Klaviyo (KVYO) Q3 2025: AI-Powered Service Adoption Surges, 43% International Growth Unlocks New Runway
Klaviyo’s Q3 results underscore AI-driven product velocity, rapid international expansion, and deepening mid-market traction. Service product adoption is outpacing historical launches, while AI integration is accelerating customer outcomes and platform stickiness. Raised guidance and a bullish multi-year outlook reflect growing confidence in Klaviyo’s ability to be the definitive B2C CRM as legacy replatforming accelerates.
Summary
- AI Integration Drives Product Expansion: Klaviyo’s agentic AI unlocks new marketing and service capabilities, rapidly adopted by customers.
- International Acceleration Sustains Momentum: EMEA and APAC deliver breakout growth as localization and new channels fuel global scale.
- Multi-Product Platform Deepens Customer Stickiness: Over half of ARR now comes from multi-product customers, reinforcing platform consolidation trends.
Performance Analysis
Klaviyo’s Q3 performance highlights robust demand across all growth engines, with record net customer additions and notable expansion in the $50K+ ARR cohort. International revenue surged 43% YoY, marking the sixth consecutive quarter of accelerating growth outside the Americas and now constituting more than 35% of total revenue. The company’s multi-product approach continues to gain traction, as over half of ARR is now attributed to customers using multiple Klaviyo solutions.
Non-GAAP gross margin remained steady at 76%, and operating leverage improved, with non-GAAP operating margin at 14.5%. Free cash flow margin also expanded, reflecting disciplined execution and efficiency gains even as Klaviyo invests heavily in AI and product innovation. The adoption rate for the new Klaviyo Service line outpaced even the historic SMS launch, signaling a strong appetite for integrated marketing and service solutions.
- AI-Driven Upsell: Adoption of agentic AI products is driving measurable increases in campaign performance and customer revenue.
- Mid-Market and Enterprise Penetration: Record 272 net new $50K+ ARR customers, up 36% YoY, demonstrating success in moving up-market.
- Global Channel Expansion: WhatsApp and SMS launches in new geographies are unlocking incremental revenue streams and engagement.
Klaviyo’s rule of 40 performance reached nearly 47%, placing it among the top echelon of public SaaS companies at scale. The platform’s ability to deliver direct, attributable ROI is resonating in a market increasingly focused on efficiency and outcome-based investment.
Executive Commentary
"AI is providing tremendous tailwinds to our mission of bringing businesses and consumers closer together and huge opportunities for our growth. We're rapidly moving towards a world where every business will have access to the technology that can present their products and services in the best possible way, personalized to the individual consumer, and available wherever consumers are, and doing this autonomously through AI with human oversight and intervention where the business wants it, not because it's required."
Andrew Bialecki, Co-Founder and Chief Executive Officer
"There are fewer than 10 public software companies who are growing more than 30%, over $1 billion in revenue run rate, and achieving the rule of 40. We're proud to be among that top performing group. Our growth engines are delivering, and AI is a force multiplier."
Amanda Whalen, Chief Financial Officer
Strategic Positioning
1. Agentic AI as a Platform Differentiator
Klaviyo’s agentic AI—a system of intelligent agents that automate and optimize marketing and service workflows—has become a core differentiator. The Marketing Agent now delivers full campaign creation, with early adopters reporting 24% to 40% lifts in campaign-attributed revenue. Customer Agent and Customer Hub products extend AI-driven engagement across web, chat, SMS, and WhatsApp, making Klaviyo a true omnichannel B2C CRM.
2. International Expansion as a Growth Engine
EMEA and APAC revenues grew 43% YoY, supported by new language rollouts, expanded messaging coverage, and WhatsApp integration. Localized infrastructure and partnerships in key markets (e.g., PrestaShop, Shopware) are extending Klaviyo’s reach and relevance, while global brands like Meshki leverage the platform for both customer engagement and operational decision-making.
3. Multi-Product Adoption Drives Retention and Upsell
Over 50% of ARR now comes from customers using multiple products, deepening platform stickiness and increasing net revenue retention (NRR) to 109%. The Service product line is seeing rapid uptake, with greenfield adoption in Customer Hub and Customer Agent, and competitive displacement in Help Desk. Klaviyo’s pricing model—based on profile, message, and resolution volume—aligns incentives with customer outcomes, not seat count.
4. Mid-Market and Enterprise Momentum
Record additions in the $50K+ ARR cohort and seven-figure renewals with large brands underscore Klaviyo’s successful move up-market. The unified data and application stack is resonating with enterprises seeking to replace fragmented legacy MarTech with a single, AI-powered platform for marketing, service, and analytics.
5. Ecosystem and Open Platform Strategy
Klaviyo’s open architecture and MCP server enable third-party developers and agencies to build custom AI agents and workflows, broadening the platform’s utility and integration into broader commerce and conversational AI ecosystems (e.g., ChatGPT, OpenAI’s ACP, Google’s AP2).
Key Considerations
This quarter’s results reflect Klaviyo’s ability to execute on multiple vectors—AI productization, global expansion, and up-market penetration—while maintaining disciplined financial management. Strategic context is defined by:
Key Considerations:
- AI Monetization Pathways: Early results from Marketing Agent and Customer Agent are driving customer ROI, with pricing pilots for additional AI features set to begin in the coming months.
- Legacy Stack Replacement Cycle: A growing replatforming wave is accelerating, with enterprises seeking unified, AI-native MarTech and service stacks; Klaviyo’s closed-loop architecture is well positioned to capture this shift.
- International Durability: Localization, infrastructure expansion, and regional channel launches are expected to sustain high international growth rates for several years.
- Customer Cohort Expansion: Net new additions in the $50K+ ARR cohort and high retention signal deepening relevance in the mid-market and enterprise segments.
- Outcome-Based Pricing Model: Pricing based on delivered value (profile, message, resolution) aligns with customer outcomes and supports long-term expansion as AI amplifies usage.
Risks
Risks include potential macro-driven budget caution among SMB and mid-market customers, the challenge of scaling new AI-powered products from early adoption to mainstream monetization, and competitive responses from legacy MarTech incumbents accelerating their own AI integration. Execution risk remains as Klaviyo balances rapid innovation with global expansion and maintains high gross margins amid increasing text messaging and infrastructure costs.
Forward Outlook
For Q4, Klaviyo guided to:
- Revenue of $331 to $335 million (23% to 24% YoY growth)
- Non-GAAP operating income of $43.5 to $46.5 million (13% to 14% margin)
For full-year 2025, management raised guidance:
- Revenue of $1.215 to $1.219 billion (30% YoY growth)
- Non-GAAP operating income of $161.8 to $164.8 million (13% to 14% margin)
Management highlighted:
- Continued acceleration from international and mid-market segments
- Early but strong Service adoption, with upside potential as AI-powered products scale
- 2026 baseline revenue growth of at least 21% to 22%, with margin expansion of at least one point
Takeaways
Klaviyo’s Q3 demonstrates a rare combination of high growth, expanding profitability, and accelerating innovation in a competitive SaaS landscape.
- AI as a Force Multiplier: Agentic AI is not only improving customer outcomes but is also driving measurable revenue impact and platform expansion.
- International and Up-Market Expansion: Six quarters of accelerating international growth and record $50K+ ARR cohort additions reinforce the durability of Klaviyo’s growth engines.
- Watch for AI Monetization and Service Scaling: Investors should track the ramp of AI-powered product monetization and the trajectory of Service adoption, as both are positioned to drive outsized incremental growth in 2026 and beyond.
Conclusion
Klaviyo’s Q3 2025 results validate its strategy of AI-led product innovation, platform consolidation, and global scale. With momentum across all core growth engines and raised guidance, Klaviyo is well positioned to lead the next era of B2C CRM as legacy replatforming accelerates and AI-native solutions become the new standard.
Industry Read-Through
Klaviyo’s breakout quarter signals an industry inflection where agentic AI, unified data, and outcome-based pricing are now table stakes for MarTech and customer engagement platforms. The rapid adoption of AI-driven service and marketing agents points to a broader shift away from fragmented, legacy stacks toward integrated, intelligence-driven systems. Vendors not investing in true AI automation, cross-channel orchestration, and open ecosystem integration risk rapid displacement as customers seek measurable ROI and operational simplicity. These dynamics will shape not just MarTech, but the broader SaaS and digital commerce landscapes over the next several years.