Klaviyo(KVYO) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Klaviyo reported significant revenue growth in Q1 2025, alongside a net loss, increased total assets, and a decrease in operating cash flow Condensed Consolidated Balance Sheets (Unaudited) The balance sheet shows total assets increased to $1.347 billion, total liabilities rose to $283.4 million, and stockholders' equity grew to $1.064 billion as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $888,432 | $881,473 | | Total current assets | $1,007,239 | $979,749 | | Total assets | $1,347,311 | $1,273,308 | | Liabilities & Equity | | | | Total current liabilities | $192,824 | $199,893 | | Total liabilities | $283,379 | $239,321 | | Total stockholders' equity | $1,063,932 | $1,033,987 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For Q1 2025, revenue grew 33.3% to $279.8 million, gross profit increased, but operating loss widened to $23.8 million, resulting in a net loss of $14.1 million Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenue | $279,827 | $209,993 | | Gross Profit | $212,127 | $165,055 | | Operating Loss | $(23,750) | $(22,092) | | Net Loss | $(14,089) | $(12,882) | | Net loss per share, basic and diluted | $(0.05) | $(0.05) | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash provided by operating activities decreased to $14.4 million in Q1 2025, while cash used in investing activities increased, resulting in a net increase in cash of $6.6 million Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,362 | $26,182 | | Net cash used in investing activities | $(7,741) | $(3,225) | | Net cash used in financing activities | $(37) | $(5,737) | | Net increase in cash | $6,584 | $17,220 | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail revenue recognition from tiered subscriptions, highlight Shopify collaboration fees of $7.9 million, and report remaining performance obligations of $173.1 million and stock-based compensation of $39.4 million for Q1 2025 - Revenue is generated through tiered subscription plans based on consumer profiles and message volume[29] - Fees paid to Shopify under a revenue sharing agreement totaled $7.9 million in Q1 2025, recognized as selling and marketing expense[39] - Remaining performance obligations totaled $173.1 million as of March 31, 2025, with $163.7 million expected within twelve months[47] - Total stock-based compensation expense was $39.4 million for Q1 2025[85] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 33.3% revenue increase in Q1 2025 driven by new and existing customers, alongside a 40% rise in high-ARR customers, despite a decline in NRR and continued net losses due to increased operating expenses - As of March 31, 2025, Klaviyo served over 169,000 businesses globally[97][100] Key Performance Metrics (as of March 31) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Customers > $50k ARR | 3,030 | 2,157 | +40% | | NRR | 108% | 114% | -6 p.p. | - Revenue for Q1 2025 increased by $69.8 million (33.3%) YoY, with 60% from new customers and 40% from existing customer expansion[142] - Cost of revenue grew 50.7% YoY, outpacing revenue growth, driven by increased cloud infrastructure and outbound communication costs[143] - Selling and marketing expenses rose 34.5% YoY to $123.5 million, primarily due to personnel, advertising, and partnership costs[145] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on its $889.2 million cash holdings and foreign currency risk from international operating expenses, though sales are USD-denominated and no hedging derivatives are used - The company is exposed to interest rate risk on its $889.2 million cash, cash equivalents, and restricted cash balance as of March 31, 2025, with no debt[176] - Foreign currency risk arises from operating expenses denominated in local currencies (e.g., UK, Australia, Ireland), while all sales are in U.S. dollars[179] - A hypothetical 10% change in the U.S. dollar's value is not expected to materially impact operating results[179] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[181] - No material changes occurred in internal control over financial reporting during Q1 2025[182] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings expected to adversely affect its financial condition or operations - Klaviyo is not currently a party to any material legal proceedings[186] Risk Factors Key risks include sustaining revenue growth, managing expansion, intense competition, significant dependency on Shopify, compliance with data privacy laws, cybersecurity, reliance on key personnel, and concentrated voting power - The company's rapid historical revenue growth, including 33.3% for Q1 2025, may not be sustainable and could decelerate[188] - A significant dependency exists on Shopify integration, with approximately 77.7% of ARR as of December 31, 2024, from customers also using Shopify[204] - The company has a history of net losses, including $14.1 million in Q1 2025, and increasing operating expenses may hinder future profitability[217] - The business is subject to stringent and evolving data privacy laws like GDPR and CCPA, with non-compliance risking significant fines and business harm[283][298][300] - The dual-class stock structure concentrates 64.6% of voting power with insiders as of March 31, 2025, limiting Series A stockholders' influence[349] Unregistered Sales of Equity Securities and Use of Proceeds Shopify exercised warrants for 344,382 Series B common shares on February 21, 2025, in an unregistered sale, with no material change in IPO proceeds use - On February 21, 2025, Shopify exercised warrants for 344,382 Series B common shares at $0.01 per share, exempt from registration[376] - No material change occurred in the use of proceeds from the company's IPO[377] Other Information Director Ping Li adopted a Rule 10b5-1 trading plan on March 14, 2025, for the sale of 15,573 shares, with no other similar arrangements by directors or officers during the quarter - Director Ping Li adopted a Rule 10b5-1 trading plan on March 14, 2025, for the sale of 15,573 shares[381] Exhibits This section lists exhibits filed with the 10-Q report, including required certifications from principal officers and interactive data files - The filing includes required certifications from the Principal Executive Officer and Principal Financial Officer pursuant to SEC rules and the Sarbanes-Oxley Act[383]