KVYO - Earnings call transcript Q2 2024

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Operator

Good afternoon, and welcome to Klaviyo's Second Quarter Fiscal 2024 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions]

With that, I would like to turn the call over to Andrew Zilli, Vice President of Investor Relations. Please go ahead.

Andrew Zilli

Thanks. for Second thanks Call. XXXX and afternoon, joining Quarter Klaviyo's Earnings Good

IR With earnings SEC are Whalen, can today's our presentation, release, Andrew be at and on Our CEO; investor CFO. of Bialecki, filings Co-Founder press and call on me the a and replay found website today investors.klaviyo.com. Amanda call

supplemental reminder, to found comparable release directly can be which the in or our earnings materials, GAAP website. today release include will found Investor commentary a be most As non-GAAP Reconciliations press today's on measures. can Relations measures earnings our

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

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

Andrew Bialecki

every must-have transform joining across valuable Thanks, growing easily and million, XX% strong for and for second Zilli, into help world touch their them thanks delivered than revenue to we data more as more around of $XXX the year-over-year. a us very quarter are Klaviyo today. platform everyone quickly XXX,XXX connections results we believe with in point. customers the We

built do. model the to at work every their joint heart Our is success. day, earn We and customers everything trust of we our for are

as our grows. customers So Klaviyo grow,

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

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weeks only our If ago, Klaviyo asking breakdown difficulty the Samsonite number They built platform, Klaviyo ingesting due Samsonite action. SMS. we've receive all you platform. North integrated seen workflows a provider, X and this of and data automated with They was large their brands, that e-mail you you've brand bringing onto giving American e-mail from after to point using differentiated that options point them to the a SMS flows. years forms to bring execute multiple fragmented in a company, enable could of and quarter with That's then X we chose on all because those solution. a legacy across an ever together for selected place. were of luggage travel had why impressed to review product of that and into the over templates, one their data our provider our easy-to-build provides from you've e-mail e-mail unify this of all channels solutions data, returned had world's X they every customers largest customizing powerful a one their insights touch strategy. Samsonite, omnichannel Klaviyo and

campaigns. multichannel driver companies a be with our flows as for SMS consolidate key growth to capabilities Klaviyo continues SMS and platform leverage us to to better look of data for

relationship with in This XXX and a the for years million quarter, expanding with and Klaviyo e-mail customer our tremendous company seen their merchandise, selling franchises entertainment X content Barstool social success followers. over sports influence digital media XX we been They've communities. have their sports Sports, and the expanded

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

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ecosystem, their from anywhere. and both well platform, data so Klaviyo integrations have third-party from more consumer These Meta. bring data built data onto The you other the platforms on be. inbound to our our campaigns as allowing customers like as an your library and incredible platform we customers out can data their leverage growing all one are pull on our Google of outbound, will integration stronger With first-party help in

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that They global the competitive give prior inbound We them up create on felt chose QX providers, with of were Klaviyo new solution this poor time integrations they to would reporting Herschel by third-party up We with a to also chose outbound and build Klaviyo because a solutions Supply challenges, integration to integration in that lifestyle travel and for our developers significantly Klaviyo both and frustrated of because to framework future, efficiently. plan their features right in open legacy due integration. brand, process across point integrations Klaviyo in library XX%. third-party innovation, framework to they our part Company, reduces growth. functionality point lack AI them edge and a to more enable the following RFP and announced massive

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

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

platform offering. investing are presence we Internationally, our and to expand

had Austria, with of countries, During X provide Spain double and the Switzerland our as expand now And more time as localization year. footprint the we the capabilities Australia. in this to forward. to internationalization MMS quarter, coverage adding we continue SMS going countries last our international coverage continued in SMS than to into enhance We we and expansion our XX plan well for

we as increase product launched we and quarter, our a result. large This and in a new customers saw French, usage in

with of and solution start a more improve chose company. It of were testing overall deal revenue and to platform new Klaviyo through SMS to because help their data Petit a to a looking our use to wine Ballon, e-mail signed subscription for They retention. new addition consumer we example, e-mail. plan For them in Le French generate

right improving product and us differentiator. so have we their released a and continually In number which customers. deliverability. Customers profile new for Companies the brands. suppress bulk key to tell that profiles stopped now QX, the road helps is consumer map of can suppression click ensure features, engaging can our product one market platform tool, offering with our our a a by our with including their customers profiles profiles dedicated those keep are to clean We suppressing that may they active

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our together to will all we easily recently segments, curated Up with. the more Klaviyo practices, our about get help Power platform, new designed engage continue of we throughout out Up, by all making one Klaviyo a best assets resource with most To to to journey customers work functionality bring across empowering committed customers self-service to it Power their easy content of place. provide in resources customer these to to and support we customer centralized center discover partners launched features As and Klaviyo. to deliver excellent the and answers community are find to add with

will Power We our dedication success. Up part our support to to long-term customers' as of enhance continue

year. the with I'm and second extremely happy of strong results quarter the our half first

beyond customers have customers. we of as We marketing opportunity smarter us our cases the a tremendous our ahead for future the to world. power digital have help bigger long-term relationships use plans around even for unlock And we

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

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

Amanda Whalen

delivered Klaviyo financial the at growth performance QX year-over-year very to efficient deliver XX% both quarter reported drive We're XX Andrew. and grew Thanks, another strong margin, XX% pleased to well exceeding in to $XXX as performance. this million, of scale. continue we expectations. operating above with we non-GAAP our of Revenue Rule a

the customers, and We primary customers, in and In continue over internationally X,XXX strength new XX% to deliver and growth market. high new with end have the across customers, growing of entrepreneurs up added customers expanding the more our We year-over-year. in those in X XXX,XXX adding than QX, saw vectors: now mid-market. expanding we

seeing in a the diversity the discussed Despite this, across that over last customer months. of SMB are several our geography. some softness the quarter the due has size been we delivered and the industry widely base market we However, to of across strong customer

Existing be was in seen as XXX% customers usage earlier retention due our with for XXXX revenue dollar-based September growing and increase of existing rate customer price about well year. lapping their expand trends NRR, by an we as continue as the or adding products, decline quarter, us spoke the the which to this new expected can net our to

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

a near for haven't changed. our important the It's continued this, As gross NRR our that and despite we strength retention confirms decline Klaviyo see in belief our customers. our in expectations to is continue to note must-have stability for which term in rates, a a platform result, that

Internationally, global we continue grow to business. our

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

Ireland, also We saw the strength U.K., and Germany. Italy in

In year-over-year in growth fact, QX In year-over-year. from our our revenue accelerated in international aggregate, QX. in revenue XX% to EMEA grew XX% XX%

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

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

XX% expenses. last operating as revenue sales be quarter, and our up R&D work last primarily points we'll of of driven features increase software capitalized XXX on by in year-over-year, quarters. the few an expense revenue, rolling development and year in XXX XX% over the result we've for count basis non-GAAP programs that that discussed was as of Sales investments was down of a more points to customer-facing out. Turning result a marketing head marketing basis expense

points G&A quarters, drive was over of year-over-year, of next the Finally, primarily down some more these international as tax-related reserves. of the G&A expect expense fluctuations of do which expenses. some XXX release result XX% may revenue, We few in basis a releases

well was stronger our free non-GAAP coming than of other expenses revenue from in cash a timing the expected margin as as prior as as $XX than of of the representing of quarter, bit second XX%. count payroll $XX lighter million operational non-GAAP down due items for operating result as was generated slightly million, a the and the during a guidance We strength, earlier our This discussed the flow operating year the For I quarter. collections. to the income quarter, head well

Moving to guidance.

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

to We margin operating timing shift had expect quarter a operating lower is $XX.X of to $XX.X a count we to This representing to related slower-than-anticipated head some due investments suggested last as in in million, XX%. non-GAAP million income be XX% bit better non-GAAP of to the well the as than OpEx QX. growth

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

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

million a $X non-GAAP XX% to by are representing $XXX margin million $XXX raising guidance to of We also to XX%. income our operating operating non-GAAP million,

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

Finally, fully million. to full count expect be we for the year, diluted share approximately XXX

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

to We and the years remainder the as coming for we growth are build continue foundation efficient of XXXX forward. and durable going the excited about

we'll And Operator? Q&A. up with open the for call that,

Operator

from Our first Bracelin Piper comes Instructions] Brent [Operator from Sandler. question

Brent Bracelin

year I there. here than top for guess macro many. to June Clearly, was for I But remains a you the wanted start line. little quarter pretty durability the on it growth. actually this is stronger ago. challenged challenging of growth like Growth it looks out It was with accelerated a out bit

here? the bit just in is more business little click you momentum. optimism you hear strength demand and the You're It and year. a what's the into double around giving optimism that's guiding just underpinning and for up surprising the the Can driving drivers to love

Amanda Whalen

with pleased strong the question. Thanks, revenue quarter really Appreciate quarter. And was from It Brent. results QX. a very Amanda. the in we're It's the

market. of the from on conversion. strength quarter, about in we have then well to side we this history. talked efficiency And than company's We our the our as our as see we strength of said, investments our free-to-paid some $XX,XXX in customers marketing driven in continue ARR made number to end upper in the by in also market greater the we call, added investments that we we we of And the SMS. as entrepreneur product increase saw highest strength As saw

growth penetration usage quarter, a seeing and We're terrific strong International year-over-year. growing had our we're and expanding with customers, our internationally. XX%

what customer think to durable operating And shows our really base, in testament resilient can that drivers is geography, across size, strength the across the that multiple So we multiple customer the diversity of a I quarter. of it of and is environments. be

Operator

Our next Stanley. from question Morgan comes from Keith Weiss

Keith Weiss

on question a one wanted in line. Congratulations solid focus an quarter really if I the on line, macro one to uneven you the top backdrop, on maybe question -- bottom will.

guide. or investments particular a like top products were investments that? that's What's guide into adds, and explains the Is the definitely the in good it us -- our of Can Is does Anything bit lot quarter. customer sort picked from full this enabling like QX a backdrop? And companies? of are you different quarter, up expansion if side like that to what's last little take the international color performance the then it lot even QX? up timing give that line, margin and some adds really the the but ramp-up a weaker on like you any the bottom a the with On weaker in be to going new pulling SMBs of numbers pick partner that? coming down down of that equation, enabling in Or the of It we initiatives? line highlighted. on QX year customer seem it operating

Amanda Whalen

strong kind a for net net over in got and so we've Thanks quarter customers. QX, Keith, X,XXX now much, We your and new It XXX,XXX customers adds. was appreciate added words.

about shifting go-to-market group, we're we and talked resources mid-market. product-led we last are As quarter, in our more towards into SMB And increasingly, putting entrepreneur the growth.

a the was improvements in just entrepreneur We and as strength is those well, benefit this minute about our little driven investments strength from We direct group as saw our that as talked ago really at by of that we've from saw of upper a product-led strength efficiency in growth drive bit In the efforts. as really coming as market end go-to-market to making that the the quarter, we larger well. the those we efforts. free-to-paid been customer customer of marketing well spend in conversion lands a result saw that that that

the I high-quality really our that adding in spoke keep number on net is is helping grow. even Boston And over We're Fortune we quarter like this mind, will say the adds, on the we're national forward time because grocery that a really might bit that retailer. over about company customers and Proper, okay We're a move time. XXXX added that pleased customers. Andrew Now more around to with focus Samsonite, customers looking

importantly, to your of regarding returns. continue of year, incrementally infrastructure mid-market that then the on of drive through product. And be growth. the for markets. us And we're investments unfold ongoing. of going see team, continuing outperformance as for in during the and build right Those are may at business, reinvesting the international. capture investments to those spoke back and the reinvesting focus We're the to to across to And year, beginning about strong how investments out as and question seeing going investment durable timing we We're those and go-to-market and areas the the right year are it are the we we're X

and As the strong we call, EMEA about in talked really to APAC. on are growth investments leading international

of our to up the in towards we're continuing new features, going look invest our Friday, to to efforts year, we're we As Black in increasing run features. product to Monday. to Cyber back marketing enhance half team the existing be launch the And

this the quarter recently. that that we we new announced of launched features AI were that Some to great examples

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

Operator

from Our Mizuho. next from comes Panigrahi Siti question

Sitikantha Panigrahi

about just Congratulations products. your on strong my question new And a quarter.

as does Reviews, do that of some products even your your How direct about next and pricing. about You should how we your that as to integration influence customers base? guys don't seeing large product, the years? AI, the you that have you're then strategy? few the in upcoming product How And the talked think well monetize using some

Andrew Bialecki

Sure. Happy into to dive that.

if core with you e-mail we're we out database added products. that last our started released, both in we've of monetizing the So CDP, and with We think making those seeing on good that progress products and both we've excited the And SMS. directly. added about Reviews And year, both we're and are products about the adoption those. there. Very we're

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

So the that monetizing those do we're we not for those tools directly, artificial will incremental drive building, but -- intelligence, expect that productivity we're usage.

there. an there's indirect mechanism So

receives come new we're opportunity today, products And we we incremental timing, for time. monetizing an ideas, marketing customers up not over as well a think who create. content, you that around message Value right we're with to it often doing revenue that right campaigns, or which helping lot be Attributed help the to And helping think, to do to then while Klaviyo what generating monetize of tuning as stuff strategies, going are that marketing net those, those have you the the we together, our customers there's the optimize new to buy

they're are just is they're for not them driving. -- revenue productivity. And really directly what's They about great

this. the really customers our value of So understand

there's have of monetize on lot We now building with So a opportunity. right optionality know to customers time we're lines any an we working those, but don't that out.

measure have that? Klaviyo are is the consumers. How And lastly, of drive you we that and talked much product more need we every take strategy, so artificial to customers it's with everything we we services. interaction that that know well think take truth can core think about do marketing for it about We built, for can can and use data that it. channels, they just your can we've consumers they that to to the advantage that to how want personalized, it of customers of we take intelligence that -- like business about help multiproduct. use and you that then business, source customer adoption, every that but how more platform other optimize The as single beyond have that we the And

what when like somebody you have or to about things properties When a -- to or is people's educated get they mobile think and like digital websites means trying question it apps.

you'll from use So top a therefore there's over excited and platform I years. building the we've that on coming this think the I'm those, about and products over of coming going cases do the expand lot of months that very see on often built, can data us the we're the and to

Operator

Hynes comes next from Our Canaccord. DJ from question

David Hynes

Congrats on a nice really quarter.

adds in of came they half of their So merchant this said QX saw Shopify obviously Interestingly, adds. outside markets. from reported morning. I'm you sure core new that really English-speaking merchant strong about

do platform same then there. quickly the those to localize the B, merchants? So how for you can A, in move demand guys X see And characteristics questions you markets? those

Andrew Bialecki

a give Amanda and little start international, I'll on. follow can color and Yes, on

strong I growth well. as So international we're think seeing

and the product in take in -- French, marketing, launched we've into that we well. France And that's year, languages this markets. local language we and that then our with other gone months, along think earlier I last that can very mentioned to we So other few that take run there's and playbook

And so had there you like companies Ballon. with Le we've wins can like great Petit some see

stories. we're localizing look the plays of documentation, campaigns internationally, starting in some marketing customer think Also, more out the digital invest to the to And I we're we're broadly ad like running.

So the coming I think you'll see play out months. over those

Operator

William Bhatia Arjun Blair. from comes question next from Our

Arjun Bhatia

you. maybe I'll for Andrew, a have And my congrats one quarter Perfect. on here. nice

can the on that momentum upmarket, -- these of how we're one upmarket some mobile you push is as scale I'm there. especially Just progress things new of channels that about that some to your your upfront think look the all on? landing touch when push thus seeing, cohort, far for we might contributing -- of with going that a capabilities. $XX,XXX how didn't And customers curious is buying capabilities where platform they they in be mobile of customers that much is the

Andrew Bialecki

absolutely. Yes,

start -- data again, So tight and think for I place, when our it's integration. mid-market one channels primarily I reach we into folks, and we and us to enterprise, coming to think in are the platform as that of all the marketing the then

So similar on is product of we that finding locations a on what several We chunk with obviously interested that one call, and the place. creating to of talked those them tools. sending using the all customers want of team and think and specifically to we e-mail between working have our campaigns. Klaviyo capabilities. we're have great functionality. I are content And in on good that's how are they personalize measure use want about They those the provides the and number other want in They of mobile, mobile now performance those high-volume -- SMS, each data last help of building push folks interplay out channels,

early So We're for for customers I us. finding was it's that them. think where a requirement

enterprise, I need have folks that a time, address mix the functionality and that don't. they able we're Now that. mobile And properties that there's expect, those of over either to in where then

for outside to mobile retail folks within we new apps. e-commerce, that finding those. that up that, there's But obviously and even can cases of that that's start we And now then opening use we're think have I address can address. us

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

Operator

TD from next comes question Our Derrick from Cowen. Wood

James Wood

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

Andrew Bialecki

Yes.

things data the put where mean use importance data to the have with you action I actually things. end that the on take asset, and tightly consumer their -- applications that they about take allowing the having is it. so X have, and say the know businesses first to -- work of I'll they coupled So consumers the

important. So integration database system marketing That really is one. between action of and is

So I heads-up, think big we're actually -- we've like bit lead of got that. a a on a

can that see to with the start you features that building. then some of we're And

released we example, use AI. we as AI, past about for Email AI. case. quarter, This We've talked a Flows So launched now Segments productivity

different whether you're that entrepreneur starting automatically create All marketing understand are these build prompts enterprise, to business, small tools and look actually, can a set or a the can data data just more have of faster. an kind into for workflows large segmentations your out you or those so And you campaigns of you.

the on a front, lot progress. making So productivity we're of

We're also personalized able also campaigns. to release --

you the of you about future what if campaign. of is if this variations So all have it's multiple that think about, idea

have And be data just we could picked incremental for we the for for what's data was level best it of you our can the to right because version Historically, dozens. platform, person actually best able businesses, all figure basis lift a we're everybody. What there's what the that. that on variant, actually For do some the out content inside them. consumer on each meant

-- I'm accelerate And doing business more them suggest allow actually data with and autonomously. pull action to people help ability that the machine we've optimization think help thesis folks then together, their this what had is all of to all it, excited I So in intelligence do learning, only more now to that to our them to think artificial not that. allow is I strategies, able we're about

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

Amanda Whalen

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

And And and excited their of with platform All those can to us. customer CDP that their e-mail, work use Reviews data them and they that their brought Klaviyo. we're drive growth. they SMS, now their our together to consolidated so help really to and personalization revenue

Operator

from question Truist. from comes next Our Terry Tillman

Terrell Tillman

X market. the I with French question. bonjour I the seeing a It's though. should It's say in got single you're parts guess ramp

some adoption? of First, all what that incrementally Is kind have after evolving I been CDP, and with of but updates? you with learning seeing done are you've kind and helping packaging testing you know

prepared And then is, around remarks your of this a heard the deliverability. second I lot question in part

and getting new customers world cycle? and with more tender bulk these kind creating bigger changes, this maybe of you're almost of is initially of a deliverability TCO of around than As kind replacement kind

Andrew Bialecki

Terry. Thanks,

So first, I'll CDP. about talk

our data customer So really what our we found X, product, there's cases. CDP platform, X with use

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

what both a about And making Do those Do to both bit think little you experiment out? the you we're actually of ways with I'm started packing that. we excited together? really different side. product put separate products to about So the is on those

to speed ingesting lot data it of we've both improve the as other to the tooling of side, a systems. getting as work out On data well done

new to the the a of analytics. that an on the talked And connectors about how the are big as feature well. up We about part example, then speeding Klaviyo analytics and the top within of product call around at CDP a we side, integrations as launched -- outbound

actually there's marketing of that affinities campaigns with incremental turn So where figure we can into out brands SKUs, instantly and revenue. drive lots help can they products, that between

about So progress there. excited we're the

that's we it's one we since of on the and focus deliverability, personalization core things the getting right is It's content. been of right the then person, on what I'd been started. -- And for, at the say obviously what stands Klaviyo

changes roll some we haven't of providers, As material impact e-mail through those service us. on a had saw the

come customers dedication know chosen how fact, is, and important some deliverability engine. of because to e-mail They they've the we've us They to know Klaviyo. our revenue seen deliverability. and SMS In

to folks. our integration that and great ensure teams deliverability done job have is customer for working teams our a So

I -- about both So CDP the we're And big excited that's front, on the the think delivery progress front a has become there. very differentiator.

about think changes. packaging use and -- potentially cases starting a about lot I some to learn think there's we're the

Operator

from comes Barclays. Our Lenschow from next question Raimo

Raimo Lenschow

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

Andrew Bialecki

said ago. on add Amanda few minutes of a I'll Yes. what top

our So grow the their That's us what first essential. must-have is for so engine that's we business. do, And this makes what revenue we're businesses. customers a love helping

X nuanced. SMB, We actually it's groupings. the within think little SMB I a divide into

is then businesses, SMBs. And think about out, small like The they're very If larger first about also we teams. just really entrepreneurs. think starting

seen attributed sales speak ads those larger softness to in to to categories, is And of space. fewer each when part X some of that the So cycles. that we about of longer think Amanda SMB mentioned, we've relatively talked we slightly

a are to not reminder, and sales larger those find days those are sales -- SMBs. we And still cycles folks a cycles months. just bit in longer. our it's little I mean as with measure Now we still moving weeks,

see smaller that of strength for we new new there, new are out, that's net the broadly customer Now segment the group more -- to are from just logos starting did and that where for across lot folks that folks a Klaviyo.

out when and that's think we I a a defaulting those starting looking data that their sign place ultimately they're business, customers us to grow and businesses are -- Klaviyo customer store business. choosing that to and then grow they're as So their message as to and really take good still

Operator

Berg from Needham. question comes from next Our Scott

Scott Berg

still investments softer your out you're called both those but you as that might Have is on mid-year. a upmarket. any little the nice here. strength me investments here tweaks across favor to a at changes that I go-to-market made Really guess quarter the seeing moment, kind one on of out, the for making segments question pointed side SMB, of that today? of really good some or you you're different strength upmarket maybe areas those Amanda

Andrew Bialecki

Yes.

investing for of looking there's seeing color. opportunities we're about behind where intentional little very those. we're So a bit market and Maybe where pull

from On mentioned side, as And -- the growth. results the mid-market. we're try we're some the sales in seeing programs seeing to digital we've then programs, running growth. areas side, to we've on the well Amanda international capacity as where drive like been increasing marketing of we're seen marketing the

building for finding in in We're entire Klaviyo products. more cases various at in or don't portfolio some investing large awareness know also Klaviyo we're of And folks markets. our either about

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

Operator

from Baird. Our Rob next Oliver comes from question

Robert Oliver

guess know seen, some kind guys internationally I SMS. some getting X-part of in quickly a consolidation sounds with about question of as traction. SMS about you rollouts solid you of if the that traction I it's it talked wins your Maybe you're and have pretty

gross to don't are your But how to you progressing love on of for a you then your on that I break that, have X relative be a get -- SMS. for that margins side with there's And know to would I ramp out reconcile what would a broadly know in customers we would a expected we love on basis of SMS. might quarterly I that's Amanda, part I but the expectations. flavor guess, hear those driving things Just just things. seen other percentage impact wanted haven't commensurate to

Andrew Bialecki

gross and SMS the Yes. to can about margin. speak talk I'll Great. Amanda part,

we're seeing adoption, we'll some those. -- we'll hit penetration, continue we good milestones we're disclosing like and share as So while not

We are traction, seeing mentioned. like good you

a SMS I regions Australia, And big part as adding have available seeing Spain, think those messaging making as for we we good Austria, well sure of strategy, about international SMS in in think adoption as there. it well. the adding as international multimedia expansion, we that is are -- our Switzerland is

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

we're in about very SMS. excited the seeing So progress

penetration. long way in a still terms to there's go think I of

Amanda Whalen

the growth question And On efficiencies. did on the SMS progress in slightly support that those margin, and see seeing expected, front. we that had we're was we're and the we're benefits infrastructure we and to business. that margin primarily gross your in it than of because continue the the better continued come offsetting that to gross what And progress the making seeing are in Yes.

infrastructure I our KMTA, Agent. So love those is one that efficiencies to would Mail of Klaviyo Transfer highlight

quarters own our as our continue comps over agent. to get further more transfer expect leverage coming onto of volume mail transfer the to We we mail in

grow very well. SMS, as continues said, to Andrew

been become mix. offset that that this the will a and our our see to do pretty we it's to That it customer gross margins. largely to of on some what deliver given as we've of able pressure continues going business. we so product our gross point create as proud bigger margins to grow, some And fact and expect best-in-class that We're portion

Operator

Radke question Citi. next from from Tyler Our comes

Tyler Radke

relates habits volumes, just curious volumes of SMB question follow-up or go of of to to utilization Did it wanted down in you that relation their SMB what customers about just in do those what behavioral that relates higher as your order -- observed list? as message A it more up you could the that, message side. contacts some demand? to as think that and us I'm the if seeing on ask seeing weakness I SMB the in consumer e-mail of you're to the behaviorally customers. just understand to rates we and quarter are you backfill SMB side. to SMB If environment? Secondly, translates e-mail it purchasing, in on find volumes kind help

Amanda Whalen

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

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

We are get it not materially also worse. seeing

we for are And this to earlier, through perform mentioned as customers. must-have a because, that continuing we environment strong we're think these Andrew

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

Andrew Bialecki

I'll top have more Maybe comment of Amanda. one on

percentage a we engine, at, demand And They've are think more they look a percentage watch they increasing, great. doubled got of and when existing great folks customers of down relationships. looking already uncertainty. hey, kind there's are It's source We're I that. on revenue existing a number Klaviyo. where we've and -- revenue of that that thing is from so comes is other a the seen of that talked customers -- The to

Operator

Our next Altmann question comes from Scotiabank. from Nick

Nicholas Altmann

the given ask wanted added you equation to of I question Awesome. X the on side. just there. SMS But strength new countries guys on the another the side international

SMS you're in much question you kind from how side geos have of these can pent-up additions of international some the to been acceleration demand how spoke building SMS countries? about EMEA some to much of You of in the you add look on but off just seeing as and talk earlier, growth Rob's new unlock of an these and

And just international follow-up, on then outside accelerating strength think just as how do and the investments potentially international given efforts a side, seeing? about those the the given you're just strength you

Andrew Bialecki

talk it. I'll about

of mentioned when a product So side. from and we we that doing, go-to-market talk we're a about international, both a things couple

of about talked language. we So terms localizing in

a larger we about localizing talked of And marketing a we're customer bit more a up putting and base, region. the also as of becoming that's content some partners, flywheel. in We build

available. to addition of our making that, sure all are it's In products

obviously, very important. So SMS, that's with

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

the I'll serve we the say really make international market sure thing when thing with too, integrated -- tightly we're last partners, I'll that going well. and really think other But as to think say, I to that about is them market with we folks like

that So we've for tight something example, with. built integration Shopify talked products. their out a Markets really about That's

well really we together. So work

That's worked with drive good fit. helping and And a that of prevalent tech of a demand Asia. of driving and Europe product other software -- are in platforms so we've more lot that's platforms, market a lot lot

seeing good continue we're regions in in in like we and of growth. investment, where to terms And invest countries

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

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

Operator

question Ader from Capital Markets. next Our comes from KeyBanc Jackson

Kyle Diehl

of terms think folks of then your you on Amanda, that the help Ader. just quickly I new capacity And just and Maybe currently year? season some for same the you note, head lower Kyle quickly approaching count. can how sales are kind the the in where squaring plans think, this of in you Great. margin a This also us of guys might you bit the Can from of given some of head is for terms some commentary, ramp holiday to coming have increased Jackson Diehl count that period little alluded on here. about

Andrew Bialecki

Yes, take I'll that.

And so intentional say that sure been things. demand One, was we've since that proportionate started build. I'll about a head products to on hiring we business couple the the to very hiring and making count we of always the front, the and want

end the grew So QX of slightly of from head QX. end count the to

Specifically we've the on amount that more the demand. sales we we to capacity, also right scale and prepared as got we're of side, see think

the more that Klaviyo of comment the uptick then over is using one to growth do we us season, to see last actually Klaviyo great that holiday things to lot customers holiday coming holiday season. season. the the come the over actually, a of And customers an on our in is want that existing But from use

SMS, that think to their they that all our to in well core well So increase we of meet across of products, case, demand. we when demand we're staffed or teams customer e-mail of to that cover very say staffed one folks we're our think want usage

Operator

Goldman next question Our Sachs. Borges Gabriela comes from from

Carolyn Valenti

with set customer closed these have are seeing This seeing today extent then the without mid-market. is ask much functionality? what Callie product momentum is the and AI you do that probably also, to incremental not on to CDP, that How to Reviews you're And for think you Valenti lands your any Wanted attributable on on Gabriela. quarter. would of new Congrats of broadening features? the the

Andrew Bialecki

for Yes. Thanks the question.

of it's a it's both. issue think I -- an

product you all fact store a data and I data built, can that and work. the that testament that we that think a it's it to platform help put Klaviyo is we the to

to and we personalization automatically allow that artificial and then more talked ability attribute to its you think optimize. I intelligence better about to do

some all finding area all what of all I we this have its think of we work and to customers in about applications those capabilities, of place channels and is idea was that really related analytic features, those larger one with SMS mobile resonates CDP together. more as availability all with One our these we're talked that is

we're So invest as capabilities, enterprises. those an that think we build think continue -- and in better I fit for finding map the it's I best even product to out road larger

Amanda Whalen

quarter, offering. quarter. and the and was of their that we have this multiple who some that single think, you're optimize consolidate home can had organic platform part in the to of brands multichannel food us because questions an example goods chose to asking, They One company wanted so Klaviyo that portfolio I And strategy of their reporting. one a they in they onto unified our came

portfolio So across reporting we allowed that they feature are excited insights, to better that recently easily get them do high-level launched to to accounts launched drive Klaviyo. and with really

Operator

[Operator Instructions].

comes question next Loop from Our Kim from Yun Capital.

Yun Suk Kim

and around customer All Question I which acquisitions quarter. strong record around enterprise think new the you customers, on was go-to-market a quarter. mid-market right. mentioned Congrats motion, for

these on of after source the is Shopify of investments merchants? outside curious displacement and Or outside on Shopify specifically Plus still opportunities of this the platform? are And focused where incremental just after going customers of new large these the Shopify So marketing customers. legacy you also, biggest sales going $XX,XXX-plus how your much are Is platform?

Andrew Bialecki

that. answer to Happy

partnership again, So distribution. got with there's a it's a great -- We've Shopify.

other a stacks. and grown lot a have number of especially have have that we mid-market of We customers up that into tech on enterprise. And mutual customers,

at to reason that the the it's I store put it because commerce all integration distribution, to sizes. break their don't and but the higher and varied we're And with in them we like is winning customer ability think of of think our out data stacks all -- work. tight I larger across those -- So the then the fairly

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

Operator

everyone, Call. Quarter XXXX reached We hope much wonderful a Conference Klaviyo's Second for you day. have session. We Thank Fiscal attending our you have so for question-and-answer the closing again,

now may disconnect. You

Klaviyo (KVYO) 7 Aug 242024 Q2 Earnings call transcript