What is Klaviyo
Klaviyo is a marketing automation platform that automates eCommerce SMS and email marketing to help businesses acquire, retain and grow their customers by sending marketing emails.
It's built for Shopify, BigCommerce, and stores and has a lot of advanced features such as email segmentation, email automation, pre-built reports, and drip campaigns.
Management/Leadership
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CEO: Andrew Bialecki Prior to founding Klaviyo, Mr. Bialecki served as Chief Technology Officer of RockTech, a sales and marketing software company, from April 2011 to June 2012, Senior Engineer at Performable, a marketing software company, from July 2010 to March 2011, and Lead Engineer at Applied Predictive Technologies, a business analytics software company, from September 2007 to June 2010.
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CFO: Amanda Whalen was appointed chief financial officer last week. Prior to joining Klaviyo, Whalen served as Executive Vice President and Chief Financial Officer of Walmart International. In that role, Whalen was responsible for finance across eight international markets with a revenue of over $90 billion, including the high growth companies Flipkart, PhonePe, and Walmex, the largest publicly traded company in Mexico.
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Director: Jennifer Ceran has served as a member of Klaviyo’s board of directors since May 2021, and also served as our Interim Chief Financial Officer from November 2021 to May 2022. Ms. Ceran previously served as Chief Financial Officer of Smartsheet Inc., a productivity and project management software development company, from September 2016 to January 2021. Prior to joining Smartsheet, Ms. Ceran served as Chief Financial Officer at Quotient Technology, Inc., a marketing platform company, from September 2015 to September 2016, and as Vice President of Finance at Box, Inc., a cloud content management platform, from October 2012 to September 2015. From April 2003 to August 2012, Ms. Ceran served in various leadership capacities at eBay Inc., a global commerce and consumer payment platform, including as Vice President of Finance. Ms. Ceran currently serves as a director at Riskified Ltd., NerdWallet, Inc., and various private companies, and is a former director at Okta, Inc. and Plum Acquisition Corp I.
You can find the rest of the management here, if interested. https://investors.klaviyo.com/governance/board-of-directors/default.aspx
They were listed almost 1 year ago at $30 a share and have recently climbed back up to $31/share.
Financials
Based on the quarterly report for the period that ended June 30:
- Revenue: Total revenue of $222.2 million, up from total revenue of $164.6 million in the second quarter of 2023, representing year-over-year growth of 35%.
- Gross profit: Gross profit of $171.9 million, representing a gross margin of 77%, compared to gross profit of $127.1 million in the second quarter of 2023, representing a gross margin of 77%.
- Non-GAAP gross profit: Non-GAAP gross profit of $174.7 million, representing a non-GAAP gross margin of 79%, compared to non-GAAP gross profit of $127.1 million in the second quarter of 2023, representing a non-GAAP gross margin of 77%.
- Operating (loss) income: Operating loss of $(14.1) million, representing operating margin of (6)%, compared to operating income of $7.0 million in the second quarter of 2023, representing an operating margin of 4%.
- Balance sheet and cash flow: Cash, cash equivalents, and restricted cash as of the end of the second quarter was $794.6 million. Cash from operating activities was $40.9 million, representing a margin of 18%. Free cash flow for the second quarter was $37.1 million, representing free cash flow margin of 17%.
- They also have a ratio of 8:1 in terms of total current assets to total current liabilities. Meaning they can payoff their short term debt 8x. This is good news.
Id also like to add an investment piece they have “We have excluded the impact of the Shopify investment option of 15,743,174 shares at $88.93 per share as it was out of the money as of June 30, 2024. The investment option expires on July 28, 2030.”
They have a phat relationship with Shopify and are expecting to grow with them and capitalize on their company growth.
All of this can be found on their earnings report: https://investors.klaviyo.com/financials/sec-filings/default.aspx
Good News
Expanded SMS offering to 12 countries with availability in Austria, Switzerland and Spain.Announced new integrations with Toast, BazaarVoice, TikTok, and Pinterest, adding to the company's more than 350 third-party integrations.New and expansion deals closed with Samsonite, Herschel Supply Company, and Barstool Sports and others during the quarter ended June 30, 2024.Over 151,000 customers were using Klaviyo to drive their own revenue growth as of June 30, 2024, compared to over 130,000 customers as of June 30, 2023.
Increased penetration up market, ending the quarter with 2,386 customers generating over $50,000 of ARR, compared to 1,458 at the end of the second quarter of 2023, an increase of 64% year-over-year. Also good to note this is the highest number of greater than 50,000 ARR customers that they have in their company's history.
According to Klaviyo's own data – more than 20,000 brands have switched from Mailchimp to Klaviyo (note Mailchimp was acquired by intuit back in 2021).
Klaviyo virtually integrates with every eCommerce platform and app you'll ever need. It has over 200+ pre-built integrations to customer support tools, SMS tools, loyalty programs, user-generated content, subscription tools, payments, and virtually any app you have in your tech stack.
Price Targets
Needham: $40 (9/4/24)
Barclays: Overweight ($32) (8/8/24)
Keyblanc: ($33) (8/8/24)
Financial Outlook
Revenue: Q3 (225M) -> Q4 (910M)
Non-GAAP: Q3 (21.5M) -> Q4 (103M)
Their spending on R&D and G&A were both down by 100+ basis points on their recent earnings report. As they increased their spending on Sales and Marketing which they already stated would be happening in the previous quarters.
TLDR: KVYO good deals, solid growth projections, great leadership/board, entry price slightly higher than IPO price, starting to dominate its industry and acquiring customers from Mailchimp.
This is just DD I have no positions currently, but I AM looking to acquire shares, and most likely calls for the next earnings in November.
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