Klaviyo, Inc.

Hello and welcome to the Klaviyo Q1 2026 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would now like to turn the call over to Ryan Flame, Director of Investor Relations. Ryan, you may begin.

Welcome, everyone. We appreciate you joining us. Joining me today are Klaviyo co-founder and co-CEO Andrew Bialecki, co-CEO Chano Fernandez, and CFO Amanda Whalen. Andrew, Chano, and Amanda will first share their views on the quarter, and then we'll open up the line for your questions. 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 risk factors, uncertainties, and assumptions, and other factors that could affect our financial results are included in our filings with the SEC. We do not undertake any responsibility to update these forward-looking statements except as required by law. Andrew, that concludes my introduction. We're ready to begin.

Thanks, everyone, and welcome. We've entered the era of agents and infrastructure, at least so far as software is concerned, and our first quarter showed what that means for Klaviyo. Before I cover our results and highlight a few specific observations, I'd like to take a few minutes to remind everyone of the opportunity AI presents and how we're taking advantage of it. Our strategy is centered on helping businesses grow by maximizing their most important asset, their relationships with their consumers. The businesses that win are the ones that deliver stunning personalized experiences at scale. That's been the goal of everything we've built at Klaviyo for the last decade. And the reality is that creating those experiences through deep personalization, engaging media, meeting customers where they want to be met, and optimizing those experiences automatically is still not easy. Our work over the last decade has been building the infrastructure to make that possible, what we call the B2C CRM. As we built it, we felt a growing gap between what our infrastructure is capable of and how businesses are actually using it. This capability overhang means businesses are missing opportunities with their consumers, and in turn, leaving real dollars and greater success on the table. AI agents are allowing us to close that gap and revealing enormous latent demand for intelligence to design, deliver, and optimize consumer experiences. Our agents are going further, finding new opportunities for the businesses we serve and contributing back to product direction. They're already among our most advanced users of our data and experience infrastructure, pushing the limits of what's possible and giving feedback for what to build next. We're entering a positive loop where agents use our infrastructure to build stunning consumer experiences that generates data and feedback that improves the infrastructure, which in turn makes agents smarter and more capable. And the cycle repeats. Together, agents and the infrastructure we provide are the autonomous B2C CRM. We believe every consumer business will run on it and every consumer experience will be driven by it. And our agents and infrastructure get better with increased data scale and usage. Our infrastructure sees almost 4 billion daily events and signals across 8 billion consumer profiles. Ingesting, storing, and indexing these signals in real time gives every business running on Klaviyo a real-time data feed on how consumers and businesses are interacting with each other and, critically, gives businesses and the agents they run context on what will delight consumers. The laws of consumer behavior shift in real time. Our customers and the agents they deploy use our real-time view of consumers as context to deliver stunning, highly performing experiences. And agents make it even easier to infuse this context into experiences for the benefit of consumers and businesses alike. Let's look at our first quarter results to show what this looks like in practice. Revenue increased 28% year over year to $358 million, with strong momentum across enterprise, international, and our B2C CRM platform. Non-GAAP operating margin increased to over 16%, the highest in our history. More than 196,000 brands are on our platform. We closed the largest number of multi-million dollar ARR deals ever, and our largest customers once again grew their revenue, known as GMV, roughly two times faster than the broader market. Our investments in AI are not limited to the agents and infrastructure we build, but extend to how we operate and deliver Klaviyo. Annualized revenue per full-time employee in Q1 was over $600,000, up more than 25% year over year. As an example, we're committing and shipping code at nearly double the rate per engineer from a year ago. As a result, we shipped more than 75 features in the first quarter, including a private preview of our next-generation marketing analytics agent, Composer. increased intelligence and channel capabilities for customer agent, and deeper partnerships and product integrations with Google, Anthropic, Shopify, and Canva. I'd like to share a bit more on our agent products and how we're seeing customers use them, starting with Composer. Composer is our next-generation agent for marketing and analysis and is an entirely redesigned agent harness. It builds from the learnings of how customers are using our first-generation marketing agent. Marketing agent's functionality was more narrowly scoped to content marketing and campaign creation. Composer takes advantage of the advances in underlying LLM's abilities to reason and use tools. Composer's scope is dramatically expanded. It can reason over your data, take actions across consumer experiences, and learn from those experiments. The private preview we introduced in March includes the ability to autonomously query and analyze consumer and marketing data and create marketing campaigns and automations across all surfaces with support for creating and optimizing customer agent coming soon. On top of this, we built Composer to be extensible, so customers and partners can build sub-agents and system connectors it can use. It makes them available wherever users work, not just the Klaviyo interface. Because this is such a significant step forward, we're being deliberate about quality, both in Composer's analysis and its creative decision-making. The bar is high, and we're committed to meeting it. Similar to how vibe coding represented a shift from engineers focusing on how software is created to what software to create, we've seen a similar trend with Composer where users are vibe marketing by focusing on what they want to achieve and create, letting Composer do the research and initial creation, and then iterating with Composer on the insights and perfecting its outputs. The proof points are very exciting. Take one beauty brand in our preview. Composer audited their marketing, found automations that had been broken for years, fixed them live, and surfaced half a dozen other opportunities their team had never gotten to across creative, discounting strategy, and personalization. That pattern is repeating across our enterprise users in the preview. Teams are using Composer to audit, source opportunities, and implement in a single session. One of the most recognized apparel brands in the U.S. saw a 40% plus increase in top performing flow revenue following a single session. Hydroflask used Composer to find misconfigured targeting that had been preventing a campaign to send, and Composer fixed it with them live. A prominent personal finance company mapped and prioritized more than 1,000 flows across 13 business units in a single session, giving their team a clear picture of where to focus first. This is why global brands are telling us that Composer solves the biggest pain point they have and is the best agentic marketing solution they've seen on the market in the past year. And because Composer runs securely inside Klaviyo's data perimeter, it already addresses the data privacy concerns that typically slow enterprise AI adoption. For one enterprise fashion brand, it was the first marketing AI tool to clear their security team's review because Composer runs inside Klaviyo's trusted environment. Composer is the future of how businesses will use Klaviyo to understand their consumers and create stunning experiences for them. We're very excited to open up to more of our customers and partners in the coming weeks. Turning to customer agent, and similar to Composer, we've taken advantage of the improvements in underlying LLM intelligence and tool use to allow businesses to create more tailored, highly performing agents their consumers can interact with. The experience and abilities of Customer Agent built on Klaviyo can now be entirely customized with our custom skills launch last week. Customer Agent now runs across text, WhatsApp, email, RCS, and web chat, and we're adding voice and multilingual support. Adoption continues to grow month over month, and the experiences Customer Agent delivers are showing real results. digitally native fashion brand Naked Wardrobe resolved 84% of conversations through customer agent and AI and saw a 28% increase in average order value, helping consumers own their style and buy on their time, including many instances of consumers shopping and chatting at 2 a.m. when customer support would have otherwise been offline. Finally, underneath our agents is our data infrastructure, capable of training, serving, and optimizing personalization, machine learning, and AI models. These models don't require direct tuning from users. They learn from usage and they improve the platform automatically. What this unlocks is true one-to-one personalization. The right content for every consumer at every interaction delivered across every channel and agent we operate. These models and the features that leverage them were used by nearly two-thirds of our customers in the first quarter. And usage is driving outcomes. As an example, customers using our personalized send time models saw a 35% lift in click-through rates. More engaged consumers and higher revenue driven by infrastructure that gets smarter the more it's used. We believe this is the year marketing and analysis agents like Composer and always-on agents like Customer Agent become standard and ubiquitous. And we've built for that deliberately, meeting customers in the tools they already use, an open garden, not a walled one. And to accelerate that, we've deepened integrations and expanded partnerships across the AI ecosystem. In February, we deepened our integration with Google by launching RCS to all customers, and we opened up beta access to Google search and ads products that connect discovery directly to customer agent experiences over RCS. The consumer can now see an ad, tap it, and then immediately have an immersive conversation with a brand powered by customer agent. Google delivers the reach, Klaviyo stores the consumer relationship, and delivers the personalized experience. We've extended access to our infrastructure and agents via expanded MCP connectors and applications with Claude, ChatGPT, and Canva. MCP usage of Klaviyo continues to expand rapidly, increasing more than 10% week over week in Q1. The top users of MCP are querying more consumer data and building more marketing campaigns than their peers. with 16% more platform usage relative to those who don't use MCP. Businesses are connecting more data to Klaviyo, centralizing it and taking advantage of the increased accessibility. Consumer event volume from the hundreds of apps in our marketplace is up 44% year on year. As an example, AS Beauty, home to Laura Geller and other brands, and one of our largest customers, runs a complete omni-channel program on Klaviyo, including greatly expanding their text messaging program this quarter. Their team queries Klaviyo data and cloud to model campaign performance and make faster decisions. Their KAV, or Klaviyo Attributed Value, is up 20% over the past two years. A senior leader there recently described Klaviyo as an indispensable pillar of their business, infrastructure that they and their brands rely upon. None of this happens without our customers and partners pushing us and Klaviyo's delivering. We're grateful for both. I'd like to finish by providing an update on our leadership team. First, Q1 was Chano and I's first full quarter together as co-CEOs, and it's been a terrific partnership where we have so much in common, including a relentless drive to deliver and highly complimentary skills. Second, as we announced in a press release earlier today, after almost four years as our CFO, Amanda has made the personal decision to step down from her role at Klaviyo in the coming months, spend more time with her family before pursuing the next phase of her career. I want to take a moment to recognize what Amanda has meant to Klaviyo. She was instrumental in building the team that took us through IPO and helped us scale into a multi-products global AI native business. Amanda will continue to lead our finance organization through August 21st and will remain in an advisory capacity through November to support a smooth transition. We've initiated a search for our next CFO who will build on our strong financial foundation and momentum. Beyond what she's helped us build, she's been a terrific strategic partner and a trusted advisor to me and many others across Klaviyo. We wish her the absolute best. Amanda, on behalf of the entire Klaviyo team, thank you. And with that, John O.