Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Klaviyo Inc (KVYO, Financial) reported a strong Q3 with revenue of $235 million, marking a 34% year-over-year growth.
- The company added over 6,000 new customers, bringing the total to more than 157,000, showing a 16% increase year-over-year.
- Klaviyo Inc (KVYO) is seeing significant growth in its international markets, with EMEA revenue growing by 45% year-over-year.
- The company has expanded its SMS coverage to 18 countries and introduced its platform in five new languages, enhancing its global reach.
- Klaviyo Inc (KVYO) continues to drive cross-sell growth, particularly with SMS, with over 80% of its top 50 customers now using this service.
Negative Points
- The company is experiencing softness in the SMB market, impacting new customer acquisition and expansion.
- Klaviyo Inc (KVYO) expects a continued decline in its dollar-based net revenue retention rate (NRR) due to macroeconomic pressures and larger initial customer landings.
- Non-GAAP gross margin decreased by 200 basis points year-over-year, partly due to increased infrastructure costs for Black Friday, Cyber Monday preparations.
- The company anticipates a modest impact on growth going into next year due to continued pressure on customer expansion.
- Klaviyo Inc (KVYO) expects Q4 non-GAAP operating income to decline due to the implementation of a new employee cash bonus program.
Q & A Highlights
Q: Can you provide an update on your customer acquisition channels and their performance?
A: Andrew Bialecki, CEO, explained that Klaviyo's acquisition strategy includes inbound marketing, a freemium model, partnerships with digital agencies and tech platforms like Shopify, and a direct sales approach for mid-market and enterprise customers. They are seeing strong growth across all channels, particularly in the entrepreneur segment through platforms like Shopify and in the mid-market and enterprise segments through sales and larger partners.
Q: How is the current macroeconomic environment affecting your business, particularly in the SMB segment?
A: Amanda Whalen, CFO, noted that the macro environment remains consistent with previous quarters, showing some softness in new customer acquisition and expansion, particularly in the SMB segment. However, Klaviyo's diverse customer base across sizes and geographies helps mitigate these effects. The company is focused on delivering value, which is crucial in the current value-based market.
Q: What impact do the new CTO and CPO hires have on Klaviyo's technology strategy?
A: Andrew Bialecki, CEO, expressed excitement about the new hires, emphasizing their experience in scaling businesses and building planet-scale infrastructure. This aligns with Klaviyo's goal to be the system of record for consumer data, focusing on scalability, reliability, and security.
Q: With Klaviyo approaching a billion in ARR, what is the strategy for the next phase of growth?
A: Andrew Bialecki, CEO, outlined plans to continue expanding in the SMB market, internationally, and into the mid-market and enterprise segments. Klaviyo aims to grow its product portfolio, focusing on best-in-class offerings across messaging channels and customer experiences, potentially through both organic development and M&A.
Q: How is Klaviyo progressing with its international expansion, particularly with new language support?
A: Amanda Whalen, CFO, highlighted strong international growth, particularly in EMEA with 45% revenue growth. The company is adding local language-speaking sales reps and has launched products in five new languages, which has been well-received by customers. The partner network is also playing a crucial role in supporting international expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
