Klaviyo 2024 Earnings -- Expanding Up, Down, and Sideways
Klaviyo has a three-pronged growth strategy and it is starting to play out well, especially in an environment where there is not a lot of great competition for what they are doing (which is surprising). Here are a few points on each:
Overall:
* Full year revenue up 34% to $937 million
* FCF now $150 million
* Full year revenue guidance slightly down to 23-24% y/y
Expanding Up:
* Going to market w/ Shopify in larger customers (Reebok, Champion, Barkbox)
* Full Year International growing 42% y/y - matching Shopify's growth patterns
* 2,850 customers, generating over $50,000 in ARR, up 46% year-over-year.
Expanding Down:
* Now the "default" marketing platform for WooCommerce. What?!
Well, why not do it is the answer? Who else are they going to pick, Mailchimp? (asking for a friend).
* 15k shared customers today, but WooCommerce has 4 million customers globally. This is a super-smart deal even if it is more downmarket. Why not scoop and score?
* Only potential downside risk is distraction (which is real): you are who you serve most.
Expanding Sideways: Growth within customers and across customers
* Average Revenue Per Customer Up 15% Y/Y indicating growth within accounts.
If I had to target a few risks for Klaviyo:
* As people adopt SMS, their gross margins decrease. This is currently their highest upsell product.
* Not super-clear that Enterprise is interested in adopting them for SMS (does not seem like they will report it out going forward)
* Woo could pull them further down-market, alienating the needs of their top customers. Shopify has (mostly) been able to avoid this problem but it's a tricky balance not every company can find.
On the upside, however, there is still a lot to like here. They could end up being a bigger business than Shopify if they play their cards right. Seems to this observer that they have more easily monetizable product expansion opportunities in other platforms, other verticals and data. All areas which are somewhat out of reach to Shopify itself. Still founder-led
Probably one of my stealth long-term companies to watch, to the extent that a $1B+ run-rate ARR company like Klaviyo can be considered stealth.
