Klaviyo, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing. Klaviyo provides subscription-based software for personalized customer engagement across email, SMS, and push, with reviews and customer data platform add-ons. Its customer base is concentrated in retail and e-commerce.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $698.1 million | $472.7 million |
| Revenue growth | 47.7% | 62.7% |
| Gross profit / margin | $520.2 million / 74.5% | $344.7 million / 72.9% |
| Operating loss / margin | $330.6 million / (47.4%) | $55.0 million / (11.6%) |
| Net loss / margin | $308.2 million / (44.2%) | $49.2 million / (10.4%) |
| Cash from operating activities | $119.4 million | $(23.6) million |
| Cash, cash equivalents, and restricted cash | $739.7 million | $386.9 million |
| Debt | None | None |
FY2023 net loss included $340.8 million of stock-based compensation expense, primarily from vesting of pre-IPO double-trigger awards after the IPO. Total stock-based compensation expense was $342.1 million. The company reported $24.1 million of interest income, up from $5.5 million in FY2022, mainly reflecting higher rates and greater cash balances following the IPO.
At year-end, working capital was $672.9 million. Operating cash flow benefited substantially from non-cash expenses, especially stock compensation. Investing cash outflow was $9.4 million; financing cash inflow was $242.7 million, including $320.1 million of net IPO proceeds, partly offset by $81.6 million of employee tax payments related to equity awards.
Changes and operating indicators
- Revenue rose 47.7%; about 68% of the increase came from existing customers and 32% from new customers. Management estimated the September 2022 price increase contributed a low-double-digit increase in incremental FY2023 revenue dollars.
- Gross margin improved to 74.5% from 72.9%, reflecting revenue growth and infrastructure cost efficiencies. Management expects SMS-related sending costs to pressure gross margin modestly as SMS usage increases.
- Operating expenses increased sharply, including IPO-triggered stock compensation. Research and development expense rose to $262.2 million from $104.1 million; selling and marketing rose to $394.4 million from $213.8 million.
- Customers increased to over 143,000 from 119,000. Customers generating over $50,000 of ARR rose 80% to 1,958. Dollar-based net revenue retention declined to 117% from 119%; the filing notes the prior-year price increase had temporarily lifted revenue-based measures.
- Klaviyo reported more than $50 billion of Klaviyo Attributed Value for customers in 2023. This is a company-defined operating metric, not Klaviyo revenue, and is not a forecast.
- The September 2023 IPO generated approximately $320.1 million of net proceeds for the company. The IPO also triggered vesting of pre-IPO equity awards and converted redeemable common stock into Series B shares.
Outlook, risks, and unusual items
The filing provides no specific numerical revenue or earnings guidance. Management describes plans to attract and expand customers, move up-market, expand internationally, and invest in products and new verticals. It expects operating expenses to increase in the near term, including public-company costs and investment in sales, marketing, and product development. Management believes operating cash flows and available resources are sufficient for at least the next twelve months, subject to business performance and cost management.
- Shopify relationship: Approximately 77.7% of ARR came from customers that also use Shopify, although only about 9.4% of new ARR came through the Shopify app store. The seven-year agreement includes revenue-sharing and marketing arrangements. Klaviyo recorded $52.9 million of prepaid marketing expense amortization in 2023 and had $295.4 million of unrecognized marketing expense related to Shopify warrants.
- Commitments: Non-cancellable marketing and service-provider commitments totaled $346.2 million, including $117.7 million due within 12 months. Lease obligations totaled $56.9 million, including $14.4 million due within 12 months.
- Key risks: Competition; dependence on third-party integrations, especially Shopify; customer churn and marketing-budget sensitivity; privacy, data-protection, messaging-consent, cybersecurity, and email-deliverability requirements; execution of enterprise and international expansion; and potential margin pressure from SMS costs. The company disclosed past security incidents in 2019 and 2022, but said it was not aware of a cybersecurity incident materially affecting or reasonably likely to materially affect the company as of the filing date.
- Other items: A March 2023 workforce reduction affected approximately 8% of employees and resulted in $7.9 million of restructuring costs. The company reported no material pending legal proceedings. It had $349.2 million of federal and $245.1 million of state net operating loss carryforwards, subject to applicable limitations.
- Governance and ownership: Series B shares carry ten votes per share versus one vote for Series A. Directors, executives, and affiliates held 57.2% of voting power at year-end, concentrating control. The company does not expect to pay dividends in the foreseeable future.
Most important facts to verify
- Whether customer expansion and new-customer growth can sustain revenue growth as the prior price increase rolls out of comparisons and NRR moderates.
- How much of the FY2023 loss reflects IPO-triggered stock compensation, and the expected ongoing expense and dilution from unvested awards.
- Whether gross margin can hold up as SMS usage and associated communication costs rise.
- The durability and terms of the Shopify partnership, given the high ARR overlap with Shopify users and substantial future marketing expense commitments.
- Cash-flow conversion, including the effects of sales commissions, vendor commitments, and working-capital changes.
- Progress in enterprise sales, international localization, and expansion beyond retail and e-commerce, alongside privacy, cybersecurity, and deliverability compliance.