Oh, wow. It doesn't heat up. Oh, yeah. Showtime.
Let's do it.
Thank you. Hey, thanks for joining us for our next session. Really happy to have AB and Amanda here. Before we kick off, I think that's your first time at our conference here. So maybe start a little bit like ground us on Klaviyo, a nd then I'll kick it off from here.
Awesome. Yeah, s o for folks that don't know Klaviyo, we provide a, now autonomous, or you could say agentic, like AI parlance, a self-driving consumer CRM. So our customers are 183,000+ businesses around the world that are not only consumer-focused. You can think of businesses that have lots and lots of end customers themselves and consumers, where they need to deliver stunning customer experiences across marketing, service, their website, mobile apps.
That's highly tailored and personalized to every single consumer to drive incremental engagement and monetization. But they need to do that all through software. There are no, t here are no account managers or sales reps or anybody that's gonna help solve their customer experience problems. So you can think of us as that CRM really serving the underserved market of consumer businesses, a nd we do that for businesses, big and small.
So everybody from those just starting out, to small businesses, to some of the world's leading iconic brands, brands like Mattel, Unilever and their portfolio brands, Reebok, and yeah, in the last couple of months, we went from, you know, a lot of us folks know us for marketing.
Really the secret sauce of Klaviyo is the underlying data platform. We think of this like scalable brain for a business, stores everything you know about your customers, and now, you know, through some of the machine learning and now some of the modern AI techniques of LLMs, we're able to create a logic layer on top that allows, you know, our marketing to self-optimize, and in the last couple of months, we've released a new product around that, our Marketing Agent we can get at.
And then also, on the customer service side, we recently released a set of three products there. So now you can think about Klaviyo as covering for any business, you know, the entire spectrum of, you know, the customer experience, a nd then, yeah, 180,000 customers. Amanda, you wanna cover the kind of financial rundown?
Yeah. 180,000 customers plus w e are north of a billion in run rate, growing north of 30% per year this year and doing it while delivering consistently ever since we went public above the Rule of 40.
You've been one of the few companies that has been showing revenue growth over 30%, like, in all these times, so i t's like, congratulations, by the way. Like, that's kind of an amazing feature.
Yeah. When we look out there at the public software universe, we see fewer than 10 companies who are over billion dollars in revenue run rate, growing north of 30% and doing it while delivering Rule of 40.
Yeah. No, no, that's amazing. Yeah, exactly. The two topical questions. One is we just had, you know, Black Friday, Cyber Monday. How's that played out for you and any trends you've seen there?
Yeah. We work with consumer businesses, you know, around the world, a lot of, certainly a lot of retail and e-commerce. Obviously the Black Friday Cyber Monday, you know, Thanksgiving weekend is a big one, start of the holiday season. This year was an awesome year. I'll give you like two trends. First, some results and then a couple of trends that we noticed. We help businesses generate, sent over 22 billion messages, process over 10 billion data points on their consumers. They can now add to these like very rich consumer profiles that they have. Then critically, with our software, you can actually measure the revenue impact.
Over the five-day weekend, you know, from Thanksgiving through Monday, our business has generated over $3.8 billion in sales directly tied back to the marketing they were doing through Klaviyo. So that's why all of our customers think of us very much as a revenue engine. That $3.8 billion, by the way, that represented 42% of all of the revenue, that those businesses generated over the weekend, over that holiday weekend. So not only are we generating revenue, but we're generating almost half of the revenue that these businesses rely on in the busiest time of year. And then trends-wise, I'll say, you know, two things.
The first is this is the real first year you saw, you know, kind of, AI applied out in the wild. So two things. With our Marketing Agent released, that's an autonomy layer on top of our marketing platform that you can think of like, we'll design marketing campaigns, marketing strategy for you. We saw a lot more adoption from our customers. We recently launched in September of folks who are now generating marketing campaigns entirely through AI, right?
Right.
Either through prompts they're generating or literally our system saying, "Hey, here's what we think the best strategy for you is," you know, at this critical time of year. Customers can then review that, send that. That's generating now millions of dollars in incremental KAV on top of that. So, you know, it's very early, l ike, the adoption is still, a doption rates are very low for the customers that have leaned into that. We're already seeing them using AI to define their market strategy.
Yeah.
And then on the customer service side, you know, we launched our Customer Agent platform, which allowed businesses to, you know, basically create their digital representative that, you know, can be on their website or connect to text messaging or WhatsApp or email, other messaging channels. And we saw great engagement from that. You know, just to give you an example, you know, we have customers now, a swimwear brand of ours, you know, actually down in Sydney, down in Australia.
They're using our Customer Agent not just to do kind of product research, like, you know, explain, you know, what swimwear they offer, but they've actually given it a personality and set of skills where that agent can actually help people plan a, almost plan a vacation. So they'll get questions from their customers like, "Hey, I'm going on a trip for 10 days, and one, I'm wondering, like, what suits to get that fit my budget? But also, if I'm going on a 10-day vacation, how many swimsuits should I buy? What would you recommend?"
And even they're now thinking about things like, "Hey, as part of that, you know, hey, if we know where you're going, that agent can be valued and say, 'Hey, here's some of the things we'd suggest. By the way, we know that, you know, you're going to the beaches, you know, on the Gold Coast. Hey, here's some beaches that you should go stop at.'" So our customer agent, we're seeing a lot. We saw, obviously. It's our first holiday with that, but these agents are really becoming a core part of the shopping experience.
Yeah.
Not just in ChatGPT, but like literally on people's sites, and then, you know, we talked about the 42%, you know, loyalty, t hat 42% just keeps ticking up year-on-year. This importance of digital relationships to businesses, knowing who their customers are, being able to action that data, you know, through AI and seeing that generate results. We're seeing increasingly, businesses, when it comes to holidays, going back to customers that either have pre-existing relationships with.
From the previous years or customers, you know, that maybe aren't customers yet, but they, you know, somehow they built a relationship with them over the course of the year. They're going back to those customers, to convert and make their holiday numbers versus, say, advertising to get new demands.
Yeah, yeah, yeah. Okay. Perfect. Yeah. That's, that's really exciting. And then, if you think about it, like, how do I, how do you productize that? Does that, does that come like as part of the offering? Do I have to buy a different SKU? Like, how does it, you know, how do you deliver that?
Yeah. Sure. Look, the moment really is now when it comes to, you know, the CRM, the customer experience space, you know, becoming more autonomous. And when we mean autonomy in two ways, right? The first is the delivery of the experience. Like, we obviously serve consumer businesses. There are no sales reps. There are no account managers that are gonna reach out to you.
The delivery has to be through software. And now autonomy's also coming to the design side of that, defining what is the marketing actually be doing? How should my customer agent behave? Increasingly, we have AI that's actually doing that as well. We're monetizing this in two ways. On the customer agent side and the customer service side, this is all a usage-based or even an outcome-based product.
Yeah.
So, quick example. Every time a consumer has a conversation, you know, with an end consumer that the consumer says, like, "Yes, I just solved my problem." We monetize that. There's, you know, a small fee for that, and on top of that, we're finding our customers will say, "Hey, if that conversation results in a transaction, I'll even pay you a commission on the sales that are generated." So that's how we think about monetization there. We're almost like a surrogate, like, you know, sales function for these businesses that don't have a sales team.
Yeah.
And then our Marketing Agent, we found that, while we're not, we so far have bundled most of that functionality, or some of that functionality bundled into our core marketing platform. The other part we have in Marketing Analytics and autonomy SKU, where it does advanced personalizations, you think of things like per product recommendations, knowing what's the best channel for each customer.
We use that in two ways. Our customers, you know, one, it helps them personalize marketing campaigns down to the person that drives incremental lift. And so they, you know, they, there's an additional tier if they want that capability. And then secondarily, that product will also identify other marketing opportunities. So we talk about like building this marketing calendar.
We have a set of algorithms and agents that will literally go through, you know, somebody's data both inside of Klaviyo and outside of it to help them find pockets of either customers or maybe it's inventory that's new or they need to clear, a nd we'll generate marketing campaigns off of that. Things that their team could do, but now that just happens, you know, autonomously.
I mean, it's, so now, I don't know if you thought about it when you started the company, like having the data, and now the AI to go with the data, you know, actually your value proposition must kind of go on steroids now then, in theory.
Yeah. I think there's, you know, it was people. I get a lot of questions like, "Hey, how do you think about software, you know, your tech, your infrastructure in the, you know, in the age of AI?" And I think the key thing for us is like, you need to think about every software product is like, "Hey, how much of it is true infrastructure where there's something behind the scenes that really makes it magical?
Yeah.
Versus it's like, "Hey, It's just a really shiny UI layer," right? And for us, we started Klaviyo as a database, data infrastructure company. So we are excellent at storing, you know, these kind of, you know, these billions of consumer events in real time, indexing them, and then serving them. So either, you know, the end applications, so say a chat application or a marketing automation layer, but now increasingly LLMs can interpret, have access to that data and can use it, you know, as sort of additional context, right, when they're generating content.
We built this data infrastructure. We then built the message infrastructure and now this like real time, you know, chat and conversational infrastructure. That's really the magic of what we've done. And so with AI, we look at that and like, is really useful in two ways.
One is, it gives us kind of like thinking and logic engine. So now instead of having to rely on our users, you know, or they having to do all the work to figure out how to program it and configure it, we can actually just use LLMs to do that. That's what we're doing with our Marketing Agent and Customer Agent.
The second thing is like, LLMs is this kind of like mapping or interpretation layer. We're finding that it's making it easier. So rather than having to use our interfaces, right, to say design a marketing campaign, instead you can actually just through natural language describe the kind of marketing campaign that you want.
And then whether it's through Klaviyo's interfaces or say it's, you know, your internal chats, right, Slack or Teams or some other LLM or really any text-based system, you now can just send that prompt to us and we can convert it, right, into fully fledged marketing. So I think this is really, it's a, for us, it's like, it's actually almost an easier way to get at the infrastructure that underlies Klaviyo.
Yeah.
At the end of the day, if that results in, you know, better customer engagement, right, you know, happier consumers, then that's, you know, ultimately like, you know, that's what our businesses want, right, and that's what we can monetize.
Yeah, yeah. And Amanda, like, to get you a little bit involved here as well, how do you think customers, what's customers' propensity to pay for some of that? Like, because the big debate in the industry is that's really nice, but it's table stakes. I expect that for no money, you know, because we're going to AI, you know, off you go.
Yeah. The propensity is quite high, and as we know that and we have great confidence in that because of what we've seen already in the business, so we launched our Marketing Analytics product last February, and what Marketing Analytics does is it is basically advanced analytics, some of which are AI-driven and AI-driven personalization that makes a consumer or a business's relationships with its consumers that much more valuable because they have better insights into who those consumers are and they're better able to directly target that.
So we have a customer of ours, for instance, who is in the apparel space, and they implemented Marketing Analytics earlier this year. Their revenue year-on-year that they're generating through Klaviyo, that KAV that Andrew spoke about, is up close to 40% year-on-year. And so what we've seen, and that's coming not just from the analytics piece, but they're also using some of the earlier stage AI personalization, like AI gender-based prediction that helps them sort their customers without needing to ask questions into who are those who are gonna be interested in buying women's clothing versus who are those who are gonna be interested in buying men's clothing.
And so what we've seen through that is that where customers are seeing increased value, where they're seeing that we can use AI in this last mile personalization to make those relationships more value and generate more revenue per customer for their consumers, they're definitely able to, you know, and willing to pay for that. So we're incredibly bullish on the ability to continue to increase monetization of that as we launch even more and better.
Yeah, a nd then, moving on a little bit from the AI theme because we are half our time we're spent now on that one, talk a little bit about the channels as well, like that we think about, like, you know, historically with email, but now it's kind of broader. Like, how do you think the channels will evolve, especially then, and I don't know how AI even plays into that. I don't know if it does, you know?
Sure. Yeah, so I talked about like the importance of Klaviyo's maybe two, two things here. The first is the importance of we talk about this like messaging infrastructure that we have and like we think there's like this channel excellence. When it comes to like consumers and how they, you know, communicate with, you know, businesses, right, whether it's like a business communicating with the consumer or vice versa, our basic strategy is like, we're gonna play the field. Wherever consumers are, we wanna match up to that.
So that's actually the reason we started with emails. We asked a lot of business, "Hey, what do your consumers prefer?" They said, "Oh, email's the thing." You know, a couple of years ago, we branched that out into text messaging, right? And text messaging, we actually, you know, the standards there are having, you know, increased, right, some of the flexibility, some of the rich media you can do. And just recently, like, you know, probably last year, we added mobile app functionality.
So you can think of like if, hey, if you have a mobile app and you wanna communicate with somebody, you know, either through a push notification or some in-app experience, you can do that. And just a few months ago, we added WhatsApp as a channel, and now we're branching more into social. We actually just acquired a company that will help integrate with Instagram. And so now that folks that are, you know, maybe chatting with a business or direct messaging with a business over Instagram can now like also, they can also do that through Klaviyo.
Yeah.
So we generally, we look at it as like, look, there's probably half a dozen channels which are very popular and like, you know, some of these are region-dependent, globally. But across all those channels, we one are excellent at, you know, the media that's supported and the communication kind of norms on those channels. We're great at working with the providers there. So with email, we do a lot around deliverability. I think we deliverability, in messaging is a little bit similar to fraud and payments. Like, you just have to be good at it, in order to support those channels.
Yeah.
And then also we're very good at like stitching them all together. So, you know, one of the things you know, our customers typically ask us and say, "Hey, I know you guys support five or six channels, but like, can you tell me which ones my consumers prefer? Can you help me message them on the channels that they each individually want?
Oh, yeah.
And that's something that obviously like, yeah, we have all this data, right, you know, across, you know, across our ecosystem and then for individual brands. The last thing I'll say is like, as it relates to channels is, you know, there are obviously channels which, you know, we, we have historically focused on channels that provide a direct line of communication to a business.
So somewhere where it's like, "Hey, you get somebody's email address, phone number, you know, you know, it could be on WhatsApp," et cetera. Increasingly, we're finding businesses, you know, we're, we're expanding our marketing capabilities to handle channels that, maybe sit outside of that. They're not owned and operated, right, or, you know, they have full control over. So let's take like what's happened with consumer LLMs, ChatGPT, et cetera.
We integrate, you know, with those LLMs so that for things like when, you know, when there's now commerce happening outside, right, of, you know, a business's website, you know, those transactions flow back into Klaviyo. So when somebody, for instance, like if, if somebody transacts on a website, all of that metadata about that consumer comes into our data platform and we index it for real-time usage.
The same exact thing happens when somebody buys now on ChatGPT, and we find it, I mean, this is, we've actually integrated into all of these platforms such that all of that data flows through to us, and then that business has the ability to then use that on all of the channels we support.
Yeah, yeah.
I think one more thing on channels is that what we see and hear from customers is that they wanna communicate consistently across all of these channels. And so they don't like point solutions because point solutions create an inconsistent customer experience. They wanna use that same, you were, you know, mentioned earlier, the power of our data platform.
They wanna use that same data, everything that they know about a consumer, and use it to power it, whether it is email or SMS or any of the other channels. And so by unifying on Klaviyo, they get a better customer experience. They spend less time stitching information together across systems and more time personalizing that interaction, which drives their revenue.
That's a question for Amanda now, the like number question. So if you think about it, like, how do we have to think about the impact for you on the monetization, you know, on the money side, like in terms of, you know, you pay for email, but then if you do SMS, you pay more. If you do like some other stuff, you pay more. Like, how does this kind of translate into numbers for you?
Sure. If you take a email as a starter, and generally our customers have to start with email because our email product is unified with our data. So you buy data or, sorry, email sends plus profiles, and the profile is where all of this information that you know about your consumer lives.
Yeah.
Then you add on SMS. You can also add on marketing analytics or our analytics products, which include marketing analytics and our advanced data platform. And then now with the launch of service, you can also expand into service, right, so that it's not just unification across your proactive marketing channels, but it's also unifying your reactive inbound service channels as well.
When you total up across all of those, it can be in the neighborhood of triple the revenue that you generate from just that email subscription alone. So the power, you know, for our business is quite high in terms of the incremental revenue that we can generate and the potential, you know, size of these customer relationships as we expand across not just marketing channels, but also importantly, analytics and service as well. That doesn't even begin to include some of the uplift that we just talked about from AI.
Yeah, exactly. Yeah. So you're not that worried about growth then. Like, I mean, you still have to deliver, but like, it's not an opportunity problem. Yeah.
We are very bullish on our growth.
On the last one on growth, then it's like, talk a little bit about international, like, because like that's the other thing that is probably a vector here.
Yeah. International is just has fantastic growth, so international has accelerated its growth for six quarters in a row now. The growth rate of growth internationally has actually been increasing, and our EMEA region grew 48% last quarter, and what's driving that is that we're making the product and the whole customer experience more and more accessible to companies around the globe, so what we've seen is this, this need and this demand for personalizing the customer experience is universal.
That is not limited to merchants and, you know, to brands in the US. Brands around the world wanna be able to offer personalized interactions at scale, and so as we've made it easier for them to do so, the demand has and the, you know, the latent demand and the interest that we're seeing is just incredibly high. The ways that we've made that easier are one, launching new languages. So when we went public a few years ago, we were only in English and only in U.S. dollars, and we were in a handful of markets for SMS.
Today, we are in 11 languages, a nd we're in 22 markets for SMS. And so as we've made it easier for customers to buy in their native language and to use the product, that's just really accelerated demand. And then what drives that going forward is we're continuing to innovate. So we're launching new locally relevant channels like WhatsApp.
And then importantly, we are customizing the whole journey, not just having product, but also, you know, local language marketing, local language partner networks of the folks who are really relevant in each of those geographies, local language sellers. And as you add on each of those in a given market, the effect is compounding and drives that growth.
Where are we on international as a percent of revenue now? Like, just to give us an idea about perspective.
Yeah.
Yeah, give us some sort of.
It's roughly a third of our revenue right now is from international, and that has been steadily increasing over the past years just as we've continued to grow.
Yeah, yeah. Okay. Perfect. Makes sense, and then, see, I found another vector of growth. What about going, like, one of the things that we've noticed is like you're going slightly higher up in the market as well. Like, can you speak to that in terms of, is that just the product got more mature? You got more scalable? Is it more effort that you finally put in there? Like, how should we have to think about that? And where are we on that journey?
Yeah, so you know, it's interesting, but my co-founder and I came from, you know, true enterprise software before we started Klaviyo, and we decided that it's like, hey, we're gonna build this really scalable platform, data platform, and then now marketing and service on top of it, but we really aimed our go-to-market towards SMBs. That was intentional in the early days 'cause, you know, said, hey, we think we can just, we can grow more efficiently there, and we thought it was a very underserved market.
What we found over the years is that an increasing number of enterprise businesses are saying like, hey, Klaviyo seems to be like the right tech stack. That was the right concept. It comes with this like data platform built in, right, or that I can buy that's deeply integrated with marketing service. That for us is the killer differentiator as we move up into the enterprise. A lot of folks say it's like, I don't wanna try to stitch together a data warehouse or data lake and get it to talk to these applications and do it in real time and then try to figure out how I'm gonna do attribution and reinforcement learning.
I want all of that, you know, to work tightly together, so you know, you can see as we report out on, you know, our number of customers above $50,000 in, you know, ARR, 50K ACVs, and t hat number just continues to increase. It's actually something that we've really pressed on this year. We've made a lot of good progress is deliberately going after more enterprise businesses. And I'll go back to this thing of like, you know, the moment is kind of now, I think, for this customer experience and CRM category in terms of, hey, it's getting more autonomous. Like, these systems are starting to like self-reinforce, figure out how to define experiences on their own.
They're self-optimizing. And that's obviously the scale of enterprise means that there's a lot more utility there. You know, our point of view now is, you know, if you'd talked to us when we went public a couple of years ago, we said, yeah, we're, you know, we're working on like this kind of mid-market segment. We'll get to the enterprise. We're now the, you know, my opinion is in the next two years, every single enterprise is going to reevaluate and make decisions about what the future of their customer experience and CRM stack is.
And since we're focused on these consumer businesses where like, you know, automation and autonomy is the thing, you know, we feel really good about what we're doing with AI and then just the strength of our platform writ large. We're going after, you know, these enterprise businesses now. and, yeah, seen a lot of success.
Yeah. Is that, let me weave in the question there that I had, wanted to ask earlier, actually. You just kind of had an announcement around the co-CEO situation, or like not situation, but like co-CEO structure. Like, can you speak to that? And does that fit into kind of actually that kind of, slightly moving up market as well?
Yeah. I mean, well, it's definitely a benefit, so yeah, on, gosh, what's today? Wednesday. Yesterday morning, man, time flies. Yeah, we announced that, you know, one of our board members who I've been working with for the past few months and really developed this like killer relationship over the last couple of years, Chano Fernandez, who's the, you know, CEO, co-CEO at Workday, is gonna be joining as co-CEO with myself.
I'm really excited about this 'cause I've been talking with him for a while really about how like we've been working on AI and really its applications and kind of like building this agentic autonomous CRM. We had this big product launch in September where we really unveiled for the first time our Marketing Agents. We can do marketing autonomously, our Customer Agent, they can deliver customer service.
We've been watching the early results from that. And I'm convinced from the numbers we're seeing, even though the actual penetration is relatively small, you know, the quality of the experiences we're able to deliver now through AI, with the customers that have adopted and what I can see is like the roadmap ahead of us, the next two years, the entire CRM category is just like everybody's going to default to their agentic version of that.
So there will be a leader there, and, you know, obviously we intend to lead that. So I've been talking with, you know, Chano, my co-founder Ed, and I said, you know, I really wanna spend the next 24 months and go very deep on this. And I could use a partner to help me, you know, really just abstract or take off my plate as much of the rest of the business as I can. So anyways, I've known Chano for a long time. You know, he and I, you know, I just, he's a CEO I really admired for his intellect and his just raw intensity.
And obviously he has a lot of experience doing businesses at scale. Workday is a wonderful business, international, you know, he's from Europe, gets constantly pressing me on like the, hey, how is Klaviyo growing outside of the ex-U.S., North America? And obviously understands large enterprise. And so we looked at this and said like, hey, he's an excellent operator, somebody I deeply trust, and he has these expertise. And so yeah, I mean, I'm very excited 'cause like, you know, now I'm able to ramp up some of the time I'm spending with our product engineering teams and customers.
Yeah.
As we're ushering in this, you know, kind of agentic future, and I think also he's excited. He's like, hey, look, I can help us, you know, really unlock some doors, right, and execute on both international like we talked about, and our enterprise. So my hope is that, or my belief is we can actually do all of those because there is going to be a category-defining CRM business.
Yeah.
That does this in the AI era, and, you know, obviously we believe that should be us.
Yep. Okay. Well, good luck. That sounds like really exciting. Amanda, and I mean, this was maybe part of that, like, but the one surprise from the Analyst Day was kind of the margin guidance, which was probably we were all kind of going top right and straight away, but yeah, listening now on the opportunity side is kind of a lot. Like, how did this discussions go about like, okay, maybe we wanna spend more money now because this is important for us? Like, can you speak to that?
Yeah. I mean, we're a growth company, and we're gonna continue to drive growth. And there is so much growth and so much market opportunity ahead of us, and that is only continuing to increase and open up even more market with that everything that's happening in AI. So we're incredibly excited about the growth that is ahead of us. And we can deliver on that growth while expanding margins at the same time. And you saw that in our numbers. And it's one of the great things about working with Andrew and also working with Ed as co-founder is that there is this longtime belief that it doesn't have to be an either/or between growth and continuing to, you know, deliver strong margins.
And so, you know, they've always believed that it takes some extra creativity, that you have to push people a little bit harder, but that with the right creativity and now increasingly with the way that AI is changing our business, you can keep driving that strength. And it's not so much about efficiency. It's about actually making the product and the outcome better because you're thinking about things from an entirely different point of view. So the way that we think about the business going forward is we're gonna continue to invest behind these great growth opportunities that we have.
We're gonna lean in on it, and we're gonna do it with the same creativity and focus that we've always had. And I think you can see it in our results as a company. Over the last, you know, several years, we've been consistently above Rule of 40, and we've got really strong confidence that going forward we can continue to be as well.
Yeah. Good. Actually, I'll leave that as a good closing statement, huh? That was really good, team. I really enjoyed our conversation. Looks really exciting. Looking forward to observing you on that journey. Thank you.
Great.
Awesome.
Thank you.