Klaviyo (KVYO 1.87%), a marketing automation and customer data company with over 176,000 customers worldwide, released its earnings results for Q2, on August 5, 2025. The company’s results exceeded consensus estimates across key GAAP (revenue) and non-GAAP (EPS) metrics, as GAAP revenue reached $293.1 million—well ahead of the expected $278.7 million—and non-GAAP earnings per share (EPS) came in at $0.16 versus a $0.13 estimate. Despite this outperformance, the gross margin (GAAP) slipped compared to the year-ago period as costs related to scaling infrastructure increased. Overall, the period showed momentum in customer growth, international expansion, and new product launches.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.16 | $0.13 | N/A | N/A |
| Revenue (GAAP) | $293.1 million | $278.7 million | $222.2 million | 32.0% |
| Non-GAAP Operating Margin | 14.0% | 15.4% | (1.4) pp | |
| Free Cash Flow | $59.3 million | $37.1 million | 59.8% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Model and Strategic Priorities
Klaviyo provides cloud-based marketing automation and customer relationship management (CRM) software for consumer-facing businesses, helping brands use data to personalize communications and build ongoing customer relationships. Its core platform combines data analytics, audience segmentation, multichannel messaging—like email, SMS text messages, and social media integrations—and automation tools.
Key areas of focus for Klaviyo's strategy include deepening data-driven personalization, expanding its vertically integrated technology stack, driving product-led growth, and breaking into new verticals and geographies. The ability to unify marketing, service, and analytics—all powered by an AI-first data architecture—remains at the heart of its business strategy. Growing enterprise and mid-market adoption, coupled with a push into Europe and Asia-Pacific, are central to accelerating ongoing growth.
Quarter Highlights: Growth, Margins, and Product Developments
In Q2 FY2025, Klaviyo delivered GAAP revenue growth of 32%, with total sales rising from $222.2 million to $293.1 million. This outperformance versus analyst forecasts was matched by EPS on a non-GAAP basis, which increased to $0.16 compared to $0.15 in Q2 FY2024. The company’s large-customer segment, composed of clients generating $50,000 or more in annual recurring revenue, expanded by 38% to reach 3,291 accounts. Total paying customers exceeded 176,000, a 17% increase from the prior year. International markets were especially strong, with revenue in Europe, the Middle East, Africa, and Asia-Pacific climbing 42% year-over-year. Specific markets such as France, Germany, and Spain delivered more than 100% year-over-year growth in new business, reflecting the benefits of local-language capabilities and new regional websites.
The company’s dollar-based net revenue retention remained solid at 108%. Klaviyo pointed to the quality of new customer gains—not just the quantity—with higher-value enterprise accounts and broader adoption of add-on modules, such as SMS messaging and the new analytics products, contributing to this expansion.
On the product front, Klaviyo launched the public beta of "Klaviyo Service," a suite of AI-powered service tools featuring real-time shopping agents. These new capabilities aim to bring personalized service experiences to brands of all sizes. Platform integrations deepened further, especially with digital advertising giants like Meta and TikTok, and new modules supporting analytics and direct social channel engagement.
While topline and customer growth accelerated, non-GAAP gross margin slipped by about three percentage points year-over-year as costs for infrastructure and scaling international SMS volumes grew. The non-GAAP operating margin also declined to 14.0% from 15.4% in Q2 2024. Increased spending on selling, marketing, and research and development—rising by 32.5% overall on a GAAP basis—was a strategic move to support entry into new regions, power product launches, and capture larger customers. GAAP results were negative, impacted by nearly $59 million in stock-based compensation and payroll tax-related charges in the quarter. In contrast, free cash flow (non-GAAP) improved by almost 60% year-over-year, reaching $59.3 million and representing over one-fifth of total revenue. The company ended the period with $935.5 million in cash and equivalents on its balance sheet. No dividend was declared.
Looking Ahead: Guidance and Focus Areas
Management raised its revenue forecast, guiding for a full-year range of $1.195–$1.203 billion compared to its prior outlook of $1.171–$1.179 billion. This represents expected annual revenue growth of 27% to 28%. For Q3, guidance projects revenue between $297 million and $301 million—a 26 to 28% increase from the comparable period last year. Non-GAAP operating margin is expected to moderate to 11–12% as investment levels remain high.
As Klaviyo continues its expansion across enterprise and international markets, areas of investor focus include the tradeoff between growth and profitability, trends in customer retention, and the pace of gross margin stabilization. Management intends to keep investing behind new AI-powered products, infrastructure scaling, and leadership in the competitive B2C CRM market. The company’s outlook and growth profile remain closely tied to how effectively it can win new customers, deepen relationships within its existing base, and maintain an edge in product innovation.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
