KVYO - Earnings call transcript Q1 2024

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Operator

[Audio Gap] result of new information, future events or changes in our expectations, except as required by law.

For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks and uncertainties described under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2024, that is filed with the Securities and Exchange Commission, or SEC, and in subsequent filings made by us with the SEC, which may be obtained on the SEC's website at www.sec.gov and on our Investor Relations website.

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

Andrew Bialecki

the everyone us strong to today. Jack. sizes quarter Thank pleased power joining to you across all of our Thanks, smarter We're digital our for to Consumer-facing businesses are relationships. world using results. platform first share

I'll launches, drive tools hardware financial these quarter, customer-facing ecosystem to cover XXXX. This product roles had revenue our in it investments to Amanda second our year number a and with we the quarter customers results outlook and to need our growth. exciting provide turn full to then of along products, provide topics the and engineering, for over our cover

year up we'll we the XX% to free our and as call year-over-year open revenue to grew of million a margin million, cash non-GAAP Later, operating the flow. XX% our while for $XX generating $XXX This business Q&A. was for strong start

artificial continued to our progress mid-market, just in products. as the We and make from [indiscernible] known London intelligence We [indiscernible]. conference into returned our integrating internationally

I largest the it what event get partners, we [indiscernible] to and and London partners, the so great and for them to our energy see ever from our customers our like close many XXXX. largest by to since of We was employees was inspired at in-person customers, are building.

around the and ecosystem was businesses on which the consumer-facing standard the the they world. of we This the of Klaviyo further have quality with I with people of the that One opportunity was across validation software remarked spoke judge a it.

down doubling We're community. our with

digital consumer assets databases with us trusting relationship. their customers Our valuable most their to smarter power are

of than peers. [indiscernible] $XX and types their fastest-growing of consumer XXx list These least faster and at e-commerce brands. are all drive Klaviyo We of companies million brand. their put out XXXX continue to in recently Company at growing to brands The turned least insurgent had all the & to list retail see revenue. revenue

proud like Swatch, these growth. of [indiscernible] brands XX companies to and serve We're relying Dr. drive revenue to all Klaviyo Dev, with Liquid cream Poppy, on over XX% ice their

the us During hottest From finding revenue. also to and name, to are new [indiscernible]. with business the quarter, drive the [indiscernible] businesses up-and-coming we household disruptors closed

the have drive customers in generating the to quarter. which We These continue XX% ARR, We mid-market of up compared $XX,XXX our in from to up during XX% momentum X,XXX ARR, customers now a over was represent XX% ago. year year-over-year.

this businesses in the us. months, cohort This business. quarter like XX% of In XX represents of time that the last size rely this marks growth significant seen the our upon first over we've

As of This the over end of top that $X.X we the to which up million, the year-on-year. average XX customers our of about an speaks value is quarter, provide for our have customers. ARR XX%

our in fashion one first have their of quality and They're with online company the notification. Since top X billion our for first to across in largest quarter, the push needs channels few made consumers. we taking live of past a they e-mail, of the SMS women. over advantage we integration deals store consolidate going platform Shopify over the During sense push platform enhancements their have quarter, us to This because years. notifications to the and the our business of landed history to

we scalability all out, relationships of businesses digital our roll of Because fully they per investments platform, be billion our Once of to help year. and they e-mails smarter reliability power to sending the up expect XX sizes. in for

of existing including portfolio customer of e-mail International. the Penguin challenges brands, In multiple Perry quarter facing was Perry providers. few their tech Another new was key Ellis and their Original Callaway, Rafaella. Ellis a stack during with

to Ellis replicate consumer excited help with their a be AV their test reduce Perry journey. better to be automated strategies leading We're successful experiment brands ability reporting, of single they'll view and to their to growth. able Klaviyo, flows. across with consumers, to improve revenue With of able the to more goal have They'll and their time also driving

successful to us. customers for for and both outcomes land drive model and Our expand continues

becoming year, [indiscernible] last customer a after home Plast, including success in been consolidating us. and Osprey brands, the summer have and and first with e-mail After SMS driving of Hydro outdoor OXO

them the quality both adding up hours offering. developer with to in their business and better of quarter, has volume During harness includes our CDP first-party expansion SMS data and we native which The their our expanded them, our on an integration their allowed for marketing. free

SMS expansion that We're we a Co. One win to our consolidating our and our outcomes with additionally fantastic partners is help co-sold Canada. customers e-mail drive during in power and ours This seeing us. are strong was with drive to now of on to Klaviyo denim smarter ecosystem Andy e-mail Andy quarter and with partner, example had customer with Swim LucknCo own customer partner the allowing business. with grow how Swim, help of of their benefits digital is our love we relationships. Consolidating Swim company their swimwear Andy Luckin lean to business our great a

like few our about some speak to to a progress take internationally. of Now minutes I'd

really year-over-year see As about to we conference, revenue to quarter continue grow EMEA I opportunity during strong to business. from grow returned offering. with XX% a focused the our grew and mentioned, And we Klaviyo our more London, localized just K we're that there or excited London. EMEA opportunity

beauty customer. the France based a fast-growing During we as added in quarter, a brand manicures,

a opportunity on EMEA they're their over welcome a of we're strong trial excited revenue to well. example board, of Klaviyo QX, APAC excited smaller little to we're saw our great our of The tracked some running and as geographies, After in our in for results [indiscernible] represented seeing fast and footprint in a internationally. to migration regions We're and their at them future and Klaviyo. XX% success the global expand the

internationalization some K now We business. coverage in further provide we few the international on On front, expected countries of months. help we and more with recent on announced in number localization. At product London, SMS have to come progress will the grow efforts our X a that our next announcements of

our SMS various our across geographies needs capabilities extend market to more ability easily international consumers to geographies. has met Our across to customers'

is customers connect allow intent Europe Our channels. to across add across them their with and to even more consumers

localized offered English. interface will our we In France later first with announced fact, local time This a French rollout the our first month. is be user recently other going language our live platform this than in

increase Klaviyo announced we began new marketing quarters. coming in basis languages a and saw French, streamlines on a efficient We'll management and When over and self-serve web roll localized multi-account insights we spend brands the continuing unified our portfolio targeted out in to marketing pages meaningful across across be rate. conversion diverse locally availability execution general we swift brands, also simplifies of portfolio. and with by At upcoming region. operations success control [indiscernible], amplifying and management Klaviyo campaign centralizing the allows for

better as International for and across X types for in base multi-account the of both of allows those geared really in Portfolio management customers and towards of our mid-market markets brands. is multiple tend customer operate our these customers. primary types to

across includes brand, using unified wins, of and One digital a portfolio. their of relationships full to Luca portfolio Balcom, our Roxy Quiksilver, view brand have customer is their which liberated recent

segment key higher-quality our further with This differentiator quarter, segmentation out our new built of feature. review we

fees. can Improving load support building. correct processing the segment speed segment, and of customers reducing manual building Now a view while segment preview improving of count their

side, Finally, in Health our natural on with AI. AI processing healthy customers momentum directly the We answered product of new Health and the questions uses we to point see of launch intelligence a usage continued get Klaviyo ask our we're allow artificial AI of manner. language features, AI-based for in self-serve in customers. real importantly, driving outcomes but more seeing proof our to

those customers hundreds AI artificial XXX,XXX our features, FordAI attributed of We've dollars our XX% and the value millions through customers including segment adoption [indiscernible]. with KV features. created last have We segments XX assistant quarter. helped additionally using months, fast In over are AI Klaviyo SMS our intelligence AI, generate AI, customers seeing objects in growing of the during over of or e-mail using

significant Forms AI well. as driving is value

luxury care natural use customers, sign-up Harper, our placement their of Forms website. brand timing of AI skin and forms on optimize to One Tata the a

forms to the X after of were generated automatically XX tested compared then variations days and different prior. test XX XX and

both in functionality. our adoption jumped products XX%. drive to over our continuing improving to We're usage invest by the drive had across customers to user Form and tools artificial to platform provide interfaces intelligence submissions revenue. embedding for our We're working and

the the On sales reaching to front, invest and across make go-to-market globe. we we're marketing sure across customers continuing are to

close our improving ability our further articulate our platform internationally. sales the of our and capacity We're larger footprint expand to out accounts. building network value partner to and We're

be further taking the the On localized for expansion. front, well positioned learnings to international be France we'll from

like to I'd team. Lastly, over of before on a it Amanda, our updates to turning provide table

year has our with over to First, it decided Klaviyo Alan spend company at into end to step today. this want [indiscernible], contribution the I that down want I the significant to calendar more for his X.X the to last thank to family. build personally announce years his time Alan CTO, of is

his and than engineers greatly leadership also training all function, he's team corporate Chief and Carmel bench. and new global efforts strong welcome and and including scale well. When Alan We and a XX our of Carmel leading joined, we I'd HR people wish like had People is operations in us our tremendously appreciate social responsibility. diverse build be fewer acquisition to new to world-class helped development, and Galvin, him Officer. retention, inclusion going as team a talent

and We're significant confident over to drive proud turn growth strong, company in within team. Amanda the financials to board We're and to outlook. Chief we [indiscernible]. build of beyond. to results world-class most cover Carmel a as I'll efficient experience has excited our And Carmel of it shape the People momentum and as with serving Officer and in the business our to have XXXX guide Amanda? our that, industry, has our on recently culture help the software

Amanda Whalen

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

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

As quarter. the a strong year Andrew noted, we first with started

delivered continue our million we the first operating a We growth quarter, In XX%, scale with financial in and to growth efficient XX% year-over-year margin. at generated in framework. see of non-GAAP representing line manner, an in revenue, we strong $XXX

perform new into and to continue the primary growth expanding customers, X customers, across mid-market. We those adding expanding vectors, with internationally growing our

year-over-year terms regards entrepreneur serve In customers. customer increased bit customers, and We're customers. side, our with softness smallest on adding logo XX% to now logo a trends consistent to particularly we proud and retention seeing addition new are of new XXX,XXX the our base of amongst over

more shifting of reminder, investment while go-to-market SMEs in entrepreneurs, a mid-market. continue and target investments are we towards As our continued the to through it product, intentionally and doing we we're

were from new revenue in net logo quarter, year-over-year. up logo While down cohort adds the was dollars the new

You'll QX, average was customer, and increase see $X,XXX to XX% year-over-year. our which this up per reflected revenue approximately continues in in

We of customers continuing our expand rate dollar-based XXX%. or are retention revenue to as evidenced our by with net NRR

our decline discussed prior impact to expected from of our call. to As we September NRR on due XXXX the the increase trends quarter, the spending [indiscernible] last last and we period discussed our price

we and not unsubscribed quarter, in last updated seen any rates. we Google's have and with behavior, impact Consistent customers' requirements material Yahoo our seeing changes not upgrade are our

see value to personalize Klaviyo particularly consumer their our the and or segment attributed our to ability strong platform customers through bases. continuing are KAB drive capabilities, We through

as increased APAC seeing we Germany, Internationally, in business. aggregate and in our strong Netherlands. EMEA the XX% continued Europe growth QX with to strength global year-over-year We're France increase U.K., the from and particular in our revenue

mid-market seeing quarter the in with customers and businesses to ARR. we're generating more XX% first turning We Finally, the This growth. us. represented over ended $XX,XXX X,XXX year-over-year in more

hit As customers. Andrew ARR XX% these we now our this milestone with coming quarter an mentioned, of from over important

be Moving compared non-GAAP discussing results X.X profit will to was a down gross the XX%. XXXX. point This margin basis. of Gross quarter income for on QX improvement statement. representing the a $XXX.X million, I a marks

male migrate volume the system cloud of optimization. see our We've team's R&D agent, Klaviyo continued benefits to KMTA. transfer to continue to engineering on efforts our We and

these a Looking the offset efforts the to we associated costs see of SMS helped channel. higher to with expect ahead, portion

headwinds next of of due year. For seasonality year, of margin and a of a headwind points decline our to gross to compared the growth last expect the points quarter we the we of gross over quarters the fourth margin couple expect to full continue to in X further SMS. couple a Compared QX, to on in

count to or marketing to expenses. grow sales expense programs $XX.X international We've to Turning operating generate for and invest in Sales the to revenue marketing continued was serve to XX% and million mid-market our demand head our quarter. of customers. and capacity

narrative resonating. QX that out rolled Klaviyo is we in new Our

We continue investments different new continuing we making, right returns. revenue. million investments products, level the XX% or of to offerings will to capabilities invest the we expense closely AI are of core of which unit economics we Andrew $XX.X monitor our was highlighted many see of to make earlier. and where the continue R&D our We're and behind

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

now are public company We readiness, line expect get lapping leverage to tied and investments this to from over more time.

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

flow generate the up some of increased on to generated margin To flow, year. year-over-year. in a also XX% cash flow $XX XX-month quarter, We to year-over-year by and to free flow X-point sustainable during leading ability cash compared million trailing cash improvement prior give our free million $XXX the our free cash perspective

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

to XXXX. Next, full outlook the I'd our and for like about quarter talk second year

As experienced seasonality in a our model. reminder, typical we

As quarter, typically last we sequential growth revenue downgrades season. the the discussed lagging of holiday due impact second the has after to modest quarter

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

in We to XX%. is the which made X% quarter, step go-to-market. impact to non-GAAP in first greater the non-GAAP a of some dollar of timing a to in in expect in second margin due particularly down sequential million, be operating quarter, engineering investments operating representing late This million margin have and operating $XX.X to of the the $XX.X income range

diluted For shares approximately million. fully to the expect quarter, outstanding second $XXX we be

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

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

up are last the about growth. set year opportunistically year, As progresses, as for incremental product spoke to across we Klaviyo and we investments making go-to-market long-term

as timing the in see expect on seasonally deleverage fourth we margin of with expansion quarter. to margin well these quarter year-over-year third investments, Based operating our some in strong the

delivered healthy be the diluted count and out, operating and year, for share income free on fully expect we the we strong To $XXX top flow. close with this full strong million. approximately Finally, line growth results to quarter cash

the of we on And us, and year it are the we'll long-term We up for are against that, call excited for Operator? opportunity for this shareholders. ahead with for focused and executing Q&A. our open

Operator

Instructions] Bhatia go from to [Operator We'll our question first Arjun at William Blair.

Arjun Bhatia

just the Perfect I larger was here. the XX. maybe, had you of To which given, nice and congrats results some on, on start with, I top to customers, touch of that around wanted one your think, disclosures Andrew, the

you there your bound help also that and further they and is view look bit you your I -- And ARR, average think or market little you're do are the you're is how Maybe -- target where had it sounds a targeting customers one sales that the the over move like to in? as landing you're landing getting what mid-market. of your X-figure reps larger frame into just a larger. go-to-market the especially the resources, investing upper us

Andrew Bialecki

be Thanks, Arjun. on that a bound very results there. shared we size that Sure. upper question the on business answer don't to with bound, can we're And upper see of your we're happy Yes, the seeing because strong on we Klaviyo.

SMS, much out of all a there, And see to running integrated customer as one one everybody place solutions we of those. easier We access in which this the legacy e-mail, retail just marketing more continue built a that a folks We as personalization, and to with that folks just There's data fact lot it's on marketing the channel. use. just up stacks channels there's directly of adds what with in database e-comm and great it that integrate point of and after. is all makes and to is platforms lot just that lot better

just they over for that that store on marketing goods point They quick had with better a legacy So example, all you XXX a SMS, consolidate were data. locations. one give us these for with solution platforms to sporting access of we a to e-mail

more they going can more and that's customers experiment to from more quickly. revenue engagement So they to growth. And know lead

So capacity And coverage and segment the sales into that we up think for been in that mid-market expanding well a team, internationally. that beyond. can and focus our as intentional on we today really take ramping way then as we've very mid-market we've got

seen there, we a the excited growth think there's So we've that lot about to we're more and come. very

Operator

Baird. to move at next We'll Oliver Rob

Robert Oliver

you little Amanda, a I ask wanted bit. to just

the the at bit quite had maybe you business. obviously any in just of And are lots You if SMS investments updated an change see to of a wanted macro. seasonality then been there macro, talked all? a the that you portion little making the relative view about that to get different I from dynamic to And guys and

to wanted macro just in update get guys what of you on terms from I seeing So are opportunity. the you an

Amanda Whalen

in to Yes, SMS, the some to we SMS. Sure. to holiday and continues with more period. very to seasonality, tends Generally, SMS it of communication Thanks, peak be point-in-time, linked high-priority with terms see Rob. of that what be tends shopping consistent be

SMS see holiday period. peak during So we those shopping

of seasonality, familiar margin were one we of there's into natural during QX that all QX which being gross see Monday QX, in bit the with, Black what about Cyber some we're So of course, you a talking Interestingly, and and Friday, can in little

again, That past, we've holidays around change again what SMS with of lead period. is of all Day, little Mother's QX, to the Day, Day, a Memorial you seen shopping back very bit But in those fourth QX from there. Father's the up between holiday have no real of a from coming more so consistent is wider July. the that big

on the based we're would not but seeing of seeing, better, I macro, terms it's say it's is on steady. It's not worse. what In also what what getting getting we're

to that linkage But those are some behavior they're of we on we again, they're see macro think that stable. see steady the called do the from is the trends our some very is consistent, trends We some what macro. on of coming that customer there call, that last and in out and we

that see than is trend as pretty to growing time, continue KAV have The other that interesting is their their is that's or growth which customers' stable our is we well. attributed seen Clavo faster we GMV. And pattern value GMV that the over we see

reason platform the than we faster And it's them. growing is revenue drives GMV the are a for who

our We nice macro software on built we your are this have -- have on to growth. help you on top that focusing a to to so to customers what is not a drive be helping line and -- must-have, continuing focus drive in count we're our the because software environment

So can most running are for we're our place as the to we're best of they possible. practices use and on building Klaviyo customers get that what content the out

one of great come And has they our and are who's space, XX a over example in for use revenue customers to that those cookware segments, segments the generating made XX over generate that, recently in segments AI million of in as them. $X

terms So customers our way that drive the growth. on great help relying us to trends their in of are

Operator

from to go We'll Porter Morgan next Elizabeth Stanley.

Unknown Analyst

I health better few is the by the it next understand customers behavior Elizabeth the spend of over about and that the the expansion would trend the for NRR. on Katie can This helpful Can the tonight. you ask of think quarter. expanding one quarter. we price NRR customers to NRR provide I appreciate quarters? lapping in on visibility wanted Congrats into more be perhaps to how impacted is [indiscernible] on Porter increase

Amanda Whalen

Sure. Thanks so much.

with we where set feel and As our are peer positive we NRR. others across in our play our we who really about space, look

you great XXX% expected a we we're to with talk to to think expansion last due trend tick where quarter about couple pleased we is that's as down. have. did just I of a are. factors. We And that NRR And mentioned,

that just down we're increase tick and last lapping because customer speaking to also because trends to out when the talked price about it the the behavior called I we're see, we as expected we We macro, quarter. about, continue

is some in forward quarters. points So as factor the continue will spoke there another NRR, decline we And would that we is so in of NRR the make much deals anticipate big that on more and tend those it purchases Andrew reminder, about reflected a larger in to when in earlier, that land to land expansion. not few that their upfront. I coming then customers, going larger as next over look they a That's

we As how particularly time, it where things is. is our of is one and NRR sticky the product we're proud that think of over about

because the for tech driving we are our of the of data we It's ROI foundational and so to them. that source them. their high because of are to important also customers stack because we're how customer for central

which our think of is is, number businesses that the for retention, of serve. gross course, So size really best-in-class an we part NRR that we important of

Operator

from Borges We'll Goldman take Sachs. Gabriela at our question next

Unknown Analyst

Kelly is in This Really Valenti quarter. nice to see on the for revenue to upside the Gabriela.

biggest in that? the to in wanted dig was Just to What business of part driver What little main quarter? the the upside surprised the a that bit. was your of

Andrew Bialecki

Sure. to I'll attribute go Amanda what I mean, Well, about. talked -- we just back

adding You we our growth think about about more customers. think like levers,

We something and platforms a or great customer moving then continue of suites towards just newsletter channels. older as consolidating about marketing then point talked see database and off that adoption, legacy SMB marketing we central a data folks to across mid-market, that's has

continuing customers. add So to

see talked lot up. of We SMS that adoption products. continue about a We ticking of to other and

now touched in there. just language. impressed From before. it to And international by on across drive And with release, the to still that. we international, investments very mid-market, the we're last internationally. just continue we yes, making and expand then briefly. portfolio just on French sales partners And week, internationalizing hit growth We're product launched I'll Klaviyo our

a very of I So we're lot about that's why momentum think and drivers, we're [indiscernible]. across there, our X seeing bullish key

Operator

Brent to Bracelin We'll move Piper next Sandler. at

Brent Bracelin

seeing What million why still [indiscernible], feels SMB It I database, with the be coupled But have Can marketing prioritization slowing a around growth super SMB the maybe SMB step little there priority feels different. insulated. walk customer wanted higher broader given to maybe from with category. and category spend ARR that concerns slightly the you through exposure XX%. just Klaviyo businesses maybe take you we're aren't spend $XXX a just There standpoint? software growing are more across back helpful. step XX% many investors that that Any gives color a would back.

Andrew Bialecki

and absolutely. We have Klaviyo when customers, to must really because Yes, versus our must-have there's what often we percentage think to the from are must-haves about talked we a of are talk of to a greater about what their we're -- how and us the coming for day X, Amanda think kind and nice X are sales Klaviyo piece -- make our increasing software of position driving as a try to revenue. customers parts have. we through that

about in to is that but of et able products, first also not marketing cetera, then applications. SMS, the being customers our just The and all use your to truth data central being other source e-mail, that, with use

to centrality so matters. I a We've product is, got that real hundreds of driver. attribution the profit, into measure tie back we real Klaviyo, you're in that And your applications usage of directly ability can part a built and plug that if results, really to think second that really product revenue, huge the then that's

more was more to or extend better, going doing we're of going be strategy. the experiences, you When with they're a personalized big engaging whole think In drive idea with they're product we revenue. part our that's And -- story. intelligence what fact, more started Klaviyo, that artificial about now you as when to the like

that experiments, we running. and by As to being the we campaigns engagement in customer of invest think run optimize they're big as being able revenue a marketing helping to about AI, businesses more driver increase able

I looks think revenue, [indiscernible]. when I we fit everybody And budgets think get software little have. kind of must driving because bit is we're tighter, So a which at a

Operator

Our next Raimo comes Barclays Lenschow question at from .

Raimo Lenschow

of you to you about differences SMB already got it, geographic that as think strong think listen that differently? not a of see as But you buildout your geographic might from impact about question allocation Shopify of Does -- you if perspective? do there yesterday, that kind about if U.S. impact a European Europe you you about resource your are Amanda, space. Does the that any health think the If was

Amanda Whalen

Great Yes. question.

out seeing called on actually strength Europe. we we're call, in as So the

So our particular. U.K., in strength XX% European and France year-over-year, Germany, business in over revenue, we're was up Netherlands, seeing particular in

we a to in in little our with think French make are launching who really language, bit starting new days SMBs SMS many inroad just earlier there. particularly are in and launching now in penetration there's new Europe, starting we're as So so just a markets, that important we're I in out

-- If our see we're you strength from look at our and our customers customer count, continuing Europe. to

not new that's but leaning we're see into we results expanding adding great in why And new opportunity, because of countries, lots only languages there opportunity ahead.

Operator

to next go We'll Scott Berg at Needham.

Scott Berg

I question on a wanted your A really to functionality. AI AB, quarter here. Congrats. ask nice

components quarters. several few over the of release to able last been it You've

of today. of journey from understand help in at seen AI base maybe more course start? Where frequently. the you've using others? least What you Maybe they time most maybe at As do that just what over that look you see your customer functionality initially them terms us used than what often they're do

Andrew Bialecki

the Yes, for it's focus The tieback absolutely. years. last of X, major X, been ours a X

describe So our AI let me in strategy X parts.

first When more forms a more our run AI, of part AI, all the SMS Klaviyo, flows big assistance, you create AI, help how all look at more, e-mail there, segments The Klaviyo you they're features experiments. is AI, use about about to portion productivity. AI,

going twice believe usage. marketers help to and internally we to that get we a experiments, done of and lead businesses a to that's heuristic have lift can as going lead in much We to that's more KV lots

of how lots adoption. front, seeing we're that on that's So progressing. very with We're happy

Part strategies. So is optimization those then X that's productivity. of part one, marketing

Forms say, we in let's opening talked revenue. that leads about sign-up to AI remarks. -- better a a an website, more variations example to which by to So ultimately form that rate running the a more leads on subscribers, of leads That more

part X. that's So

doing strategies. they're not really actually And with how net that I'm marketing but do people new about help is excited we X marketing then the just up part come improve

there right If you're matching that today. of just hundreds right and lots or the time. consumers, or the campaigns, your the And business are our segments of artificial the intelligence up product millions find with that to for through them thousands opportunities a and of customer folks driving at Klaviyo can those base, personalization has are additive help those revenue are KV of

So X we're the your And on see of But part the expect I and marketing those customers, to think most and I being X net where buckets first quarters, more of to strategy, X productivity. seeing you're those mean, as your able I going those you valuable. coming valuable. marketing optimization optimization over our strategy. about we've on are then marketing things, they That's extremely across usage. are productivity products new But in the expanding strategies, shipped the of on then for sort all -- think think most expand

And us say, building so is our we're tooling product. while of that the monetize, what part trying productivity makes to product best-in-class not directly, a we're into

drive be different packaging. either the are we come as to think going optimize marketing doing adoption new them there's or that net there as products or with up opportunities pricing folks additional and we start help for to I can campaigns,

a of When of products. our We've it we all round to this directly actually more to it out sophisticated build Klaviyo really we revenue as businesses. intelligence lot that started for marketer. engine built out, took into So started a

us. still to to really that on our we're in model relying we're think customers early -- very over And shift I getting

for I I in the whole that's coming. think And the think big space. that's opportunity the category

Operator

Terry Truist we'll Tillman at go Securities. Next, to

Terrell Tillman

go-to-market perspective or an so whether more AB, what from investments CDP upmarket. I'm opportunity, it's curious you as some about being it actually or -- capabilities the of the innovation I to relates see the unlocking do an AI about. pulled Scott you of think But have clearly and with portfolio asked that

what you of curious more some need meaningful see potential and for bit RFPs, unlock more what them Just a the they products? little these is and with even maybe newer

Andrew Bialecki

seeing I this. folks. we take take for I'll more Terrell. Thanks, Yes. we're upmarket, move as what wlil [indiscernible] from it

this truth, of CDP, all So I with database. is, mean the first central it a starts our source customer

Helen there. our seeing I'm the that seeing about we're progress there. really the almost of and we're the demand CDP excited Troy and the away. mentioned We on touch adoption to right CDP the Just adopting pipeline,

and could as One X CDP that is you think data governance I opportunities. think federation. about

So easily place, they into to that. thing X their seeing not consumer but wanted for to advertising they customer integrate their data in want to to just larger we're and providing we're from marketing, and website, on X businesses service

that's differentiator. so real a And

like They businesses. marketing second want The we're focused lot for these of be on a still -- we've all And is SMS rely and consumers actually some been be together. thing and to other consumer customers that our rounding the able different work out not stack and there's that channels of lot that but complexity, to of really bigger e-mail on doing them prove to reduced orchestrated channels. altogether, to real a experience. It's lift it point with of better. only out solutions A for larger the better

PDP actually with found data play. of one there's those about So things over analytics we marketing the adding channels, it's is notched that an but governance, on time,

With feature some advanced ideas. part are our CDP to the run out of reports, marketing allows some of set them help more of which customers box discover our to new

For and That's it marketing quickly or days. has can you folks an out past, customers the analysis create example, that's used but be customers that campaigns in that. to lapsed, on have something months have used in hours RFM something idea that discover we that made really to was based take loyal, we've of our would to since actually it it had, do box the implement, large but and

So picture. those productivity that's the artificial the some on, optimizations boost, and machine learning I complete intelligence, layer of you think with X the things, take then all

to for larger want a businesses, think allows really stack that them complete then customer the personalized they and consumer one place. store experiences all in I data drive

do that the trying to but we're of with so we other using. And then making we integrate offer, the they're products software both sure that

Operator

next move Group. We'll at to Siti Mizuho Panigrahi

Sitikantha Panigrahi

talked you to integration. online this Shopify that store deal with about great see It's largest fashion

of at opportunity they some And many use further think base your greenfield opportunity, As of a you you this more is do look it opportunity partnership, kind with how sort a what mostly plus the in this of displacement? of the you Or penetrate kind that can Shopify see when Do -- in service? is you installed base? opportunity?

Andrew Bialecki

Yes.

loved Shopify partner that work Plus -- our our integration closely. So particular, personalization. products and we so really in Shopify mentioned and working X relationship with strong, our continue that for With our to we we and together, that Shopify, well is really a matters lot

consumer we how go, Plus of just use channels additional of a Shopify think of as there's more got room terms we've database from in those across share, expanding and still to then in it marketing more can businesses, adding the use lot think I also customers strong our not customer we and So parts Shopify but merchants, but for in data experience. market

customers like I vision When to lot growth a and talked of helps about what our Klaviyo. to sales lot us the and that that's them have. that a looking more for And they customer them are really It road I partners, of give team, our team talk adopt we map. customers

date very that a happy well. we've we're to as the of there's ecosystem. in the And progress to room So there Shopify made think we lot grow with

Operator

We'll TD move Wood next Derrick at to Cowen.

James Wood

you the up have also end of market. but lower investing the acquisition a you're resources Amanda, engine at more customer strong market,

be are should that Should X,XXX as Or net year? new quarter-to-quarter we progress other thinking the to see seasonal rate? customer comments get in kind to a in QX. sense run and the how of we the levels think in new there on you So factors drop of especially through to We made. the XXXX, the new customers that's of I of down about light impacts expect macro generation did wanted some we

Amanda Whalen

Derrick. Thanks, question. great Yes,

the investment continuing we're environment which then the you macro those of and -- we is referred macro the to, of logo mid-market. a a shifting We that of As combination we through of focused the we it's on intentionally a it end softness think are discussed new we're count, things. intentional doing of that as decisions a of go-to-market at and on in bit combination as adds. is was the SMBs going there our couple see really well We towards the lower to And did call, the what's in and terms really think more target of market. products but entrepreneurs,

impact But they customers, on smaller smaller count, when you a the revenue. have impact total count have disproportionate those and on at look logo logo the net they a

they interesting trend customer an those seeing the look higher their that us each drive are are to mid-market. plans. you we our entrepreneurs SMBs groups, if them Customers Within customers. across larger ASP there groups, of that Now turning are the in in the within business of more their signing in each closing for the we growing customer that to businesses, and are of revenue is results up

I going the logos going expect on more as the continue more to and growth you year, we're growth about between balance total would to of it's logos logos, forward, moderated a new but new grow and So ASP. rest of adding in balance think we're the be there of number growth to that of going in

Andrew Bialecki

That's thing top what of add shared. one great. on I'll Amanda just

-- regardless within still of business, a to and -- of a on about mid-market, relationship more in this obviously there. delivering invest our whether continue teams have platforms. established talked about go and great or think out-of-the-box we we experience focused of we out There's growing you're in with Shopify to our existing just And businesses, stage of share. and talked So a we Plus terms within SMB way enterprise. partnerships the long are Shopify large kind very We starting still product you're the market also

of and of of We lot Mana running other doing also a SMBs, as there's retail that we're relatively in platforms internationally. We work we're mentioned, should -- lot a be early think Klaviyo. customers space growing in with the quantity more that and e-commerce There's on then there's think internationally. large

Operator

to Radke we'll Next, Citi. at go Tyler

Tyler Radke

question investments talked on talk here? focusing you X there then more? about are investments? If the certain could ticked parter opportunities, changes bit industries seeing a France. here. in those -- into and you marketing the like go-to-market. where you where spending And Similar about about guess, Are sequentially. in one, there? just looked some you you're Could you're down it talk Number targeting international leaning that especially I go-to-market you're just Yes. it of sales Is -- kind that

Andrew Bialecki

Great. talk about talk sales I'll like the and in and little then marketing our a to trend Amanda bit can spend. strategy

that intentionally areas. to mentioned side, sales on on capacity I increasing we've the So very focus been sales X core

seeing strong where mid-market being we're growth. first The

existing is growth second what is with that a our again internationally, And where the Klaviyo adopt to customer we Klaviyo them opportunity. The we call think platform. full help customers big third the team works then

there. and we well well, positioned going that's we're So think

of mid-market, we folks folks in and to investing these newer we mentioned are On knowing for some we also the marketing side, in to we're areas creating brand who and we're international, mentioned really moments us. attach

Klaviyo both those new existing a launch from and we're Klaviyo to Conference believers customers meet [indiscernible] net customers more as our meet existing months saw together their ago, big are customers customer brings You few experience. in learn events London as use well to

we from So like we're investments well. those what as really seeing

talked marketing newer you especially to existing side, all our some market even our the on doing customers that mention I'll about I give e-mail to products, learning products, Finally, about we're their advanced a example, bring of the just and a to lot users but or what of they're ours, educating a SMS are can of who can or customers CDP channels other still bring. what little lot business of

we think a so lot And upside of there's there.

and So unit very focused all and still e-commerce experimenting we're good commitments disciplined. on strong retail of doing staying economics to that, and much and with

Amanda Whalen

the sales of with And do you step then seasonality regarding the asked about, investment. marketing to sequential and has down in that that

season. linked timing a shopping and have primarily are lot of So the programs marketing we marketing holiday because to it's marketing that

timing in we sales we the that second unfold in As how half Andrew through marketing operating in prepared continuing of be to about of over the of had year. We'll remarks invest that reflected programs said, particularly expect ramping And capacity. see up our the comments margins the can course of the the we're to you talking year. some

Operator

Hynes DJ from question at next our Canaccord. take We'll

David Hynes

what kind else the was your can sales favor we to what there? long Maybe tipped go cycle? the Curious color. involved? in large of look would online with be back -- fashion ultimately women's the like win the Who that helpful decision was How brand. RFP

Andrew Bialecki

Sure.

of of older the the which include So channels. customer other in it's enterprise, experiences doesn't back-end build we still tech, can the personalization and have, of and -- and lot SMS that e-mail, and that we the obviously limits kinds database amount across mid-market a you

a Klaviyo as tech solutions, lot. scaled marketing help case, customer from they'd they sends they came our a a that back outgrown a few And on I point us and share time. customers. our been of We've the lot that as up So lot the reasons but legacy actual hear us, just well thought on particular the In grown years they just of ago then things for came had and had that systems like back. all

of tightly their with integrations integration outside consumer-facing and well that with retail Our their more systems things as website marketing. sit back-end into e-commerce their and as

integrations, those done. to of So with the use, things ability the ease get combined lot a of

to the personalize data plus that's to able we're to access where that think use going. being I and

to fully interfaces office intelligence larger take to experience. every the data all to not data. and all have A of each able able the about don't and our stitch to been truth our plug They we're the that pieces, of front a single into have of consumer to database I larger talked but source and to have of really a brands going do with feel like of for channels, They lot our it consumer. lot the talk ability aspect software just you that Not excited be what with enterprise haven't you they're still mid-market customers, they together. consumer they the also and consulting other. customer artificial don't

that out with build for marketing products to And want that's going about broader consumer what CRM Klaviyo, a to build do that they both move and is to we're I company. this got we addresses talk what that shot think data really but at businesses. being also today. with we've quickly

where makes I what interesting. we So think that's and we're both where going, it are

Operator

We'll go next to Nick Altmann Scotiabank. at

Nicholas Altmann

customers at you U.S. in the I how guys are question the international Martech in those at could the Andrew, EMEA in rolled buying just channels, various you their are they're maybe about the with where build different cetera. Raimo's off of journeys, those willingness wanted talk international interest conversations and have guys features customers if given with wondering geared just et out customers. consolidate, was from you just on propensity, side. coming plateau to of event terms on I to international

U.S. any be differ international Just color and conversations would you can other interesting. with customers provide versus how those

Andrew Bialecki

about Yes, great what always customers It's and hear sure. a directly Yes. event, hands it's with and really get on from to them great matters.

mean first, -- So And Asia it's I a both the to that, we're really and they're lot that -- I of the and of they've -- complexity. reducing do. really in that's are businesses the to driven. They for sophistication to ideas and about want they on got both value are level, to how excellent. in in put access Europe winning they that's know a these mean, Europe should They really challenge is lot have data prop. it Asia, know The work. what because

into log different folks accounts at to want of different Almost Klaviyo I you Europe. for to in single quick went log all brands at said, many launched Still tools a at accounts "Hey, once region were I give working we I many a different story, majority you week. least every of regions, hands websites multiple multiple at were manage event, either multiple Klaviyo set said, many had panel mean every in we XX I week, the place. stores, Cadia "How multiple When Klaviyo across everybody not a brands, A asked portfolio. hand. raised in down. or And you they accounts, customers And least of their how of of least

quickly and both building So set as complexity. XX of other of in We last as which such tutorials. the move just the should French to we help all way actual with but to so France, put customers documentation, on software we're launched We the to plumbing help and itself of technical able international effort from to did that, be will the address our all launching that many that spent features huge do guide English product, like portfolio. going We our like a to languages, be reduce really like to that the who well the our a internationalize team it customers. could months we're more in us up future all

So as creating are of grow our additionally. of growing on ideas hundreds of up of focused campaigns that's those partners to number kind a we've internationally allowing well add us and plus marketing all a great lot overlay run platform Europe very flywheel then that customers, additional you very plus headcount, over sales partners got that's sophisticated, pieces in as a

Operator

Nader go We'll at next to KeyBanc. Jackson

Unknown Analyst

Kyle [indiscernible] a Maybe Jack question Great. This first. clarifying Nader. quick just is for

back half throughout I a the carry And year, through in sounded SMS entire from Or of kind color it the larger just you of of productivity there growth into or there mix And that of the primarily up in us lands? like think the quarter thoughtfulness growing we guys -- kind customer spend the provide still that by could last mention December. cohort? is the are up more XX,XXX-plus Is particularly on a it of side, and execution a backdrop, kind quarter of thoughtfulness talk the better of coming any business. of Did towards in fair being similar when that mid-market. was it was in driven for secondarily, customers cohort? bit that so kind that is then here about

Amanda Whalen

question. you. -- Short Thank great

to seeing spoke very what with we So with are regards thoughtfulness consistent themes quarter. we're customer trends the about and that in the behavior, the last

that their this reasons and they're trends make aligns usage is to And plans we remains seeing that behind generally, a expand the more being quarter, talk what e-mails but the their plans SMS managing is it was the to targeted size look moderated plan in less they're doing and the expansion into consistent. being seeing us. that data customers they're to customer and SMS, when the driving. to proactive it the they on with at in continue very focused more They're sure that that the we're it send of And So overall magnitude in they that just we're rate.

differentiators And our base and both that those look very one marketing. relationships of we more well is high contribute targeted, things the across that really we high competitive retention see and that intentional effective is ROI. let very very, high key with be helps in when have we that to fact our them with of customers customers build customer And the what ROI be their data

them think drive we do revenue value we've creating. to good both those share time, how over out So and business, trends of in we're are we we very that got that in the just to continue and how figure help

regarding mix, the guess, seasonality then remember, customer the XX,XXX important business. of it's first, our And I to

The XX,XXX expansion is fourth quarter, of the year, the the us, key of second of a for ads. driver is and biggest number and expansion half in time that particular,

the of milestone reached there. now cohort that from that proud call is with the we So continued the we're overall, that our XX% that pleased we we're the spoke really with customers. really XXX-plus that we coming ARR pleased about of seeing and progress have We're adds on this of over

Operator

I'll over turn closing Andrew are remarks. questions I the that, have those all for for the With to Bialecki call. call today's back And

Andrew Bialecki

We're us the evening, call. for very year Great. our Klaviyo Well, Have you excited thank our a and a great today's all for year. want ahead. for joining everyone. customers again start on to the our team, We partners nice thank

Operator

this your you participation. And concludes Thank conference today's for call.

disconnect. now may You

Klaviyo (KVYO) 8 May 242024 Q1 Earnings call transcript