Klaviyo (NYSE:KVYO) reported 25% revenue growth for the third quarter of 2026 and raised its full-year forecast, as enterprise customers expanded their use of its marketing platform and adoption of its artificial intelligence tools increased.
Revenue rose to $387.2 million, exceeding the company’s guidance, Chief Financial Officer Erica Smith said on the earnings call. Klaviyo ended the quarter with more than 211,000 customers and surpassed a $1.5 billion annualized revenue run rate, Co-Founder and Co-CEO Andrew Bialecki said.
The company now expects full-year revenue of $1.537 billion to $1.541 billion, an increase of $9 million at the midpoint of its prior forecast. For the fourth quarter, it projected revenue of $421 million to $425 million, representing 21% growth at the midpoint.
Enterprise and multi-product sales grow
Co-CEO Chano Fernández said Klaviyo ended the quarter with 105 customers generating at least $500,000 in annual recurring revenue, up 57% from a year earlier. Customers generating at least $250,000 in annual recurring revenue rose 49% to 390.
Fernández said growth in those enterprise cohorts was weighted somewhat more toward existing customers than new ones, although he highlighted new customer wins including Bagel Brands and Frasers Group. Frasers signed a multi-product, multi-year agreement covering 13 brands, including Sports Direct, Frasers and Harvey Nichols, he said.
Multi-product deals accounted for 43% of new annual recurring revenue in the quarter, up nearly eight percentage points from a year earlier. Customers using three or more products represented 22% of annual recurring revenue, up two points from the prior quarter, Smith said. Fernández added that annual recurring revenue from personalization products grew more than 100% year over year.
International revenue also increased. Revenue outside the Americas grew 32%, while revenue in Europe, the Middle East and Africa excluding the U.K. rose 40%, Smith said. Klaviyo’s European Union data center entered limited availability in October and remains on track for general availability in 2027, according to Fernández.
AI adoption rises, but monetization remains early
Bialecki said daily active accounts for Composer, Klaviyo’s marketing AI agent, more than doubled to over 10,000 in the three weeks following an October release. Weekly usage more than tripled to 18 million credits over that period.
The company is prioritizing adoption and providing free credits to customers, Bialecki said. Daily active Composer accounts represented about 5% of Klaviyo’s daily active accounts, leaving room for broader use. Free accounts using Composer converted to paid plans at about 1.5 times the rate of those not using it, he said.
Management is working to help customers move beyond individual prompts toward scheduled and recurring tasks. Bialecki said scheduled tasks tripled and custom skills doubled in the three weeks after the latest release. Klaviyo also announced embedded partnerships with Shopify and Wix that include Composer.
Adoption of Customer Agent, which is used for customer support, rose nearly 60% quarter over quarter among customers with at least $50,000 in annual recurring revenue, Bialecki said. He expects growth from Composer to come more quickly than growth from Customer Agent, which can require more work to understand customers’ support operations and policies.
Retention, margins and outlook
Net revenue retention was 108% in the third quarter. Smith said gross retention remained steady and expansion in text messaging and cross-selling supported the metric, while the effect of last year’s profile enforcement will continue to weigh on trailing 12-month net revenue retention through the first quarter of 2027.
Smith also said that as more customers buy multiple products in their initial contracts, less of their spending will appear as later expansion. She encouraged investors to assess net revenue retention alongside growth in larger customer cohorts.
Non-GAAP gross margin was 75%, up sequentially as Klaviyo managed cloud infrastructure costs but lower than a year earlier as text messaging made up more of the business. Non-GAAP operating income was $56.9 million, or a 15% margin. The company generated $24.8 million in free cash flow and ended the quarter with $706 million in cash.
Klaviyo completed its previously announced $500 million share repurchase authorization in October, and its board approved an additional $300 million authorization, Smith said. The company expects fourth-quarter non-GAAP operating income of $66.5 million to $69.5 million and full-year non-GAAP operating income of $233 million to $236 million.
Smith said the company expects a fourth-quarter decline in gross margin as text messaging increases during the holiday season. Klaviyo plans to provide its 2027 outlook on its year-end earnings call rather than offer an early forecast this quarter.
About Klaviyo (NYSE:KVYO)
Klaviyo, Inc (NYSE: KVYO) provides a customer data and marketing automation platform designed primarily for businesses that sell online. Its software helps organizations collect, organize and analyze customer information, then use those insights to create personalized marketing and customer engagement campaigns.
The company’s platform supports communication across channels including email, SMS and mobile push notifications. Its products provide tools for audience segmentation, campaign orchestration, automation, analytics and reporting, with capabilities intended to help businesses improve customer acquisition, engagement and retention.
