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Klaviyo’s quarter says two things clearly: The core business is still healthy, and the move upmarket is working. Revenue grew 28% YoY to $358M. Non-GAAP operating margin hit 16.4%, the company’s best result as a public company. GAAP operating income turned positive. Full-year revenue guidance moved up to $1.514B to $1.522B (23% growth).
The more interesting part is what changed underneath it. The quarter also surfaced a tension that matters more than the headline beat. Klaviyo is getting early traction with agencies, even as Composer pushes further into the kind of work agencies used to own. And in one of the clearest signals of product strength, Klaviyo is still choosing to absorb carrier pass-through fees rather than hand them straight to customers.
The Good
Customers over $50K ARR grew 38% YoY, to 4,175. Co-CEO Chano Fernández said Klaviyo doubled customers over $1M ARR last year. The company now has customers above $6M ARR.
The move to enterprise is working and makes the co-CEO model look more rational.
Chano is clearly leaning into enterprise and partner motion, while cofounder and co-CEO Andrew Bialecki is staying product forward. One quarter does not prove the org design is right, but this quarter is at least consistent with it working.
NRR held at 110%. Outgoing CFO Amanda Whalen broke it into the three drivers that matter: expansion of existing product usage, cross-sell, and lapping last year’s profile-enforcement benefit. It should be higher, but there’s more on that below.
Accenture and other partners are helping to source and influence enterprise deals, not just implement them after the fact. The best partnerships answer the customer’s question: Why should we work with both of you, and why does it matter? Klaviyo’s current partnerships seem to answer that question well.
International was also too strong to ignore. Revenue outside the Americas grew 39% YoY and now represents 36.6% of revenue. EMEA, excluding the UK, grew 51%, its sixth straight quarter above 50%.
That matters because international is starting to rhyme with enterprise. The same themes are showing up: multi-market complexity, channel expansion, local catalogs, WhatsApp, and the need to execute across regions without duct-taping systems together.
The Interesting
Composer was the most interesting thing on the call.
Andrew described it as a system of sub-agents doing two jobs: creating campaigns, automations, templates, and content; and analyzing customers, cohorts, behavior, and campaign performance. It can not only generate content but also learn from prior campaigns and stay on-brand.
AI should be spooking agencies. Look at the pressure already building across ad agencies and consultancies. And every time Anthropic ships a meaningful new product, the market seems eager to punish some corner of software or services, regardless of whether the threat is immediate.
So, while Andrew and Chano both pushed back on the idea that AI disintermediates agencies, there is little market proof for that. Agencies, consultancies, and anyone who made money sitting between data and execution are nervous about AI. In that light, the co-CEOs’ optimism is contrarian.
The Unknown
The biggest unknown is still SMB.
For two years now, the company has been increasingly quiet about the segment. And yet the 110% NRR seems to suggest that wins in enterprise and mid-market may be offsetting softer behavior somewhere lower in the base.
Using Klaviyo’s GMV segmentation, SMB is $100K to $20M GMV, mid-market is $20M to $400M GMV, and enterprise is $400M+. SMB+ is the informal upper-SMB/lower-mid-market band, where a lot of Klaviyo’s historical strength lives.
Unpacking the 10-Q, 56% of growth came from new customers and 44% came from existing customers. Yes, that is an apples-to-oranges comparison against the large-customer growth stats. But if you are telling investors that $1M ARR customers doubled and $50K ARR customers grew 38%, while saying little about true SMB, it is not hard to suspect the lower end is softer than it should be.
Klaviyo used to be my favorite proof point that Main Street was healthy. But like its investor Shopify, it has gone quieter on the true SMB. If that softness is real, it matters beyond Klaviyo. SMB is where a lot of people still look for economic signals.
The second unknown is AI monetization. The product is clearly getting smarter. The harder question is whether that intelligence becomes a real new revenue stream or simply a better way to defend and expand the core business.
Finally
Klaviyo is starting to look more like an enterprise software company than the market still gives it credit for.
The product is broadening. The partnership strategy is maturing. The enterprise mix is improving. And AI is becoming useful inside the workflow, which is the only version of AI that really matters.
The open question is whether that intelligence becomes a real, new revenue stream without alienating partners and whether Klaviyo will ever start talking plainly about the SMB again.