Klaviyo, Inc. 2026 Q2 Earnings Call

We appreciate you joining us. Joining me today are Klaviyo Co-founder and Co-CEO Andrew Bialecki, Co-CEO Chano Fernández, 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 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. 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. 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, 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 introductions.

We're ready to begin. Thanks, Brad, and welcome, everyone.

Let's start with the headlines. Klaviyo has scaled to nearly $1.5 billion in annualized revenue run rate, growing quarterly revenue 26% year-on-year. We signed our largest deal ever last quarter, an eight-figure multi-product contract with one of the fastest-growing brands in e-commerce. More than 205,000 brands now rely on Klaviyo. We offer our customers an autonomous B2C CRM. We vertically integrated the data infrastructure, experience infrastructure, and the AI and agents to decide which experiences to deliver each consumer to drive better engagement, revenue, and growth. Our customers are proving that the right infrastructure with all of your customer context and the right agents can deliver stunning consumer experiences that stand out and turn visitors into customers and keep them coming back.

We're continuing to bet on being the source of truth for a business's consumer context and embedding that real-time into agents and end consumer experiences. Using the scale and volume of our consumer data points, we have to tune and guide AI models and agents and building all of this faster and with more tailored guidance to each of our customers through our internal use of LLMs and agents. Every business will have an agent that decides, delivers, and autonomously optimizes the experiences their customers have. That's the promise of an autonomous B2C CRM. I'd like to take a few minutes to share some updates on both the infrastructure and agentic layers of our products. Our data infrastructure now stores more than 9 billion consumer profiles and ingests and indexes more than a quarter of a trillion data points every quarter.

We know context is the key for high-performing agents and experiences. We spent the past few months improving the scalability and burst ability of Klaviyo's infrastructure to handle data and messaging workloads that require personalizing and powering up to 100 million marketing messages and experiences in less than 20 minutes. This helps our largest enterprise customers with massive audiences, as well as AI agents that want to ask more questions and do greater personalization. Having clean data and context is important, too. We've taken that a step further by using machine learning and AI to train models to predict consumer behavior, and this powers features like personalized send times, channel preference, audience optimization, and personalized product and content recommendations.

Many of these features are included as part of our data and analytics products, which includes Marketing Analytics, and those products are collectively growing ARR more than 100% year-over-year. Our customers are finding there is real, demonstrable ROI in growth from using AI to improve the marketing and experiences they deliver to consumers. Our marketing platform and infrastructure continue to deliver. While our messaging volume continues to scale into the hundreds of billions of messages per quarter, our compliance and deliverability infrastructure are continuing to improve. Delivery and engagement rates improved year-over-year, while unsubscribed spam and bounce rates decreased. We're also seeing the flexibility and scalability of our marketing platform being leveraged by enterprises and advanced users, both human and AI.

Multi-channel campaigns have increased nearly 50% quarter-over-quarter, and marketing flows have seen a 48% increase in the number of messages and decision point actions added to those automations. Our B2C CRM platform sets the table for agents, ones our customers have built outside of Klaviyo and those we built for our customers. In June, we launched our Composer agent to all of our customers, and the response has been very exciting. As a reminder, Composer is our purpose-built agent harness that's trained to excel at analyzing your customers and past marketing and taking those learnings to create and optimize marketing campaigns and automations. In the first month since launch, Composer already has over 95,000 users, and very encouragingly, nearly a quarter have turned into recurring weekly Composer users. We've given all of our customers 10,000 credits to experiment and use with Composer, and the feedback has been overwhelming.

We're shipping updates multiple times a day to improve Composer's performance, breadth, and usability. As recently as last week, credit consumption grew 30% week-over-week. Usage is broad from entrepreneurs to enterprise, including 27% of our mid-market and enterprise customers being Composer users and exhibiting strong repeat usage. To share two examples, a fashion brand used Composer to design and send two marketing campaigns about shoes that were back in stock. They used Composer to select the audiences and consumers those would go to, asked Composer to calculate the best time to send those campaigns, had Composer run in a loop to review, audit, and optimize their campaigns, ran a test send, and then scheduled both campaigns, all from our agentic interface.

Another enterprise U.S. retailer used Composer to audit the performance and logic of marketing flows and made adjustments that increased performance by tens of thousands of dollars, all in a matter of hours. This is real agent ROI. I want to comment here on some of the reasons Composer is gaining traction. First, we built the ability to understand the structure of data, the ontology, and semantics into Composer to improve our agents' reasoning abilities. Second, Composer understands the style of a brand, what we call their taste, because it has the direct context of marketing and business decisions they've made in the past. Third, Composer is available where and how users want to work. Fourth, it has access to aggregated knowledge we've curated about what makes marketing and consumer experiences convert.

Focusing on these areas, we believe there is a long runway in front of us to improve agent performance and grow usage. As an example, in just the past few weeks post-launch, we improved the percentage of generated campaigns users ended up using as part of their marketing to 46%, up from 35% just a few weeks ago. As a result of improvements to taste, alignment, and validation, we have a long list of these types of gains in front of us. Finally, Customer Agent, which gives every business an always-on agent for their customers, covering both support and sales conversations, has seen adoption grow 40% quarter-over-quarter and weekly resolution volumes grow nearly 80% since early June.

Boston Proper launched their Customer Agent and within two weeks had generated 3X ROI in incremental revenue by being embedded on their website, while also resolving autonomously more than half of their support tickets. Earlier this year, we built out an AI agent, which we've embedded into Composer to help brands automate the setup and ongoing optimization of their Customer Agent. We believe Customer Agents are going to be ubiquitous, but many businesses aren't versed in how to configure or improve an agent and how to measure its performance and quality. For businesses of all sizes, from entrepreneurs and SMBs to enterprises, we're leading in building agents to train the agents that understand your business and can automatically configure, experiment, and optimize agents you deploy to customers that not only handle support cases, but also delight customers and drive revenue and growth.

All of this has resulted in our customers generating nearly $50 billion in attributed revenue or Klaviyo attributed value, KAV, in the first six months of the year. We've done this while building agents for ourselves, allowing us to increase ARR per Klaviyo by 28% year-over-year. We're finding ways to increase our capacity, and with that, our ambition is increasing as well. The opportunity to give every business an agent to help them grow their business and delight customers is clear. As we announced earlier today, I'm excited to build on our results so far with the acquisition of the Agency team. I've known the founder of Agency, Elias Torres, for over a decade, and he's been on the forefront of AI agents for customer experiences and is a technologist and a builder I deeply respect.