Klaviyo Q1 2025 Earnings Report

Klaviyo EPS Results

• Actual EPS: $0.14
• Consensus EPS: $0.12
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.13

Klaviyo Revenue Results

• Actual Revenue: $279.83 million
• Expected Revenue: $267.79 million
• Beat/Miss: Beat by +$12.04 million
• YoY Revenue Growth: +33.30%

Klaviyo Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 4:30PM ET

Klaviyo (NYSE:KVYO), a technology company, provides a software-as-a-service platform in the United States, other Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company offers Klaviyo, a cloud-native platform for data store, segmentation engine, campaigns and flows, and messaging infrastructure. It also provides email to send personalized marketing emails, including drag-and-drop email templates to edit and customize pre-built templates; email campaigns and automations with smart send time features, generative artificial intelligence for subject line creation, A/B testing tools, and consumer list segmentation; short message services to send targeted marketing text messages to consumers, as well as built-in contact cards to ensure that texts does not appear as random numbers; and push, a personalized push notification to engage with consumer. In addition, the company offers other applications, such as reviews, which collect product reviews; and customer data platform that allows to manage, deploy, transform, and sync data. It serves its products to entrepreneurs, small and medium-sized businesses to mid-market businesses, and enterprises. The was incorporated in 2012 and is headquartered in Boston, Massachusetts.

Klaviyo Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 FY25, Klaviyo reported revenue of $280 million, up 33% year-over-year, serving over 59,000 customers with strong mid-market and international growth.
• Launched a unified AI-powered B2C CRM platform combining marketing, service and analytics with new features like automated follow-ups, brand-voice email AI, custom objects and SMS conversations.
• Secured enterprise and global deals with names like Hershey, Belkin, Moose Knuckles and Bauhaus, while expanding its partner ecosystem through WooCommerce, Meta and TikTok integrations.
• Delivered an 11.6% non-GAAP operating margin, ended Q1 with 169,000 customers (+16% YoY), 3,030 customers >$50K ARR (up 40% YoY), 1,000+ customers >$100K ARR and maintained 108% net revenue retention.
• Raised full-year revenue guidance to $1.171–$1.179 billion (25–26% growth) and expects Q2 revenue of $276–$280 million, noting customers remain cautiously optimistic and continue consolidating tech stacks amid macro uncertainty.

Presentation

[Operator]

Thank you. With that, I would like to turn the call over to Andrew Zilli, Vice President of Investor Relations. You may begin.

[Andrew Zilli, Vice President of Investor Relations at Klaviyo]

Thanks.

[Andrew Zilli, Vice President of Investor Relations at Klaviyo]

Good afternoon, and thanks for joining Klaviyo's first quarter twenty twenty five earnings call. Our earnings press release, investor presentation, SEC filings and a replay of today's call can be found on our IR website at investors.claviyo.com. With me on the call today are Andrew Bayalecki, Co Founder and CEO and Amanda Whalen, CFO. As a reminder, our commentary today will include non GAAP measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials, which can be found on our Investor Relations website.

[Andrew Zilli, Vice President of Investor Relations at Klaviyo]

Additionally, some of our comments today contain forward looking statements that are subject to risks, uncertainties and assumptions, which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent annual report on Form 10 ks and subsequent quarterly reports on Form 10 Q. Except as required by law, we do not undertake any responsibility to update these forward looking statements. With that, I'll now turn it over to Andrew.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Thanks, Zilly, and thank you all for joining us today. Plego delivered a strong start to 2025 with q one revenue of $280,000,000 representing 33% year over year growth. We now empower over a 59,000 customers worldwide from individual entrepreneurs to global enterprises to build smarter digital relationships. We are a must have omnichannel platform for businesses looking to connect with their consumers in a meaningful way to drive revenue. Our performance once again proved out three defining themes for Klaviyo.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

First, we are a growth company and we are executing well on our strategy to deliver sustainable, efficient, long term growth with notable momentum growing in the mid market and above and expanding internationally. Second, our vertically integrated data first approach with the powerful embedded Klaviyo data platform and fast pace of innovation are core differentiators. And third, Klaviyo is uniquely positioned to redefine the next era of consumer engagement as the only CRM built for b to c businesses. The future of marketing is more personalized, but companies can only deliver on that if they know who their consumers are and where to best reach them. With b two c CRM, we've brought together multichannel marketing automation, customer service, and marketing analytics onto one AI powered data platform.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

This allows companies to take action on their data and build long term loyal consumer relationships across every touch point. B two c CRM positions Klaviyo to address a critical gap in the market, providing consumer brands with a system designed for their unique, high volume, fast paced needs. This is a natural evolution of our journey from a leading marketing automation platform to a comprehensive solution that unifies marketing service and analytics. That's more personalization and less costly service interaction, delivering better outcomes for both consumers and brands. Playvio marketing combines our messaging channels with campaigns, flows, forms, reviews, and more.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

It remains at the core of our platform and in q one our team delivered several new features that leverage data and AI make it even easier for brands to engage with their consumers across channels. This includes automated campaign follow-up to improve campaign reengagement, brand voice consistency for email AI automatically capture and apply unique brand guidelines to AI generated content, and several new form features to drive better sign up rates. We also recently introduced custom objects, which allows brands to define their own data structure with fully customizable properties. For example, a restaurant can create an object to capture reservation occasion, allowing them to store that on the consumer profile and leverage it for future engagement opportunities. Currently, in limited availability, this feature is particularly important for larger brands and customers outside of ecommerce.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We also launched automated conversations for SMS, which enables our customers to drive more sales with a tailored shopping experience by integrating campaigns and flows into SMS conversation. This enables our customers to collect more information from their consumers and use that information to provide product recommendations, making the interactions more engaging and personalized. Our commitment to innovating across our platform remains core to why a diverse set of customers choose Klaviyo. In q one, we signed new or expansion deals with companies of all sizes, including Quip, Burt's Bees Baby, Mark Fisher, Kendo Beauty, and Features. We also power many of the fastest growing companies in the consumer space.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

They recently released their 2,025 Insurgent Brands list made up of companies with more than $25,000,000 annual revenue and growing 10 times their category average. Approximately 70% of the companies on the twenty twenty five list are Klaviyo customers. Many companies are faced with a common challenge, the complexity brought by multiple point solutions and older legacy systems that don't integrate together and make it extremely difficult to build lasting consumer relationships. This is driving a secular shift as companies are looking to modernize and consolidate their tech stack to enable a faster and more personalized consumer experience. Our modern vertically integrated platform positions Klaviyo well as companies of all sizes look to consolidate onto a unified data powered platform.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

The more complex use cases that often come with larger brands play to Caladio's strength. Our platform can handle the scale, security requirements, and multi country needs of many larger customers. And our API first design offers the flexibility to support a wide range of use cases. Our competitive position against the legacy marketing cloud has never been stronger as evidenced by several notable new mid market and enterprise customer wins. One great example of this is a deal we signed in q one with the Hershey company.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

The team was seeking a more modern and intuitive marketing platform for email and SMS for their direct to consumer commerce platforms. They also wanted marketing analytics for their Hershey's chocolate world destination and their shop hershey's.com e commerce platform and chose Klaviyo as their partner to drive this forward. We also welcomed Belkin, a leading consumer electronics brand to Klaviyo in q one. The amount of manual development work required by their legacy marketing cloud was slowing down the marketing team's efforts. Delton chose Klaviyo's marketing platform to help them improve their user experience, unlock more one to one personalization options, and leverage automation while reducing the time spent by the marketing team operating in the platform.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And we signed a great new deal with Goreana, a Southern California based jewelry brand that sells digitally and across retail locations in The United States. They were using a point solution vendor for email and were experiencing several pain points, like issues with geo targeting, having to use separate vendor for forms, and difficulty with reporting and analytics. They were also going to have to use a standalone CDP to properly analyze their data. They came to Kligger for email SMS push and marketing analytics because of the combination of our built in data platform, our extensive prebuilt integration library, our ability to simplify even their most complex use cases. Internationally, the investments we made in our product and go to market are yielding great results.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Over the last several quarters, we added several new languages, expanded our SMS channel to new countries and added more sales reps with local language capabilities, fueling continued international growth in Q1. We saw notable strength in France, Germany and Spain, each of which delivered more than 100% year on year growth in new business in the quarter. In Q1, we signed a new deal with Moose Knuckles, a Canadian luxury outerwear brand. They were seeking a solution to better identify and understand their customers and agility in setting up personalized communication. Without a centralized CRM, they lacked a unified view of in store and online shoppers.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Klaviyo stood out for its intuitive segmentation engine, seamless data ingestion from existing systems, and AI powered features built throughout the platform. We also expanded our relationship with Bauhaus, a leading home improvement chain in Europe. They were using multiple vendors across their Nordics business without a single source of truth. They are consolidating that region onto Klaviyo, leveraging marketing automation and marketing analytics. We're excited to further our relationship with Vauhaus in the future.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We also started working with new customers like My First Years, a leading UK baby and child brands, and expanded with existing customers like Reebok for their European business. We're also continuing our targeted marketing efforts in specific regions including our A Sydney event which was held today and our K London event in June. Many of these wins were driven by our strong and growing partner ecosystem which continues to expand our reach and functionality. Our recently announced WooCommerce partnership is already exceeding expectations with new customer adoption across diverse segments in retail, non retail, and international. In q one, we also deepened our relationship with major tech platforms like Meta and TikTok through expanded integrations with Klaviyo.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Importantly, they are seeing the value of building on the Klaviyo data platform help their customers drive growth and build stronger data informed relationships. And we continue to expand the number of hospitality integrations with the availability of Punch, a loyalty vendor for restaurants. Before I wrap it up and hand it over to Amanda, let me quickly touch on the current macro environment. We've been talking with a lot of customers and have heard some consistent themes. In general, many of our customers are feeling tentative but optimistic.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Many of them have already diversified their supply chain over the last year and several brands with no exposure to China mentioned they are considering going on the offensive growing inventory for the holiday season and going after more market share. Klaviyo's importance in both favorable and challenging macroeconomic environment stems from the critical role our platform plays. We help companies retain and engage their existing loyal consumers, and those existing consumers are an important component of every business regardless of economic cycle. Customers have also told us that consolidating from multiple point solutions to Klaviyo is a key consideration as it enables a single source of truth to build personalized, loyal relationships. Building those loyal relationships is absolutely essential, and Klaviyo enables our customers to do exactly that with exceptional and measurable ROI.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We have a massive market opportunity ahead of us, and our data first b two c CRM platform is a key differentiator that positions Klaviyo to redefine consumer engagement. As we look ahead, we are focused on continuing to deliver the innovations that our customers and partners are asking for. This includes further integrating AI throughout the Plagio platform, adding more marketing channels and expanding service use cases. We are well positioned to be the platform every consumer oriented business From marketing to service to analytics, enabling them to build strong personalized relationships with each of their consumers. And with that, I'd like to turn it over to Amanda.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Thanks, Andrew. Klaviyo drove a strong first quarter to kick off 2025 as we continue to deliver efficient growth at scale. Revenue grew 33% year over year to $280,000,000 and we delivered a non GAAP operating margin of 11.6%. We are really pleased with these results. Our first quarter results were continued proof of the value we deliver to customers and reflect the successful execution of our growth strategy.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

We are adding new customers, growing in the mid market, expanding with existing customers and expanding internationally. We ended Q1 with more than 169,000 customers, up 16% year over year. This was better than our expectations as our customer retention was stronger than anticipated following the pricing updates we announced during the quarter and remained consistent with prior quarters. In fact, our customer retention rates coming off the holiday season were consistent with the trends we saw in Q1 last year. Our success in attracting larger customers is evident as we ended the quarter with 3,030 customers with over $50,000 in ARR, up 40% year over year.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And we now have more than 1,000 customers paying us more than $100,000 in ARR. We continue to see a strong trend of new lands in this cohort, demonstrating the payoff from our investments in the mid market and above. We delivered a Q1 NRR of 108%, in line with last quarter, driven by consistent gross revenue retention, improvement in email expansion, and to a lesser extent, benefit from the pricing changes. While we don't forecast or guide to this number, we are pleased with the consistency we're seeing. We are continuing to drive progress in our cross sell motion, and we're seeing more of our larger customers land on Klaviyo with multiple products.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

In Q1, our SMS penetration within SMB and mid market customers increased again. We saw strong adoption of our marketing analytics application, and we are seeing a lot of interest from customers for our new customer hub service offering. As you heard from Andrew, our investments made towards expanding internationally on both the go to market and product fronts are delivering returns as our strong international growth continued in the first quarter. EMEA revenue grew 47% year over year and total EMEA and APAC revenue grew 42% year over year. Our Q1 revenue over performance was driven by broad based strength.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Consistent with our expectations, the pricing updates that went live in February contributed an immaterial amount to first quarter revenue. We continue to believe that the pricing changes will have a minimal impact on full year growth rates, and we will only provide further updates if our view changes. Moving on, first quarter non GAAP gross margin was 77%, down approximately three points year over year, primarily due to increased infrastructure costs and the continued growth of our SMS product. A portion of the incremental infrastructure costs supported the expansion of important feature capabilities for larger customers and new verticals and our ongoing commitment to provide infrastructure to serve businesses of all sizes. Turning to non GAAP operating expenses.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

As a reminder, in Q1, we began accruing for our employee cash bonus program on a quarterly basis, resulting in an increase in each line item year over year. G and A as a percentage of revenue declined year over year as a result of smaller one time items compared to last year. R and D as a percentage of revenue also declined due to an increase in capitalized software. Sales and marketing as a percentage of revenue increased year over year as a result of timing of marketing program spend and incremental investments for B2C CRM. For the first quarter, income was $32,000,000 representing a non GAAP operating margin of 11.6%.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

This came in better than our guidance, primarily as a result of the revenue upside we saw in the quarter. We generated free cash flow of $6,600,000 during the quarter, which was better than expected due to the higher collections and timing of payments. As a reminder, we paid out our employee cash bonus program in Q1, which impacted free cash flow. Before turning to guidance, let me briefly discuss the macro environment. While potential tariffs and consumer sentiment are top of mind for our customers and for Klaviyo, Thus far, we have not seen a material impact on our business.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Klaviyo drives revenue for our customers from their existing consumers, which is typically a highly efficient and profitable growth channel. Should they need to scale back, many customers have told us that retention would be one of the last areas where they would reduce spending. Instead, they would be more likely to pull back on new consumer acquisition costs, such as ad spending. Klaviyo's position as a high ROI must have revenue generator for brands of all sizes gives us greater stability through a range of economic cycles. Our business performed well in Q1 and remained strong.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

However, we are also paying close attention to the macro environment and the impact it may have on our business. As a result, our guidance reflects a balance between the strength of our business and the uncertainty of the macro environment. We believe this is a prudent approach as it factors in some potential economic risk. As we look ahead, we remain optimistic about 2025 and beyond. For Q2, we expect revenue of $276,000,000 to $280,000,000 representing year over year growth of 24 to 26%, driven by continued strength upmarket and internationally.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

We expect second quarter non GAAP operating income of $28.5 to $31,500,000 representing a non GAAP operating margin of 10% to 11%. For the full year 2025, we are raising revenue guidance to $1,171,000,000 to $1,179,000,000 for year over year growth of 25% to 26%. We expect non GAAP operating income of $133,000,000 to $139,000,000 representing a non GAAP operating margin of 11% to 12%. In closing, we are off to a strong start this year, and our growth strategy is bearing fruit as we're delivering balanced top and bottom line growth efficiently and at scale. Our position in the market continues to strengthen.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

We are the only CRM for consumer brands that can power personalized engagement with our marketing automation, customer service, and marketing analytics application built on top of the Klaviyo data platform. This vertically integrated offering is establishing a foundation of sustainable growth for both Klaviyo and our customers. And with that, I'll open the call up for Q and A. Operator?

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Raimo Lenschow from Barclays. Your line is open.

[Raimo Lenschow, Managing Director at Barclays]

Perfect. Thank you and congrats for me. Simple question, you addressed it on the call already a little bit. Like if you think about uncertain times, AB, like and Amanda, what have you seen before? Like, we've just had, like, 2022, '20 '20 '3, where it was a little bit more uncertain.

[Raimo Lenschow, Managing Director at Barclays]

Can you compare kind of what you saw there and customer behavior at the moment that you're seeing there? Thank you, and congrats for me again.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yeah. Thanks for the question, Raimo. So, you know, the first thing we'll say is, we're very happy about the quarter. Thanks to our customers, to Klaviyo's, making it all possible. And it's because Klaviyo's mission critical, the businesses that we work with.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

You know, we're a revenue engine for these businesses, and we help connect them to their most important asset, which is their customers and their existing customers. So I think when, you know, the economic environment is a little more uncertain, as as I've talked to customers in the last few weeks, the last few months, you know, they're doubling down on existing consumer relationships. They know there's very high ROI from our product. They're leaned into that. And, you know, as as the economic cycle kind of, you know, waxes and wanes, we built Playvio to really be an all weather, company and all weather sub product.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So when, you know, when businesses are growing, the number of customers, new customers, we can help with acquisition. And on the flip side, when it's more challenging, you know, I think a lot of businesses turn back to focusing on their existing customers and those relationships they already have. And, you know, Klagiyo is the source of truth for all that. So I think we're we're very, you know, we're happy with where we are. Also, as we've talked to our customers, you know, we mentioned in the opening remarks, our customers are are cautious, but they're optimistic, you know, because of those relationships they have with their customers, their ability to grow off of that.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And we've also talked to a lot of businesses, and they're very they're very resilient. You know, our customer base is very diverse. You know, there's a variety of folks that you know, with different business models, different supply chains. And, you know, I think as collectively, I think we've been there to support them, and we think that they're gonna, you know, they've been working through this, you know, cautiously, but I think they're, you know, optimistic about, you know, what they have.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And just to add a couple of points to what AB had to say there. You know, first, as we shared, we're really pleased with the ongoing strength and resilience that we've seen not only in our business, but in our customers as well. We are closely monitoring the key metrics in our business, like customer sales cycle, which which remains stable, and KAV, which is continuing to grow. And as we think about Klaviyo over multiple economic cycles, it's important to remember that we index to digital relationships. Those profiles and relationships that a brand has with their consumers and not to GMV.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

So our business tends to experience less volatility both in good times and in bad, where and that's illustrated recently by the trends that we're seeing of KAV growth outpacing GMV growth as our customers focused on, as AB said, on those loyal existing customer relationships. And then from our business perspective, we are focused on controlling the things that we can control and leaning into the strengths that have long defined Klaviyo. And this includes, just like AB was talking about, staying close to our customers, investing in strategic growth priorities and operating the business prudently just as we always have.

[Raimo Lenschow, Managing Director at Barclays]

Very clear. That's very helpful. Thank you.

[Operator]

Your next question comes from the line of Jackson Ader from KeyBanc Capital Markets. Your line is open.

[Jackson Ader, Managing Director at KeyBanc Capital Markets]

Great. Thanks for taking our questions, guys. First one is, can you just give us a sense for maybe your overall exposure or end customers' exposure to either China or other tariff countries in terms of the goods that they sell on their platform that run through Slavio?

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Sure. Thanks for the question, Jackson. There are many different ways to be exposed to China, especially with a customer base that's as large and diverse as ours, so it's a bit of a complex situation. But as Abi mentioned, we've been having many conversations with our customers over the last month. As you might imagine, our customer base sells many diverse products, and because of that, their supply chains are very diverse as well.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

We've heard from many of them that they've been already diversifying their supply chain away from China over the last several quarters as tariff potential started to emerge. And then we've also heard from some brands who have no exposure to China, and they're viewing this point in time as an opportunity where they're thinking about doubling down, acquiring increased inventory, and even potentially going on the offensive to win market share. Overall, what they're telling us, as we said earlier, is that they're tentative, but they're really optimistic in this dynamic environment. And from our business perspective, we're very confident that we drive high ROI for our customers, and we're essential for both their growth and their retention, which makes us an incredibly important partnership in in both good and challenging macro times.

[Jackson Ader, Managing Director at KeyBanc Capital Markets]

Okay. Great. That's helpful. And then a quick follow-up. If we think about all the new the new products that have been launched, whether it's CRM or customer hub or certain, what kind of growth or expectation for contribution from those new products are baked into 2025 at this point? Thank you.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yeah, I can take that. So, the first is we haven't baked in a lot of, revenue, into our into our, you know, into our guidance and our projections for this year, to give ourselves time to those products and make sure we've really got them right for customers before we scale them out. But I'll tell you since the launch in February, you know, we we broadened out Klaviyo's vision from just, you know, marketing and email and SMS, to well beyond that to say, hey. You know, what what are all the aspects of the customer experience that clearly you can help with?

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And we believe the core three apps for the consumer, the b two c CRM stack, are marketing, service, and analytics. I can tell you that, like, we launched, you know, the first product, you know, within the within our service portfolio, customer hub, and that's been in a beta for the last few months. We've got hundreds of businesses using it. It's, you know, it's a way to extend, you know, onto your website, the customer experience, allow people to log in, get help with past orders, get recommendations, get get service. Right?

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

You know, so to get questions answered. And the the feedback there has been really strong. And I think most importantly, just like our marketing products, we're able to tie back actual, you know, attributed revenue, additional sales that customers are seeing from those, you know, consumers, those website visitors that are taking advantage of this new functionality. And that's the tune of I've talked to a couple of brands where it's generating know, these are small, medium sized businesses that are generating incremental tens of thousands of dollars in sales. So they can see the ROI from these new products.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And, you know, we're excited about is marketing and service. We think about those as the, you know, proactive and reactive sides of the customer experience. We're excited to bring those together and show that service can be more than just, you know, answering questions, but can actually drive a better, better engagement so much that leads to additional sales. So we're off to a good start there. They'll be you know, we're working on pricing and packaging for that, but, critically, the feedback is really strong.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And then on the analytics side, you know, we've launched a marketing analytics product, SKU, in February, and that was based on, talking to customers and realizing that, you know, the analytics that Klaviyo was providing as part of our our formerly our CDP product, it's actually applicable to a lot more businesses that we're excited to use, some of our RFM analysis, some of our funnel analysis to help them, you know, figure out, you know, which customers were at what stage of the life cycle and, you know, connect that directly back into marketing. And, again, to drive incremental revenue. Right? And it makes, you know, the overall ROI of the, you know, Klaviyo, their investment in Klaviyo higher. We realized that wasn't just something for larger enterprise brands, but actually our entrepreneurs, our smaller SMBs, our SMBs also benefit from that.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So we're very happy with the, you know, the progress we've made and the sales we've seen for that product in q one, and we expect that that's gonna be, you know, a revenue driver as well. So we haven't baked you know, we didn't bake a lot of revenue expectation into the year, you know, from those new products, but we're excited, you know, about the potential they're gonna have in 2026 and, you know, future years.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And one thing we're particularly excited about with marketing analytics is just as AB said, the power of the results that it drives for our customers. One of my favorite stories from the quarter was Caracara, a growing d to c brand, longtime Klaviyo email customer. They recently consolidated their tech stack onto Klaviyo, adding SMS and marketing analytics because they wanted to get new insight into which messaging was resonating with which customers. And by using this really data driven multichannel approach, they were able to achieve 170 x ROI in just three months, and over 48% of their Klaviyo revenue came from repeat purchaser segments who they identified using that RFM modeling in marketing analytics.

[Jackson Ader, Managing Director at KeyBanc Capital Markets]

That's great. Really thorough. Thank you very much.

[Operator]

Your next question comes from the line of Gabriela Borges from Goldman Sachs. Your line is open.

[Gabriela Borges, Analyst at Goldman Sachs]

Hey, good afternoon. Thank you. Amanda, just on Jackson's earlier question, is there a way to think about the relative sizing of those two cohorts that you mentioned, the cautiously optimistic diversifying cohort versus the offensive cohort? And as you looked at the second half of the year, you mentioned taking into account macroeconomic risk. Maybe just a little bit on your forecasting approach there.

[Gabriela Borges, Analyst at Goldman Sachs]

When we calculate the math, it feels like the second half revenue guide is about the same as it was before. So just a little bit on how you thought about that. Thank you.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Yeah. Great question. So, you know, as we said, it's there's an incredible amount of diversity across our customer base, and so therefore, you know, not sizing the specifics. But as you think about the revenue guidance and the outlook that we've built in, we raised the revenue guidance on the back of strong q one performance as well as robust customer demand signals that we're seeing. And these conversations that we're having with our customers indicate that they are very clearly focused on retention and growth with their loyal consumers as well as focused on efficiency, which is exactly where our platform helps them to deliver value.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

As we looked at the back half of the year, we undertook extensive scenario planning and a deep analysis of our business just given the macro backdrop, and that includes looking closely at trends and operational metrics like customer KAB trends, looking at sales cycle link, all of which have remained consistent through the April. Overall, we've got a lot of confidence in the trajectory of the business. And while it remains healthy, we're mindful of the current macro environment. And so we built a healthy dose of prudence into the guidance for the back half of the year that gives us flexibility to adjust for unforeseen risks throughout the year. So as we look forward, we will continue to monitor the macro environment, and we will remain agile in responding to any changes that we see out there.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

We are going to plan to continue to invest behind our growth strategy because we've seen great returns from those investments thus far. And we're confident that our platform's value proposition combined with disciplined approach to execution, positions us really well for continued success.

[Gabriela Borges, Analyst at Goldman Sachs]

Thank you very much.

[Operator]

Your next question comes from the line of Parker Lane from Stifel. Your line is open.

[Parker Lane, Managing Director - Equity Research at Stifel Financial Corp]

Hi, guys. Thanks for taking the question. Amanda, maybe just to stay on the same theme of the prudent guidance in light of the uncertainty out there. When you look at things like SMS attached, international traction, messaging volume, are there any particular areas you feel like would be most sensitive or have been accounted for for greater sensitivity in light of what we're seeing out there?

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Yeah. It's a great question. You know, in this type of environment where you're seeing lots of uncertainty, we looked at multiple different scenarios, you know, what might happen under multiple, you know, different views of the economy, how customers might respond. If anyone has a crystal ball out there, it's fairly challenging to see, but we wanted to make sure that we are prepared for a variety of different scenarios. And so, you know, as we've mentioned before, what we've seen in the past in our business is that because we index to digital relationships as opposed to GMV, we tend to have less volatility both on the upside and the downside.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And that gives us some confidence in what we expect to see in the back half of the year.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And then I'll add one other thing. You know, as Amanda talked about the ROI of our product, you know, even with SMS where there's a, you know, slightly higher cost basis to our customers, we're able to show the ROI of SMS campaigns, obviously, as well as email campaigns, all all of this marketing directly in Klaviyo. And as long as that ROI continues to be very positive, you know, even if even if there's a little bit of variance to that, it's so good that we find you know, as I talk to businesses, they're not, you know, constraining budget so long as they're seeing that performance. And that's that's one of the things that gives us confidence about, you know, clearly going forward. Many have said, like, because it's not you're not marketing to customers you don't know and have to acquire.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

They're customers you already know and are getting to come back. And that obviously helps the ROI. It also means that, you know, sort of the, you know, the the the budget, the marketing that you can deploy is already somewhat known. It's already in your Klaviyo account. And I think that also gives us some confidence.

[Parker Lane, Managing Director - Equity Research at Stifel Financial Corp]

Got it. Appreciate the feedback.

[Operator]

Your next question comes from the line of Brent Bracelin from Piper Sandler. Your line is open.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Thank you. Good afternoon. I wanted to go back to the new service and analytics products. AB, what's the sweet spot relative to size of customer that is responding most favorably to the new products? And then Amanda, could you maybe frame the potential ARPU uplift as you see some early customers consolidate the tech stacks?

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Is it the 10%, maybe 20%, more than 20% uplift to ARPU? Just love to hear those two things. Any color there would be helpful. Thanks.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yeah. So I'll touch on each of the two new product categories. So with let's take analytics first. You know, as as we mentioned, we actually think that has wide applicability. I mean, there's maybe some subset of our smallest, you know, the offer they're just starting out.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

They don't have enough data mass to use our marketing only product. But for the vast majority of Twilio customers, we actually think it's a great it's easy it's an easy add on. It's an easy attached product. So we think that that will apply to the vast majority of our customers. And then for service, you know, it's interesting.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Customer hub, we actually think is applicable to all businesses. It's a way to extend the personalization and use the data that's already in your, you know, Klaviyo, data platform. A way to use that now extend it onto your website. So that also applies to all market segments. We've designed know, this thing, we started service really focused on, okay.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Let let's work with, you know, SMBs and make sure the, you know, the product market fit is really good there. I think based on, you know, as Amanda talked about, some of the, you know, some of the opportunities that we're seeing in the mid market enterprise, that's making us think harder about how we can make sure that that our service products scale to the enterprise, more quickly. We think there's a moment right now with service where, you know, obviously, there's a big focus on automation and how to do more with that, you know, using AI and, obviously, using the clay you know, Claudio data that backs that and, you know, combining that with AI is very powerful. So we're really thinking about how we can bring that to a larger swath of our customers faster than just our SMBs. And the last thing I'll say is, like, the the the story of, hey.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

All of the entire consumer experience, you want one brain, one Klaviyo data platform, one data platform that undergirds all that. You want all of the applications that interface with your end consumers, you know, our our customers' customers. You want all that driven, you know, from one comprehensive platform. That resonates a ton with SMBs and actually more than, you know, more than we expected. It's resonates a lot with enterprise.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We're we're very much leaning into that opportunity. And, yeah, I'll let Amanda talk a little bit about some of the, you know, ARPU uplift that we're we're thinking about.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Yeah. In terms of the ARPU uplift, you know, service, as AB mentioned, is early days. We are still in beta, so more to come on service and service pricing both as we approach GA later this year and also as we continue to build out the suite of offerings related to service. Marketing analytics has a nice ARPU uplift associated with it. It's a portion of email, so it's not necessarily the same ARPU uplift that you would see from a product like SMS.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

But also one of the wonderful things about both marketing analytics and service is that they are leveraging the same underlying data, the same consumer relationships. In other words, largely the same cost structure associated with our email and data platform. They don't necessarily come with the same per message sending cost that a product like SMS does. And, therefore, they also come with a nice gross margin profile that's more akin to what we see in our email plus data product.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Helpful color. Thank you.

[Operator]

Your next question comes from the line of Arjun Bhatia from William Blair. Your line is open.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

Perfect. Thank you. And maybe I'll stick to the same theme. In terms of the new solutions, obviously, a pretty exciting kind of add on to the to the core platform here. But when you when you're thinking about the service solution, ABM, I'm curious.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

Does this for customers, does it necessitate the replacement of some sort of an incumbent solution? You know, maybe I'm thinking of, like, a Zendesk that might be in there or or given where your position, can it sit alongside for now? Like, how are you thinking about those dynamics? And then similarly on the go to market side, should we expect this to be a little bit more of a higher touch go to market motion? Or can you sell these solutions through the low touch self serve type of approach as well? Thank you.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yeah. Great. I'm happy happy to comment on both. So, we're talking about, service. Like, let's let's break it into, you know, a couple of different, you know, products, piece of, you know, functionality that, we're building into our case service, product group.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So the customer hub that we've released, we actually just think is novel and new. It's a new experience, you know, embedded on a business' website. It makes it easy for, you know, consumers to log in to see, you know, past purchases, past orders, and then, you know, get recommendations. There's a marketing element to it as well as then get you know, ask questions. Right?

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Get get help. And, interestingly, that that help could be more service. Hey. I have questions about the thing I bought. It could also just be more of a marketing, you know, sales use case of, hey.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

You know, I'm I'm curious, you know, what size should I buy of this thing that I'm I'm interested. That, we think, is totally novel, and that considers alongside, you know, existing service product. The second thing that we're really focused on is this idea of, hey. You know, automating more of those conversations, we'll say. Right?

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

I think that, if you if you look at it, that that is a is a product category. You know, it's obviously been around for a few years, but it's really leveled up because of, you know, AI, you know, native solutions. And this is where I think, you know, we're we're with Klaviyo, we're happy if you wanna plug into our customer hub. If you wanna use something you've already already have, adopt our customer hub first, that's great. But we think we have the ability, you know, because of our ability to build, you know, really useful usable products, really scalable products, as well as the fact that we have the source of truth about your customer and and giving that context to our service, you know, kind of AI, chat agents, that that's gonna make our product really compelling. So in that case, I think there'll there may be a little bit of, like, running side by side, taking things off. But I think we're a lot of you know, the customers I talked to said, hey. Look. If you can consolidate all this together so that there's one consumer experience that stitches, you know, what that spans marketing, service, help you know who my customers are with, you know, your analytics product, that sounds great.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And so I think that I think, you know, our customers are looking for this unified, set of applications. The second the second thing, around, hey. Is this gonna be higher touch or not? You know, for starters, I think for our SMB customers, again, we we take a lot of pride in the quality of the products we build and how, you know, adoptable they are, without needing to necessarily talk to somebody on the Klaviyo end. So I expect a lot of SMBs were designing, you know, workloads and having such that they can adopt these all on their own.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

One the great parts about our customer hub product is it's literally to you know, after you kind of review the design of it since it's embedded on your website, it's one click to turn on. It's so fast. It doesn't require any, you know, engineering, any coding. It's just easy to turn on right away, and I think our, you know, our service agent will be similar. Now we expect, similar with marketing, there will be customers that have more questions, you know, that have more complex, you know, implementations, data feeds they wanna plan, and we're excited to do that.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We're obviously, we know how to do that with, you know, with marketing and all the market channels we support, and we'll we'll provide the exact same great experience, you know, for those more, you know, mid market enterprise customers or for folks that need it.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

Perfect. Very helpful. Thank you. Congrats on a nice start here.

[Operator]

Your next question comes from the line of Terry Tillman from Truist. Your line is open.

[Terry Tillman, Managing Director at Truist Securities]

Yes. Thanks. Hi, Abe, Amanda and Zilly. So congrats on the international traction. It's a single question, but multi parter.

[Terry Tillman, Managing Director at Truist Securities]

What are you seeing in terms of the international traction in terms of when you're signing new customers, are they kind of similar personas as how your business has been in The US? And or are they buying kind of multiple products at one time? And the second part of this is where are you in actually kind of field sales reps or kind of outbound investments versus harvesting those investments? Thank you.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yep. Yeah. Happy to take this one. Yeah. Charlie, I I think that's spot on.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Like, I think what we found as we've expanded to, internationally and especially in Europe, very proud of, you know, over 40% growth year on year in Europe. Europe's now over 34%, or international at 34% of our total business. Yeah. What we're finding is is as we've expanded, added language capabilities, we've added SMS. We've added, you know, support in Klaviyo's that are, you know, speak people native tongue, you know, native language.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

That made it a lot easier to enter some of those large European markets, France, Germany, Spain, all which we talked about having, you know, growing at over a % year on year. The persona is pretty similar. It started out largely as SMBs. And so we're very excited about that progress. And actually, we think that if you look at you kind of compare it to our growth, say, in The US where we also started with SMBs and then grow into mid market and now enterprise.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

I think we have the opportunity to do the exact same thing in Europe, but just on a faster timeline. So we've started, this year. We made some decisions to make some investments in local, you know, sales teams, and starting to, test that. We also launched, you know, just last week, you know, full the full video website experience in German, in Spanish, in Italian, in addition to France, which we launched last year, French. So we think that that is that is gonna lay the groundwork for more growth there.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And I think we'll we'll continue to see that in SMB, and I actually think we'll we'll see that even, you know, sort of a faster acceleration into the mid market. And maybe if you look at, like, Clicker's overall growth, you know, where we were same time period, if you're in The US.

[Terry Tillman, Managing Director at Truist Securities]

Thank you.

[Operator]

Your next question comes from the line of Rob Oliver from Baird. Your line is open.

[Rob Oliver, Senior Research Analyst at Robert W. Baird & Co]

Great. Thanks, guys. I appreciate it. I had two. AB for you, I was wondering if you could give us or frame for us a little bit where we are with the Meta and TikTok integrations on the platform.

[Rob Oliver, Senior Research Analyst at Robert W. Baird & Co]

They both seem like potentially meaningful opportunities, particularly as you continue to fill out the product portfolio at the lower mid range? And then, Amanda, just a follow-up for you. You had mentioned how you saw better than expected retention off of the price increases. In the wake of the price increases, clearly very encouraging. I was wondering if you could just comment relative to kind of why you thought that was and what sort of confidence that gives you guys relative to appetite, not just for additional price increases down the road, but receptivity of additional products from Klaviyo and additional value from Klaviyo? Thanks.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yep. Okay. Great. So on on Meta and TikTok, if you think about Klaviyo marketing, you know, obviously, primary focus has been on the direct channels between a a business and its end and its end customers, consumers. So email, SMS, things where the business has, you know, kind of complete control on a direct connection.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We're broadly putting a lot of price and engineering investment towards the team to build out other channels there. You know, we've launched or for mobile applications, also, you know, owned and operated by a business. But now, you know, the last twelve months, we've taken a look at, hey. What what are other, you know, places, you know, digital places on the Internet that businesses and consumers are meeting. And, obviously, a big part of that is, social platforms, that, and TikTok.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So a couple of things that we're doing there. You know, what we what we launched in the last, few months is better, tighter integration into the ad networks, in some of the shopping capabilities of those platforms. So, for example, with with Meta, you know, on Instagram shops, you can now take some of the reviews and the content that you're you're collecting from customers, and you can use that not just as, you know, social proof, in email, in SMS, on your website. You can actually also use that inside Instagram. So it's deepening this you know, the connection between Playvio and these platforms.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And so that's the other way you can look at our reviews, products, functionality, and, you know, leveraging those assets beyond just email, SMS, mobile. And for TikTok, that's one where, you know, we're excited for every, you know, for every social network, you know, they often have a variety of different ad units. And one of the things we're excited about is a lot of those, you know, advertising networks have a way to not just drive the true traffic, but actually collect some information about who that, you know, end consumer is. So for TikTok, you know, they have, lead ad units that allow somebody rather than just acquiring clicks for traffic, you can actually also learn you know, acquire some of these, you know, name, phone number, email address. And, obviously, that inside of Klaviyo is very powerful.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

It basically gives them a way to collect more subscribers directly from those other platforms. So we're gonna continue to invest in these, you know, social networks, you know, other, you know, major Internet applications. We're doing our system work with WhatsApp, building a tighter integration there. So I think, clearly, our primary focus is still on these, you know, kind of owned and operated channels like email, SMS, mobile. But I think we're gonna try to round out our entire marketing portfolio with some of these other channels that we know are important for brands and consumers.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And to your question on pricing, thank you so much. We were very pleased by the higher than expected retention rates that we saw following the February pricing changes because it validates the important role that we play as a must have revenue driving platform for brands who are serious about their growth and serious about their retention. And the key difference that we saw from pilot into GA was that our team took and applied the learnings from the pilot to get out ahead of and mitigate the churn risks as we moved into GA. We went out and very proactively communicated with customers about the tools and the resources that we had put in place to help them clean up their active profiles, which allows them to more effectively target the right customers and drive high ROI from those highly engaged profiles who remain. And the consistent retention in q one shows the stickiness of the platform and the value that customers get from having all of their data on Klaviyo's vertically integrated platform where they can easily take action and build lasting customer relationships.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And in fact, in some cases, we have already seen customers who left Klaviyo earlier in the year because of profile enforcement coming back to us because of the value and the ease of use of our platform. And and to your question on new products and how this fits in as we think about pricing going forward, as we mentioned last quarter, these changes that we made in February are very important because they anchor the pricing in the value of the consumer profile and the power of the data that it contains. There are also, if you recall, were some parts of it that reduced pricing friction for our customers so that Klaviyo can be as easy to buy as we are easy to use. But it's that anchoring on consumer profiles that's really important as we think going forward because consumer profiles are also the driver of pricing for, for instance, our new marketing analytics. So having this change, while it provides very little, you know, minimal, as we said, uplift to revenue, it's very important strategically because it provides that foundation for growth in the future.

[Rob Oliver, Senior Research Analyst at Robert W. Baird & Co]

I appreciate all the color. Thank you, guys.

[Operator]

Your next question comes from the line of Elizabeth Porter from Morgan Stanley. Your line is open.

[Elizabeth Porter, Executive Director at Morgan Stanley]

Great. Thank you so much for the question. Is the commentary on existing customers and Klaviyo being the last thing that they're willing to cut is really encouraging. And I was hoping you just provide additional color on what you're seeing on more of the new customer top of funnel demand side. So could you just talk to what you saw from the gross adds?

[Elizabeth Porter, Executive Director at Morgan Stanley]

Is WooCommerce starting to become a bigger contributor to customer acquisition? And just lastly, how top of funnel has trended kind of thus far into Q2? Thank you.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Yep. Okay. So I'll I'll talk through the, you know, some of the what we're seeing on the demand side on the top of call side. So as Amanda mentioned, you know, look, the the fact that we have such great, retention, which I think then translates into word-of-mouth from customers, I mean, that's a key part of how we thought about driving demand. So I'll give you a a quick rundown as what we're seeing, a little bit by a different type of customer.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

You know, mentioned for our smallest customers, you know, for they're just starting out entrepreneurs, we call them. We're actually seeing quite a bit of strength in that cohort. You know, I think we think that's testament to, you know, again, the cost businesses loving Klaviyo. When they spin up a new venture, they're, you know, they're either using Klaviyo because they've used it in past life or referring it to, you know, to friends. And that's been something we've really been investing in, and we're very excited to see that kind of continued growth in that smaller SMB segment.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

In our core SMB segment, we continue to see those customers growing with us. Interestingly there, like, think we're seeing increasing demand both internationally. We knew about that. Also, a little bit more outside of pure retail. You know, other use cases, travel, hospitality, restaurants, etcetera.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So that's in that core kind of SMB segment. Still seeing very good growth there. And then we mentioned, you know, in the mid market and enterprise, you may already talked about about, you know, measuring deal cycles. We're not seeing any real, lengthening there. We're very excited about some the milestones we've hit, you know, having over a thousand customers now at a hundred k in ARR.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We think there's a lot of opportunity there. And I mentioned how, you know, sharing our product vision of this b to c CRM and building it all, you know, AI first from the ground up attached to our Collegio data platform. So all of these applications work together. That is really that has that has gotten a lot of folks' attention in that mid market enterprise segment. And so I think a lot of folks are excited for us to deliver on that, and we do see, you know, some good leading indicators in terms of pipeline growth and then, obviously, customer addition.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And we're clearly early in Q2, so we're not going to specifically disclose metrics related to April. But I will say that we look at all of our key operational metrics and indicators on a daily basis. And through the April, those remained consistent. And we took those trends that we're seeing in the business into account when we were building our outlook, and we have really strong confidence in the q two guide.

[Elizabeth Porter, Executive Director at Morgan Stanley]

Great. Thank you very much.

[Operator]

Your next question comes from the line of DJ Hines from Canaccord. Your line is open.

[Dj Hynes, Analyst at Canaccord Genuity Inc]

Hey. Thank you, guys, and congrats on a nice quarter. AB, I was hoping you could talk a little bit about how you're thinking about sequencing or prioritizing investment dollars these days. I feel like from the time of the IPO, you've been very explicit. It's kind of new customer acquisition or new logo ads first, then upmarket, then international.

[Dj Hynes, Analyst at Canaccord Genuity Inc]

Now the surface area is greatly expanded with all the new product introductions. Just talk about kind of prioritization of investments these days and where you're focused.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Sure. Well, in general, we're we're going to be a very, you know, ambitious, company. And for us, that means aiming at the biggest opportunities. Where's the where's the place we can drive the most value for customers and not, you know, not not restrict ourselves to just the, you know, the markets or the products we have today?

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So let me touch on a couple things there that I think we're very excited about. The first is, what we're doing around machine learning, and artificial intelligence. I've talked in the past about, like, you know, the fact that we can help businesses use their data, to do better personalization and do that automatically. We actually, increasingly, over the last few months, think that opportunity is even larger than we, you know, previously thought. I think there's the opportunity to use some of the technology that's come out, improvements in some of the large language models to actually help businesses automate more of the content creation, you know, even without personalization and the amount of leveling up that that does.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

We think that, you know, a lot of the businesses that work with Klaviyo, we give them very powerful tools, but they're actually rate limited by how fast they can dream up and create content. A lot of those, you know, barriers are going away. So that techno technological leap plus the fact that we have all of this data to provide as context into that content creation process and that we can measure the results and iterate and help businesses improve, we think there's a massive opportunity there. We think that's both an opportunity, you know, to, you know, strengthen our, you know, product market fit with existing customers, but we also think there's, you know, large, you know, monetization opportunities because there's incremental value we can provide to businesses. So we've we're putting a lot of focus on that.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

Know, we already talked about, you know, the, the mid market and now moving into the enterprise. You know, we think that that's just there's there's a lot of businesses there, you know, some of which still have you know, aren't aware of Klaviyo that when they find out, you know, that Klaviyo exists and that we built, you know, sort of marketing and now other applications with this data first, AI first point of view, you know, they're eager to level up. You know, the technologies the marketing technology, you know, from ten years, fifteen years ago, it's not state of the art anymore. They're looking for best in breed, and I and we think that we can fill that and do a great job there. So that you know, we'll bring a lot of effort on there.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And then finally, you know, obviously, the, the b to c, CRM, this expansion of, you know, new marketing channels, as well as these other applications of service and analytics. You know, I think service, is a very interesting use case. You know, we think about marketing as kind of the you know, how do how do you help customers, end consumers, you know, remind them what's top of mind in a very personal way. We think the other side of that is, like, when people need help, how are we how are we doing that in a way that, know, answers our question more quickly. We think that's a huge market and very, very important.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

So all three of those, we think, you know, match our criteria of, hey. The market is very large. When we talk to customers, there's a lot of, willingness to try. They wanna level up what they're doing. They know AI is, you know, it's new age.

[Andrew Bialecki, Co-Founder, CEO & Chairperson at Klaviyo]

And, I think we have we have teams that are very committed, you know, working really hard, to build great products and great experiences, for all those opportunities.

[Dj Hynes, Analyst at Canaccord Genuity Inc]

Yep. Very helpful. Thank you.

[Operator]

And we have time for one more question. Your final question comes from the line of Brett Huff from Stephens. Your line is open.

[Brett Huff, Managing Director at Stephens Inc]

Thanks so much for fitting me in. Appreciate it. Congrats on a nice quarter. Digging in a little bit on international, which we've been excited about. How did international perform relative to your expectations vis a vis what's built in the guidance?

[Brett Huff, Managing Director at Stephens Inc]

And the thrust of the question is trying to understand as we look at the raised guidance, which is great, how much of that is being buoyed by international? Because it seems like it's a net new market you all are going after, right? It's new stuff that maybe has less to do with macro. Thanks for the time.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

Yes. Great question. Thanks so much, Brett. So the international trends that we're seeing are, as you said, incredibly strong. We made investments last year in launching new languages and expanding SMS to multiple markets, and we're seeing those paid off this year.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

The fact that I think we're particularly proud of is France, Germany and Spain each growing their new business in the quarter over 100% year over year, which was four to 10 times faster than those markets were growing last year. So it certainly is an important accelerator, and it's an accelerator that we continue to invest behind, making investments like AB spoke about earlier. Last year, we launched the product in new languages. This year, we're launching an important part of the customer journey by making local websites in German, Spanish and Italian. So built into the guidance is an assumption that we're going to continue to see results from those strong investments that we've made.

[Amanda Whalen, Chief Financial Officer at Klaviyo]

And then also, that we will start to see some benefit that comes through later in the year from some of the investments that we're making now in go to market and localization of that customer journey that really helps to build upon the investments that we started last year.

[Brett Huff, Managing Director at Stephens Inc]

Great. Thanks so much.

[Operator]

And this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Andrew Zilli, Vice President of Investor Relations
• Andrew Bialecki, Co-Founder, CEO & Chairperson
• Amanda Whalen, Chief Financial Officer

Analysts

• Raimo Lenschow, Managing Director at Barclays
• Jackson Ader, Managing Director at KeyBanc Capital Markets
• Gabriela Borges, Analyst at Goldman Sachs
• Parker Lane, Managing Director - Equity Research at Stifel Financial Corp
• Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies
• Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair
• Terry Tillman, Managing Director at Truist Securities
• Rob Oliver, Senior Research Analyst at Robert W. Baird & Co
• Elizabeth Porter, Executive Director at Morgan Stanley
• Dj Hynes, Analyst at Canaccord Genuity Inc
• Brett Huff, Managing Director at Stephens Inc