Klaviyo, Inc. Q1 FY2025 earnings call

Key Themes - Growth: Klaviyo is a growth company executing its strategy for sustainable, efficient long-term growth with momentum in mid-market and above and international expansion. - Differentiators: Vertically-integrated data-first approach and fast pace of innovation are core. - B2C CRM: Uniquely positioned as a CRM built for B2C businesses, unifying marketing, service, and analytics. ### Product Innovations - Marketing: Delivered new features like automated campaign follow-up, brand voice consistency for email AI, new form features, Custom Objects, and automated conversations for SMS. - Service: Customer Hub in beta with strong traction, allowing extension of consumer experience on websites. - Analytics: Marketing analytics product launched in February with potential for incremental revenue. ### International Growth - Added languages, expanded SMS channel to new countries, and increased sales reps with local language capabilities. France, Germany, and Spain saw over 100% year-over-year growth in new business. Signed deals with companies like The Hershey Company, Belkin, and Gorjana. Deepened relationships with Meta and TikTok through expanded integrations. ### Customer Retention and Expansion - Customer retention rates were stronger than expected post-pricing updates. Saw strong cross-sell motion with larger customers landing on multiple products. SMS penetration within SMB and mid-market customers increased, and there was strong interest in Customer Hub and marketing analytics.

Klaviyo's Q1 2025 revenue was $280 million, representing 33% year-over-year growth. They have empowered over 169,000 customers worldwide. Ended Q1 with more than 169,000 customers, a 16% year-over-year increase. Had 3,030 customers with over $50,000 in ARR, up 40% year-over-year, and more than 1,000 customers paying over $100,000 in ARR. EMEA revenue grew 47% year-over-year, and total EMEA and APAC revenue grew 42% year-over-year. Q1 non-GAAP gross margin was 77%, down approximately 3 points year-over-year due to increased infrastructure costs and growth of SMS product.

Q2 Guidance - Expected revenue of $276 million to $280 million, representing year-over-year growth of 24% to 26%. - Second quarter non-GAAP operating income expected to be $28.5 million to $31.5 million, with a non-GAAP operating margin of 10% to 11%. ### Full-Year 2025 Guidance - Raised revenue guidance to $1.171 billion to $1.179 billion for year-over-year growth of 25% to 26%. - Expected non-GAAP operating income of $133 million to $139 million, with a non-GAAP operating margin of 11% to 12%.

Macro-environment uncertainty, including potential tariffs and consumer sentiment, could impact the business. However, thus far, no material impact has been seen on Klaviyo's business.

Q: Raimo Lenschow asked about comparing current uncertain times with past and customer behavior.

A: Andrew Bialecki stated that Klaviyo is mission-critical for businesses, and customers double down on existing consumer relationships during uncertain times. Klaviyo is an all-weather product. Amanda Whalen added that key metrics like customer sales cycle remain stable, and Klaviyo indexes to digital relationships.

Q: Jackson Ader asked about customer exposure to China and new products' contribution.

A: Amanda Whalen said customers have been diversifying their supply chain, and Andrew Bialecki talked about new products like Customer Hub and marketing analytics with strong feedback and potential for incremental revenue.

Q: Gabriela Borges asked about relative sizing of cohorts and forecasting approach.

A: Amanda Whalen said there is a diverse customer base, and prudence was built into guidance based on scenario planning and monitoring metrics.

Q: Parker Lane asked about sensitive areas in guidance.

A: Amanda Whalen said less volatility due to indexing to digital relationships, and Andrew Bialecki added that the ROI of products keeps budgets positive.

Q: Brent Bracelin asked about sweet spot of new products and ARPU uplift.

A: Andrew Bialecki said analytics has wide applicability, service products are applicable to all, and Amanda Whalen mentioned marketing analytics has a nice ARPU uplift.

Q: Arjun Bhatia asked about new service and analytics products' fit and go-to-market.

A: Andrew Bialecki said Customer Hub is easy to turn on, applicable to all, and will scale to enterprise faster.

Q: Terry Tillman asked about international traction and investments.

A: Andrew Bialecki said there are similar personas to the US, and investments in local sales teams and language capabilities have been made.

Q: Rob Oliver asked about Meta/TikTok integrations and pricing.

A: Andrew Bialecki talked about integrations with social platforms, and Amanda Whalen said higher retention post-pricing changes validates the platform's value.

Q: Elizabeth Porter asked about new customer demand and top of funnel.

A: Andrew Bialecki said there is strength in smaller SMB, core SMB, and mid-market enterprise, and Amanda Whalen said key metrics are consistent in Q2.

Q: DJ Hynes asked about investment prioritization.

A: Andrew Bialecki said focus is on AI, mid-market/enterprise, and B2C CRM expansion.

Q: Brett Huff asked about international performance and guidance.

A: Amanda Whalen said there is strong international growth, and guidance is built from investments in languages and go-to-market.