Klaviyo Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: DJ Hynes - Canaccord - Analyst : Hey, Thanks guys and congrats on the next quarter, Amanda. I appreciate the early look at 2025. And ABK, Please give us an update on your various customer acquisition engines or channels, whether that's, you know, through Shopify marketing agencies, direct selling like anything stand out to you in terms of performing particularly well or vice versa.

Question: DJ Hynes - Canaccord - Analyst : Yeah, Makes sense. Thank You.

Question: Raimo Lenschow - Barclays - Analyst : Thanks, Congrats for me as well. Amanda and Andrew, like the he softness like that you kind of mentioned on the call, like if you think about the economy, like we've been in like in tougher times for a while and you guys have been kind of actually managing this kind of pretty well like, did you see like a change again like in the last quarter that do you think it's kind of more macro or do you think it could be like election uncertainty and that kind of plays a role here? You know, like I'm just saying, it's like we've been in this kind of environment for a while and most other people talk about more stabilization on lower levels, but stabilization. Thank you

Question: Raimo Lenschow - Barclays - Analyst : Okay, perfect. Thank you. Makes sense. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, KVYO.N - Q3 2024 Klaviyo Inc Earnings Call

Question: Scott Berg - Needham and Company LLC - Analyst : Hi, everyone. Thanks for taking the question in the next quarter here. ABK just wanted to ask on the two new hires that you mentioned, the CTO and CPO your platform. I know you've talked pretty extensively about the you know, database kind of bottoms up platform and the benefit you all receive from that. But how do these two new hires? You know, how are you expecting them to impact the technology kind of footprint going forward?

Question: Scott Berg - Needham and Company LLC - Analyst : Wonderful.

Question: Brent Bracelin - Piper Sandler - Analyst : Thank you. Good afternoon. AB that the Q4 guy here does suggest the businesses is poised to cross over a billion ARR exiting the year. I'd be curious to hear your thoughts on and product vision here on the next billion Wall Street always wants more. You're bringing new talent. You have a strong balance sheet, good cash flow. You could always lean into M&A walk us through kind of the appetite to add that next billion. And and how much you're going to lean into M&A you know, internal investment, walk us through that vision. That'd be helpful. Thanks.

Question: Brent Bracelin - Piper Sandler - Analyst : Helpful color. Thank you.

Question: Michael Burke - Wells Fargo Securities - Analyst : Hey, congrats on the core. Thanks for taking my question. I want to touch on the international opportunity quickly that you seem to be operating on all cylinders there and you had some pretty nice announcements across languages as well as native capabilities there. What how can you think about the progress since launching those? I know it's early on but across the the new languages and the five new regions, any initial takeaways there, you can leverage for new geographies as you expand. Thank you.

Question: Michael Burke - Wells Fargo Securities - Analyst : Awesome. Thank you.

Question: Rob Oliver - Baird - Analyst : Great, good evening. Thanks for taking my question. AB mine is for you. A couple questions ago, brand asked about the next leg of growth to $2 billion. And you know, when you look at some of the other products aside from SMS, which is obviously number one on Cross sell, I know Amanda (inaudible) still has an area of maybe talk a little bit about what you're seeing from reviews and then in particular CDP where I know you guys made some changes to how you package the CDP solution and would love to get an update on how that sort of bifurcation of the product is. Perhaps driving incremental wins. Thank you.

Question: Rob Oliver - Baird - Analyst : Great. Thank you for All the call. I appreciate it.

Question: Keith Weiss - Morgan Stanley - Analyst : Excellent. Thank you guys for taking the question and congratulations on a solid quarter. I wanted to dig into the NRR commentary a little bit And why it weighs on growth into next year. I was a little bit surprised because it sounds like the up sell motion is going and the cross motion is going quite well for you guys, particularly with SMS, but the, the, the switch portfolio is expanding really nicely. The expansions have been pressured by Macro for a while and so you're anniversary then that's not like a net new impact into next year and the bigger lands. I mean, that's just, you're, you're accruing the revenues elsewhere rather than NRR, you're just getting it up front. So can you touch a little bit of why the NRR continues sliding, like why there's not set offsets from cross sell and why that's a incremental pressure on revenue growth into the forward here.

Question: Keith Weiss - Morgan Stanley - Analyst : Got it just a quick follow up. If we think about the expansion and within NB being somewhat macro related, can we read through that? Like you're assuming a continued sort of the continued was the continuation of the current macro environment right now, which hasn't been great into next year. So like we could take it away saying you're being conservative about sort of macro assumptions into 2025.

Question: Keith Weiss - Morgan Stanley - Analyst : Absolutely. That's super helpful. Thank you so much, Amanda.

Question: Arjun Bhatia - William Blair - Analyst : Alright, Thank You very much. I wanted to touch on the market traction. It sounds like, you know, to the earlier point you were making Amanda just then that your customers are landing larger. You're seeing the 50 K customer count increase quite a bit. And you have a host of kind of large logos to, to show for it. But as you move further up market, how are you seeing the competitive dynamics change? How are you seeing the vendors that you're displacing change? And what impact is it, is it having on win rates and, and sales cycles in particular? And then as you look into next year on the NRR front, what should we expect from those larger customers? Because it seems like some of the pressure is with smaller customers. But should we expect one year out after landing two years out after landing that those larger customers might actually expand at a faster rate than your, your customer base today? Thank you.

Question: Arjun Bhatia - William Blair - Analyst : Okay. Understood. Perfect. Thank you.

Question: Derrick Wood - TD Cowen - Analyst : Thanks. Amanda, another impressive quarter around margins. Sounds like there's a lot of moving parts to consider in Q4. And I guess by my calculation that the cash bonus payments operating margin guide would be around 8% which is still down from the mid 10s, year-to-date. Could you just comment on how to think about some of the seasonal factors, especially the the degree of seasonal compression and, and gross margins and the seasonal uptick in sales and marketing spend and remind us why you tend to see such big ramp in sales and marketing spend in Q4.

Question: Derrick Wood - TD Cowen - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, KVYO.N - Q3 2024 Klaviyo Inc Earnings Call

Question: Terry Tillman - Truist - Analyst : Thanks AB, Amanda and Zoe. My question is kind of a multi parter here. First, in terms of just another reminder for us, Amanda, in terms of four Q, how does that usually look in terms of seasonality of winning new customers? I don't know, do they want to want to keep kind of those kind of decisions off the table because of the holiday selling or because of your upmarket motion, you could still see some strong activity in terms of new customer business. And then the second part of this question is appreciate the macro dynamics and value based kind of decisioning by your customers. Do you assume in the holiday period that like your existing cohorts of SMS customers are actually going to send lower volumes than last year? Thank you.

Question: John Gomez - Scotiabank - Analyst : Hi, This is John Gomez on for Nick Altman. Thanks for taking my question. Can you talk about your pipeline for upmarket logos? And when you think about the pipeline and seasonality upmarket, should we expect the bulk of that strength to come in Q4? Given that's the biggest renewal quarter and perhaps this provides the best opportunity for displacement activity. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, KVYO.N - Q3 2024 Klaviyo Inc Earnings Call

Question: John Gomez - Scotiabank - Analyst : Great. Thank you.

Question: Mark Zuckerberg - Benchmark - Analyst : Thank you. I was just curious if shopifies more recent expansion and success that they're having at the enterprise level is starting to trickle into your pipeline and and sort of how your preparedness and go to market looks there relative to, mid market. Thank you.

Question: Mark Zuckerberg - Benchmark - Analyst : Excellent. Thank you.

Question: Cali Valenti - Goldman - Analyst : Hi. Thank you for taking my question. And congrats on the quarter building on kind of the discussion we had on, you know, integrating the E-commerce and the marketing layers. Can you talk a little bit about some of the ways that you're helping Klaviyo connect to add audiences? I know this came up last quarter. So curious, kind of what use cases you're seeing and how you see that potentially expanding over time. Thank you.

Question: Cali Valenti - Goldman - Analyst : Oh, sorry. Yeah, I just wanted to hear about how you're helping Klaviyo customers connect to add audiences. I know that came up on the call last quarter. So just curious what kind of like use cases you're seeing and how you see that expanding over time?

Question: Cali Valenti - Goldman - Analyst : Great. Thank you.