10-K: Klaviyo Reports Strong 2025 Revenue Growth, Narrows Net Loss

Klaviyo, Inc. announced its 2025 annual results, showcasing significant revenue growth driven by customer expansion and new AI-powered offerings, alongside a reduced net loss.

Summary

• Revenue for the year ended December 31, 2025, increased by 31.6% to $1,234.0 million, up from $937.5 million in 2024.
• Net loss for 2025 was $(31.8) million, a 31.2% decrease from $(46.1) million in 2024.
• Gross profit for 2025 grew by 28.7% to $921.5 million, compared to $716.2 million in 2024, with gross profit margins of 74.7% and 76.4% respectively.
• The company served over 193,000 customers as of December 31, 2025, an increase from 167,000 customers as of December 31, 2024.
• Customers generating over $50,000 of Annualized Recurring Revenue (ARR) increased by 37% year-over-year, reaching 3,912 as of December 31, 2025.
• The Dollar-Based Net Revenue Retention (NRR) rate was 110% as of December 31, 2025, up from 108% in 2024.
• International revenue accounted for 39.9% of total revenue in 2025, compared to 37.6% in 2024.
• Klaviyo launched new AI-powered products in 2025, including Klaviyo B2C CRM, Marketing Agent, Customer Agent, Customer Hub, and Helpdesk, and acquired Gatsby to integrate social media engagement data.
• Operating expenses as a percentage of revenue decreased across selling and marketing (41.0% in 2025 vs. 43.1% in 2024), research and development (23.6% in 2025 vs. 25.4% in 2024), and general and administrative (15.5% in 2025 vs. 16.8% in 2024).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, reflecting strong revenue growth and a narrowing net loss, coupled with strategic advancements in AI and international expansion. However, the slight decline in gross margin and the inherent risks associated with rapid growth and reliance on key partnerships temper the overall sentiment.

Positives

• Strong revenue growth of 31.6% year-over-year, reaching $1,234.0 million in 2025.
• Significant reduction in net loss by 31.2% to $(31.8) million in 2025, indicating progress towards profitability.
• Increased customer base to over 193,000 businesses, demonstrating continued market penetration.
• Substantial growth in high-value customers, with a 37% increase in customers generating over $50,000 ARR.
• Improved Dollar-Based Net Revenue Retention (NRR) to 110% in 2025, reflecting strong expansion within the existing customer base.
• Successful international expansion, with non-U.S. revenue contributing 39.9% of total revenue.
• Launch of new AI-powered products like Marketing Agent and Customer Agent, enhancing platform capabilities and addressing B2C CRM market gaps.
• Acquisition of Gatsby in 2025 to integrate social media engagement data, broadening the platform's offerings.
• Positive cash flow from operating activities, increasing to $218.0 million in 2025.
• Strong liquidity position with $1.1 billion in cash, cash equivalents, and restricted cash as of December 31, 2025.

Negatives

• Gross profit margin decreased to 74.7% in 2025 from 76.4% in 2024, primarily due to higher outbound communication sending costs (text and WhatsApp) and cloud infrastructure costs.
• Anticipated deceleration of revenue growth rate over time due to business maturation.
• Expectation of increasing operating expenses in the future, which may challenge profitability if revenue growth does not keep pace.
• Significant reliance on Shopify, with approximately 77.9% of ARR derived from customers also using the Shopify platform, posing a concentration risk if the partnership is disrupted.
• Exposure to foreign currency exchange rate fluctuations, resulting in a $2.2 million net other expense in 2025.
• Workforce reduction of approximately 3% in 2025, following an 8% reduction in 2023, indicating ongoing efforts to streamline operations which can be disruptive.
• History of net losses, with no certainty of achieving and maintaining profitability in the future.

Risks

• Rapid historical revenue growth is not indicative of future growth, and the company may not sustain its historical growth rate.
• Failure to effectively manage rapid growth or anticipated growth could adversely affect business, results of operations, and financial condition.
• Limited operating history in a rapidly changing industry makes evaluating current business and future prospects difficult and increases investment risk.
• Operating in a highly competitive industry, with potential inability to compete effectively against established companies or new market entrants.
• Dependence on successful integration with third-party platforms, especially Shopify, and risks of disruptions to these integrations or relationships.
• Reliance on third-party relationships, such as marketing agency and technology partners, for customer attraction and platform utility.
• Unfavorable conditions in the industry or global economy, or reductions in spending on marketing, could adversely affect business.
• Inability to add new customers, retain existing customers, or increase sales to existing customers.
• History of net losses and anticipated increasing operating expenses, with no guarantee of achieving and maintaining profitability.
• Longer sales cycles and scaling challenges with enterprise customers as the company moves up-market.
• Significant investment in research and development may not translate into successful new products or enhancements.
• Failure to adapt and respond effectively to technological changes, evolving industry standards, changing regulations, or customer needs.
• Dependence on senior management team and key employees; inability to attract and retain highly skilled personnel.
• Legal obligations related to privacy and security, with actual or perceived failure to comply potentially harming the business.
• Cybersecurity incidents or data breaches could harm reputation, reduce demand, and incur significant liabilities.
• Failure to protect proprietary technology and intellectual property rights.
• Increased risks associated with incorporating AI technology, including potential for inaccurate/biased outputs, adversarial attacks, and evolving regulations.
• Volatility in the trading price of Series A common stock due to limited public market history and small public float.
• Dual series common stock structure concentrates voting control with Series B holders, limiting influence of Series A stockholders.
• Exposure to foreign currency exchange rate fluctuations.
• Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations.
• Judgments or estimates relating to critical accounting estimates may prove to be incorrect.
• Operational metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies may harm reputation.
• Failure to maintain an effective system of disclosure controls and internal control over financial reporting.
• Changes in tax law could adversely affect business, financial condition, and results of operations.
• International operations and structure subject the company to potentially adverse tax consequences.
• Ability to use net operating loss carryforwards to offset future taxable income is subject to limitation and risk.
• Requirement for additional capital to support business growth, which might not be available on acceptable terms, if at all.
• Partnerships, strategic investments, alliances, or acquisitions could be difficult to identify, pose integration challenges, divert management attention, disrupt business, and dilute stockholder value.
• Future litigation could be costly and time-consuming to defend.
• Indemnification obligations to customers and other third parties expose the company to substantial potential liability.
• Subject to anti-corruption, anti-bribery, and similar laws, with non-compliance leading to criminal penalties or significant fines.
• The effects of a pandemic, epidemic, outbreak of an infectious disease, or other public health crises may materially affect business operations.
• Subject to new and evolving data processing and interoperability regulations (e.g., EU Data Act), which may increase compliance obligations and operational complexity.
• Federal, state, and foreign laws that regulate the senders of commercial emails and text messages (e.g., CAN-SPAM, TCPA, CASL) could adversely affect the ability to provide products.
• Failure of the platform to function in a manner that allows customers to operate in compliance with regulations and/or industry standards.
• Liability or reputational harm as a result of the activities of customers, the content sent through the platform (including AI-generated content), or the data they store on servers.
• Standards that private entities and inbox service providers use to regulate and filter email may interfere with the effectiveness of the platform.
• Business is subject to the risks of earthquakes, fire, floods, and other natural catastrophic events, and to interruption by man-made problems.
• Climate change may have a long-term impact on the business.

Future Outlook

Klaviyo anticipates its revenue growth rate will decelerate over time as the business matures. The company expects operating expenses to increase in future periods due to continued investments in technology infrastructure, platform development (including AI and machine learning), international expansion, and sales and marketing efforts. Gross margin is projected to decline modestly in the near term as the usage of higher-cost messaging channels like text and WhatsApp increases, though overall gross profit dollars are expected to grow. Klaviyo plans to continue investing in new industry verticals and product use cases and expects cash balances to increase, with a diversified cash management strategy. The company also anticipates its effective tax rate and cash tax payments could increase due to global minimum tax legislation and expects net operating losses to increase in the future.

Management Comments

• Klaviyo is a B2C CRM that helps consumer companies create smarter, stronger, and more valuable customer experiences.
• We unify the data, intelligence, and actions that define a consumer relationship into an infrastructure built for autonomy and scale.
• Our strategy is to build the autonomous future for B2C companies.
• We believe this approach supports market expansion, deeper multi-offering adoption, increased usage through automation, and a durable, subscription-based revenue model which is primarily priced based on fixed consumer profile tiers which aligns with consumer outcomes.
• We believe that the customer experience, along with the value they derive from Klaviyo, differentiates us in the marketplace.
• We believe continued investment and innovation in our platform, capabilities, and offerings are important for our growth.

Industry Context

StockSavvy.ai notes that Klaviyo's focus on a B2C CRM, integrating marketing, service, and analytics on a unified data platform, positions it uniquely against broader marketing solution providers like Mailchimp and Braze, and consolidated software giants like Adobe and Salesforce. The emphasis on AI and generative AI capabilities, such as Marketing Agent and Customer Agent, aligns with the accelerating industry trend of AI-driven automation to enhance personalization and efficiency in customer engagement. The company's strong growth in customers and NRR, particularly within the e-commerce vertical and expanding internationally, demonstrates its ability to capture market share in a competitive and rapidly evolving landscape, while also highlighting the increasing demand for specialized, data-first solutions over generic platforms.

Comparison to Industry Standards

• Klaviyo's NRR of 110% in 2025 is a strong indicator of customer satisfaction and expansion, comparing favorably to many SaaS companies that aim for NRR above 100%.
• The gross profit margin of 74.7% is robust for a SaaS company, though the slight decline from 76.4% in 2024 due to increased messaging costs (text, WhatsApp) suggests a trade-off for broader channel adoption, which is a common dynamic in omnichannel platforms.
• The company's customer growth to over 193,000 businesses, with a 37% increase in customers generating over $50,000 ARR, indicates successful up-market penetration, a strategy often pursued by growing SaaS firms to diversify revenue streams beyond SMBs.
• The integration of AI and machine learning into core offerings like Marketing Agent and Customer Agent positions Klaviyo competitively against peers who are also heavily investing in AI, such as Salesforce's Einstein or Adobe's Sensei, by offering specialized B2C applications.

Management Changes

Corporate Governance

Legal Proceedings

• Not currently a party to any material legal proceedings.
• Not aware of any governmental inquiries or investigations into the business.
• May from time to time in the future be subject to litigation and legal proceedings and claims that arise in the ordinary course of business.

Related Party Transactions

• Shopify Inc.: Strategic partnership, revenue sharing agreement, common stock warrant agreement, and stock purchase agreement. Approximately 77.9% of ARR was derived from customers also using the Shopify platform as of December 31, 2025. Incurred $33.2 million in fees paid to Shopify under the revenue sharing agreement in 2025. Shopify partially exercised warrants for 344,381 shares of Series B common stock on November 14, 2025. An Investment Option allows Shopify to purchase an additional 15,743,174 shares of common stock at $88.93 per share, exercisable until July 28, 2030.
• Wyze Labs, Inc.: Entered into a contract in December 2025; related party to a member of the Board of Directors. Recognized an immaterial amount of revenue in 2025. As of December 31, 2025, there was an outstanding accounts receivable balance of $220.4 thousand and deferred revenue balance of $202.2 thousand, with a total remaining performance obligation of $392.6 thousand.
• Jellyfish: Purchased services in May 2025; related party to a member of the Board of Directors. Purchased services totaling approximately $212.5 thousand in 2025, with $148.0 thousand included within prepaid expenses.

Stakeholder Impact

• Shareholders (Series A): Face potential for dilution from future equity financings or stock incentive plans. Their influence on corporate matters is limited by the concentrated voting control held by Series B shareholders. Subject to trading price volatility.
• Shareholders (Series B): Maintain significant voting control over corporate matters.
• Employees: Workforce reductions in 2025 (3%) and 2023 (8%) could impact morale and productivity. Stock-based compensation remains a key incentive and retention tool.
• Customers: Benefit from new AI-powered features (Marketing Agent, Customer Agent, Customer Hub, Helpdesk) and expanded platform capabilities. Face risks from potential disruptions to third-party integrations (e.g., Shopify), cybersecurity incidents, and issues with message deliverability.
• Partners (Shopify): Continue to benefit from the strategic partnership and revenue sharing agreement.
• Suppliers/Vendors: The company's reliance on a few key vendors (three vendors represented 18%, 14%, and 13% of total vendor expenditures in 2025) indicates a concentration risk for these relationships.

Next Steps

• Continue to invest in technology infrastructure and operations, including systems architecture, scalability, availability, performance, and security.
• Further develop platform, including investments in AI and machine learning technologies, and the development of new products and functionality.
• Expand international operations, including opening additional offices and hiring employees to grow the business and reach new customers.
• Expand the selling and marketing organization to engage existing and prospective customers, increase brand awareness, and drive adoption of products.
• Pursue acquisitions or strategic investments to complement products or expand platform capabilities.
• Adapt the platform to the needs of larger enterprise accounts, including enhancing features and scalability.
• Expand product offerings to better serve the international market, including adding additional languages and currencies to the platform.
• Sustain product and technology innovation to continue delivering value to customers as technology and consumer preferences change.
• Monitor and upgrade internal controls as necessary or appropriate for the business.

Key Dates

Recommendation

Klaviyo demonstrates strong revenue growth and a positive trend in narrowing net losses, driven by successful product innovation, AI integration, and customer expansion. The increased NRR and growth in high-value customers are favorable indicators. However, the slight decline in gross margin, significant reliance on the Shopify partnership, and the inherent risks of operating in a highly competitive and rapidly evolving AI-driven market warrant a cautious approach. The dual-class share structure also limits the influence of Series A shareholders. A "hold" recommendation reflects the company's solid performance and strategic positioning, balanced against these operational and governance risks.

Keywords

B2C CRM, Marketing Automation, AI, Machine Learning, E-commerce, Customer Engagement, Data Platform, SaaS, Digital Marketing, Shopify, Text Messaging, WhatsApp, Customer Service, Analytics, Cloud Computing, IPO, Dual-Class Stock