Summary
Klaviyo reported second quarter fiscal 2026 revenue of $370.6 million, up 26.4% from the prior-year quarter. The company raised its full-year fiscal 2026 revenue guidance to $1.526 billion to $1.534 billion, which implies 24% growth. For the third quarter of fiscal 2026, management guided revenue to $377 million to $381 million, or 21.5% to 22.5% growth. The customer base exceeded 205,000, and customers generating more than $50,000 of ARR reached 4,477, up 36% year over year. Net revenue retention was 109%, up one percentage point from the prior-year period. Revenue outside the Americas grew 35% year over year. About 20% of ARR came from customers using 3 or more products. Annualized revenue per employee rose 28% year over year. These metrics suggest the land-and-expand model is still working.
Gross profit was $269.1 million, up 21.3%. Gross margin fell 3.1 percentage points to 72.6%. The decline reflects higher outbound communication sending costs from text and WhatsApp usage, plus cloud infrastructure and personnel costs. Operating loss narrowed to $15.0 million, and operating margin improved 6.6 percentage points to -4.0%. Net loss narrowed to $8.8 million, and diluted EPS was -$0.03. On a non-GAAP basis, operating income was $50.9 million, with a 13.7% operating margin. Non-GAAP net income per share was $0.19. Management expects gross margin to decline modestly in the near term as text and WhatsApp volumes grow, with the fourth quarter likely seeing the heaviest impact because of holiday seasonality. That is a margin headwind management flagged.
Product momentum was a central part of the quarter. Klaviyo released Composer, enhanced Customer Agent with a Conversational Agent Builder, Custom Skills, Simulations, and API access, and launched K Social for general availability. The company agreed to acquire the team and technology of Agency, an AI-native customer success company, and Agency co-founder and CEO Elias Torres will become Chief Product Officer after closing. Klaviyo also expanded its AI ecosystem with an Anthropic Claude integration and a native Figma integration, and it launched as a Shopify Sidekick and Stripe Projects partner. New customers included Warner Music Group, the San Francisco 49ers, and Claire's, plus a regional expansion with The Body Shop. These moves support the autonomous B2C CRM strategy, but they also raise integration and execution risk.
Cash generation was strong. Operating cash flow was $93.9 million, up 68.5%. Free cash flow was $82.9 million. Capital expenditures were $6.6 million, up 218.3%. Deferred revenue ended the quarter at $119.5 million, up 44.5%. Remaining performance obligations were $310.1 million, up 55.6%. For the first six months of fiscal 2026, revenue was $728.6 million, up 27.2%. Year-to-date gross profit was $538.0 million, up 24.0%. Year-to-date operating loss was $13.2 million, a 76.0% narrowing. Year-to-date net income was $0.2 million, a swing to profit from a loss in the prior-year period. Year-to-date diluted EPS was $0.00. Year-to-date operating cash flow was $128.2 million, up 82.9%. Year-to-date capital expenditures were $18.2 million, up 284.0%. Management stated that operating cash flows provide sufficient liquidity for at least the next twelve months. The company repurchased shares under a $500.0 million authorization, with $162.7 million remaining as of June 30, 2026.
Guidance for the third quarter of fiscal 2026 includes non-GAAP operating income of $40 million to $43 million and a non-GAAP operating margin of 10.5% to 11%. For the full fiscal year 2026, management guided non-GAAP operating income to $212 million to $218 million and a non-GAAP operating margin of 14%. The main risks are margin pressure from text and WhatsApp messaging, fourth-quarter seasonality, competition, and the integration of the Agency acquisition. Klaviyo also depends on third-party platforms such as Shopify, and it faces macroeconomic factors including tariffs. The company must sustain growth, attract new customers, retain revenue from existing customers, and increase sales from both new and existing customers. It also needs to keep leveraging AI and machine learning in its products and sustain strong international growth. Those are the main execution risks management flagged.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $370.6M | $358.0M | +3.5% | $293.1M | +26.4% |
| Gross profit | $269.1M | $268.9M | +0.1% | $221.9M | +21.3% |
| Gross margin | 72.6% | 75.1% | -2.5 pp | 75.7% | -3.1 pp |
| Research & development | $91.9M | $80.0M | +14.9% | $72.5M | +26.9% |
| Sales & marketing | $139.3M | $134.1M | +3.9% | $126.6M | +10.0% |
| General & administrative | $52.8M | $53.1M | -0.4% | $54.1M | -2.4% |
| Total operating expenses | $284.1M | $267.1M | +6.3% | $253.2M | +12.2% |
| Operating income (loss) | -$15.0M | $1.7M | -957.5% | -$31.3M | +52.2% |
| Operating margin | -4.0% | 0.5% | -4.5 pp | -10.7% | +6.6 pp |
| Net income (loss) | -$8.8M | $9.0M | -197.9% | -$24.3M | +63.6% |
| Net margin | -2.4% | 2.5% | -4.9 pp | -8.3% | +5.9 pp |
| Diluted EPS | -$0.03 | $0.03 | -$0.06 | -$0.09 | +$0.06 |
| Customers | 205,000 | 196,000 | +4.6% | 176,000 | +16.5% |
| Net retention rate | 109.0% | 110.0% | -1.0 pp | 108.0% | +1.0 pp |
Risks
Risk Factors highlight rapid AI advances and competitors with superior AI capabilities, larger training datasets, or autonomous agents that may offer more effective solutions. Third-party platforms may embed competing AI features, and MD&A emphasizes reliance on AI-first offerings such as Composer and Customer Agent.
MD&A states text messaging and WhatsApp messaging have higher associated communication sending costs and expects gross margin to decline modestly, with the largest impact in the fourth quarter. Reported figures show gross margin was 72.6% in FY2026 Q2, down 3.1 percentage points from 75.7% in FY2025 Q2, and 73.8% for the six months ended June 30, 2026, down 1.9 percentage points.
As of December 31, 2025, approximately 77.9% of ARR came from customers who also use Shopify's platform; the agreement expires in 2029. Any removal from Shopify's app store, disruption to data synchronization, or non-renewal could materially harm customer experience and demand.
The company is moving up-market to enterprise customers where sales cycles are expected to be longer and revenue timing less predictable, requiring increased selling and customer support expenses before corresponding revenue. MD&A identifies growth with larger customers as a key factor.
Most customer subscriptions are month-to-month, and many customers are small to mid-size businesses with no obligation to renew or maintain usage. NRR was 109% as of June 30, 2026, up from 108% as of June 30, 2025, but churn or reduced spend remains a risk.
Revenue depends heavily on retail and eCommerce customers and small businesses, which may reduce marketing spend during economic downturns. Risk Factors cite tariffs, inflation, and trade policy uncertainty as factors that could lower platform usage and increase collection difficulties.
For the six months ended June 30, 2026, 41.6% of revenue came from customer accounts outside the United States. Expanding in Singapore, France, Canada, and other markets increases exposure to labor, tax, data privacy, and trade regulations.
Competition for experienced software engineers, AI and machine learning personnel, and senior sales executives is intense. A portion of the workforce is remote, and equity award value fluctuations may affect recruiting and retention, including of co-CEOs and key employees.
Risk Factors state rapid historical revenue growth is not indicative of future growth and the revenue growth rate will decelerate over time as the business matures. Revenue was $728.6 million for the six months ended June 30, 2026, up 27.2% from $572.9 million, but the company warns not to rely on historical growth.
The Share Repurchase Program may reduce public float and further concentrate ownership among directors, executive officers, and affiliates. Dual-class structure gives co-founders significant voting control, which may limit other stockholders' influence.
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 FY2026 (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 2, 2026.