Conference Transcript - KVYO 2026-06-03

Arjun Bhatia, Analyst — William Blair

Perfect. We will go ahead and get it started. Thank you everyone for joining us. Amanda, thank you so much for being here.

Amanda Whalen, CFO

Thank you so much. You have been nice and cool.

Arjun Bhatia, Analyst — William Blair

Yeah, that's right.

Amanda Whalen, CFO

I appreciate that. Not going to overheat.

Arjun Bhatia, Analyst — William Blair

It's very nice. Yeah. And for those that don't know, Amanda is the CFO at Klaviyo. And before we get started, just a quick compliance. My name is Arjun Bhatia. I am the research analyst here at William Blair who covers Klaviyo. And I am required to inform you that a full list of disclosures can be found at WilliamBlair.com. Okay. With that, let's get started. I'm looking forward to this conversation. I think one of the interesting things about Klaviyo just has been the sort of the transformation that you've been on over the last, at least, I don't know, 18 months. think you've rolled out this vision of the autonomous b2c crm which is very aligned with your customer base but what does that mean and how are you sort of changing from this data and marketing platform to something um more more holistic and how is your value proposition for your customers evolving with this vision of the b2c crm our value proposition and the value

Amanda Whalen, CFO

we deliver from customers has always been the fact that we help them drive more revenue we help their businesses grow by helping them to build personalized relationships with their consumers and do it on a way that feels one-to-one but does so at internet scale so the way that i think about it is it's like your favorite brand or your favorite salesperson at your favorite store mine at the store that i shop at most often is a salesperson who happens to be named evelyn and when i talk to her she knows everything about me she knows what events do i have coming up she knows what i've bought in the past she helps me handle my returns she reminds me of gift cards that i have some of those you may notice are sales and marketing use cases some of them are service but it's all wrapped up into one relationship and same thing i talk to her across channels i text her i email her i visit her in person in the store but it's this consistent relationship that you've got across channels and brands and that's what retailers and what b2c businesses are trying to build everyone wants the ability to be able to communicate with each customer as if they're your only customer so klaviyo where we started was actually building a database to bring together all the information that a b2c business knows about their consumers bring it into one place and use it to power personalized relationships starting with marketing but consumer brands don't want to just have it relate to marketing they want it to interact with service again with every single touch point across every single channel and that's what we help brands do today we serve over 196 000 brands we have eight billion consumer profiles across our database and we serve brands of all sizes ranging from entrepreneurs who are just starting out all the way up to established brands and businesses like mattel and hershey and belkin who are large enterprises but just because they're large doesn't mean they want to be any less personalized yeah

Arjun Bhatia, Analyst — William Blair

and so in that example you klaviyo is the sort of the engine and the infrastructure that is um feeding that data to the salesperson you're talking to to let them know this is amanda

Amanda Whalen, CFO

this is what she likes this is what she's bought in the past has bought in the past this is the way that she's going to interact best with your brand um you know the other example i think of i have one of my very favorite klaviyo brands that i love to get information from and they send me a message this is gonna sound extreme but every day and you know what I open it almost every day because I love that brand so much I get really excited it happens to be the first name of the brand is Veronica and it started by two sisters named Veronica when I see what the Veronica's are recommending right now I get really excited our former head of investor relations who you made you remember his favorite was an outdoor brand now if an outdoor brand I like being outdoors but if an outdoor brand send me something every day I would be like no please stop like maybe once every three months I'm good right Klaviyo helps you interact with a consumer in the way that they want to be interacted with that's appropriate for how engaged they are in your brand yeah from frequency channel and every frequency channel you name it we can actually personalize it not just how frequently you send something but we can personalize it down to you prefer to open your messages in the morning I I prefer to open mine in the afternoon. We can personalize your send time based on an AI-driven prediction of what's going to be the best way to communicate individually with you.

Arjun Bhatia, Analyst — William Blair

Interesting. And so for the brand, now that's your customers, what is the ROI for them look like when personalization increases? How does it end up flowing through their business, and how do you help them improve their operations and customer outcomes?

Amanda Whalen, CFO

It's an excellent question, and I'll point to two different things. One, in our business, when you're communicating with someone, particularly from a marketing perspective, we have two different types of messages that folks generally send. They generally send either what we call a campaign, and a campaign goes out to everyone that's being sent to all at the same time. It might be tweaked and personalized. So, you know, the Valentine's Day campaign for one of our customers might be different if you're buying their beauty products as opposed to their baby products. but everybody's getting at the same time. Or you have what's called, we call it a flow, but it's basically an automation. It's a triggered event based on something that that particular consumer is doing at that particular time. So an automation might be, we have an automation for consumers who are new to the brand, or we have an automation for consumers who haven't purchased in a certain amount of time to try and win them back into the brand, or an automation many people would have heard of would be if someone browses something and puts it in their cart, and then doesn't click through to purchase, we'll send a reminder based on that. But each of those is triggered based on a real-time live action. A flow generates 10 times more revenue per message compared to a static campaign. 10 times more. So the ROI on that is incredibly high and shows the benefit of this targeting and the automation. Another example is personalization. Personalized send time drives 35% better outcomes than sending send time that's generalized across everybody. And what we see in our business is when we're driving that higher revenue per message, consumers lean in more, or sorry, customers lean in more because they're driving higher revenue. It encourages them to send more interactions, which then in turn grows their business, which grows our business.

Arjun Bhatia, Analyst — William Blair

Right, it's a really growth, it's a growth engine.

Amanda Whalen, CFO

It's a growth engine.

Arjun Bhatia, Analyst — William Blair

Yeah, okay, very interesting. There is, I wanna talk about AI because, you know, a lot of what you're saying in terms of sort of intelligent send times, data, like these are also critical to AI, but I think there's a real sort of debate in the market about, you know, is AI a competitive threat? Is it a tailwind? And I would love to sort of just hear your kind of view on that in terms of Klaviyo, like what are your moats from an AI defensibility perspective and then what are you doing on the offensive side to actually help it benefit your business?

Amanda Whalen, CFO

AI is absolutely a tailwind for our business. It's increasing demand and it's increasing usage for our product. The moat that we bring that is even more important in an AI driven world is the fact that we started as a data platform. We are indispensable infrastructure for our customers because we have not only all of their data about their consumers, but we have 196,000 customers, eight billion consumer profiles. We ingest close to four billion data points per day. And all of that gives us remarkable intelligence about what behaviors consumers are taking and importantly, what outcomes that drives. So we have a closed loop continuous learning process that says this action tends to lead to this outcome. And that enables us, and importantly, the agents that we're building, to be even smarter in helping make recommendations to our customers and take actions that are gonna drive higher revenue, higher growth for them than means higher growth for us.

Arjun Bhatia, Analyst — William Blair

And is the data in this instance, it sounds like there's two components. One is sort of your customer's consumer data, their customer's data. And then the other is the learnings that you're sort of encoding into your platform to help it benefit. So which is the customer's data versus sort of Klaviyo's data? Yeah.

Amanda Whalen, CFO

So the customer has all of their own data and what they bring and what they're able to access, for instance, through the MCP server integration that we have is to access all of their own data and what works for their consumer set. The learning that they get and the benefit from being on the Klaviyo platform is that we also bring all of this intelligence from all of the other experiences across all our consumers. Now, we don't share personal information across consumers. It's more the generic learning of this type of action tends to lead to this type of outcome. And it enables us to do things like we have with our Composer product an analytic agent. That analytic agent is based on all of our learning across all of our customers over time about what works and what doesn't. We recently used the analytic agent with one of our apparel brand customers who we work with. They had over 100 automations set up in Klaviyo. They felt like things probably weren't working exactly as designed, but it's hard after you've built up 100 automations to remember what all of those designs were. They ran our analytic agent. It found 16 issues with different automations that they had that were fairly critical issues. It made recommendations. said yes i want to make that change that automation and they saw a 40 increase in the revenue that they were generating generating without those insights about what input drives what outcome they wouldn't have been able to drive that increase in revenue interesting okay um and

Arjun Bhatia, Analyst — William Blair

maybe on that topic let's talk about your agentic suite um you started with two initial agents which are you know your marketing agent and which is now composer agent and your customer agent just talk about what these two kind of core um pillars of your agentic suite are and you know i think everyone's trying to figure out also you know how does klavio end up monetizing these or what's the tailwind that emerges so i would love to hear about the pricing model and how that works

Amanda Whalen, CFO

as well happy to talk it through and i'll probably talk about ai and how it monetizes in our business in three ways one is each of our agents marketing agent slash now composer and customer agent and then also how it increases usage of the overall platform with marketing agent and composer we're in private beta right now composer has two core elements to it one is a creation agent that allows you to vibe code marketing we call it vibe marketing you can now instead of having to you know create a drag and drop linear you know flow model of what you want to do and how do i want to position my text boxes and you name it you can just tell clavio i want to send a fourth of july campaign to my vip customers who you know have bought fourth of july products from me in the past and it will generate the content for you it will create the segment that you should send it to it'll create the imagery and off you go and you can generate some really strong outcomes and we've seen customers type in a vibe you know a prompt Klaviyo generates the campaign they send it and they generate really high revenue from those campaigns so that is creation which is take your idea use natural language turn it into an outcome the second part of it is the analytic agent which is this ability to go in and understand what's happening in your marketing where you could be doing better and then actually implement making it happen the analogy I use is it's a little bit the same way that the new anthropic model comes through and find security flaws Klaviyo's analytic agent will come through your marketing plans and find places where you have the opportunity to get even better and it generates outcomes like the 40% uplift From a monetization standpoint, it's not currently being separately monetized, but we are getting very close to that. Right now we're in private beta, and as we expand the beta, we will start to monetize this separately, and it'll be based on some proxy of the number of tokens that they're using. And what we've been focusing on thus far is, will that usage drive great outcomes for our customers? Because if it drives great revenue for them, then we know that we have confidence that they'll adopt and continue using it. So that's marketing, yeah, go ahead.

Arjun Bhatia, Analyst — William Blair

So these are consumption-based sort of pricing models that are tied to usage? That's right.

Amanda Whalen, CFO

Okay. And for those who are newer to the Klaviyo story, one thing that I think is really important to understand is we do not price based on seats. It's not just our AI products that are priced based on consumption and usage. Our entire product suite is priced based on consumption and usage, it has been from the very start we want our incentives to be aligned with our customers so we price either based on their data that they store with us in the form of a consumer profile or we price based on sends in this case we price based on token usage and in the case of customer agent on the service side we price based on outcomes so when we can resolve a consumer's

Arjun Bhatia, Analyst — William Blair

question that's when we charge for it values aligned with the customers yeah very much okay Okay. And just on the point on sort of where we are in the monetization journey, it seems like the tailwind from AI is still very much ahead of us. How would you sort of just characterize, you know, these products are still in beta, but how would you characterize sort of customer readiness to adopt these? And maybe, you know, if there's some feedback from beta that you can

Amanda Whalen, CFO

share, that would be kind of interesting too. Sure. Let me start on the composer side, and then we can maybe transition into the customer agent. On the composer side, we had one customer who's in the beard grooming space who we work with, who said, this is the best product I have seen in the last couple of years. He said, this solves my team's number one pain point, which is our marketing structure has grown so much that it's hard to understand how it all fits together and make sure it's all optimized. And he said, I think this also solves the number one pain point of my peers at other companies as well on their teams too. The feedback has been just phenomenal in terms of the impact that it can drive. Customer agent, on the service side, we're seeing similar strong feedback. That one is live in market, so we're not in beta there. We're in general availability. We're monetizing for it already today. And customers are seeing some great results. We have a brand naked wardrobe And there's a video from one of the folks at Naked Wardrobe that's on our website with an interview with him. I would encourage folks to watch it if you have a few minutes. But they're driving high resolution rates. And importantly, they're driving 28% higher average order value using Klaviyo's customer agent because our customer agent isn't just resolving support questions. Their customer agent is selling. It's selling at two in the morning when you wouldn't necessarily have a human available to speak to um and so that increases their revenue it's not just cost avoidance it's actually a

Arjun Bhatia, Analyst — William Blair

revenue driver for them too very interesting um i want to maybe switch gears to like a sort an adjacent topic um which is agentic commerce um that's sort of a big sort of underlying and ongoing change happening in the ecosystem you know you're a lot of your customers are retail and e-commerce brands um your partner with shopify which is also leading this charge to agentic commerce what does that mean for klaviyo like how does it impact your positioning as a company if agentic commerce does take off um oh yeah um we're really excited about it and we do

Amanda Whalen, CFO

have a strong partnership with shopify that goes back many years we also have a partnership with google who is one of shopify's partners in the agentic commerce and the protocol space and what we believe is that agentic commerce opens up new ways for brands to be discovered and that is exciting for our customers because they want to be discovered in as many places as they can be similar to the way that you know i think you hear from shopify we want our brands to be able to communicate with their customers across any and all channel that those customers want to be on whether that is shopping agentically whether that is shopping through you know social media so we have partnerships as well with tick tock and with meta or whether that is shopping through a brand's own store you want to be able to have a really consistent experience and then what we hear from brands is one that once they get discovered on those platforms they want a way to build a one-to-one relationship with their consumers they want to take that agentic you know source of the initial relationship and turn it into an ongoing loyal customer relationship directly with that brand and that's exactly what klaviyo does so our customers are seeing significant increases in the number of leads that are coming in and the number of connections that they're getting through agentic commerce and through llms and then what they're partnering with Klaviyo on is once this customer comes in how do i convert them into a repeat buyer as directly as i can because yeah as a consumer if you once you

Arjun Bhatia, Analyst — William Blair

discover a brand and you like them you're you don't need to go necessarily back to the discovery phase you can just deal directly with that brand as long as they know you yeah that's right um you

Amanda Whalen, CFO

know one of my favorite other favorite Klaviyo customers is a jeans brand and last year i was looking for a new favorite pair of jeans I went to an LLM for advice on what might fit and what's in style I tried a few different ones and picked a favorite but then now I go back directly to that brand and they're always now they've figured out that I am a repeat buyer who responds particularly well to what's new and what's on sale and so I get direct communications about we're having a sale here's the latest style yeah this is what we think you ought to do and more

Arjun Bhatia, Analyst — William Blair

times than not yeah how the personalization works there we go that's right um all right let's um maybe talk about just growth algorithm for the company you grew over 30 percent last year as a business in q1 it was high 20s growth for investors maybe that are newer to the story just help frame what the building blocks to growth going forward look like is it new customers expansions AI monetization how does that all fit in yeah the way that I would

Amanda Whalen, CFO

think about growth in our business is I would think about our business as a series of s-curves our business originally when we started many years ago was primarily targeted at email for small and medium businesses primarily in the Americas and as we've grown and expanded we've layered on a series of of new s-curves from a product a geography and a customer type standpoint that are really helping to drive our growth going forward so on the new product side we added several years ago text messaging text messaging as of last fall was a 180 million dollars in revenue on a trailing 12 month basis it's now close to 30 percent of our customers who are in the mid-market or sorry the S&B and Upspace who are text messaging customers of ours and yet there is still really rapid growth happening in that space as we continue to gain share and brands continue to consolidate. Another S-curve and growth lever for us is in international. When I started at Klaviyo, we only operated in English. Didn't matter if you sat in America or if you sat in Spain or if you sat in Sweden you were going to interact with Klaviyo in English. Today we're in 11 languages. We went from six SMS markets I think several when I was beginning or actually when we went public to now we're in north of 20 or close to 20 and we just continue this international expansion at a really rapid pace in fact our international business you know not only is a rapidly growing i think last quarter was 39 year on year but our continental european business all of the business in the mia outside of the uk just had its sixth straight quarter of greater than 50 year-on-year growth so international is another important growth driver for us and then the last is the expansion into mid-market and enterprise you know again we historically started with smbs but now if you look at our customer base we have a significant portion of our customers who are generating north of um of fifty thousand dollars in arr with us but even more importantly the number of customers who are over a million dollars with us doubled year on year last year our top 10 customers the average is now north of two million dollars so the perception of klaviyo as oriented towards smaller business is really i think shifting that's an incredibly incredibly important segment for us but mid-market and enterprise continues to grow now we've got brands as i said like hershey and mattel and we're helping these larger businesses really transform

Arjun Bhatia, Analyst — William Blair

for this new era of consumer engagement i think um i it was last quarter i think you disclosed a six million we did dollar ar customer deal which is quite large yeah um yeah so certainly i think the traction up market is noticeable what is the um maybe talk about sort of the adaptability of the platform to serve these really small customers as well as these large brands how does the value prop differ and how do you notice you know are there differences in how a large customer might use or deploy Klaviyo versus smaller customers um what i will say let me start with what's

Amanda Whalen, CFO

universal and then let's go into what's different so what is universal is that every single brand regardless of size wants to be able to communicate with every one of their consumers as if they were their only consumer and every brand is thinking about how do i drive revenue from my loyal consumers because it's getting increasingly expensive these days to go out and acquire new customers the return on ad spending is going down the targeting is getting harder klaviyo is the one who helps brands drive their ltv in a world where their cac is going up now that is universal we drive their revenue and their growth and help them drive personalization what's unique about brands on the enterprise and mid-market side is that those brands are generally dealing with legacy technology stacks frequently fairly disjointed their data lives in multiple places they might have multiple point solutions for different channels and it makes it really really hard for the brand to execute on what they know they want to do which is to drive these personalized relationships one of our brands came to us the summer before last and they had actually been the largest customer of one of the big legacy providers they'd been with that legacy provider for four years and in four years they put in four automations four automations now let me contrast that with the apparel brand who we were just talking about who it was on clavio who had 100 automations set up and it wasn't that they didn't have great ideas they're an incredibly strong marketing team they just couldn't execute on it because to customize anything in this legacy product would take a team of engineers and it would take a year With Klaviyo, they can turn from idea into reality right away, and they can get one consistent end-to-end view of the customer life cycle that just makes their communication so much more powerful. So you know, a great example of that is Patagonia. Patagonia was a long-time email customer of ours. They were using a different provider for their text messaging, and they really wanted to be able to get into whatsapp and in particular rcs the problem that they were having was that their consumers were getting duplicative in some cases overlapping in some cases conflicting messages across email and text messaging with clavier they were able to unify that they created one single omnichannel customer journey and now they're getting into rcs as well so they really wanted to see the benefits of that single platform that clavio can provide okay um perfect um maybe

Arjun Bhatia, Analyst — William Blair

i i want to touch on some more near-term and topical items from last quarter i think one of the big things was this um price increase so you you mentioned you have this sms business that is growing quite quickly um i think last quarter you talked about how the carriers are are raising price for sending a text message and you've decided sort of to absorb that price increase up until this point. Maybe just talk about that decision of why you decided to hold back price and didn't pass it on to your customers and how that might change going forward.

Amanda Whalen, CFO

So the decision was for many of our customers, or sorry, for many of our competitors, they passed through these carrier fees automatically. We made the decision when we launched SMS to price all in one, not to separately charge for the Klaviyo fee compared to the carrier fee because our customers wanted that consistency, that predictability, and that ability to manage to the single all-in price. Carrier fees are a normal part of our business that is typical in the text messaging space, and so we're used to handling these increases as they come along from time to time. We saw a stepped up level in Q4, but still not enough to be worth the customer disruption. We really wanted to be very customer first in this decision. The carrier fees have continued. It is something that we're thinking about, about how we will handle that in the back half of the year now that they've materially changed. But we wanted folks to be aware of it just as we think about the overall interaction. But the origin of the decision was really around how do we be customer first and how do we help our customers have that predictability? Right. Now, one question that you may have gotten that I just wanna clarify for this group as well is that the impact, you know, if and when we do choose to decide to pass through those carrier fees, it does not have really a material impact on the revenue in the back half of the year. So our beat and our raise for the full year, that raise is not driven by anything related to carrier fees. It really is this underlying momentum that we're seeing in the business.

Arjun Bhatia, Analyst — William Blair

Okay, got it. And those are all the factors you talked about, upmarket, international new products.

Amanda Whalen, CFO

Exactly.

Arjun Bhatia, Analyst — William Blair

Okay, perfect. Well, we are up on time, so I will leave it there. Amanda, thank you so much.

Amanda Whalen, CFO

Thanks so much.