0001835830-25-000110
SEC filingRevenue growth of 32.2% driven by new customers and platform expansion, with gross margin declining to 75.5% due to higher SMS costs.
For the three months ended September 30, 2025, Klaviyo reported revenue of $310.9 million, a 32.2% increase compared to $235.1 million in the same period last year. The growth was attributed to new business, geographic expansion, expanded platform usage, and growth of text messaging and WhatsApp channels. Approximately 56% of the revenue increase came from new customers acquired in the prior 12 months, while 44% came from existing customers.
Gross profit increased 29.9% to $234.7 million, but gross margin declined to 75.5% from 76.9% in the prior year period. The margin compression was driven by a 40.1% increase in cost of revenue, primarily due to higher outbound communication sending costs ($10.0 million) from increased SMS and WhatsApp usage, and higher cloud-based infrastructure costs ($6.4 million).
Operating loss improved to $(10.8) million from $(13.3) million, with operating margin improving to (3.6)% from (5.6)%. Selling and marketing expenses increased 27.6% to $127.7 million, driven by higher headcount and stock-based compensation. Research and development costs rose 30.3% to $72.7 million, including $4.2 million in restructuring expense. General and administrative expenses increased 18.4% to $45.3 million, primarily due to tax filings and payment processing fees.
Net loss narrowed to $(0.4) million from $(1.3) million, benefiting from improved operating performance and stable interest income of $10.3 million.
Klaviyo operates as a single reportable segment. Key performance metrics indicate strong customer growth and up-market momentum. The number of customers generating over $50,000 in annual recurring revenue (ARR) grew 36% year-over-year to 3,563 as of September 30, 2025. Dollar-Based Net Revenue Retention (NRR) was 109%, down from 110% in the prior year, reflecting relatively lower comparable expansion of existing customer plans. The company reported over 183,000 total customers as of September 30, 2025.
International revenue accounted for 34.6% of total revenue for the nine months ended September 30, 2025, highlighting continued geographic expansion. The company has expanded its platform to support multiple languages and is exploring additional currencies for billing.
Management expects continued investment in innovation and product development, particularly in AI-powered offerings such as Marketing Agent and Customer Agent. The company anticipates gross margin to decline modestly in the near term as SMS and WhatsApp volumes increase, though this may be partially offset by scale efficiencies and higher-margin product adoption. Selling and marketing expenses are expected to remain the largest operating expense in dollar amount, with increases in headcount and partnership fees. Research and development costs are expected to increase in dollar amount but remain consistent as a percentage of revenue. The company believes its operating cash flows provide sufficient liquidity for at least the next twelve months, with cash, cash equivalents, and restricted cash totaling $981.0 million as of September 30, 2025.
As of September 30, 2025, Klaviyo holds $980.3 million in cash and cash equivalents, up from $881.5 million at year-end 2024. The company has no marketable securities or debt, with total stockholders' equity of $1.14 billion. Restricted cash is minimal ($0.7 million non-current). The strong cash position is supported by positive operating cash flow of $124.8 million for the nine months ended September 30, 2025.
Klaviyo reports $247.5 million in non-cancelable purchase commitments as of September 30, 2025, up from $225.5 million at year-end 2024. These primarily relate to service provider contracts. Additionally, the company has operating lease liabilities of $113.4 million with a weighted average remaining term of 6.7 years. A significant off-balance-sheet commitment is the $202.8 million of unrecognized marketing expense related to Shopify warrants, which will be amortized over 3.83 years. Prepaid marketing expense stood at $138.0 million.
During the nine-month period, Klaviyo invested $22.8 million in capital expenditures ($7.0 million for property and equipment and $15.7 million for capitalized software development costs). No share buybacks or dividends were declared. The company's primary capital allocation strategy remains investing in growth and platform development, with significant stock-based compensation of $127.8 million for the period.
Klaviyo operates as a single reportable segment. Revenue is disaggregated geographically: 60% from the United States ($535.1 million for nine months), 24% from EMEA ($215.8 million), 10% from APAC ($90.4 million), and 5% from other Americas ($42.6 million). Long-lived assets are concentrated in the United States ($149.7 million) and the United Kingdom ($10.7 million). The company's CODM uses consolidated net income as the key measure of performance.
Operating cash flow of $124.8M significantly exceeded the net loss of $38.8M, reflecting strong cash generation from non-cash charges. Stock-based compensation ($124.2M) and amortization of deferred contract acquisition costs ($21.5M) were the primary add-backs. Working capital changes consumed $54.5M, driven by increases in accounts receivable ($20.0M) and deferred contract acquisition costs ($35.2M), partially offset by deferred revenue growth ($23.4M).
Capital expenditures (capex) totaled $22.8M, comprising $7.0M in property and equipment and $15.7M in capitalized software development costs. This represents a 96% increase from the prior year's $11.6M, indicating heightened investment in infrastructure and product development. Free cash flow (operating cash flow minus capex) was $102.1M, providing ample coverage for the $13.1M in employee tax payments related to stock-based awards.
No share repurchases or dividends were reported. The company's cash position grew by $98.4M to $981.0M, driven by operating cash flow and $9.7M in employee stock purchase plan proceeds. The $2.0M acquisition of a business was a modest use of investing cash. Overall, cash flow quality is high, with operating cash flow comfortably funding both capex and employee tax obligations.