? driving, As those them largely As can usage customers, think grow -- just better increases. right? to value or increases and we increase we sell the it Klaviyo may It customers, value we products, we're we their to Shopify, of that the of our core monetize increases revenue more of how us. SMS. monetize they

customer look Those at the like, metric, key I maybe that look at, So, then count. ones. of -- that are kind would and

Operator

Cowen. the question, for from Derrick with line more comes that time We one Wood have and TD of

James Wood

wanted I SMS to my And trends. about congratulations. Andrew, I'll echo ask adoption

out this You starting ago. of of adoption a of years gate sharp the guys curve couple had

of last moderated Over quarters, couple the a that's bit.

just any re-accelerate you to levels can demand How to that today? may next months? XX there adoption about shaping talk So over curve? XX functionality what feature kind trends hit the looking you're you key like are the of adoption look do see milestones And

Andrew Bialecki

that Sure. Certainly platform. that I down are there belief to this want Yes. channels time from that one all mean, and marketing I customers. time to fully again consolidate. hear I expect customers

amazing referenced For That's then, combined better. And what seen even was the that growth coffee SMS a performed a their onto this customer instance, company. with we But they've email. SMS. quarter actually, consolidated creator-founded Klaviyo. X It about attracted them

where they we're want So customers like it's examples that that's seeing that what do. to

expanding with believe things coverage itself. you couple product Now, to In needs our We Ireland. products. But to functionality. be there's new SMS case, can We always all product And adding always top on. of mentioned our this then, a better of best-in-class even that, that work be messaging believe obviously, we're it's by email we're hard combine better. SMS at and on when other I it our

their spend think opportunity, the today, see big common one it's the world. reasons is literally SMS around internationally, move us of a we and folks we about as just to So coverage can't

into that's within focus and major North Asia. for a America, then Europe, So within it's team, especially our expanding that coverage

great have at figure that awesome, what our is macro combined. you're place. sure and to hard personalize all all to be move you manage one into work a then, channel we're providing to the based want They think to That's They place. And the to our content want intelligence and They from help making I them want want be to we're it one So big artificial trend. experience. reporting it have out product customers see able what's on is. right you the Klaviyo, going

Operator

Those the questions have for are all that, call. Bialecki today's remarks. Andrew I With call I the over to for will turn closing

Andrew Bialecki

thank all all speaking again earnings forward our looking Klaviyos And next for joining hard thank around call. Thanks. us Well, to to with everyone you you your for on We're world, work. quarter. first the Great.

Operator

call. That you. conclude does Thank today's

disconnect. now may You

Klaviyo (KVYO) 7 Nov 232023 Q3 Earnings call transcript