Klaviyo (NYSE: KVYO) reported fiscal Q2 2026 revenue of $370.6 million, up 26% from $293.1 million a year earlier, while its GAAP diluted loss per share narrowed to $0.03 from $0.09. Enterprise, international and multi-product adoption supported growth, and stronger cash generation accompanied a smaller GAAP operating loss despite lower gross margin.
Core earnings results
Gross profit increased more slowly than revenue because cost of revenue rose about 42%, reducing GAAP gross margin by approximately three percentage points. However, operating expenses grew only about 12%, allowing the GAAP operating loss to narrow by roughly half.
Cash generation also improved materially. Operating cash flow reached $93.9 million, and free cash flow increased to $82.9 million from approximately $48.4 million a year earlier.
| Metric | Q2 FY2026 | Q2 FY2025 | Year-over-year change |
|---|---|---|---|
| Revenue | $370.6 million | $293.1 million | +26% |
| GAAP gross profit | $269.1 million | $221.9 million | +21% |
| GAAP gross margin | 73% | Approximately 76% | Down about 3 pts |
| GAAP operating loss | $(15.0) million | $(31.3) million | Loss narrowed 52% |
| GAAP net loss | $(8.8) million | $(24.3) million | Loss narrowed 64% |
| GAAP diluted EPS | $(0.03) | $(0.09) | Loss per share narrowed |
| Non-GAAP operating income and margin | $50.9 million; 14% | Not provided | — |
| Non-GAAP diluted EPS | $0.19 | Not provided | — |
| Operating cash flow | $93.9 million | $55.7 million | +68% |
| Free cash flow | $82.9 million | Approximately $48.4 million | +71% |
Free cash flow is a non-GAAP measure defined as operating cash flow less property and equipment purchases, capitalized software development costs and purchases of other non-current assets.
Business and operating performance
Klaviyo ended the quarter with more than 205,000 customers. The number of customers generating more than $50,000 in annual recurring revenue increased 36% to 4,477, indicating continued expansion among larger accounts.
Revenue outside the Americas grew 35%, faster than consolidated revenue. Multi-product adoption also contributed: customers using at least three products represented 20% of ARR. Net revenue retention was 109%, one percentage point higher than a year earlier, supported by expansion, cross-selling and retention.
During the quarter, Klaviyo released Composer, expanded Customer Agent and made K:Social generally available. It also agreed to acquire the team and technology of AI-native customer success company Agency. No financial terms or expected contribution from that transaction were provided.
Gross-margin pressure was offset by operating leverage
Cost of revenue rose to $101.5 million from $71.2 million, outpacing revenue growth and causing gross margin to decline. The company did not provide a specific explanation for this increase, making cost-of-revenue trends an important item to monitor.
Below the gross-profit line, spending grew more slowly than revenue. Selling and marketing expense increased about 10%, research and development rose approximately 27%, and general and administrative expense declined about 2%. As a result, the GAAP operating margin improved to negative 4% from approximately negative 11% despite the lower gross margin.
The distinction between GAAP and non-GAAP profitability remains significant. Klaviyo reported a $15.0 million GAAP operating loss but $50.9 million of non-GAAP operating income. Disclosed quarterly expenses included $51.3 million of stock-based compensation and $13.2 million of prepaid marketing expense amortization, both of which are among the items the company excludes from its non-GAAP measures. Klaviyo notes that stock-based compensation is expected to remain a significant recurring expense.
Cash flow and balance sheet
Operating cash flow exceeded the company’s GAAP net loss by a wide margin. Non-cash expenses, including stock-based compensation and amortization, contributed to the difference, while increases in accounts payable, accrued expenses and deferred revenue also supported cash flow. Higher deferred contract acquisition costs and accounts receivable were partial offsets.
Cash and cash equivalents ended the quarter at $832.6 million, down from $1.065 billion at December 31, 2025. Klaviyo spent $233.6 million on share repurchases during Q2, producing a $234.8 million net financing cash outflow. Positive operating cash flow partly offset that use of cash, leaving total cash, cash equivalents and restricted cash down $152.0 million during the quarter.
Fiscal 2026 guidance
Klaviyo raised its full-year revenue outlook to $1.526 billion-$1.534 billion, representing expected growth of 24%. The prior revenue range was not included in the supplied release, so the size of the increase cannot be quantified.
Q3 guidance calls for 21.5%-22.5% revenue growth, below the 26% recorded in Q2. The company nevertheless expects a 14% non-GAAP operating margin for the full year.
| Metric | Q3 FY2026 guidance | FY2026 guidance | Update |
|---|---|---|---|
| Revenue | $377 million-$381 million | $1.526 billion-$1.534 billion | Full-year outlook raised |
| Year-over-year revenue growth | 21.5%-22.5% | 24% | Q3 growth below Q2’s 26% |
| Non-GAAP operating income | $40 million-$43 million | $212 million-$218 million | Prior comparison not provided |
| Non-GAAP operating margin | 10.5%-11% | 14% | Prior comparison not provided |
| Fully diluted shares | 286 million | 293 million | Prior comparison not provided |
Klaviyo did not reconcile its non-GAAP operating income guidance to GAAP because it said certain excluded items cannot be reasonably predicted.
Recent insider transactions
The supplied insider data identifies three recent sales with transaction prices and values. It also lists several zero-price director stock awards without share quantities and some transactions without descriptions; those incomplete records are excluded from the quantified table.
| Date | Insider | Position | Transaction | Shares | Value |
|---|---|---|---|---|---|
| July 16, 2026 | Amanda Whalen | CFO | Sale at $17.75 per share | 14,000 | $248,500 |
| June 18, 2026 | Amanda Whalen | CFO | Sale at $13.23 per share | 14,000 | $185,220 |
| May 26, 2026 | Andrew Bialecki | CEO | Sale at $14.61 per share | Approximately 212,529 | $3.1 million |
The six-month aggregate data classified 3.90 million shares as purchases and 2.35 million as sales, for a net 1.55 million purchase-classified shares. Those classifications may include equity awards, so they should not automatically be interpreted as discretionary open-market purchases. The records also do not disclose the motives behind individual sales.
Risks investors should monitor
- Slower near-term growth: Q3 guidance implies revenue growth of 21.5%-22.5%, compared with 26% in Q2. Sustaining enterprise, international and multi-product momentum will be important to the full-year outlook.
- Gross-margin pressure: Cost of revenue grew faster than sales and reduced GAAP gross margin by about three percentage points. Continued pressure could offset some of the operating leverage achieved in other expenses.
- GAAP and adjusted profitability remain far apart: Stock-based compensation is significant and recurring, making GAAP results and potential shareholder dilution important alongside non-GAAP margins.
- Capital allocation reduced liquidity: The $233.6 million quarterly repurchase exceeded Q2 free cash flow and was the main financing use of cash during the period.
- Product and acquisition execution: The autonomous CRM strategy depends on adoption of newer AI products and successful execution of the planned Agency team and technology acquisition.
Summary
Klaviyo’s second quarter combined 26% revenue growth with improving operating leverage and cash generation, although cost-of-revenue growth compressed gross margin. Larger customers, international expansion and broader product adoption supported the quarter, while the raised full-year revenue outlook signals continued growth. The main follow-up areas are Q3 growth moderation, gross-margin trends, the gap between GAAP and adjusted profitability, and the cash impact of capital allocation.
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