Summary
Klaviyo's second quarter revenue rose 31.9% to $293.1 million. Year-to-date revenue increased 32.6% to $572.9 million. The customer base grew to over 176,000 as of June 30, 2025, up from over 151,000 a year earlier. Large customers generating more than $50,000 of ARR reached 3,291, up 38% year over year from 2,386. Net revenue retention was 108%, down from 112% a year earlier. The decline was largely driven by relatively lower comparable expansion of existing customer plans. International expansion remained a bright spot, with 42% year-over-year revenue growth in EMEA and APAC. Management raised full fiscal year 2025 revenue guidance to $1.195 billion to $1.203 billion, representing 27% to 28% year-over-year growth. For the next quarter, third quarter revenue guidance is $297.0 million to $301.0 million, or 26% to 28% growth. Full fiscal year 2025 non-GAAP operating income guidance is $144.0 million to $150.0 million, and third quarter non-GAAP operating income guidance is $32.5 million to $35.5 million. The company also guided third quarter non-GAAP operating margin to 11% to 12% and full fiscal year 2025 non-GAAP operating margin to 12%.
Profitability metrics show the cost of growth. Gross profit rose 29.0% to $221.9 million, but gross margin slipped to 75.7%, down 1.7 percentage points. The operating loss widened to $31.3 million, and operating margin was -10.7%, down 4.4 percentage points. Net loss widened to $24.3 million. Diluted EPS was -$0.09, a wider loss than the prior-year quarter. On a non-GAAP basis, gross profit was $224.1 million with a 76% margin. Non-GAAP operating income was $40.9 million with a 14% margin. Non-GAAP net income per diluted share was $0.16. The gap between GAAP and non-GAAP results reflects items such as stock-based compensation and employer payroll taxes, which management excludes. Higher SMS usage and cloud infrastructure costs pressured gross margin. The company expects gross margin to decline modestly in the near term as SMS volume increases, with the impact most heavily felt in the fourth quarter due to holiday seasonality. Revenue growth in the quarter came from both new and existing customers. Sales to existing customers accounted for approximately 44% of the increase, while new customers accounted for approximately 56%.
Cash generation remained solid. Operating cash flow was $55.7 million, up 36.2% year over year. Year-to-date operating cash flow was $70.1 million, up 4.5%. Capital expenditures were $2.1 million, up 167.9%. Free cash flow was $59.3 million. Operating cash flow margin was 19.0%, and free cash flow margin was 20.2%. Deferred revenue rose 76.8% to $82.7 million, and remaining performance obligations rose 72.6% to $199.3 million. The company ended the quarter with a strong cash position.
Risks and management changes deserve attention. President Steve Rowland will retire, remaining in his role until December 31, 2025, and then serving as a strategic advisor until March 31, 2026. The company faces risks around sustaining its growth rate, attracting new customers, retaining revenue from existing customers, and expanding internationally. It also cites competition, macroeconomic factors including tariffs, and its ability to leverage artificial intelligence and machine learning. Other risks include integrating with third-party platforms, relationships with marketing agency and technology partners, unfavorable industry conditions, and the success of marketing and sales strategies. Seasonality is a factor, with demand typically stronger in the fourth quarter due to holiday shopping. The decline in net revenue retention to 108% from 112% suggests some moderation in expansion activity. Management did not provide a reconciliation of non-GAAP operating income guidance to GAAP because certain items cannot be reasonably predicted.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $293.1M | $279.8M | +4.7% | $222.2M | +31.9% |
| Gross profit | $221.9M | $212.1M | +4.6% | $171.9M | +29.0% |
| Gross margin | 75.7% | 75.8% | -0.1 pp | 77.4% | -1.7 pp |
| Research & development | $72.5M | $69.3M | +4.5% | $55.7M | +30.0% |
| Sales & marketing | $126.6M | $123.5M | +2.5% | $94.5M | +34.0% |
| General & administrative | $54.1M | $43.0M | +25.8% | $35.8M | +51.3% |
| Total operating expenses | $253.2M | $235.9M | +7.3% | $186.0M | +36.1% |
| Operating income (loss) | -$31.3M | -$23.8M | -31.9% | -$14.1M | -122.9% |
| Operating margin | -10.7% | -8.5% | -2.2 pp | -6.3% | -4.4 pp |
| Net income (loss) | -$24.3M | -$14.1M | -72.3% | -$4.9M | -391.3% |
| Net margin | -8.3% | -5.0% | -3.2 pp | -2.2% | -6.1 pp |
| Diluted EPS | -$0.09 | -$0.05 | -$0.04 | -$0.02 | -$0.07 |
| Customers | 176,000 | 169,000 | +4.1% | 151,000 | +16.6% |
| Net retention rate | 108.0% | 108.0% | ±0.0 pp | 112.0% | -4.0 pp |
Risks
As of December 31, 2024, approximately 77.7% of ARR was derived from customers who also use Shopify's platform, while only 9.4% of new ARR in 2024 came through the Shopify app store. The Shopify agreement expires in 2029, and any disruption, non-renewal, or removal from the app store could materially harm demand and results.
Net loss was $24.3 million in FY2025 Q2, and the loss widened from $4.9 million in FY2024 Q2; operating loss widened to $31.3 million from $14.1 million. The company expects costs and expenses to increase as it invests in infrastructure, platform development, international expansion, and sales and marketing.
MD&A states gross margin is expected to decline modestly as SMS volume increases because SMS has higher communication sending costs, with the impact most concentrated in Q4. Reported gross margin was 75.7% in FY2025 Q2, down 1.7 pp from the prior-year quarter, and 75.8% YTD, down 2.2 pp.
Risk factors state rapid historical revenue growth is not indicative of future growth and the revenue growth rate will decelerate over time. Revenue was up 31.9% in FY2025 Q2 and up 32.6% YTD, but business maturation and other factors may slow growth.
As Klaviyo moves up-market, enterprise sales cycles are expected to be longer and less predictable, requiring more selling and support resources before revenue is recognized. This may increase the time between incurring operating expenses and generating corresponding revenue.
The filing notes machine learning and AI use has become increasingly prevalent, and Klaviyo may be unable to integrate AI features of the quality sought by customers or offered by competitors. Competitors include Adobe, Salesforce, Mailchimp, and Braze, and some separate SMS carrier fees from product fees, which may appear more attractive.
Revenue depends on retail and eCommerce customers, and weak economic conditions, inflation, tariffs, or trade conflicts could reduce customer marketing spend, especially among small businesses. Tariffs could cause customers to request discounts or delay purchasing decisions.
For the three and six months ended June 30, 2025, 39.5% and 39.1% of revenue came from outside the United States, and Klaviyo added Singapore operations in 2025. International growth exposes it to tariffs, tax changes, privacy laws, and foreign exchange fluctuations.
Success depends on senior management, including co-founder and CEO Andrew Bialecki, and competition for experienced software engineers and senior sales executives is intense. Stock award value and remote workforce complexity may affect hiring and retention.
Series B common stock has ten votes per share, and directors, executive officers, and affiliates held 64.3% of voting power as of June 30, 2025. This concentrated control limits other stockholders' influence and may prevent unsolicited acquisition proposals.
Klaviyo outsources substantially all cloud infrastructure to a third-party hosting provider and depends on third-party services for email, SMS, and push notification delivery. Disruption, capacity limits, or termination could interrupt platform access and harm customer relationships.
SaaS KPIs
All quarters →Customers Generating Over $50,000 of ARR
Free Cash Flow
Free Cash Flow Margin
Non-GAAP Operating Margin
Total customers
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Klaviyo, Inc.'s SEC filings for Q2 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.