Klaviyo, Inc.

Good afternoon and welcome to Klaviyo's second quarter fiscal 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We ask that you please limit your questions to one. With that, I would like to turn the call over to Andrew Zilli, Vice President of Investor Relations.

Good afternoon, and thanks for joining Klaviyo's second quarter 2025 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.klaviyo.com. With me on the call today are Andrew Bialecki, 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. 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-K 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.

Thanks, Hilly, and thank you all for joining us today. Klaviyo delivered another fantastic quarter, demonstrating our continued momentum and critical value to consumer businesses worldwide as the only CRM built for B2C. In the second quarter, we delivered revenue of $293 million, up 32% year-on-year. We now empower over 176,000 customers from individual entrepreneurs to global enterprises to build smarter digital relationships that drive revenue and grow their business. Our performance this quarter once again validated the three defining themes for Klaviyo, which continue to guide our strategy and execution. First, we are a growth company and continue to execute on our strategic priorities to deliver sustainable, efficient, long-term growth. We are expanding internationally, and we're investing and making progress with our move-up market. Second, Klaviyo remains well-differentiated with our vertically integrated, data-first approach, driven by fully embedded AI and powered by the Klaviyo data platform. The Klavier Data platform's capacity to process billions of events and profiles is fundamental to our real-time capabilities, which drives faster, more intelligent segmentation and personalization at scale. And third, we're making incredible progress bringing our multi-product B2C CRM vision to life, with early momentum in service and analytics, and continued innovation in multi-channel marketing automation. Many companies today are dealing with disconnected systems, often bolt-ons or stitched-together Frankenstacks not designed for fluid consumer interactions. Our platform addresses a critical market gap by providing consumer brands with a single integrated data platform designed for their unique, high-volume, fast-paced needs. We unify the pre- and post-buying experience across marketing and customer service, driven by insights from analytics, delivering inherent speed, simplicity, and flexibility. In fact, IDC noted that Klaviyo clearly addresses a set of needs often overlooked by other vendors and is bridging the gap between commerce and customer service. Our product and engineering team continues to innovate fast, delivering incredible new features in the second quarter. At Klaviyo London in June, we unveiled major enhancements to our marketing platform to tackle one of marketing's most persistent challenges, fragmented customer experiences. Our focus here is twofold. First, we want to support the channels that matter to our customers and be great at these channels individually. To support real-time conversational journeys through rich, interactive messages, we release native support for RCS, which is the future of text messaging, and WhatsApp. And second, we are focused on making our platform even better at supporting multiple channel, channel affinity marketing. On that note, we announced our omni-channel campaign builder, a new canvas to plan, launch, and measure complex multi-day campaigns across channels. We now have omni-channel across all major areas of our marketing platform. And with built-in insights and AI optimized delivery, teams can execute faster, reduce costs, and increase ROI without switching tools or duplicating work. We also announced channel affinity powered by Klaviyo AI. This intelligent new capability leverages predictive attributes to automatically discern each customer's preferred communication channels in optimal engagement times. By understanding these key predictive signals, channel affinity ensures messages are delivered precisely where and when they're most likely to convert. Finally, we launched multi-touch attribution, providing real-time visibility into revenue drivers beyond last click. Now turning to our service products. The paradigm of customer service is shifting at an unprecedented pace, moving far beyond simple exchanges and returns. In the near future, it's our belief that consumers will expect highly personalized experiences with every brand they interact with, facilitated by their own personal AI agents. We are building the technology that will empower every brand to make this a reality. Just a few weeks ago, we expanded our service offering with the launch of two private betas one for Helpdesk and another for our conversational agent. Our AI-first Helpdesk brings customer support into the same platform as marketing, giving service and marketing teams a shared real-time view of every customer, order, interaction, and conversation. Our conversational agent leverages a brand's Klaviyo data, catalog, content, shopping behavior, and other integrations, offer tailored product recommendations, facilitate product discovery, surface coupons, and assist with orders. This goes beyond customer service and cost reduction efforts. Instead, we view this as the consumer's personal assistant, which today happens via chat, but over time, this agent can assist across every touchpoint a consumer has with a brand, messaging channels, mobile push, emails, voice, and more. This is not just for traditional customer service issues like returning an item. For example, The agent answers questions like which shirt pairs best with the pants I'm looking at, and it can quickly provide product recommendations directly to the consumer, which ultimately drives more revenue. Our goal is to democratize this technology, making it possible for consumer brands of all sizes and across industries to provide this level of personalized experience to all of their consumers. These products build upon our multi-product strategy, which we launched earlier this year with Customer Hub. Importantly, we view Customer Hub as much more than just customer service. It's really a jumping-off point for the future of personalization and bridges the gap between marketing and service to bring them closer together. We're very pleased with the success we've seen to date, and customers love the ability to unify consumer experiences across marketing and service using the data they have in Klaviyo. When companies successfully create seamless consumer experiences across touchpoints, it helps build more loyal customer relationships which also drives more lifetime revenue. In fact, in just five months since we launched Customer Hub, we've generated millions in additional, incremental, attributable revenue for our customers. Finally, the third product category of the B2C CRM, analytics. Our marketing analytics products, which we launched earlier this year, is also gaining strong momentum and already has nearly 2,000 customers. This powerful tool ensures that critical efforts like win-back emails and abandoned cart flows are precisely targeted and timed for maximum effectiveness in ROI. For example, Kibbe, a women's apparel brand, harnessed marketing analytics, RFM segmentation, and catalog insights to fuel post-delivery automations that are driving significant incremental revenue. The combination of marketing analytics and SMS to complement their email strategy resulted in a 100x ROI for Kibbe in the past year. Across all of our products that make up the B2C CRM stack, we're taking an AI-first approach. In addition to the many new AI-powered solutions across marketing, service, and analytics, we're solidifying Klaviyo's leadership as one of the next-gen technology stacks with new features like our MCP server. Brands can now access or integrate Klaviyo data directly into the LLMs they're using, and this is more than just a technical achievement. It's an important step in empowering our customers to supercharge workflows and cementing Klaviyo as the indispensable single source of truth for consumer businesses. Customers are already using our MCP server for things like planning out their campaign calendar, finding changes that can be made to flows or campaigns to drive better performance on a daily and weekly basis, and other use cases. This is just one way we're empowering our customers to leverage their data for better consumer engagement. We're also proud to share that Klaviyo has been recognized as a leader in the 2025 IDC MarketScape for AI-enabled marketing platforms, which evaluates and ranks based on current capabilities and future strategy. As businesses grapple with fragmented tech stacks, the secular shift towards unified data-powered platforms that are AI-first like Klaviyo is clear. Legacy technology is a significant pain point for mid-market and enterprise companies, and we continue to see success with our efforts to displace incumbents. This quarter, we signed Winston Flowers, a premium floral and gift company. They were facing ongoing issues with their legacy marketing cloud, particularly concerning its usability and agility for their small marketing team. They chose Klaviyo for our ease of use, faster time to market, and strong multi-channel capabilities. We also signed a deal with a premium coffee brand who was finding it difficult to execute even basic marketing functions like abandoned card flows despite significant investment in their legacy marketing cloud. They chose Klaviyo because they needed a solution that would deliver immediate results and provide a more intuitive and effective platform for their marketing efforts. We're pleased with the success we've seen in the mid-market and enterprise, and you've heard about many of the notable large customers who have joined us over the last couple of years. But we know there's more we can do to support the higher end of the market, And we are continuing to evolve our product and go-to-market efforts as a result. On the go-to-market side, we're adding additional enterprise experience to our team and increasing strategic partner collaboration, enabling us to drive deeper engagement with complex customers. On the product side, we continue to add features and functionality to the platform that are important to large enterprises, including custom objects, mobile in-app messaging, channel affinity, and more. We are also continuing to expand the scalability of our platform to serve the largest consumer brands and the diversity of use cases they have. These features are key to winning and supporting mid-market and enterprise customers going forward, and will continue our rapid pace of innovation to make our platform the leading solution for their evolving needs. We continue to see companies choose Klaviyo to consolidate their marketing tech stack from the fragmented tools they have been dealing with. In the second quarter, we expanded our relationship with Princess Polly, a leading digital fashion brand with a growing physical presence. Princess Polly has been using Klaviyo Email, who is one of the largest SMS customers of another vendor. They consolidated SMS with Klaviyo to leverage the power of our omnichannel platform for more effective consumer engagement across channels. We also signed a deal with Loop Earplugs, a rapidly growing company that creates stylish, high-quality ear protections. Loop was struggling with a fragmented marketing strategy, relying on multiple vendors that led to a lot of inefficiency. They chose Klaviyo for our comprehensive platform that will enable them to consolidate email and SMS to drive growth and streamline their customer engagement. International expansion continues to be a significant growth opportunity for Klaviyo. In addition to the WhatsApp launch, we've simplified multilingual email campaigns in Klaviyo and launched our website in German, Spanish, and Italian. These investments are yielding results. In the second quarter, we grew international revenue over 42% year on year, adding brands like Nothing, a UK-based, fast-growing challenger in the smartphones and audio category. Nothing was grappling with a fragmented CRM strategy with their legacy tool, which made it difficult to drive repeat business and loyalty. They selected Klaviyo to unify their CRM strategy and leverage our powerful automations to boost direct-to-consumer revenue. Our thriving partner ecosystem is a force multiplier, expanding our reach and functionality. We're thrilled to announce two new integrations that further expand Collegio's reach into the hospitality and entertainment sectors. Our partnership with Guesty, a leader in property management, will transform how property owners harness first-party data to boost direct bookings and cultivate lasting guest relationships. Our integration with V-Venue, a global leader in event ticketing, will empower entertainment brands to leverage attendee data for unparalleled personalization and engagement at scale, as exemplified by their work with partners like the Grammy Awards. These integrations underscore our commitment to vertical expansion and delivering transformative solutions across industries. Our vision is to empower every consumer-oriented business to standardize Enclaveo, from marketing to service to analytics, enabling them to build strong, personalized relationships with each of their consumers. We are proud of the progress we have made and are driven every day by the massive amount of white space that still exists for Klaviyo. We're excited to welcome our customers, partners, and all consumer businesses to Klaviyo Boston, the preeminent event for consumer businesses focused on growth, taking place in Boston September 25th and 26th. Following the success of Klaviyo London and Klaviyo Sydney, Plagio Boston will serve as another opportunity for sharing our strategic vision and showcasing our latest advancements for our growing ecosystems of customers, champions, and partners. We will also be hosting our first Investor Day live from Plagio Boston on September 25th, and virtual registration is open on our Investor Relations website. Before I turn it over to Amanda, I'd like to cover a couple of changes in our leadership team. I want to welcome Archana Rao, our new Chief Information Officer, who joined us in June. Archana brings 25 years of experience helping high-growth tech companies scale and will play a key role in shaping how we use AI internally to drive smarter, faster decisions and how we scale our systems to help us serve our customers better and deliver more value to the companies that rely on us. We also announced that our president, Steve Rowland, is retiring. He'll be staying on through the end of the first quarter of next year. Since joining in 2023, Steve has been instrumental in implementing our mid-market and enterprise sales motion, expanding our growth internationally, growing our partner ecosystem, and building an incredibly strong go-to-market organization. During Steve's tenure, we have driven remarkable growth with our revenue run rate growing from $660 million to more than $1.1 billion today. I'm incredibly grateful for his contribution and leadership at Klaviyo. With that, I'd like to turn it over to Amanda.