Klaviyo (KVYO) Q1 FY26 earnings call: guidance and Q&A

How is Composer adoption progressing, and how will it accelerate the AI adoption flywheel? Also, what does 'guiding with more precision' mean for Q2, given a smaller Q1 beat?

Composer combines marketing creation and analytics, showing positive feedback from diverse users. It excels at on-brand content and deep analytics, with future plans for automated actions. This intelligence is a new revenue stream and drives platform usage. The 'more precision' guidance means a tighter forecast range due to improved forecasting visibility from scale, reflecting confidence in business momentum.

“So what's great is, yes, we've introduced kind of a range of customers. Some are more power users. Some of them are more entrepreneurs who are just starting out, so we can get a feel for their usage patterns. And I'll tell you, kind of universally, the feedback has been very, very positive.”

asked by Samad Samana · answered by Andrew Bialecki

How are agency partners reacting to Klaviyo's AI tools like Composer and Customer Agent, given the potential for automation to reduce their work?

Agencies are accelerating adoption of both Composer and Customer Agent. Composer allows agencies to take on more clients due to increased leverage. Customer Agent is creating new practices for agencies, as setting up agents requires expertise. Klaviyo is helping agencies build these practices, bridging the gap for customers.

“So I've had many conversations where folks have said that they're actually changing their ratios of the kinds of products they can take on because of, I mean, Klaviyo is a product and it's just ease of use, but especially now because of like some of the agentic capabilities that we're offering.”

asked by David Hynes · answered by Andrew Bialecki

What is the current state of the enterprise opportunity, including sales cycles and legacy replacement, compared to last fall? Any updates on partner contribution?

The enterprise opportunity is even more exciting now, with tangible results like doubling $1M+ ARR customers and 38% growth in $50k+ ARR customers. Sales cycles are playing into larger quarters, especially Q4. The focus is on product investment and go-to-market discipline. Klaviyo is in the early innings but sees massive potential for reacceleration. Accenture and other partners are contributing to wins, either by influence or sourcing deals.

“I would say I feel even much more excited than I was in the autumn because I can see that tangible. Of course, I will tell you, yes, we are on the early innings of that opportunity, and we have a lot of work to do ahead of us, but the opportunity is just massive.”

asked by Robert Oliver · answered by Chano Fernandez

Can you elaborate on the impact of rising carrier fees for text messaging on potential revenue and profitability, given that some competitors pass these costs through?

Carrier fees are charges from telco carriers for text messaging. Klaviyo has strategically chosen to absorb these fees to provide predictability and trust to customers, which also offers a pricing advantage. While this impacts profitability, Klaviyo's Q1 gross margins remained steady due to significant text messaging growth and infrastructure efficiencies. The company will continue to be intentional about future pass-throughs, balancing customer predictability with margin maintenance, and this approach is built into the full-year outlook.

“Now our primary operating principle is we are trying to operate with our customers with consistency and transparency and trust. And we're helping to make their business more predictable. And so thus far, we have taken the strategic choice not to pass through those carrier fees.”

asked by Raimo Lenschow · answered by Amanda Whalen

How will Composer be monetized (stand-alone SKU vs. accelerating existing volumes)? And does this play into the decision not to pass through SMS carrier fees?

Composer is seen as an entirely new revenue stream, monetizing the intelligence it provides through tokens, similar to valuing human time. It helps customers generate significant incremental revenue by optimizing marketing and understanding customer behavior. It also has a halo effect, increasing messaging volume due to better quality and growing consumer relationships by enabling marketers to serve more cohorts. The carrier fee decision is distinct, focused on customer predictability and trust, not directly linked to Composer monetization.

“So when we think about Composer, I mean, we're ultimately, selling or we're providing is intelligence. And obviously, that's the form factor of like tokens. So what we're finding is that customers -- to go back to some of the examples that we've had is customers are, for instance, using us to review who their customers are, the state of their marketing and then using that to figure out like what to do next.”

asked by Nicholas Altmann · answered by Andrew Bialecki

NRR is 110%, up 2 points YoY but flat sequentially. What are the key drivers keeping NRR at this level, and what will push it higher in the back half, especially as profile enforcement benefits lap?

The largest driver of NRR is customer expansion through increased usage of existing products, as customers see strong ROI from automation and flows. Cross-sell also contributes significantly as customers consolidate onto Klaviyo's platform. While there will be some impact from the lapping of profile enforcement from last year, positive contributions from expansion and cross-sell are expected to maintain or improve NRR.

“The first and largest driver is expansion of customers' usage of our existing products. And that's where when they see that strong ROI and that strong return, they increase their usage and that, in fact, is contributing positively to NRR.”

asked by Siti Panigrahi · answered by Amanda Whalen

Given the lighter sequential growth in Q1 compared to prior first quarters, is the business becoming more seasonal due to retail/e-commerce exposure, or is there another explanation?

Seasonality is actually less pronounced due to profile enforcement, though Q4 remains the peak for customers. The Q1 strength came from diverse areas: 39% YoY international growth, increasing enterprise momentum with steadier multi-year contracts (e.g., All Saints' three-year deal). These factors contribute to a strong Q1 and a robust outlook, making the business less susceptible to traditional seasonality.

“I will say that in Q1, what we saw was just strength across many different parts of the business. We saw strength in our international business, where it's growing 39% year-on-year. We're seeing increasing momentum in our enterprise business.”

asked by Callie Valenti · answered by Amanda Whalen

Klaviyo's growth suggests a strong marketing budget environment, unlike other enterprise software. What's driving this demand, and why are customers investing significantly now?

Three key trends drive demand: 1) Klaviyo focuses on revenue generation, creating an insatiable appetite for tools that grow top-line and profits. 2) Consolidation within marketing and across data/analytics/service products, driven by better performance when combining data with marketing channels, not just cost reduction. 3) High demand for AI intelligence (like Composer) applied to the B2C CRM infrastructure, enabling efficient execution of marketing ideas and driving greater profitability and increased revenues.

“So the first is because unlike most software enterprise software, we're focused on revenue generation. I mean there's sort of an insatiable appetite for if you can help grow top line, grow profits, people want to spend more.”

asked by Scott Berg · answered by Andrew Bialecki