Klaviyo, Inc.

followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We do want to incorporate as many analysts as possible on the call. Please limit to one question before returning to the queue. Thank you. With that, I'd like to turn the call over to Jack Grant, Senior Director of Investor Relations and Strategic Finance.

Thanks, Operator. I'm excited to welcome you to Klaviyo's fourth quarter and full year 2023 earnings call. We will be discussing the results announced in a press release issued after the market closed today. Please refer to our investor relations website at investors.klaviyo.com for more information and a supplemental presentation related to today's earnings announcement. With me on the call today are Andrew Bialiecki, co-founder and chief executive officer, and Amanda Whalen, chief financial officer. During today's call, we will make statements regarding our business that may be considered forward looking under applicable securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning our outlook for the first quarter and full year 2024. These forward looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements as a result of new information, future events, or changes in our expectations, except as required by law. For discussing the material risks and uncertainties that could affect our actual results, please refer to the risks and uncertainties described under the heading Risk Factors in our quarterly report on Form 10Q for the quarter ended September 30th, 2023, filed with the Securities and Exchange Commission, or SEC, and in subsequent filings made by us with the SEC, including our annual report on Form 10-K for the year ended December 31st, 2023, to be filed with the SEC, which may be obtained on the SEC's website at www.sec.gov and on our investor relations website. In addition, today's call includes non-GAAP financial These measures should be considered as a supplement to and not a substitute for gap financial measures. Reconciliation to the most directly comparable gap measures can be found in today's earnings press release or earnings release supplemental materials distributed after market close to debt, which are available on our investor relations website. With that, I'll now turn it over to Andrew. Thanks, Jack.

Thank you to everyone for joining us today. the business. The fourth quarter is critical to our customers, and we delivered for them. I want to thank both our partners and the Klaviyo team for ensuring our customers had a great holiday season. On today's call, we'll go through some of the highlights from the quarter, followed by some updates on products, our market, and I'll wrap up with our fiscal year 2024 focus areas. I'll then turn it over to Amanda to cover our financial results in more detail and provide our outlook for the first quarter and full year, 2024, before we open up the call for Q&A. We measure our success by our customer success. We helped our customers generate well over $50 billion in Klaviyo Attributed Value, or KV, in 2023. Whether a business is just getting started or is already a household name like Mattel, we helped empower smarter digital relationships and drive revenue growth. This was another strong year for our business as we grew our revenue 48% year over year and drove over $100 million in free cash flow. The fourth quarter marked the first quarter that we generated over $200 million in quarterly revenue. We're continuing to see our strategy resonate across key growth initiatives. We're adding more customers, expanding with those customers, growing internationally, and scaling into the mid-market. Amanda will cover our progress on these growth areas in more detail. I'd like to call out a few notable moments from the past quarter. We know the holidays are very important for our customers, and we help power their growth. At the peak hour, our customers generated nearly $60 million in K&D. One of my favorite stories from the Black Friday, Cyber Monday, or BSTM weekend was Jones Road Beauty. Jones Road is a nine-figure cosmetic company started by Bobby Brown. The Jones Road team used Klaviyo to help drive a record-setting BSTM for their brand, with their KV during BSTM up by over 150% year over year. Jones Road used many of the best practices we see working more broadly across the industry. They leaned into their loyal customer base with more personalization driven by their segmentation strategy to execute this. We continue to provide our customers with an efficient channel, drive revenue that complements and amplifies their marketing spend on advertising networks. We're proud of stories like these where we're able to drive growth for our customers and empower them to own their destiny. Collectively, our customers did a lot of marketing and we were there for them to meet their demands Our systems delivered 11.6 million messages per minute at peak times and 14.7 billion total messages during the BFCM weekend. We delivered almost two times the number of total messages this Black Friday Cyber Monday compared to 2021. We're continuing to improve our product to ensure we are providing excellent deliverability for our customers. One of the recent focuses of our R&D team has been adding to our own lower-level email infrastructure to give us more control and visibility on how we deliver our customers' messages and reduce costs. We delivered over 1 billion messages through Klaviyo's mail transfer agent during the BFCM weekend. We're ensuring our platform can scale efficiently while providing customers with the tools they need to focus on driving revenue. We're continuing to turn the success we are powering for our customers into growing our own business. We're proud of the fact that some of the fastest-growing brands out there, including eight of Numerator's top 10 fastest-growing CPG brands in 2023, and seven of Retail Dive's top eight D2C brands to keep an eye on in 2024, rely on Klaviyo to power their growth. 2023 was a banner year of brands choosing Klaviyo for expanding their business with us. Leading companies like Stanley 1913, Dollar Shave Club, Khloe Kardashian's Good American, Sugarfina, and Hum Nutrition all chose to drive their revenue growth with us. Our ability to easily harness our customers' first-party data continues to be a differentiator in the mid-market. We're excited that Fresh Clean Threads, a mid-market apparel retailer and one of the fastest growing women-owned businesses in the country, chose Klaviyo during the quarter. Our 350-plus native integrations and APIs are allowing Fresh Clean Threads to better leverage all of their first-party data for a complete view of their customers and drive more revenue. We're excited about our opportunity to continue to serve large customers. And more and more customers are looking to consolidate their tech stack and looking to us as the one vendor for their digital relationships. During the quarter, we saw European WAC centers consolidate their SMS channel with their existing Klaviyo email subscription. They are now able to create unified customer journeys across email and SMS from marketing and customer outreach to appointment reminders and updates. Finally, we are continuing to see success expanding beyond our core retail and e-commerce markets. During the quarter, we added F45 Training, a fitness and training center operator with more than 1,800 locations as a customer. With their previous providers, they were unable to build automations and flows into their customer journeys. They're now going to use our mind-body integration to help incorporate more automation into their marketing efforts to drive increased targeting and personalization. It's early days in these new vertical offerings, but we are seeing an increasing number of fruit points in our ability to scale beyond retail and e-commerce. Now I'd like to talk about a few things on the product front, particularly around artificial intelligence and our vision there. AI has changed the world in the way e-commerce marketers work. First, predictive AI made it easier to send the right message at the right time. Then generative AI sped up the content creation process and made marketers more productive. At Klaviyo, we think the future of business to consumer marketing is autonomous. It's not just about AI that makes messages more personal and saves you time. It's about empowering you to generate and refine revenue driving ideas effortlessly. Imagine a platform that not only creates tailored experiences for each individual consumer, but continuously learn and adapt, refining strategies for the best outcome in a fraction of the time. The brands who will win won't just be using one type of artificial intelligence. They'll be using predictive, generative, and autonomous AI to save time executing today's vision and building tomorrow's strategy. That's why today we're introducing Klaviyo AI, which empowers businesses to unlock revenue-driving opportunities and deliver exceptional consumer experiences across channels. AI has always been fundamental to powering Klaviyo, and today it's getting better with features like Segment AI, which generates complex segments for you in seconds based on simple audience prompts. And Forms AI, which uses artificial intelligence to optimize web forms for conversion by testing multiple versions of your form to find the highest converting display time automatically. And finally, you've been able to generate high-performance subject lines with AI, and now you can do the same for entire blocks of email content. Email AI is all about helping you work more efficiently. Simply type your campaign's goals, and Klaviyo will design an on-brand email section in seconds. Our customers have already seen the value of our artificial intelligence tools. Prusi, which offers a wide range of clothing options, started using our subject line and SMS AI to save time in early 2023. They called it a game changer. In addition to saving about 45 minutes a day in subject line creation, engagement improved too. Their SMS unsubscribe rate dropped by over 20% year over year. We're excited to continue to build on this as we enter this new phase of marketing. In addition to our new offerings, the early feedback on CDP has been promising. One of our early adopters, Aura Frame, was able to drive efficiencies across their data management and reporting, specifically exporting CSV files, manually editing and cleaning data, and analyzing that data. As a result of adopting our CDP, they saved over 10 hours per week consolidating their customer data under one roof and supercharged their retention strategy for their 8 million apps users. We shipped hundreds of new features for our customers in 2023. Just this past quarter, a new feature our customers were particularly excited about was our updated UI for our core flows functionality. This updated UI allows for improved editing, updated components, and a more modernized approach for our users. We're going to pair new launches with improvements to our core to provide the tools needed for our customers to drive revenue through an evolving landscape. One of the recent changes to our industry was around updated requirements from Google and Yahoo for large email centers. These focus on deliverability, spam, and the overall consumer experience. As a business focused on enabling our customers to drive more personalized and relevant consumer experiences, we believe these changes are positive for the industry. We care deeply about our efforts already using Klaviyo. We have been working with our customers to make it easy to ensure they are compliant with the updated requirements. For example, one of the requirements is one click unsubscribe, which we built into our product in January so it is a frictionless experience for our customers. We also launched a deliverability score for our customers to provide a clear view on their deliverability health. The updated requirements from Google and Yahoo went into effect in February. and are continuing to roll out through April. To date, we have not seen material changes in consumer behavior as a result of these new requirements, or seen anything that would indicate that they are materially impacting subscription sizes. At this time, we don't anticipate a meaningful impact to our business. Over the long term, we believe that the companies that provide their customers with the ability to deliver personalized, targeted, and relevant content will win the market. We have a few key priorities to continue to drive strong growth this year. We're continuing to invest behind our four near-term growth drivers, adding more customers, expanding with those customers, expanding internationally, and growing into the mid-market and beyond, while planting seeds for longer-term growth. Within R&D, we are building more tools for customers of all sizes across the globe to make it even easier to use Klaviyo. We'll be launching new features focused on the mid-market and continuing our internationalization and localization efforts. While doing this, we're going to keep building more artificial intelligence into our platform to make it even easier for our customers to build smarter digital relationships. On the go-to-market front, we have a few focus areas. Within sales, we are growing our sales capacity across our teams focused on mid-market and international new customer acquisition and cross-selling into our install base. For our larger customers, we are focused on supporting these customers with cross-functional teams to drive further adoption and expansion. Klaviyo is the marketing platform that powers smarter digital relationships. Marketing is focused on evolving our brand and narrative to better tell the story of our full platform capabilities for businesses. Finally, we're going to continue to invest behind growing our 5,000-plus partner ecosystem to ensure our customers have the right agencies, system integrators, and technology partners to help them succeed with Klaviyo. A great example of this is our recently announced partnership with L. Catterton to enhance the marketing capabilities of their portfolio company. We'll be further building out our ecosystem this upcoming year and beyond. And with that, I'll turn it over to Amanda to cover the financials in more detail. Amanda?