Klaviyo Lifts Guidance After 32% Revenue Growth: Margin Expansion and Large-Customer Momentum Stand Out
Q3 Revenue Up 32% and Customer Count Surges Past 183,000
Klaviyo (NYSE: KVYO) continues its rapid ascent in the B2C CRM market, reporting $310.9 million in third quarter revenue—a 32% year-over-year jump. The company also boosted its full-year revenue guidance to $1.215-$1.219 billion, now projecting a 30% annual increase. Over 183,000 customers now use Klaviyo, up from 157,000 last year, while large customer growth is especially notable: the company closed Q3 with 3,563 customers generating over $50,000 in ARR, a 36% jump from a year ago.
| Q3 FY25 Metric | Value |
|---|---|
| Revenue | $310.9M |
| Year-over-Year Revenue Growth | 32% |
| Gross Profit (GAAP / Non-GAAP) | $234.7M / $237.1M |
| Gross Margin (GAAP / Non-GAAP) | 76% / 76% |
| Operating Loss (GAAP) | $(10.8M) |
| Non-GAAP Operating Income | $45.0M |
| Non-GAAP Operating Margin | 14% |
| Net Retention Rate (NRR) | 109% |
| Large Customers ($50k+ ARR) | 3,563 |
| Free Cash Flow | $47.1M |
| Cash from Operating Activities | $54.8M |
Enterprise Growth and International Expansion Fuel Performance
The step-change in customer base—both in number and average spend—comes as Klaviyo pushes deeper into mid-market and enterprise territory. The dollar-based net revenue retention rate (NRR) of 109% reflects continued expansion with existing customers. International momentum is clear as well, with EMEA and APAC revenue up 43% year-over-year, further diversifying Klaviyo’s growth drivers.
Profitability Metrics Strengthen with Rising Non-GAAP Income
Klaviyo’s gross margin remained stable at 76%, supporting improved bottom-line results. Non-GAAP operating income grew to $45 million for Q3, representing a healthy 14% operating margin, while free cash flow of $47.1 million yielded a free cash flow margin of over 15%. For comparison, Klaviyo reported a non-GAAP operating margin of 14.3% and free cash flow margin of 14.6% a year ago, suggesting operational leverage is being maintained or modestly expanding as the business scales.
| Key Profitability Metrics | Q3 FY25 | Q3 FY24 |
|---|---|---|
| Non-GAAP Operating Margin | 14% | 14.3% |
| Free Cash Flow Margin | 15.1% | 14.6% |
| Non-GAAP Net Income Per Share (Diluted) | $0.18 | $0.15 |
Product Expansion and AI Investment Position Klaviyo for Future Upside
The launch of K:Service (an AI-driven customer service platform) and Marketing Agent (an autonomous AI teammate for campaign management) illustrates Klaviyo’s aggressive push into agentic automation. These initiatives align with broader industry trends toward AI-enhanced marketing, potentially setting the stage for accelerated market share gains.
The company’s flagship customer event, K:BOS, drew more than 1,400 attendees, underlining Klaviyo’s rising profile with major brands. Key client wins like Rhone, Proper Hotels, and UrbanStems further reinforce its positioning with both new and expanded accounts.
Raised Guidance Signals Confidence: Full-Year Revenue Now Seen Up 30%
| FY25 Guidance | Low | High |
|---|---|---|
| Revenue ($M) | 1,215 | 1,219 |
| Year-over-Year Growth | 30% | |
| Non-GAAP Operating Income ($M) | 161.8 | 164.8 |
| Non-GAAP Operating Margin | 13% | 14% |
| Fully Diluted Shares Outstanding (M) | 306 | |
Balance Sheet Remains Strong Amid Scaling
Klaviyo finished Q3 with $980 million in cash and equivalents and no preferred stock, providing ample firepower for continued investment and strategic flexibility. Accounts receivable and prepaid expenses both rose, consistent with rapid revenue growth and ongoing business development activity. The total estimated fully diluted shares now stand at 324.4 million, accounting for warrants, RSUs, and options.
Key Takeaway: Durable Growth, Expanding Margins, and Strong Guidance Signal Ongoing Strength
With 32% revenue growth, accelerating large-customer adoption, and a strong cash position, Klaviyo enters the next quarter in a position of strength. Stable-to-improving non-GAAP margins and increased guidance signal confidence in execution. Investors and analysts will be watching the company's AI-driven product rollout and large-account traction for further signs that Klaviyo can sustain its upward momentum as it matures beyond its initial hyper-growth phase.
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