Financial Data and Key Metrics Changes - Klaviyo achieved a revenue growth of 32% year-over-year, reaching $1.2 billion for the fiscal year 2025, with a non-GAAP operating margin of 14% [5][26] - In Q4, revenue was $350 million, reflecting a 30% year-over-year increase, leading to an annualized revenue run rate of $1.4 billion [27] - Non-GAAP operating income for Q4 was $51 million, representing a 15% non-GAAP operating margin, which is a 900 basis point expansion year-over-year [31] - Free cash flow surged 61% year-over-year to $87 million, highlighting the high quality of earnings [32] Business Line Data and Key Metrics Changes - The largest customers, contributing over $50,000 of ARR, grew by 37% year-over-year [26] - The new service category is the fastest-growing product launch in Klaviyo's history, contributing to a net revenue retention (NRR) of 110%, an increase of over 200 basis points year-over-year [27][29] - Over 60% of ARR now comes from multi-product customers, with more than 15% of ARR from customers adopting at least three products [29] Market Data and Key Metrics Changes - International revenue growth accelerated to 42%, with revenue outside the Americas representing more than one-third of the business by the end of Q4 [26][24] - Q4 saw strong momentum in mobile, with over 29% of SMB Plus customers utilizing text and WhatsApp [28] Company Strategy and Development Direction - Klaviyo is focused on delivering autonomous customer experiences through its B2C CRM, leveraging AI to enhance customer engagement and operational efficiency [5][18] - The company aims to consolidate customer engagement tools into a single platform to improve decision-making and personalization, addressing the fragmentation in customer relationship management [20][22] - Klaviyo is expanding its enterprise pipeline and has seen a doubling of customers generating at least $1 million of ARR, indicating strong demand in the enterprise segment [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, projecting revenue between $1.501 billion and $1.509 billion for 2026, representing a year-on-year growth of 21.5%-22.5% [33] - The outlook for 2026 is considered de-risked, assuming minimal revenue contribution from new AI and service products, which are viewed as upside potential [33][34] - Management emphasized the importance of AI in driving customer engagement and operational efficiency, positioning Klaviyo as a revenue-yield engine [36] Other Important Information - Klaviyo processed 0.5 trillion customer interactions across 8 billion consumer profiles, translating into 3.7 billion daily signals that inform customer engagement strategies [11] - The company has launched agents for marketing and customer service, with over half of the campaigns created by the Marketing Agent now generated by AI [14][15] Q&A Session Summary Question: What was the impact from the portfolio enforcement change in the quarter? - Management indicated that the portfolio enforcement change had a smaller impact on NRR compared to the growing usage of the platform across email and SMS products and the cross-sell of newer products [41][42] Question: How did SMS perform in the quarter versus expectations? - SMS performance was strong, with a transition from SMS to RCS allowing for better customer experiences, and the integration of WhatsApp also showed positive trends [44][45] Question: Can you provide visibility into adoption and engagement trends by cohorts? - Adoption of the customer agent is seen across all customer segments, with a strong interest in the agent's capabilities, although there are challenges in training and quality assurance [49][52] Question: What is the limiting factor to an LLM or AI-native company replicating Klaviyo's context? - Klaviyo's extensive dataset and real-time data infrastructure provide a significant competitive advantage that is difficult to replicate [57][60] Question: How does the Co-CEO's enterprise experience fit into Klaviyo's strategy? - The Co-CEO's experience in scaling enterprise businesses is expected to enhance operational strengths and improve alignment across product, engineering, and go-to-market strategies [63] Question: What do you see in the Accenture partnership? - The partnership with Accenture is focused on providing services around marketing and service reinvention, leveraging Klaviyo's capabilities to address customer fragmentation [66][71]