Klaviyo Inc Q4 2024 Earnings Call Transcript

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

Question: Gabriela Borges - Goldman Sachs - Analyst : AB and Amanda, I wanted to take a little bit more color on your mid-market pipeline. And thinking about the call that you've pretty consistently provided over the last year about the opportunity you see there, could you give us maybe a little more qualification how is the mid-market pipeline growing? And when I look at your own data on customers greater than $50,000, that number has obviously been growing really nicely for a while. So, how sustainable do you think the growth in that cohort is? And any other qualitative commentary you're willing to provide would be helpful.

Question: Terry Tillman - Truist - Analyst : It might be a multi-parter, so just beware. About the upmarket opportunity here, what I'm curious about is as Steve and the team are kind of building out the infrastructure, I'm curious about like how much you're able to leverage PLG and kind of word-of-mouth as opposed to having to be heavy outbound? And the second part is, like how ramped is the sales team? And is there any kind of natural ceiling right now upmarket in terms of the size of the customer?

Question: DJ Hynes - Canaccord - Analyst : Congrats on a nice quarter. AB, I was wondering if you could update us on ARR overlap with the Shopify ecosystem, how that partnership has progressed on a lead flow perspective. And then you mentioned WooCommerce, but I'm curious if there are any other B2C ecosystem opportunities that seem promising as you guys kind of continue to diversify away from Shopify.

Question: Rob Oliver - Baird - Analyst : On international and, AB, you touched on this a little bit in response to DJ's question. But I'd be curious to get an update from you guys on what you've seen on the ground in some of the geographies, such as France and others, that you've enabled in the back half of '24. And then if you could REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 9:30PM, KVYO.N - Q4 2024 Klaviyo Inc Earnings Call just take a moment to update us on what the road map is in terms of additional either geos or languages for '25 and how the Woo relationship may have either accelerated or changed that in any way.

Question: Elizabeth Porter - Morgan Stanley - Analyst : I wanted to touch on the NRR, where you mentioned seeing some stabilization in the in-quarter metric. And I understand it's just too early to call a bottom. Would love to better understand just the behavior that you're seeing. Sounds like gross retention has been strong for a while. So, any sort of incremental clarity on where you're seeing the improvements, either cross-sell or expansion? And then when we should think about the point in time that we start to lap some easier compares?

Question: Arjun Bhatia - William Blair - Analyst : Congrats here on the nice fourth quarter. Maybe if I can come back to you, just on the product side, you talked quite a bit about where the platform might expand to next. You clearly have kind of the foundational data layer built out and you've built on top of it, obviously, with marketing. But as you're thinking of product evolution, what are you prioritizing? And is that something that we should expect this year? Or is that kind of the longer-term more kind of ambitious product road map that you've laid out?

Question: Brent Bracelin - Piper Sandler - Analyst : AB, Amanda, wanted to double-click into the customer logo growth. It accelerated to 17% for the first time in a couple of years. Could you walk through the puts and takes on customer growth expectations in the coming year? I think, Amanda, you talked about new simplified pricing potentially driving some churn. On the other hand, you have this new WooCommerce partnership in international going strong that could possibly offset that. So are we thinking about mid-teens logo growth? Or could simplified pricing be a bigger impact on the entrepreneur part of the business, and we should be thinking closer to low teens growth for customers? Any color there would be helpful.

Question: Raimo Lenschow - Barclays - Analyst : Congrats from me as well. First question on -- going back to WooCommerce. If you think about it, like the strategy was a little bit moving upmarket over last few quarters. WooCommerce looks -- is more like downmarket, in my view. Like how do we have to think about it? Is this like a new path now? Is that just broadening of the strategy? How should we think about it? And then I have one for Amanda.

Question: Raimo Lenschow - Barclays - Analyst : Okay. Perfect. And then for Amanda, like can you talk a little bit about the new offer -- or the decision to offer at auto downgrade for customers? Can you provide some color on the Medtronic here and how that might impact Q4, Q1 numbers as well?

Question: Derrick Wood - TD Cowen - Analyst : Congrats on a great quarter. AB, it sounds like you've made great strides in expanding the number of countries you can deliver SMS in. Just how should we think about the revenue unlock? I mean, is there a lot of pent-up demand? So quickly after you turn this on in new countries, you'll see some incremental revenue conversion? Or is this something that now you start a new sales cycle and start looking to cross-sell in these new countries and expect dividends to come down

Question: Scott Berg - Needham - Analyst : I just wanted to follow up on the WooCommerce partnership on the press release on it and the commentary. Didn't hear anything along the lines of, I don't know, maybe any financial incentives or any sort of terms of, I guess, engagement, how you all are working together. Preferred partnership can mean a lot of things. But maybe help us understand what the commitment level of both companies are, whether it's on a financial basis or maybe it's something else, maybe from, I don't know, a technology perspective. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 9:30PM, KVYO.N - Q4 2024 Klaviyo Inc Earnings Call

Question: Mark Zgutowicz - Benchmark - Analyst : Maybe just a macro question, if I could. A lot of good fundamental questions have already been asked. Curious on the tariff front, kind of a fluid situation right now. I'm curious if you've anticipated any downstream impacts or have heard anything from any of your customers in terms of any disruption there.

Question: Brett Knoblauch - Cantor Fitzgerald - Analyst : Maybe to start, as you look at maybe the SMS adoption or increased adoption throughout the year going from 16 to 18.2, is that about what you would have expected going into the year? Did you overachieve, meet, underachieved expectations with regarding to that?

Question: Michael Berg - Wells Fargo - Analyst : I'll ask a quick one here for Amanda. Just double-clicking on the pricing mechanism changes, have you worked through most of the installed base already by giving this monthly contracts and you announced it a month or so ago? And just from a functional standpoint, how do you think about how that works from a how the customer finds out if they're in compliance versus not? And maybe just squeeze one more in there, longer term, philosophically, how do you think about pricing here given the competitive end market, but obviously a highly value-added product? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 9:30PM, KVYO.N - Q4 2024 Klaviyo Inc Earnings Call

Question: Nick Altmann - Scotiabank - Analyst : AB, you mentioned you held your first in-person Partner Advisory Council for strategizing around 2025. So, I wanted to ask a follow-up there. But can you maybe just give us a sense as to how much of the business is being driven from the channel today, what the overarching message to partners is around 2025? And maybe just talk about the channel internationally and where that sort of fits into those expansion plans.