Klaviyo (KVYO) Q2 2025: International Revenue Jumps 42% as AI-Driven CRM Expands Upmarket
Klaviyo’s Q2 revealed a decisive international acceleration, with 42% revenue growth outside North America, alongside deepening AI integration across its B2C CRM stack. The company’s unified platform and data-first strategy are driving adoption among both SMBs and larger enterprises, while product innovation in AI-powered service and analytics is unlocking new cross-sell and expansion opportunities. With raised guidance and sustained customer momentum, Klaviyo’s next phase hinges on scaling its autonomous CRM vision globally and executing in the enterprise segment.
Summary
- International Expansion Surges: EMEA and APAC growth outpaced North America, validating localization and channel investments.
- AI-First CRM Drives Differentiation: Klaviyo’s integrated data platform and autonomous agent vision are resonating upmarket.
- Guidance Raised on Broad-Based Strength: Raised outlook reflects robust demand and cross-segment adoption of new products.
Performance Analysis
Klaviyo delivered 32% year-over-year revenue growth, with international markets a clear standout. International revenue climbed 42%, and EMEA grew 47% YoY, supported by new language rollouts and WhatsApp channel support. This momentum was broad-based, with notable strength in Norway, Germany, and Spain, each posting over 90% ARR growth from new business. Customer additions remained robust, with total customers rising 17% YoY to over 176,000, and the high-value $50K+ ARR cohort expanding 38% YoY, a record for net new additions in this segment.
Gross margin remained steady quarter-over-quarter at 76%, as infrastructure optimization offset SMS mix headwinds. While SMS growth weighed on margins, infrastructure investments began yielding efficiency gains, and new products like marketing analytics are expected to provide positive margin impact over time. Free cash flow was strong at $59 million, reflecting disciplined expense management and improved collections. Non-GAAP operating margin landed at 14%, above guidance, driven by revenue upside and operating leverage in R&D and G&A.
- International Outperformance: Localization, new channels, and local go-to-market execution fueled outsized growth abroad.
- Enterprise and Mid-Market Penetration: Larger customer expansion and cross-sell of new products accelerated, with the $50K+ ARR cohort now a key growth engine.
- Customer Expansion and Retention: Net revenue retention held at 108%, underpinned by strong gross retention, email expansion, and early returns from new service and analytics products.
Revenue momentum was supported by both new lands and expansion, as customers consolidated onto Klaviyo’s unified platform and adopted additional modules.
Executive Commentary
"Our platform addresses a critical market gap by providing consumer brands with a single integrated data platform designed for their unique, high-volume, fast-paced needs. We unify the pre- and post-buying experience across marketing and customer service, driven by insights from analytics, delivering inherent speed, simplicity, and flexibility."
Andrew Bialecki, Co-founder and CEO
"We are delivering on our goal of achieving sustainable, efficient, long-term growth through adding new customers, expanding with existing customers, international expansion, and moving up market. Our single unified platform for marketing, service, and analytics positions us well to deliver unmatched value to our customers, and establishes a solid foundation for continued innovation and growth in the future."
Amanda Whalen, Chief Financial Officer
Strategic Positioning
1. AI-First Unified CRM Platform
Klaviyo’s vertically integrated, data-first approach is now foundational to its go-to-market. The platform’s real-time data processing, AI-driven segmentation, and omni-channel orchestration are designed for B2C scale, enabling brands to consolidate fragmented “Frankenstacks” into a single system. The rollout of channel affinity, multi-touch attribution, and the MCP server—allowing direct integration with large language models—cements Klaviyo’s role as a system of record and action for consumer engagement.
2. Service and Conversational Agent Expansion
Service suite innovation is positioned as a major growth lever. The launch of AI-powered Helpdesk and conversational agents (currently in private beta) aims to redefine customer service from reactive support to proactive, personalized AI assistance across all touchpoints. Management views the total addressable market (TAM) for service as at least equal in size to marketing automation, with significant potential for incremental revenue per customer via cross-sell and LTV (lifetime value) expansion.
3. International Growth and Localization
International remains a top growth vector, with new language support, local channel integrations (WhatsApp, multilingual campaigns), and region-specific go-to-market investments. The company is seeing initial traction with both SMBs and enterprise customers in EMEA and APAC, and is investing in data residency and partner networks to deepen market penetration.
4. Enterprise and Mid-Market Move-Up
Upmarket momentum is accelerating, as Klaviyo’s consolidated data platform and autonomous CRM narrative resonate with CIOs and digital leaders. Custom objects, mobile in-app messaging, and scalable infrastructure are being prioritized to meet enterprise requirements. The company is adding experienced enterprise sales talent and deepening partner engagement to drive further penetration.
5. Product-Led Growth and Customer Expansion
Product-led initiatives are driving efficient customer acquisition and expansion, especially among entrepreneurs and SMBs. Process improvements—like earlier payment steps and optimized onboarding—are boosting free-to-paid conversion. Expansion within existing customers, especially as they adopt new modules, is a core growth engine, evidenced by record expansion in the $50K+ ARR cohort.
Key Considerations
Klaviyo’s Q2 results highlight a business at an inflection point—scaling internationally, deepening its product stack, and positioning for autonomous CRM leadership.
Key Considerations:
- International Execution: Sustained double-digit growth abroad is increasingly critical for long-term upside and margin diversification.
- Autonomous CRM Vision: The shift toward AI-driven, automated customer engagement is a secular tailwind, but requires ongoing innovation and successful enterprise adoption.
- Gross Margin Dynamics: SMS mix is a margin headwind, but infrastructure efficiencies and higher-margin analytics/service modules could offset over time.
- Cross-Sell and Product Adoption: Early signs of multi-product adoption suggest significant LTV expansion potential, but success depends on continued product integration and customer education.
Risks
Gross margin pressure from SMS volume and new channel launches could persist if higher-margin products do not scale as anticipated. Enterprise execution risk remains as Klaviyo moves upmarket, facing entrenched legacy vendors and longer sales cycles. Macro uncertainty and potential shifts in digital marketing budgets may impact customer expansion, though Q2 saw no material macro drag. International scaling brings regulatory, localization, and competitive challenges, especially as new geographies come online.
Forward Outlook
For Q3, Klaviyo guided to:
- Revenue of $297 to $301 million (26% to 28% YoY growth)
- Non-GAAP operating income of $32.5 to $35.5 million (11% to 12% margin)
For full-year 2025, management raised guidance:
- Revenue of $1.203 billion (27% to 28% YoY growth)
- Non-GAAP operating income of $144 to $150 million (12% margin)
Management noted reduced prudence in guidance due to robust demand, but maintained some caution given the dynamic macro. Seasonality is expected to moderate, with Q4 less spiky due to profile enforcement changes.
- Continued investment in international and enterprise sales capacity
- Ongoing product innovation in AI-powered service and analytics
Takeaways
Klaviyo’s Q2 demonstrates a model firing on multiple growth cylinders, with international, enterprise, and AI-first product innovation all contributing to upside. The company’s ability to deliver a unified, data-driven platform is resonating in a market seeking to consolidate fragmented tech stacks and automate engagement. Margin dynamics remain a watchpoint, but early signs of higher-value product adoption are promising.
- International and Enterprise Are Now Core Growth Engines: Localization and upmarket moves are driving both new customer lands and expansion, setting the stage for further scale.
- AI-Driven Product Expansion Is Gaining Traction: New service and analytics modules are showing early signs of cross-sell and LTV expansion, with significant TAM ahead.
- Margin Mix and Macro Remain Key Watchpoints: Execution on higher-margin products and continued resilience in customer budgets will be critical for sustained profitable growth.
Conclusion
Klaviyo’s Q2 results underscore a business executing on multiple strategic fronts—international growth, AI-first product expansion, and upmarket penetration. The raised outlook and robust customer momentum reflect both strong execution and secular tailwinds, but future upside depends on scaling autonomous CRM capabilities and deepening enterprise inroads.
Industry Read-Through
Klaviyo’s results highlight a decisive shift in the marketing automation and CRM sector toward unified, AI-powered platforms capable of serving both SMBs and enterprises. The rapid adoption of conversational AI, channel affinity, and omni-channel orchestration is setting a new bar for customer engagement, with legacy vendors increasingly vulnerable to displacement. International execution and localization are becoming table stakes, as global brands demand local language, channel, and compliance support. For peers and adjacent SaaS providers, the accelerating convergence of marketing, service, and analytics into a single data-driven stack signals a new phase of competitive intensity and platform consolidation.