Klaviyo reported strong second-quarter growth while agreeing to acquire the team and technology of Agency, an AI-native customer-success company, to accelerate the development of its autonomous B2C customer relationship management platform.
Agency co-founder and Chief Executive Officer Elias Torres is expected to become Klaviyo’s Chief Product Officer after the transaction closes.
Klaviyo did not disclose the acquisition price, payment structure, expected closing date, or anticipated financial contribution from Agency.
The wording of the announcement indicates that Klaviyo is acquiring Agency’s team and technology rather than necessarily purchasing the entire corporate entity.
Management expects Agency’s technology and employees to expand what Klaviyo’s AI agents can accomplish across marketing, customer service, and other consumer-facing workflows.
The deal also places Torres in charge of Klaviyo’s broader product organization, giving the Agency transaction strategic importance beyond the addition of an individual AI product.
Klaviyo positions itself as an autonomous B2C CRM that combines customer data, intelligence, marketing, and service capabilities.
The company believes AI agents require detailed, real-time customer context to provide accurate and personalized consumer experiences.
Klaviyo said it has spent more than a decade building the data infrastructure needed to provide that context at scale.
Management pointed to the early adoption of Composer and Customer Agent as evidence that brands are interested in using AI to automate more customer interactions.
The Agency agreement accompanied three major product announcements during the quarter.
Klaviyo released Composer, enhanced Customer Agent, and launched K:Social for general availability.
The Customer Agent enhancements included a Conversational Agent Builder, Custom Skills, Simulations, and application programming interface access for developers.
Klaviyo also expanded its broader AI ecosystem through integrations with Anthropic’s Claude and Figma.
The company became a partner for Shopify Sidekick and Stripe Projects, providing additional channels through which customers may use Klaviyo’s technology.
The product expansion supports management’s strategy of moving beyond marketing automation toward an integrated platform capable of autonomously executing customer interactions.
Klaviyo generated $370.6 million in second-quarter revenue, increasing 26% from $293.1 million during the prior-year period.
The quarterly result brought the company’s annualized revenue run rate to nearly $1.5 billion.
Revenue growth was supported by enterprise customers, international expansion, product cross-selling, and continued adoption among smaller brands.
Klaviyo added Warner Music Group, the San Francisco 49ers, and Claire’s as customers.
The company also expanded its relationship with The Body Shop across additional regions.
Total customers exceeded 205,000 at the end of June.
The number of customers generating more than $50,000 in annual recurring revenue increased 36% to 4,477.
Those higher-value customers represented approximately 2.2% of Klaviyo’s total customer count.
The calculation suggests that a relatively small but rapidly expanding group of larger customers is becoming increasingly important to Klaviyo’s growth.
Klaviyo defines a customer as a distinct paid subscription.
Separate divisions, subsidiaries, or brands within one organization may be counted as different customers when they maintain separate subscriptions.
International revenue continued growing faster than the company overall.
Revenue outside the Americas increased 35% year over year, compared with companywide growth of 26%.
Klaviyo also held its largest K:LDN event to date as it continued expanding its international presence.
Existing customers continued increasing their spending with the company.
Dollar-based net revenue retention reached 109%, increasing one percentage point from the prior-year period.
Klaviyo attributed the improvement to customer expansion, cross-selling, and strong retention.
Multi-product adoption remains an important growth opportunity.
Customers using three or more Klaviyo products generated 20% of the company’s annual recurring revenue.
That means most ARR still comes from customers using fewer than three products, leaving the company with a substantial opportunity to sell additional marketing, analytics, service, social, and AI capabilities into its existing customer base.
Klaviyo also improved employee productivity.
Annualized revenue per employee increased 28%, exceeding the company’s 26% revenue growth rate.
Management said it continued converting revenue growth efficiently while making strategic investments in expansion.
Reported gross profit increased approximately 21% to $269.1 million.
However, GAAP gross margin declined to 72.6% from 75.7%.
Non-GAAP gross margin also contracted to 73.4% from 76.4%.
The company reported a $15 million operating loss, improving from a $31.3 million loss during the prior-year quarter.
GAAP operating margin improved to negative 4% from negative 10.7%.
Klaviyo generated $50.9 million of non-GAAP operating income, compared with $40.9 million a year earlier.
Non-GAAP operating margin declined slightly to 13.7% from 14%.
The $65.9 million difference between the reported operating loss and non-GAAP operating income included $51.3 million of stock-based compensation, $13.2 million of prepaid-marketing amortization, and $1.3 million of employer payroll taxes related to employee stock transactions.
Klaviyo said stock-based compensation will continue to represent a significant recurring expense and an important component of employee compensation.
Quarterly net loss narrowed to $8.8 million, or $0.03 per share, from $24.3 million, or $0.09 per share.
Non-GAAP net income increased to $57.1 million from $47.9 million.
Non-GAAP diluted EPS rose to $0.19 from $0.16.
Cash generation remained considerably stronger than GAAP earnings.
Operating cash flow increased approximately 68% to $93.9 million from $55.7 million.
Free cash flow rose approximately 40% to $82.9 million from $59.3 million.
Free-cash-flow margin expanded to 22.4% from 20.2%, while operating cash-flow margin increased to 25.3% from 19%.
Klaviyo spent $233.6 million repurchasing shares during the quarter, approximately 2.8 times the amount of free cash flow generated.
First-half share repurchases reached $333.6 million, compared with $101.4 million of free cash flow.
Cash and cash equivalents declined to $832.6 million from approximately $1.06 billion at the end of 2025.
The company remained debt-free apart from lease obligations and other operating liabilities disclosed on its balance sheet.
Klaviyo raised its full-year revenue guidance following the second-quarter performance.
The company now expects 2026 revenue of between $1.526 billion and $1.534 billion, representing approximately 24% growth.
Full-year non-GAAP operating income is expected to reach between $212 million and $218 million, with a non-GAAP operating margin of approximately 14%.
Third-quarter revenue is expected to range from $377 million to $381 million, representing growth of between 21.5% and 22.5%.
Non-GAAP operating income is projected at $40 million to $43 million, with a margin of between 10.5% and 11%.
The Agency transaction strengthens Klaviyo’s effort to make AI agents a central layer of its platform.
However, the financial effect remains uncertain because Klaviyo has not disclosed the deal’s value, Agency’s revenue, integration costs, employee count, or expected contribution to future growth.
The long-term outcome will depend on whether Klaviyo can integrate Agency’s technology and team, expand the functionality of Customer Agent and Composer, and convert greater AI usage into additional customer spending and stronger retention.
“Software and the rise of AI agents are transforming consumer experience. But agents are only as good as the context behind them, and we’ve spent more than a decade building the real-time infrastructure that delivers that context at scale.”
“The adoption we’ve seen of Composer and Customer Agent is proof that it works. Bringing on Agency’s team will accelerate what Klaviyo’s agents can do as we continue to build the autonomous B2C CRM.”
Andrew Bialecki, Co-Founder And Co-Chief Executive Officer Of Klaviyo
“Our autonomous B2C CRM strategy is landing as brands of all sizes around the globe consolidate onto Klaviyo.”
“We closed the quarter at a nearly $1.5 billion annualized run rate, with Q2 revenue growth of 26% year over year, supported by broad-based strength across enterprise, international, and multi-product.”
“We are once again raising our full-year revenue outlook and continuing to invest strategically in growth.”
Amanda Whalen, Chief Financial Officer Of Klaviyo
