Klaviyo, Inc. — Q3 2026 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2026. Unaudited results; dollar amounts below are USD millions unless otherwise noted. Klaviyo provides a subscription SaaS platform for consumer data, marketing, customer service, analytics, and related tools, increasingly incorporating AI.
Financial performance
| Metric | Q3 2026 | Q3 2025 | Nine months 2026 | Nine months 2025 |
|---|---|---|---|---|
| Revenue | $387.2 | $310.9 | $1,115.8 | $883.8 |
| Revenue growth | 24.6% | 26.2% | ||
| Gross profit | $287.4 | $234.7 | $825.4 | $668.7 |
| Gross margin | 74.2% | 75.5% | 74.0% | 75.7% |
| Operating loss | $(4.5) | $(10.8) | $(17.7) | $(65.9) |
| Net income (loss) | $0.7 | $(0.4) | $0.9 | $(38.8) |
| Operating cash flow | $180.8 | $124.8 |
Q3 revenue growth reflected new customers, geographic expansion, greater platform usage—including text and WhatsApp—and new offerings. Management attributed about 60% of Q3 revenue growth to customers acquired in the preceding 12 months and 40% to existing customers. Selling and marketing remained the largest operating expense. Stock-based compensation was $43.2 million for Q3 and $138.3 million year to date.
Cost of revenue rose faster than revenue, driven chiefly by communication-sending costs as text and WhatsApp usage increased, as well as cloud infrastructure and technology costs. Gross margin declined year over year. Operating losses narrowed, but reported net income remained small; lower interest income partly offset operating improvement. The reported per-share amount for Q3 and nine-month 2026 is displayed as “—” in the filing, so a clear per-share value is not provided.
Balance sheet, liquidity and cash flow
- At September 30, 2026, cash, cash equivalents and restricted cash totaled $706.2 million, down from $1,065.6 million at December 31, 2025. This includes $150 million in a high-yield notice deposit requiring 31 days’ notice for withdrawal.
- Working capital was $573.1 million, down from $923.8 million at year-end 2025. Total assets were $1,294.3 million and total liabilities were $428.6 million.
- The company reported no debt. Lease liabilities totaled $134.3 million; undiscounted future lease payments were $166.0 million. Non-cancelable purchase commitments were $775.7 million.
- Nine-month operating cash flow was $180.8 million. Investing activities used $54.6 million, including property and equipment, software development, and acquired intangible assets. Financing activities used $485.7 million, primarily for share repurchases.
- The company repurchased approximately 29.2 million shares year to date. The prior $500 million program was fully completed by the filing date; on November 4, 2026, the board authorized a separate, no-expiration repurchase program of up to $300 million.
Material changes and operating indicators
- Nine-month revenue increased 26.2% year over year, while gross margin declined 1.7 percentage points. Operating loss narrowed by $48.2 million, and the company moved from a $38.8 million net loss to $0.9 million net income.
- Dollar-based net revenue retention was 108%, versus 109% a year earlier; management attributed the decline largely to lapping prior-year pricing changes. Customers generating more than $50,000, $250,000, and $500,000 of ARR grew 33%, 49%, and 57%, respectively, year over year.
- Remaining performance obligations were $352.1 million, of which $313.0 million was expected to be recognized within 12 months.
- In September 2026, the company reduced its workforce by approximately 3% and recorded $3.4 million of restructuring costs. It also acquired Agency AI’s specified software, intellectual property, and assembled workforce for $15.0 million at closing, plus estimated wind-down costs of $2.0 million; the acquired assets are being amortized over a weighted-average period of 0.83 years.
Outlook, risks and contingencies
The filing provides no specific numerical revenue, earnings, or margin guidance. Management expects operating cash flows to be sufficient for liquidity and financing needs for at least the next 12 months, while noting this depends on revenue, cash generation, cost management, and working capital. It expects continued investment in product development, infrastructure, sales and marketing, and international expansion. Management anticipates modest near-term gross-margin pressure as messaging volume and related costs rise; holiday-season usage makes Q4 particularly seasonal.
Key disclosed risks include competition and the pace of AI development; customer retention and growth; dependence on third-party integrations, particularly Shopify; privacy, cybersecurity, and message-deliverability requirements; macroeconomic and marketing-spend conditions; and execution of international and enterprise expansion. The company cited unauthorized third-party access to source code and other credentials in separate incidents in October 2024 and April 2026. Shopify represented approximately 77.9% of ARR at December 31, 2025, according to the filing. The company reported no pending or threatened litigation expected to have a material effect. Disclosure controls were assessed as effective as of September 30, 2026.
Important facts for investors to verify
- Whether customer additions and expansion sustain growth, and how to interpret 108% retention alongside strong growth in larger ARR customer cohorts.
- Whether increased text and WhatsApp usage, infrastructure costs, and holiday seasonality continue to pressure gross margin.
- How operating cash generation compares with substantial repurchases, purchase commitments, lease obligations, and the new $300 million authorization.
- Conversion timing and quality of the $352.1 million remaining performance obligations, and the contribution and amortization effects of the Agency AI acquisition.
- Current status and remediation of the disclosed cybersecurity incidents, and the resilience of key integrations, especially Shopify.