Takeaways from Klaviyo’s IPO Filing

Klaviyo is a marketing automation software company. Its SaaS platform allows businesses to market to customers via SMS text and email. It’s been a private company since it was founded in 2012 and has raised over $770 million in funding. In 2021, Klaviyo raised $320 million at a $9.5 billion valuation. Friday it filed its draft S-1 IPO filing to become a public company.

Here are a few things I noticed in the S-1:

  • SaaS platform that “enables business users of any skill level to harness their data in order to send the right message at the right time across email, SMS, and push notifications, more accurately measure and predict performance, and deploy the specific actions and campaigns that drive the highest impact” (page 1)
  • 1,548 employees (page 22)
  • 77.5% of annual recurring revenue (ARR) derived from customers who use Shopify’s platform (page 24)
  • Transitioning from majority month-to-month SMB customers to enterprise customers with longer contractual revenue agreements (page 28)
  • Federal and state net operating loss carryforwards of $199.2 million and $118.6 million, respectively (page 39)
  • Customer counts (page 77):
    -2014: surpassed 100 customers 
    -2016: surpassed 1,000 customers
    -2018: surpassed 10,000 customers
    -2023: surpassed 130,000 customers
  • 1,458 customers each generating over $50,000 ARR (page 78)
  • Dollar-based net revenue retention rate of 119% as of June 30, 2023 (page 79)
  • Sold 2.9 million shares for ~$100 million to Shopify on July 28, 2022 (page 156)
  • Fees paid to Shopify per revenue sharing agreements (page 157):
    -2020: $5.2 million
    -2021: $7.8 million
    -2022: $16.2 million
  • 7-year collaboration agreement signed July 28, 2022, with Shopify: Klaviyo is recommended email provider for all “Shopify Plus Merchants” (page 157)
  • Shopify issued warrants to purchase an additional 15.7 million shares at $0.01 per share, or $157,000 total—25% vested when collaboration agreement signed, 25% vests when IPO is completed, remainder vests quarterly (page 157)
  • Equity ownership (page 164):
    -Andrew Bialecki (CEO/Co-founder/Chairman): 38.1%
    -Ed Hallen (CPO/Co-founder): 13.9%
    -Summit Partners: 22.9%
    -Shopify: 11.3%
    -Accomplice Fund: 5.7%
  • Cash, cash equivalents, restricted cash as of June 30, 2023: $439 million (page F-3)
  • Accumulated deficit as of June 30, 2023: $2.2 billion (page F-3)
  • Revenue (page F-4):
    -2021: $290 million
    -2022: $472 million
    -2023 (through June 30): $320 million
  • Net profit/loss before tax provisions (page F-4):
    -2021: $79 million loss
    -2022: $49 million loss
    -2023 (through June 30): $16 million profit
  • Free cash flow (pages F-7, F-22, and 94)
    -2021: $36.7 million consumed
    -2022: $41.7 million consumed
    -2023 (through June 30): $53.4 million generated

This is a draft S-1, so some information is missing and will be added before it’s finalized.

Klaviyo is growing quickly, has become free cash flow positive, and is generating a profit. The company fortunes are heavily tied to Shopify. The concentration risk related to Shopify could affect public market investors’ appetite for Klaviyo. I’m curious to see how receptive public market investors are to this IPO and what valuation public markets settle on for Klaviyo.