Klaviyo, Inc. (KVYO) September 8, 2026 Conference Transcript

Off the software track with Klaviyo, we have Ed Hallin, who's the co-founder and chief strategy officer. Ed, thank you for joining us. I know, obviously, it's a busy week for you with KBOSS coming up in Boston, your big user conference. So thanks for coming down. Maybe just for folks a little less familiar with you and the Klaviyo story, just give us an overview of your background and where you focus on in your role at Klaviyo.

Yeah, totally. So we started Klaviyo in 2012. Before Klaviyo, we were working for a startup building kind of large-scale business intelligence software. So, you know, think of folks like Bank of America, Walmart, Starbucks. And one of the key problems that my co-founder, Andrew, and I were focused on there was how do we unify all the data sets that exist across these large orgs? And so if you think about a large coffee chain, the system that knew what the sales were on a given day was totally separate than the system that knew what inventory in the store was, was certainly different than the system that knew who actually was working in the store that day. And it was different than the real estate system that we could use to look up whether or not it was a college store or whether or not it was raining near that store. So that was the problem we'd been focused on. And we had this belief that, hey, businesses in the future will need a single, consistent data store that unifies all this different data and can be accessible at scale and with very low latency. And so we went through a few different ideas but built that data layer and then went saying, OK, we knew we wanted to bootstrap the business. Where can we use this system to drive revenue? and eventually focused on the S&B because we could have very tight feedback cycles and focused on revenue generation. And so we early on said, let's take this data layer and attach marketing to it. And at the time, specifically email. And so what we did is of our first 10 customers, a variety of S&Bs, a parking lot and software companies and e-commerce, three of the 10 were e-commerce companies. And we said, okay, if we're going to bootstrap, we have to lean into these. Leaned in heavily and said, okay, we are going to be the revenue generation platform, the marketing automation platform behind these. But the difference is that we started with this data layer. That's really where expertise is and bolted this data layer atop. And so fast forward 12 years, it's sort of the same at the time. We were always agnostic to what the channel was. We picked email because that was primarily what our initial customer was using to drive revenue. But over time, we think about SMS the same way. What's that the same way? Honestly, APIs, the website, really anything that can be used off this common data layer to drive, to power the business forward, but specifically the revenue. So in terms of myself and my role, I have done kind of everything over the course of it from initially co-CEO to chief product officer to chief marketing officer. And then now I spend most of my time kind of across the business, but mostly on product and AI and things like that as the chief strategy officer.

No, that's great. And I always enjoy having practitioners like yourself speak. And you're probably iterating and testing out these new AI products as it relates to improving your product development and everything. So I think it'd be great just to give the audience a kind of firsthand account of like, how has AI impacted your process? I mean, you founded the company. So when you were building software at the early days, what does that difference look like now? How would you sort of quantify what AI has been able to do in terms of improved lines of code or shipping products faster?

Yeah, it's really, it's wild. I mean, I think we've always thought of software as like you build software to drive outcomes. And so when we thought about, you know, in the early days, it's like, okay, we could spend some amount of time building software ourselves. And, like, you always want to have something where you can measure the impact of what you're doing. So for us, that was always the revenue of our customers. We still use this as a metric we call KAB, so Klaviyo Attributed Value. And then over time, obviously, the company got a lot bigger, you know, many more engineers. And we used to much more think, okay, hey, there's efficiencies we can drive with how we let people work. So we could build common engineering infrastructure. structure, we can train people, mentor and guide them, we can control kind of how senior people we hire are. But I think what we've seen over the last few years is, you know, dramatic improvements to just how fast we can ship things. And so it's really speed. And so we've seen, you know, 2x kind of like changes in how fast we're shipping things, off, you know, like common things that match consistently. And you know, we really think there's just radical more, you know, this will just keep improving over time and it's not just in engineering it's related it's product design but it's also across the org we've seen kind of like internal tools we built and um just complete changes in like processes that we can almost entirely eliminate uh internally using different ai tools and kind of every few months it's um the pace just quickens got it and and example those processes is a kind of like review documentation type stuff or yeah review document but review and documentation, but also things like, hey, how do we process expense reports internally? How do we process certain types of customer requests? How do we, where can we automate certain types of support queries that come in? But then all the way down to like, okay, just like literally how do we design product and which pieces are humans doing? And there's things where we can now spend more human time figuring out the customer needs and exactly what we're trying to build and less human time on okay uh the the actual building of or like writing of documents or you know doing things like that where we can actually shortcut a lot of steps that are now you know done by primarily by ai got it and and shifting to kind of the products and in more detail right there's been a lot of interesting releases with with customer agent you have k social composer etc And then you recently acquired Agency, too.

So give us a sense for where is the product roadmap heading? What makes sense to build versus potentially acquire inorganically? Yeah, totally.

So we started, we built this data layer, and then we layered the marketing on top. And so we always thought, hey, there's a natural expansion that will be channels. And so what are the channels people are using? and that, you know, we're heavy on email. We've since been, you know, much heavier on the full suite of kind of outbound. Think about it as like SMS and WhatsApp and things like that. More and more on just what are all the services people interact in. So not just those, the messaging, but also like the website. And then we've always thought of this as like, hey, we started with the SMB and then for a long time we've been stretching that up to much larger and larger enterprises. So there's a piece of the roadmap, which is just that continuance of the vision. A second is, you know, a couple years ago, started to say, hey, really, you want the common data and contextual layer, not just beneath marketing, but also against kind of any customer interaction. So this led to the help desk and customer agent and kind of like any products that help answer customer queries as they come in or have those dialogues, active dialogues with And so that's kind of the second bucket. I think that the third, though, is, you know, we've always thought of Klaviyo as, like, the reason people use Klaviyo is, again, to kind of, like, drive a customer outcome. What's possible now with AI tools is some of that usage is going to be a human, but a lot of that usage are also going to be agents. And some of that happens internally, some of that happens externally. And these are things like, hey, look at my strategy and figure out what are the gaps where I could be generating more revenue. look at my strategy and figure out if I've done anything wrong where I've made a mistake and set things up differently. Hey, my designers built this copy. Can you tweak the content to make it more effective? Can you design new content? But just really the full suite of how do we have an agent sit side by side with a human and make the results coming out of Klaviyo more effective? And so the key iteration of this is our Composer product, which we released a couple of months ago. So we've already had 138,000 customers use it, so kind of like tremendous adoption. And we'll continue really to be focused on this, which is just given the common data layer, given the tooling we have then to make use of that, how do we leverage AI basically to let our customers grow faster or accomplish more of their internal outcomes? And that'll be our, you know, I think that's a durable focus for the next many years.

And you touched on customer agent. And I think going back to the last earnings call, you talked about 40% sequential growth and just adoption and huge, you know, increases in weekly resolution rates. Like, where are we at in that adoption curve? Because, you know, look, I think there's a lot of excitement around agents and, you know, certainly with a huge customer base and the hundreds of thousands of customers of yourselves. Like, when should we think about that being a meaningful driver, you know, the overall growth of the business?

Yeah, I mean, currently, you know, as I think you should know, the numbers we've reported, none of the Composer or Customer Agent numbers are baked in. We're seeing tremendous progress on Customer Agent. So the 40% quarter-over-quarter remains our fastest-growing product in the company's history. And so I think it's Composer, we're kind of on week-to-week, like, here's the day-by-day iterations. You'll keep hearing a lot from us on the customer agent growth because it really is something, it's like a perfect fit for the data layer and the growth has been tremendous. And so I think we're also tremendously excited. So the agency acquisition, we brought in Aaliyah, who we've known for a very, very long time as the chief product officer. He's very focused, very specifically on agents. So my co-founder, Andrew, remains focused across product, but also deep in agents, but also with Aaliyah, as kind of a very known trusted partner. and we'll just keep leaning in to accelerate that product over time.

And with the agency acquisition, how should we think about the path that agent was on pre-acquisition now with agency? Is it going to be a new unified product in a few months down the road or are they going to be separate strategies? Yeah, really think of it as a speed thing.

So it's like it's getting great people to come in and just continue to accelerate the velocity and kind of at all levels. So it's like engineering depth on the problem coupled with kind of like the momentum we already had, a strong leader focused on the same area. And so it's really same vision, same data contextual layer. How do we do more faster? And that's generally how we think about acquisitions. So we certainly think about where we can accelerate the core vision. And then over time, you know, things like on KSocial, we bought a very small social company to just to add functionality that we could add much more quickly if we kind of did it inorganically versus organically.

Right. And just to kind of put it in plain terms, like when your customers are using customer agent, what is that? Is it primarily just used for, you know, like a returns use case for e-commerce? Like, what are kind of the most effective, where are you seeing those biggest jumps in resolution?

Yeah. So, I mean, there's a set which are, you know, like, highly predictable, exactly what you expect. It's like, hey, I've got a return. I put in the wrong shipping address. Like, the product arrived and it was broken. Just kind of this, like, set of things that, hey, are very predictable. They're very true across e-commerce. Those are very common, but the flip side is I think more and more we see that people get really, really excited about where they can actually drive revenue through these conversations. And so once you have a combination of kind of AI and humans, it's much easier to think of like it as just a customer interaction. And it's not just, hey, you know, I have a problem. Like I want to resolve this thing and make it go away as quickly as possible. But hey, actually, I have a relationship with this brand. We know what you bought. We know what you're probably going to buy in the future. We know that you just had a shipment arrive. We can actually make that a productive, mutually beneficial conversation of like, like, hey, actually, you probably want this suit jacket versus this one. And like, as you will return this one, but we think you're going to be really excited by these products over here. And I think those are the ones that are maybe a little less, you know, it's like less very down the pike of like where people expect, but it's the things that actually people are much more excited about and where we've seen a growth and resolution over time.

Right, right. Yeah, I mean, certainly an upsell opportunity if you have all that information. And on the broader AI journey, talk to us a little bit just the Shopify partnership, obviously, longstanding partnership. Where do they sort of fit in with all this? Like who kind of owns the customer from that perspective?

Yeah, I mean, it's a partnership we're super excited about, have been for a long time. So like the origin of that partnership was, you know, rewind 12 years ago. So we knew that if we were building the data layer, you have to bring in the key data sources. We integrated quickly with Shopify, Magento at the time, Salesforce, like all the different platforms that had the bulk of the data. The belief was always that like, hey, there's a transaction that they're managing, but then there's a, we're going to pull in not just their data, we're going to have a full, complete view of the customer. And so there's a, we think about the end customer, like sure, like Shopify is managing a key piece of that. for our customers and their mutual customers, it's really a very symbiotic relationship of like, yes, they're running the platform, the transaction layer, the e-commerce online experience. We're the data source of record running with the complete customer view and log, and we'll plug into their experience to make that even more personal and driving. So that basically remains true. And so it's still a very strong partnership. We're very excited by things where we can make that very mutual so we recently plugged in a sidekick app so kind of like into their AI where we can continue to personalize their experience using all the data that those merchants have in Klaviyo and so that's really how we think about it's everything with shop buy but more and more how we think about kind of like any business we work with e-commerce or not which is you're going to have these fundamental platforms driving part of the business that data is very important to us that relationship is very important to us but at the same time if you think about hey for a given end customer. I want to understand the returns data. I want to understand the inventory situation of what they look at. I want to understand the website data. I want to understand any of the long-tail system, any long-term system data, where that customer came from. And that is where we think of Klaviyo really as the data source of record.

Got it. Got it. And I did want to ask you about the KBOS conference coming up. Just what should investors be expecting in terms of product announcements. I know you're probably saving a lot for the actual conference, but just give us a sense of what we should expect out of that event later this week.

Yeah. I mean, I think we remain, the things we're excited about, I think, remain very true, which is the data source record. We have ways to drive revenue atop that. And then in the age of AI, we can do more and more to move even faster. And that's marketing, that's service. And so I think you'll just continue to see a lot of momentum there i think the the things we get really excited about are it's a great time to talk to lots of customers more and more of those customers truly do range from the biggest brands in the world to the smallest like the you know uh year you know we're a year or two into our journey um and so to me say that it's like we see actually now like a very strong community of those customers talking and then certainly a way to launch more products and but i think those very much fit in this direction of where we can really have that deep customer standing and use that to drive results for brands. And I think that is marketing, that is service, that is, hey, how do we build AI to supercharge both those?

Got it. And this idea of obviously Klaviyo being this powerful data layer, I mean, you talked about the founding of the company being in the BI space as opposed to email or whatever, right? Like one of the things we've seen recently is traditional SaaS companies are partnering with the big LLMs to kind of activate that data layer and maybe charge a consumption or premium rate on that. How do you sort of think about those partnerships with the Anthropics opening eyes of the world? Maybe we hear something later this week, but just philosophically, how do you think about that compared to some of the big announcements we've heard?

Yeah, I mean, philosophically, we think of it as, look, people use software to drive outcomes. And when they do that, more and more, it's people using software and it's AI using software. And that happens kind of like independent of your approach. And in fact, the incentive for us, or what we believe is most important for our customers, is make it possible to use Klaviyo any way you want to do that. And that might mean AI using Klaviyo directly. it might mean you're using these other tools and leveraging them in Klaviyo. It might mean you're using our Composer tool or other tools where we're actually under the hood, highly leveraging these models. But the key thing is like, hey, what's the outcome you're trying to drive? And how do we let you do that as fast as possible? And that is what makes Klaviyo durable. And so I think as we think about partnerships, it's all about finding ways to accelerate that customer value and ways that that are mutually beneficial on both sides. And so I think we're tremendously excited about what's possible. And it's really just the shape and flavor of how people are using these tools in conjunction that changes. There's not a world where people are using tools in silos. We also believe there's not a world where people are saying, are not leveraging any deep data context layer, which is kind of like fundamental to how you treat people personally and how you actually drive the outcomes you want and that are good for those customers on the other side.

Got it. And you touched on some of the larger customers earlier, which I think that's been a really, you know, impressive growth area for the company, the growth in 50,000 type customers. Can you talk about just the progress there? What, you know, I guess, what sort of verticals are you seeing success with? And then what sort of products from a multi-product perspective are the larger customers taking up most? Yeah.

I mean, we've continued to see great progress on the multi-product front. And it's, you know, it's people start with email or email and SMS. People leverage a lot of our marketing analytics and analytics tools atop that. That's a very common progression. And then we're in the early stages of starting to see people unifying their journey. So kind of consolidating across the service realms as well. And so it really is, in some ways, it's not inconsistent with what we see on the, with smaller customers, but it is a very much for large customers, they think of this as a pure consolidation of what, you know, oftentimes for many tools, how do we, how can we do the same things better, but with actually even fewer tools? And so we continue to see that, but there'll be the most common are email, SMS, often including WhatsApp and marketing analytics and kind of more data tooling atop those.

I see, I see. And the sort of consolidation motion that you talked about, where do you find the larger customers are often consolidating from? Like who's getting displaced in that?

Yeah, I mean, numerically, it's what you'd expect. It's a lot of the legacy platforms, kind of pure marketing platforms that exist independent of data. And so think of the Salesforce marketing clouds of the world, but kind of like that grouping. We also see, you know, people coming as we've reached parity on all channels. So for a long time, we invested really at all in mobile channels. And as we've invested in push notifications and those other mobile channels, we also see that, you know, people potentially coming from like other newer age platforms, but still kind of like platforms that don't have the data layer underneath.

I see. I see. Okay, so you are starting to see kind of some Salesforce marketing cloud type migrations. We see a lot of them, yeah, a lot of them.

And that's always been kind of the story on the top end, which is either you're a Klaviyo customer who grows very quickly, and then we end up serving you on the high end, and then you don't move off of it. You consider these other platforms, but you don't move. Or those legacy platforms have always been the big incumbents of people moving to Klaviyo from those legacy platforms.

I see. I see. And then as we think about the low end of your customer base, kind of more the entrepreneurs, and maybe obviously the low end for Shopify is not where you play, but one of the things many software companies have called out in this most recent quarter was weakness and top of funnel, particularly the SMB-focused names. Now, obviously, Shopify did not see that. They had a great quarter on all fronts. But what are you seeing there? And how are you sort of managing that top of funnel dynamic, just given all these headwinds and changes to traditional search?

Yeah, I mean, we, so our customer base, you know, when we think of the low end, we're particularly focused on kind of like those low end entrepreneurs who, you know, you think of have kind of found product market fit. And so I may be a new brand, but I like, I know how to make the things I'm making. I've figured out how to get my first hundred customers. So in some ways, these are not truly day one businesses, but they're just a little more established. And I think very similarly probably to what others have reported in Shopify, or specifically Shopify, is we've seen those businesses have remained good businesses. And some of the dynamics of where the demand comes from have changed. But a lot of it is very similar. And we haven't seen that there's a massive shift in those businesses or kind of like that set of our customer base.

It remains largely consistent with what it's been. Right. And just in terms of how you're approaching that top of funnel search discovery, whether it's AEO, like what are some of the, because again, I think the net ads have been very healthy for Klaviyo. Maybe this is a dynamic of B2C versus B2B, but what are some of the things you guys are doing to like make sure that you're still staying in front of customers, whether it's on, you know, an AI search versus traditional search? Yeah.

I mean, I think, so one is like we've always thought of growth as being excellent at providing tremendous customer value. What that means is, one, is highly leading into partnerships. So kind of like where we can lean into folks like Shopify or others to actually drive tremendous value for their merchants. It's not that they're actually sending us demand. It's not like the most, we have very little, it's like the Shopify app store is driving the business. It's more like as we become the platform that merchants know drives value for those, for their businesses across that platform, we find that it's a very strong word of mouth dynamic. And so it's very consistent demand if we can truly own platforms. That's remained true. I think second is, you know, we've seen just the, you know, marketing is changing. So to your point, there's like all sorts of, whether it's Arise and AO or other things, it's leaning into everything. But we've seen that it's purely really additive. So it's just the same, how do we do the things we've been doing? Most of those still work. What are the things we can add that continue to work? It's not a fundamental shift in the environment. It really is continuing to lean into the things that work well and add the things that are adding value atop them.

I wanted to ask you about some of the growing but earlier on channels like SMS and obviously even WhatsApp and some of those things. And not to make the question about gross margins because I know that's not your world, but it certainly comes up just given the nature of those products. But I guess the question for you is, as we think about those channels, clearly critical to how those customers do business, what is the strategy from a pricing perspective? I know there's been different approaches as it relates to passing on the carrier surcharges and not. But then, like, once you get them to SMS, is there another, like, higher margin service or platform that you're hoping to upsell them with? So a couple questions.

So I think first, you know, what we see at large with channels is for any given brand, the channel mix will be different. And so there's some brands that can be more SMS-heavy, some that are less SMS-heavy. For any given consumer within a brand, those channels are also different as well. And so I might, for one brand, I visit the website a lot, so I get personalized there. I receive a certain amount of email. And I only want to receive SMSs when a product's delivered. For a different brand, I may, every time there's a new product, I actually want to see the new pair of tigers or whatever via SMS. And so that mix will shift, and to some extent, we will provide a lot of intelligence to drive what those channels are, but consumers also have deeply ingrained preferences there. And so as we think about margins, it's true that kind of as we own all channels, we've historically, on SMS specifically, when we kind of launched the product back in 2018 or 2019, made the decision to make that buying process for a very new channel very simple. So we said we're going to layer all the carrier fees into that as a single price point, makes this channel very easy to adopt. As we've gotten larger and people are much more familiar with the channel, much more we say, okay, people understand the channel now. We can disentangle the carrier fees from the buying process. And so we can actually change how we're charging for this. And so we continue to think of these channels in the same way where we actually have control of how consumers buy, how our customers buy, and we'll continue to do that. Now, more and more we see, though, is like, yes, there's the charges for the core platform, like the data layer and a lot of that pricing manifests through the messaging you're using top of it. But more and more we're seeing customers buy multi-product, and we expect to see that to be a much greater trend. So buying not just multi-channel, but buying marketing analytics, buying things like KSocial, buying things like customer agent atop those, and then more and more usage of tools like Composer. So it really has become a, hey, we've got control of how we make money and how we charge for the market layers. And that is evolving, particularly for SMS. But we're seeing SMS adoption rising very quickly. So we'll see some margin impact, but generally changes. But the real thing is very strong multi-product growth over time. And the consolidation story remains very real for Klaviyo. Got it.

Got it. I did want to pause to see if there's any quick questions in the audience. the last few minutes here okay well we'll keep going um you know i guess just as you think about the topic of agentic commerce right um there's there's you know i think a lot of hype but there's there's also the uh you know the reality on the ground of like people still want to buy products and and you know have a relationship with brands so like where do you think we are now what are you seeing in your customer base? And then how is Klaviyo's strategy, how does that tie in with where you see it going?

Yeah. When we started Klaviyo, very consistently, one reason we decided we ultimately bootstrap is we got this very consistent message that was like, hey, retail's done. No one's going to buy anything in person anymore. No one's going to buy anything from a brand. Everyone's going to buy everything from Amazon. They have one, there will be a single point of all transaction. And that is the way the world worked. What we realized is like, well, it's just blatantly not true, which is there are products that are highly commoditized where this is absolutely true, where people are, you know, almost all their purchases occur in some segments of the economy. There are people who like everything occurs in Amazon for these commoditized products. There's some segments where people are absolutely walking to retail every day. And there's segments where people are building these like very strong digital relationships with brands. We've seen a tremendous rise in that part of, in those businesses and those merchants. And so as we think of agentic commerce, we firmly believe that we'll continue to see similar dynamics where there will be a strong rise of tools that let people buy in different And we'll continue to see that consumers, for some brands, want to build deep relationships. For some brands, don't want any relationship at all. But that consumer preference and how they act on those may be through an agentic tool. But from the brand's perspective, brands want to understand their customers, provide those customers a great experience, and personalize those. And that there might be another layer in the middle for some consumers for some types of brands, and we fully expect that. But it doesn't change that from the brand's perspective. You want to understand those customers and provide a very deeply personalized experience. We're not going to let go of all consumption to a model and have that model drive all purchases. So I think it'll be a huge change in how we think about it. It's very hard to predict. But the idea of personalized consumer experiences and consumers' desire to be individual and make choice will manifest in how they build those relationships with brands.

Yeah, no, that's super helpful. And my colleagues and I hosted a bunch of meetings out at the Cannes Alliance Festival this year. And one of the dynamics and key themes we heard was just this idea that people may have underinvested in brand spending and brands, you know, it's going to be that much more important to distinguish from kind of all the AI created sloth out there, right? Like, how do you see that? Yeah, I guess, is that something you're seeing? And then how does Klaviyo potentially benefit from that?

Yeah, I mean, we're definitely seeing it. The example we would have gone to at one point was like, hey, people like toilet paper, total commodity. But then we see there's like these very rapidly growing toilet paper retailers where people have relationships with brands and think of it very much as like the choices they make drive their identity. I'm making the environmentally conscious choice. I'm making the, you know, where this is manufactured. Like those are just very real. Klaviyo-wise, I mean, when we think of our reason for being, it's providing that deep customer understanding across those brands and then the intelligence atop. And more and more, it's the next step agents atop that to actually drive the strategy and implementation to actually drive it atop that. So for us, it's really our sweet spot of like, hey, when we started 12 years ago, we thought it was very obvious that you had to have all of that data in one place to build a strong digital relationship to drive the impact of a brand. We thought within two, three years, like Salesforce, MailChimp, all these companies would like build the same stuff and start from the data layer up. What we realized is like that actually is a very hard problem that we just happen to have been working on for a long amount of time. But it's still true today. And it's even more true because you have the AI tools on the other side, which is you have to have the data and the customer understanding to be able to drive the customer outcomes that you actually want to drive. So I think we're just excited. We have this thing internally that we're 1% done. And like in the age of AI, it's like you can build more faster and you can do more for customers to drive value. And like the core data underneath is just kind of more important than it's ever been.

Awesome. Well, I think that's a great place to end. We're right at time. Ed, thanks so much for joining us. I know it's a busy week and appreciate everyone coming to the conference this morning.