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What changed in Klaviyo, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Klaviyo, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+439 added−479 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-29)

Top changes in Klaviyo, Inc.'s 2024 10-K

439 paragraphs added · 479 removed · 368 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+9 added−18 removed71 unchanged
Biggest changeAs we deliver significant measurable and attributable value to our customers, they have become powerful advocates of our solution which allows us to benefit from a strong word-of-mouth motion . Many of our customers come through our self-service channel by simply coming to our website and signing up for our platform without the need for our sales team’s involvement.
Biggest changeWe have a customer first approach and have designed our platform with the north star of helping businesses improve their engagement and drive revenue. As we deliver significant measurable and attributable value to our customers, they have become powerful advocates of our solution which allows us to benefit from a strong word-of-mouth motion .
This approach enables our customers to seamlessly generate unified and highly-granular consumer profiles, populated with data from customers’ systems and from over 350 third-party integrations, from eCommerce platforms – such as Shopify, Salesforce Commerce Cloud, and WooCommerce – to loyalty, customer service, and shipping solutions.
This approach enables our customers to seamlessly generate unified and highly-granular consumer profiles, populated with data from customers’ systems and from over 350 third-party integrations, from eCommerce platforms – such as Shopify, WooCommerce, and Salesforce Commerce Cloud – to loyalty, customer service, and shipping solutions.
Product Features Integrations: We integrate with a wide range of data sources such as retail and eCommerce platforms, including Shopify, Salesforce Commerce Cloud, and WooCommerce, to comprehensively replicate all historical profile and event data in Klaviyo and synchronize data going forward.
Product Features Integrations: We integrate with a wide range of data sources such as retail and eCommerce platforms, including Shopify, WooCommerce, and Salesforce Commerce Cloud, to comprehensively replicate all historical profile and event data in Klaviyo and synchronize data going forward.
In addition, the application and interpretation of these laws and regulations often are ambiguous or inconsistent, particularly in the new and rapidly evolving industry in which we operate, and the extent they apply to us is at times unclear.
In addition, the application and interpretation of these laws and regulations are often ambiguous or inconsistent, particularly in the new and rapidly evolving industry in which we operate, and the extent to which they apply to us is at times unclear.
This includes a range of drag-and-drop email templates, allowing customers to easily edit and customize pre-built templates; email campaigns and automations, including Smart Send Time features, generative AI for subject line creation, and A/B testing tools; and advanced consumer list segmentation, all of which are tools to help create high-performing email engagements.
This includes a range of drag-and-drop email templates, allowing customers to easily edit and customize pre-built templates; email campaigns and automations, including Smart Send Time features, generative AI for email content and subject line creation, and A/B testing tools; and advanced consumer list segmentation, all of which are tools to help create high-performing email engagements.
Additionally, because our market is rapidly developing, it is possible that new entrants, particularly those with extensive resources, could introduce new products or services that compete in our market and better address our customers and potential customers. See the section titled “Risk Factors” section for a more detailed description of risks related to competition.
Additionally, because our market is rapidly developing, it is possible that new entrants, particularly those with extensive resources, could introduce new products or services that compete in our market and better address the needs of our customers and potential customers. See the section titled “Risk Factors” section for a more detailed description of risks related to competition.
We believe that the key competitive factors in our market are: • Fast time-to-value and ROI for customers; • Ease of deployment, implementation, and use; • Unified data architecture, with the ability to synchronize unaggregated, historical customer profile data with real-time event data in a single system-of-record; • Integration with third-party applications, data sources, and open-source technologies; • Breadth and depth of features and functionality; • Quality and accuracy of data and predictive intelligence; • Ability to support multiple use cases and verticals; • Strength of sales & marketing and partnership efforts; 16 Table of Contents • Market vision and product strategy; • Pace of innovation; • Brand awareness and reputation; • Performance, scalability, security, and reliability; and • Quality of service and customer satisfaction.
We believe that the key competitive factors in our market are: • Fast time-to-value and ROI for customers; • Ease of deployment, implementation, and use; • Unified data architecture, with the ability to synchronize unaggregated, historical customer profile data with real-time event data in a single system-of-record; • Integration with third-party applications, data sources, and open-source technologies; • Breadth and depth of features and functionality; • Quality and accuracy of data and predictive intelligence; • Ability to support multiple use cases and verticals; • Strength of sales & marketing and partnership efforts; • Market vision and product strategy; • Pace of innovation; • Brand awareness and reputation; • Performance, scalability, security, and reliability; and • Quality of service and customer satisfaction.
Our Customer Success and Support teams provide a wide range of services that help meet our customers’ needs, including the following: • Starting from the beginning of their journey, our onboarding teams work quickly to get customers set up with the right configuration and features to meet their business goals. • For our smallest customers, we offer self-service journeys that support and guide them from on-boarding to adoption to expansion. 15 Table of Contents • For our largest customers we offer white glove engagement, guiding the customer as a trusted advisor around best practices, industry trends, and new product features and functionality, helping our customers optimize their success with Klaviyo and ultimately drive their own growth. • Our Customer and Partner Education Services team offers capabilities from free ungated content via social channels, learning tutorials, and live virtual hands-on training sessions, to helping customers set up segmentation, flows, and campaigns. • We offer dedicated developer education and technical documentation as well as a developer-specific community to support and grow our developer ecosystem.
Our Customer Success and Support teams provide a wide range of services that help meet our customers’ needs, including the following: • Starting from the beginning of their journey, our onboarding teams work quickly to get customers set up with the right configuration and features to meet their business goals. • For our smallest customers, we offer self-service journeys that support and guide them from onboarding to adoption to expansion. • For our largest customers, we offer white glove engagement, guiding them as a trusted advisor around best practices, industry trends, and new product features and functionality, helping them optimize their success with Klaviyo and ultimately drive their own growth. • Our Customer and Partner Education Services team offers a range of services, from providing free ungated content via social channels, learning tutorials, and live virtual hands-on training sessions, to helping customers set up segmentation, flows, and campaigns. • We offer dedicated developer education and technical documentation as well as a developer-specific community to support and grow our developer ecosystem.
Our platform offers simple, one-click drag-and-drop customizable templates for designing messages and generative artificial intelligence tools for creating content, allowing our customers to easily create impactful experiences customized to their unique brands.
Our platform offers simple, one-click drag-and-drop customizable templates for designing messages and generative artificial intelligence tools for creating content and targeting communications, allowing our customers to easily create impactful experiences customized to their unique brands.
We use our https://investors.klaviyo.com and www.klaviyo.com websites, as well as our blog posts, press releases, public conference calls, webcasts, our X (formerly known as Twitter) feed, our Instagram page, our Facebook page, and our LinkedIn page, as a means of disclosing material nonpublic information and for complying with 18 Table of Contents our disclosure obligations under Regulation FD.
We use our https://investors.klaviyo.com and www.klaviyo.com websites, as well as our blog posts, press releases, public conference calls, webcasts, our X (formerly known as Twitter) feed, our Instagram page, our Facebook page, and our LinkedIn page, as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
First, as our customers increase their usage of our platform through the number of active consumer profiles they have and email and SMS messages they 9 Table of Contents send, they move to higher subscription tiers. Second, adding more communication channels and use cases, such as SMS and reviews, further expands the sales we generate from existing customers.
First, as our customers increase their usage of our platform through the number of active consumer profiles they have and email and SMS messages they send, they move to higher subscription tiers. Second, adding more communication channels and use cases, such as SMS and reviews, further expands the sales we generate from existing customers.
Our main competitors are: • Marketing solution providers, such as Mailchimp and Braze; • Large, consolidated marketing automation software providers, such as Adobe and Salesforce; and • Data-focused vendors, such as providers of cloud data warehouses or operational database technologies, which provide data infrastructure but are not purpose-built for consumer data and lack the front-end application layer.
Our main competitors are: • Marketing solution providers, such as Mailchimp and Braze; • Large, consolidated marketing automation software providers, such as Adobe and Salesforce; and 15 Table of Contents • Data-focused vendors, such as providers of cloud data warehouses or operational database technologies, which provide data infrastructure but are not purpose-built for consumer data and lack the front-end application layer.
Our customer data store was designed to consolidate customers’ first-party data at scale, synchronizing and unifying data from over 350 integrations seamlessly into a single system-of-record.
Our customer data store is designed to consolidate customers’ first-party data at scale, synchronizing and unifying data from over 350 integrations seamlessly into a single system-of-record.
This approach also allows our customers to get up-and-running quickly without having to pre-configure their data and manage complex integrations. Going forward, our vertically- 8 Table of Contents integrated technology stack also gives us the ability to easily extend our platform into new channels and applications. • Predictive insights enhanced by machine learning and artificial intelligence to drive revenue growth.
This approach also allows our customers to get up-and-running quickly without having to pre-configure their data and manage complex integrations. Going forward, our vertically-integrated technology stack also gives us the ability to easily extend our platform into new channels and applications. • Predictive insights enhanced by machine learning and artificial intelligence to drive revenue growth.
Given the broad applicability of our platform, we believe that long-term we can continue to launch new channels and capabilities to attract new customers as well as cross-sell to our existing customers. • Expand into new verticals and use cases.
Given the broad applicability of our platform, we believe that long-term we 9 Table of Contents can continue to launch new channels and capabilities to attract new customers as well as cross-sell to our existing customers. • Expand into new verticals and use cases.
Other Technology Partnerships We enhance our platform through our large technology partner ecosystem and robust library of integrations with other technology platforms, including Google, Meta, Zendesk, Gorgias, LoyaltyLion, Okendo, and Yotpo. We have built a robust suite of over 350 pre-built integrations and native data sources that customers want connected to their Klaviyo hub.
Other Technology Partnerships We enhance our platform through our large technology partner ecosystem and robust library of integrations with other technology platforms, including Google, Meta, Zendesk, Gorgias, LoyaltyLion, Pinterest, and Canva. We have built a robust suite of over 350 pre-built integrations and native data sources that customers want connected to their Klaviyo hub.
Our acquisition teams respond to inbound and partnership-referred leads while also supplementing this demand by going outbound directly to businesses to introduce Klaviyo. Our go-to-market motion targets decision makers participating in the marketing-spend cycle, including the chief marketing officer, chief customer officer, and other key functional marketing heads.
Our acquisition teams respond to inbound and partnership-referred leads while also supplementing this demand by going outbound directly to businesses to introduce Klaviyo. Our 14 Table of Contents go-to-market motion targets decision makers participating in the marketing-spend cycle, including the chief marketing officer, chief customer officer, and other key functional marketing heads.
Meanwhile, due to our advanced technological architecture and vertical integration, we can ascribe the amount of revenue that our customers generate with specific engagements through our platform, quickly and easily quantifying their success.
Meanwhile, due to 8 Table of Contents our advanced technological architecture and vertical integration, we can ascribe the amount of revenue that our customers generate with specific engagements through our platform, quickly and easily quantifying their success.
This 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.
This enables business users of any skill level to harness their data in order to send the right message at the right time across email, short message service (“SMS”), and push notifications, more accurately measure and predict performance, and deploy the specific actions and campaigns that drive the highest impact.
Our customers range from entrepreneurs and small and medium-sized businesses to mid-market businesses and enterprises. Today we have a strong presence in the retail and eCommerce vertical and see growth from international customers. As of December 31, 2023, we served over 143,000 customers, up from 119,000 customers as of December 31, 2022.
Our customers range from entrepreneurs and small and medium-sized businesses to mid-market businesses and enterprises. Today we have a strong presence in the retail and eCommerce vertical and see growth from international customers. As of December 31, 2024, we served over 167,000 customers, up from 143,000 customers as of December 31, 2023.
We have additionally integrated with Amazon Buy with Prime. Our platform integrations create value 13 Table of Contents for customers across a variety of verticals beyond retail and eCommerce. For example, we integrate with Olo in the restaurant industry, Mindbody in the fitness and wellness industry, and Eventbrite in the events industry.
We have additionally integrated with Amazon Buy with Prime. Our platform integrations create value for customers across a variety of verticals beyond retail and eCommerce. For example, we integrate with Olo and Toast in the restaurant industry, Mindbody in the fitness and wellness industry, and Eventbrite in the events industry.
In order to enable our customers to create dynamic, personalized experiences for their end users, we efficiently ingested and stored over 2.2 billion events every day on average during 2023. We use this data to power personalization and send billions of messages across multiple channels each month, including email, SMS, and push notifications.
In order to enable our customers to create dynamic, personalized experiences for their end users, we efficiently ingested and stored billions of events every day on average during 2024. We use this data to power personalization and send billions of messages each month across multiple channels, including email, SMS, and push notifications.
Our customers demand tools that help them maintain a trusted reputation with their consumers and channel providers, which we accomplish by delivering personalized experiences on time and in accordance with applicable laws, regulations, and best 12 Table of Contents practices.
Our customers demand tools that help them maintain a trusted reputation with their consumers and channel providers, which we accomplish by delivering personalized experiences on time and in accordance with applicable laws, regulations, and best practices.
Our Growth Strategies We intend to leverage our differentiated approach to capitalize on our large market opportunity and leading market position to fuel future growth with the following key growth strategies: • Attract new customers. We have rapidly expanded our customer base to over 143,000 as of December 31, 2023 due to our product-led growth strategy.
Our Growth Strategies We intend to leverage our differentiated approach to capitalize on our large market opportunity and leading market position to fuel future growth with the following key growth strategies: • Attract new customers. We have rapidly expanded our customer base to over 167,000 as of December 31, 2024 due primarily to our product-led growth strategy.
As of December 31, 2023, we had 3 registered trademarks and 6 pending trademarks in the United States and 96 registered trademarks and 39 pending trademarks in non-U.S. jurisdictions. We also have registered domain names for websites that we use in our business, such as www.klaviyo.com and other similar variations.
As of December 31, 2024, we had 6 registered trademarks and 3 pending trademarks in the United States and 112 registered trademarks and 5 pending trademarks in non-U.S. jurisdictions. We also have registered domain names for websites that we use in our business, such as www.klaviyo.com and other similar variations.
SMS: Our SMS marketing capability enables customers to send targeted text messages to their consumers and strengthen relationships through our conversational SMS feature, which allows businesses to send personalized responses 10 Table of Contents to consumers in real-time. We also offer built-in contact cards to ensure that texts from our customers don’t appear as random numbers.
SMS: Our SMS marketing capability enables customers to send targeted text messages to their consumers and strengthen relationships through our conversational SMS feature, which allows businesses to send personalized responses to consumers in real-time. We also offer built-in contact cards to ensure that texts from our customers do not appear as random numbers.
We also recently launched our CDP offering, which gives our customers user-friendly ways to transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data into and out of Klaviyo at scale.
Our CDP offering gives our customers user-friendly ways to transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data into and out of Klaviyo at scale.
For more information on the potential impacts of government regulations affecting our business, see the section titled “Risk Factors.” Human Capital Resources As of December 31, 2023, we had a total of 1,815 employees located in three countries, with the substantial majority of our employees located in the United States. We supplement our workforce with contractors and consultants.
For more information on the potential impacts of government regulations affecting our business, see the section titled “Risk Factors.” Human Capital Resources As of December 31, 2024, we had a total of 2,182 employees located in four countries, with the substantial majority of our employees located in the United States. We supplement our workforce with contractors and consultants.
We also provide developers with data sample generation tools, allowing developers to run and test their code against real, anonymized datasets which we generate for them as sample sets, versus relying on the developer to identify, obtain and ingest relevant data sets for their work. Our Customers Our platform serves businesses of all sizes, across industries and geographies.
We also provide developers with data sample generation tools, allowing them to run and test their code against real, anonymized datasets which we generate for them as sample sets, so that they do not have to identify, obtain and ingest relevant data sets for their work. Our Customers Our platform serves businesses of all sizes, across industries and geographies.
Each constituent of our ecosystem contributes to the growth of our business increasing our collective reach, the depth of our integration portfolio, and the breadth of our customer data.
Each constituent of our ecosystem contributes to the growth of our business increasing our collective reach, the depth of our integration portfolio, and the breadth of our customers’ first-party consumer data.
Other Applications Reviews: Our recently launched reviews add-on allows our customers to collect product reviews alongside their existing consumer data and messaging in Klaviyo, delivering a more seamless experience across the customer lifecycle. Customer Data Platform: Our recently launched CDP offering allows our customers to manage and deploy their data in Klaviyo more effectively.
Other Applications Reviews: Our reviews add-on allows our customers to collect product reviews alongside their existing consumer data and messaging in Klaviyo, delivering a more seamless experience across the customer lifecycle.
Our Ecosystem Our partner ecosystem enriches our customer offerings and helps us reach a broader audience than we would be able to reach on our own. Our partner ecosystem includes commerce platforms, other technology companies, marketing agencies, systems integrators, and developers.
We intend to continue to invest in our research and development capabilities to expand our platform capabilities and offerings. Our Ecosystem Our partner ecosystem enriches our customer offerings and helps us reach a broader audience than we would be able to reach on our own. Our partner ecosystem includes commerce platforms, other technology companies, marketing agencies, systems integrators, and developers.
We grew our gross profit 50.9% year-over-year, from $344.7 million in 2022 to $520.2 million in 2023, representing gross profit margins of 72.9% and 74.5%, respectively. 7 Table of Contents Our Platform We built Klaviyo because businesses need powerful technology to capture, store, analyze, and predictively use data to drive measurable, high-value outcomes.
We grew our gross profit 37.7% year-over-year, from $520.2 million in 2023 to $716.2 million in 2024, representing gross profit margins of 74.5% and 76.4%, respectively. Our Platform We built Klaviyo because businesses need powerful technology to capture, store, analyze, and predictively use data to drive measurable, high-value outcomes.
The segmentation feature enables our customers to better target consumers with personalized engagement. Via Klaviyo’s outbound integrations, segments can be automatically pushed to ad networks to further target consumers or accessed via API to power actions in other systems.
The segmentation feature enables our customers to better target consumers with personalized engagement, and our AI tools allow our customers to quickly create segments using natural language inputs. Via Klaviyo’s outbound integrations, segments can be automatically pushed to ad networks to further target consumers or accessed via API to power actions in other systems.
The extensible architecture of our data store runs an ingestion pipeline responsible for deduping, data augmentation, and identity resolution. This pipeline spawns multiple projections in real-time as billions of facts and actions are ingested, enabling us to store the processed data in multiple formats. The extensibility of the projection mechanism allows us to easily add more use cases as needed.
This pipeline spawns multiple projections in real-time as billions of facts and actions are ingested, enabling us to store the processed data in multiple formats. The extensibility of the projection mechanism allows us to easily add more use cases as needed.
As of December 31, 2023, we had 3 issued and allowed patents and 30 pending patent applications in the United States that cover various aspects of our business in the United States and abroad. Our issued patents are scheduled to expire between February 2042 and October 2042.
As of December 31, 2024, we had 12 issued and allowed patents and 41 pending patent applications in the United States that cover various aspects of our business in the United States and abroad. Our issued patents are scheduled to expire 16 Table of Contents between February 2042 and May 2043.
Corporate Information We were incorporated in 2012 under the name Klaviyo, Inc. as a Delaware corporation. Our principal executive offices are located at 125 Summer Street, 6th Floor, Boston, MA 02110, and our telephone number is (617) 213-1788. “Klaviyo” is our registered trademark in the United States, the European Union, the United Kingdom, Australia, and other jurisdictions.
Our principal executive offices are located at 125 Summer Street, 6th Floor, Boston, MA 02110, and our telephone number is (617) 213-1788. “Klaviyo” is our registered trademark in the United States, the European Union, the United Kingdom, Australia, and other jurisdictions.
We built an application layer on top of our data layer to provide a comprehensive set of tools and features that enable our customers to 6 Table of Contents easily turn consumer preferences into insights and actions.
We built an application layer on top of our data layer to provide a comprehensive set of tools and features that enable our customers to easily turn consumer preferences into insights and actions. We generate revenue through the sale of subscriptions to our customers for the use of our platform.
The principal purposes of our equity incentive plans are to attract, retain, and reward personnel through the granting of share-based compensation awards in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
The principal purposes of our equity incentive plans are to attract, retain, and reward personnel through the granting of share-based compensation awards in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives. 17 Table of Contents Corporate Information We were incorporated in 2012 under the name Klaviyo, Inc. as a Delaware corporation.
In addition to our self-service model, we deploy a high-velocity inside sales team focused on new customer acquisition, a mid-market and enterprise sales team, and a customer growth team focused on maximizing customer value and introducing all Klaviyo SKUs.
With geographic coverage across Americas, EMEA, and APAC, our sales organization serves prospective customers and existing customers of all sizes. In addition to our self-service model, we deploy a high-velocity inside sales team focused on new customer acquisition, a mid-market and enterprise sales team, and a customer growth team focused on maximizing customer value and introducing all Klaviyo SKUs.
We have intentionally separated our application layer from our data stores through the implementation of rich front-ends including HTML, JavaScript, and CSS that use techniques like backend-for-frontend APIs and leverage content delivery networks to reduce latency in accessing data.
We have intentionally separated our application layer from our data stores through the implementation of rich front-ends including HTML, JavaScript, and CSS that use techniques like backend-for-frontend APIs and leverage content delivery networks to reduce latency in accessing data. 12 Table of Contents Research and Development Our research and development organization is responsible for leading continuous innovation of our platform and channels, through the design, development, testing and delivery of features, and new technologies.
We have not experienced any work stoppages, and we consider our relations with our employees to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.
To our knowledge, none of our employees is represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.
Today, our customers primarily operate within the retail and eCommerce vertical, and we are also seeing organic demand from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from business-to-business (“B2B”) companies.
Today, our customers primarily operate within the retail and eCommerce vertical, and we are also seeing organic growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from business-to-business (“B2B”) companies. By combining easy implementation, rapid time-to-value, and clearly attributable outcomes, we drive substantial ROI for our customers.
Our consent management and compliance tools save time and money for our customers and enable them to focus on delivering a highly personalized consumer experience. Our AI-powered SMS suggested responses generate replies for our customers when consumers send them texts.
Our consent management and compliance tools save time and money for our customers and enable them to focus on delivering a highly personalized consumer experience. Our AI-powered SMS assistant uses generative AI to create message content and generate suggested responses for incoming text messages.
This increase in net loss year-over-year was mainly driven by $340.8 million in stock-based compensation expense, the majority of which was incurred in connection with the vesting of outstanding equity awards upon our Initial Public Offering (“IPO”).
This decrease in net loss year-over-year was mainly driven by an increase in revenue and a $203.4 million decrease in stock-based compensation expense, the majority of which was related to the vesting of outstanding equity awards upon our initial public offering (“IPO”) in September 2023.
We focused on marketing automation for business-to-consumer (“B2C”) companies within retail and eCommerce as our first application, and we believe our software is highly extensible across a broad range of functions for B2C and B2B businesses alike.
We focused on marketing automation within retail and eCommerce as our first application use case, and we believe our software is highly extensible across a broad range of functions and verticals.
By vertically integrating our data layer and marketing application, we make it easy for businesses to create and store unified consumer profiles and then use those profiles to derive new insights and ultimately drive revenue generation.
As of December 31, 2024, our platform had efficiently scaled to over 167,000 customers. By vertically integrating our data layer and marketing application, we make it easy for businesses to create and store unified consumer profiles and then use those profiles to derive new insights, rapidly segment their consumers, and ultimately drive revenue generation.
As our customers have scaled and become mid-market companies and larger enterprises themselves, their success with Klaviyo has attracted more interest from similarly sized businesses that are looking to drive better engagement with their consumers. As such, we have continued to build out a sales team to focus on mid-market and enterprise customers.
When we first launched our platform, we intentionally focused on serving entrepreneurs and small and medium-sized businesses (“SMBs”). As our customers have scaled and become mid-market companies and larger enterprises themselves, their success with Klaviyo has attracted more interest from similarly sized businesses that are looking to drive better engagement with their consumers.
We initially started by serving customers in North America and, in 2019, we opened our London, England office to serve the European region, followed by our Sydney, Australia office in 2022 to target the Asia Pacific region. We currently offer our platform and service only in English and only bill in US Dollars.
We initially started by serving customers in North America and, in 2019, we opened our London, England office to serve the European region, followed by our Sydney, Australia office in 2022 to target the Asia Pacific region, and we expanded our presence in the European region by adding operations in Dublin, Ireland in 2024.
Our benchmark feature aggregates anonymized performance data across our customer engagement strategies and allows businesses to compare their performance to that of their industry peers. Business metric comparisons such as open rate, average cart value, and subscriber rate allow businesses to evaluate the effectiveness of their engagement strategy and identify key areas of opportunity.
Business metric comparisons such as open rate, average cart value, and subscriber rate allow businesses to evaluate the effectiveness of their engagement strategy and identify key areas of opportunity.
Our entire data platform was designed to power many applications, with marketing as the first one. Our data layer is the core of the Klaviyo platform and the foundation on which we built all our functionality. We built a composite data store that aggregates effectively unlimited amounts of data in a way suitable for transactional, analytical, and machine learning workloads.
Our entire data platform was designed to power many applications, with marketing as the first one. Our data layer is the core of the Klaviyo platform and the foundation on which we built all our functionality.
Once customers access the Klaviyo platform, they can easily integrate with more than 350 third-party data sources to import and explore their first-party data and design and run campaigns and automations, providing rapid time-to-value.
We have built a large and growing ecosystem of major eCommerce platforms, agency partnerships, and developers, which helps us efficiently attract new customers. Once customers access the Klaviyo platform, they can easily integrate with more than 350 third-party data sources to import and explore their first-party data and design and run campaigns and automations, providing rapid time-to-value.
We launched with our data platform and email offering, and have since added additional communication channels, such as SMS and push notifications, and additional use cases, such as reviews and our CDP offering. Near term, we have a clear product roadmap ahead of us, including the launch of other marketing applications.
We launched with our data platform and email offering, and have since added additional communication channels, such as SMS and push notifications, and additional use cases, such as reviews and our CDP offering.
Our Go-To-Market Strategy 14 Table of Contents Our product-led growth motion has helped build a highly efficient go-to-market engine powered by our strong platform and fast time-to-value, with limited reliance on professional services teams for implementation.
Our Go-To-Market Strategy Our product-led growth motion has helped build a highly efficient go-to-market engine powered by our strong platform and fast time-to-value, with limited reliance on professional services teams for implementation. Our marketing activities are designed to build broad brand awareness, generate thought leadership and create demand and leads for our sales organizations within our target markets.
In addition, we recently launched our reviews and customer data platform (“CDP”) products. Klaviyo reviews allows customers to collect product reviews alongside consumer data and messages. Klaviyo CDP gives customers user-friendly ways to transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data into and out of Klaviyo at scale.
Our reviews add-on allows our customers to collect product reviews within our platform to provide a seamless experience across the customer lifecycle, and our Customer Data Platform (“CDP”) offering gives customers user-friendly ways to track new types of data, transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data in to and out of Klaviyo at scale.
Systems integrators support many of our mid-market and enterprise customers and work with businesses to help them get started on our platform. In some cases, our systems integrator partners leverage our flexible and scalable APIs to build custom integrations and bespoke solutions for their customers.
In some cases, our systems integrator partners leverage our flexible and scalable APIs to build custom integrations and bespoke solutions for their customers.
See the section titled “Risk Factors” for a more comprehensive description of risks related to our intellectual property. 17 Table of Contents Regulatory Matters We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business.
Regulatory Matters We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business.
Marketing Agencies and Systems Integrators We have built a deeply-invested community of digital marketing agencies, systems integrators, freelancers, and other consulting partners who recommend their clients use Klaviyo to design, run, and measure their marketing campaigns. In 2023, more than 5,000 unique marketing agency and consulting partners referred leads to Klaviyo.
Marketing Agencies and Systems Integrators We have built a deeply-invested community of digital marketing agencies, systems integrators, freelancers, and other consulting partners who recommend their clients use Klaviyo to design, run, and measure their marketing campaigns. These agencies help our customers run effective campaigns using Klaviyo, and provide strategic guidance to help our customers achieve their goals utilizing our platform.
Because we vertically integrated our data layer, application layer, and messaging infrastructure into one technology stack, our platform provides customers the complete set of technologies needed to design and deliver highly personalized consumer experiences across multiple digital channels.
We focused on marketing automation for business-to-consumer (“B2C”) companies within retail and eCommerce as our first application, and we believe our software is highly extensible across a broad range of functions for B2C and B2B businesses alike. 7 Table of Contents Because we vertically integrated our data layer, application layer, and messaging infrastructure into one technology stack, our platform provides customers the complete set of technologies needed to design and deliver highly personalized consumer experiences across multiple digital channels.
Our research and development team is organized in pillars aligned with our vertically-integrated stack. We additionally have small teams focused on new ventures that are oriented towards long-term growth initiatives. Each pillar is organized as small teams with high levels of ownership of the technology they develop/deploy and a mindset of continuous delivery for our customers.
It is also responsible for reliably operating and scaling our platform including the underlying cloud infrastructure. Our research and development team is organized in pillars aligned with our vertically-integrated stack. We additionally have small teams focused on new ventures that are oriented towards long-term growth initiatives.
Based on these successful expansions, we believe we have significant international opportunities ahead, especially as we add additional languages and currencies to our platform. • Invest in our platform. We have a history of innovation and will continue to develop and invest in our platform to provide more value to our customers over time.
Dollars, and we believe that adding additional currencies to our platform will help us better serve the international market. • Invest in our platform. We have a history of innovation and will continue to develop and invest in our platform to provide more value to our customers over time.
As our customers’ businesses grow, they utilize more consumer profiles and send more emails and SMS messages, which naturally increases their usage of our platform. Our revenue also expands when our customers add additional channels, such as SMS, or when their other brands, business units, and geographies start using the platform.
As our customers’ businesses grow, they utilize more active consumer profiles and send more emails and SMS messages, which naturally increases their usage of our platform.
From time to time, we also incorporate certain intellectual property licensed from third parties, including under certain open-source licenses.
From time to time, we also incorporate certain intellectual property licensed from third parties, including under certain open-source licenses. See the section titled “Risk Factors” for a more comprehensive description of risks related to our intellectual property.
We generate revenue through the sale of subscriptions to our customers for the use of our platform. Our subscription plans are tiered based on the number of active consumer profiles stored on our platform combined with the number of emails and SMS messages sent.
Our subscription plans are tiered based on the number of active consumer profiles stored on our platform and the number of emails and SMS messages sent. We currently permit our customers to send unlimited push notifications, which are included as part of our email subscription plan.
We mirror the investment these partners have made in Klaviyo by offering them a partner program (including incentives and requirements), partner-specific tools, and dedicated training and support. Marketing agencies partner with us because our platform is able to help their clients more effectively target consumers, and in the process, the agencies are able to grow their own businesses.
Marketing agencies partner with us because our platform is able to help their clients more effectively target consumers, and in the process, the agencies are able to grow their own businesses. Systems integrators support many of our customers and help them get started on our platform.
We primarily attract new customers through inbound channels based on our reputation and product quality, such as word-of-mouth, commerce platform partnerships, and agency partnerships. We have a customer first approach and have designed our platform with the north star of helping businesses improve their engagement and drive revenue.
Our large and growing ecosystem of major eCommerce platforms, agency partnerships, and developers, helps us efficiently attract new customers. We primarily attract new customers through inbound channels based on our reputation and product quality, such as word-of-mouth, commerce platform partnerships, and agency partnerships.
Our CDP offering provides enhanced features and functionality to our core platform offering, including advanced reporting and improved data management tools with minimal additional implementation required. Our go-to-market strategy is primarily product-led, and we attract the majority of our new customers through inbound channels, such as word-of-mouth, agency partnerships, and platform integrations.
Our revenue also expands when our customers add additional channels, such as SMS, and additional use cases, such as reviews and our CDP offering, or when their other brands, business units, and geographies start using our platform. 6 Table of Contents Our go-to-market strategy is primarily product-led, and we attract the majority of our new customers through inbound channels, such as word-of-mouth, agency partnerships, and platform integrations.
Our built-in attribution allows customers to quantify and understand the revenue impact of campaigns and flows. 11 Table of Contents Analytics and Benchmarks: Our predictive analytics features use artificial intelligence and machine learning to drive valuable consumer insights related to consumer lifetime value, churn risk, and behavior forecasting.
Analytics and Benchmarks: Our predictive analytics features use artificial intelligence and machine learning to drive valuable consumer insights related to consumer lifetime value, churn risk, and behavior forecasting. Our benchmark feature aggregates anonymized performance data across our customer engagement strategies and allows businesses to compare their performance to that of their industry peers.
We grew our revenue 47.7% year-over-year, from $472.7 million in 2022 to $698.1 million in 2023. Our net losses for 2022 and 2023 were $49.2 million and $308.2 million, respectively, representing a year-over-year increase of 526.6%.
As such, we have continued to build out a sales team to focus on mid-market and enterprise customers. We grew our revenue 34.3% year-over-year, from $698.1 million in 2023 to $937.5 million in 2024. Our net losses for 2023 and 2024 were $308.2 million and $46.1 million, respectively, representing a year-over-year decrease of 85.0%.
We believe this setup allows for rapid innovation of our platform. Research and development employees are primarily in Boston, Massachusetts. We intend to continue to invest in our research and development capabilities to expand our platform capabilities and offerings.
Each pillar is organized as small teams with high levels of ownership of the technology they develop/deploy and a mindset of continuous delivery for our customers. We believe this setup allows for rapid innovation of our platform. Research and development employees are primarily in Boston, Massachusetts.
Customers can start with a free tier of our platform or land directly with one of our paid subscription tiers. With geographic coverage across Americas, EMEA, and APAC, our sales organization serves prospective customers and existing customers of all sizes.
Many of our customers come through our self-service channel by simply coming to our website and signing up for our platform without the need for our sales team’s involvement. Customers can start with a free tier of our platform or land directly with one of our paid subscription tiers.
These agencies help our customers run effective campaigns using Klaviyo, and provide strategic guidance to help our customers achieve their goals utilizing our platform. Many of these partners develop in-house Klaviyo expertise, build Klaviyo-dedicated service offerings, and go-to-market as a Klaviyo partner.
Many of these partners develop in-house Klaviyo expertise, build 13 Table of Contents Klaviyo-dedicated service offerings, and go-to-market as Klaviyo partners. We mirror the investment these partners have made in Klaviyo by offering them a partner program (including incentives and requirements), partner-specific tools, and dedicated training and support.
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By combining easy implementation, rapid time-to-value, and clearly attributable outcomes, we drive substantial ROI for our customers. We focused on marketing automation within retail and eCommerce as our first application use case, and we believe our software is highly extensible across a broad range of functions and verticals.
Added
Active consumer profiles are identified profiles that can be reached via at least one enabled marketing channel in Klaviyo; this means the profile is not suppressed, either by revoking consent or being rendered undeliverable. The vast majority of our subscription plans today are monthly. Our land-and-expand strategy aligns our own success with that of our customers.
Removed
As of December 31, 2023, our platform had efficiently scaled to over 143,000 customers, and in 2023 we delivered over $50 billion of KAV (as defined below) to our customers. Businesses today struggle to deliver impactful consumer experiences because they cannot effectively harness increasingly complex consumer data.
Added
We currently offer our platform and service in English, French, German, Portuguese, Korean, Spanish and Italian, and we believe we have significant international opportunities ahead, especially as we add new languages. We also currently only bill in U.S.
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At a time when consumers expect more personalized, relevant, and consistent interactions across digital channels, they are instead inundated with an overwhelming number of inconsistent and ineffective marketing messages. As user tracking rules change, third-party data has become unreliable, complicated, and expensive to use.
Added
In 2024, we also launched Klaviyo AI, a suite of features that provide customers with AI-powered tools to streamline data segmentation, create and orchestrate campaigns, and drive better engagement. Near term, we will continue to expand our marketing automation platform and extend to product areas outside of marketing.
Removed
Meanwhile, the proliferation of first-party data has made it difficult for businesses to aggregate, synthesize, and use these disparate data sets. Other software solutions were not purpose-built to harness customers’ first-party data to deliver impactful consumer experiences.
Added
Our AI tools suggest 10 Table of Contents review headlines for consumers based on their review content, and generate personalized review replies for our customers with the click of a button. Customer Data Platform: Our CDP offering allows our customers to manage and deploy their data in Klaviyo more effectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a public company, we have incurred, and we will continue to incur, significant finance, legal, accounting, and other expenses, including director and officer liability insurance, that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, stock exchange listing requirements, the reporting requirements of the Exchange Act, and other applicable securities rules and regulations impose various requirements on public companies in the United States.
Biggest changeThe Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, stock exchange listing requirements, the reporting requirements of the Exchange Act, and other applicable securities rules and regulations impose various requirements on public companies in the United States. Our management and other personnel devote a substantial amount of time to support compliance with these requirements.
Companies that violate the GDPR can face robust regulatory enforcement and greater penalties for noncompliance, including fines of up to €20 million (or £17.5 million under UK GDPR) or 4% of their worldwide annual turnover, whichever is greater.
Companies that violate the GDPR can face robust regulatory enforcement and greater penalties for noncompliance, including fines of up to €20 million (or £17.5 million under the UK GDPR) or 4% of their worldwide annual turnover, whichever is greater.
Some inbox service providers categorize as “promotional” emails that originate from email marketing platforms and, as a result, direct them to an alternate or “tabbed” section of the recipient’s inbox. Additionally, inbox service providers can block emails from reaching their users.
Some inbox service providers categorize emails that originate from email marketing platforms as “promotional” and, as a result, direct them to an alternate or “tabbed” section of the recipient’s inbox. Additionally, inbox service providers can block emails from reaching their users.
Because of the ten-to-one voting ratio between our Series B and Series A common stock, the holders of our Series B common stock collectively continue to control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval until the seventh anniversary of our IPO, when all outstanding shares of Series A common stock and Series B common stock will convert automatically into shares of a single series of common stock, or until they no longer hold a majority of the combined voting power of our common stock.
Because of the ten-to-one voting ratio between our Series B and Series A common stock, the holders of our Series B common stock collectively continue to control a majority of the combined voting power of our common stock and therefore are able to continue to control all matters submitted to our stockholders for approval until the seventh anniversary of our IPO, when all outstanding shares of our Series A common stock and Series B common stock will convert automatically into shares of a single series of common stock, or until they no longer hold a majority of the combined voting power of our common stock.
If we do not, or if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or if we are unable to maintain our revenue growth for any reason, including the reasons listed above, it may be difficult to maintain profitability, the trading price of our Series A common stock may be volatile, demand for our products and our platform could decline, and our business, financial condition, and results of operations may be adversely affected.
If we do not, or if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or if we are unable to maintain our revenue growth for any reason, including the reasons listed above, it may be difficult to maintain profitability, the trading price of our Series A common stock may continue to be volatile, demand for our products and our platform could decline, and our business, financial condition, and results of operations may be adversely affected.
We also rely on third-party service providers and technologies to operate critical business systems to process confidential and personal information in a variety of contexts, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Our ability to monitor these third parties’ cybersecurity practices is limited.
We rely on third-party service providers and technologies to operate critical business systems to process confidential and personal information in a variety of contexts, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Our ability to monitor these third parties’ cybersecurity practices is limited.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • provide that our board of directors is classified into three classes of directors with staggered three-year terms; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • require super-majority voting to amend our amended and restated bylaws; provided, however, that majority voting is required to amend our amended and restated bylaws if our board of directors recommends that the stockholders approve such amendment; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • after the date that the outstanding shares of Series B common stock no longer represent a majority of the combined voting power of our Series A and Series B common stock (the “Voting Threshold Date”), prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; • until the Voting Threshold Date, our stockholders are able to act by written consent only if the action is first recommended or approved by our board of directors; • provide that only our board of directors is authorized to call a special meeting of stockholders; • provide for a dual series common stock structure where holders of our Series B common stock are able to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the 57 Table of Contents outstanding shares of our Series A and Series B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • provide that our board of directors is expressly authorized to alter or repeal our amended and restated bylaws; and • contain advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • provide that our board of directors is classified into three classes of directors with staggered three-year terms; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • require super-majority voting to amend our amended and restated bylaws; provided, however, that majority voting is required to amend our amended and restated bylaws if our board of directors recommends that the stockholders approve such amendment; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • after the date that the outstanding shares of Series B common stock no longer represent a majority of the combined voting power of our Series A and Series B common stock (the “Voting Threshold Date”), prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; • until the Voting Threshold Date, our stockholders are able to act by written consent only if the action is first recommended or approved by our board of directors; • provide that only our board of directors is authorized to call a special meeting of stockholders; • provide for a dual series common stock structure where holders of our Series B common stock are able to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Series A and Series B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • provide that our board of directors is expressly authorized to alter or repeal our amended and restated bylaws; and • contain advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
We expect to grant equity awards to employees, directors, consultants, and advisors under our stock incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
We expect to continue to grant equity awards to employees, directors, consultants, and advisors under our stock incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
In addition, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by governmental entities or others. Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, and social engineering (including phishing) are prevalent in our industry and our customers’ industries.
In addition, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by governmental entities or others. Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, account compromises, computer malware, viruses, and social engineering (including phishing attacks) are prevalent in our industry and our customers’ industries.
The demand for our products may be inhibited, and we may be unable to grow our business and customer base, for a number of reasons, including, but not limited to: • our failure to develop or offer new or enhanced products or features in a timely manner that keeps pace with new technologies, competitor offerings, and the evolving needs of our customers; • difficulties providing or maintaining a high level of customer satisfaction, which could cause our existing customers to cancel or decrease their subscriptions or stop referring prospective customers to us; • increases in our customer churn, decreases in our customer renewals or our failure to convert customers from lower tiers to higher tier priced subscriptions; • perceived or actual security, availability, integrity, privacy, reliability, quality, or compatibility problems with our platform, including unscheduled downtime, outages, or security breaches; • changes in search engine ranking algorithms or in search terms used by potential customers; • our inability to market our platform in a cost-effective manner to new customers or to our existing customers due to changes in regulation, or changes in the enforcement of existing regulation, that would affect our marketing or pricing practices; • unexpected increases in the costs of acquiring new customers; • our ability to expand into new industry verticals and use cases; and 24 Table of Contents • our ability to expand into new geographic regions.
The demand for our products may be inhibited, and we may be unable to grow our business and customer base, for a number of reasons, including, but not limited to: • our failure to develop or offer new or enhanced products or features in a timely manner that keeps pace with new technologies, competitor offerings, and the evolving needs of our customers; • difficulties providing or maintaining a high level of customer satisfaction, which could cause our existing customers to cancel or decrease their subscriptions or stop referring prospective customers to us; • increases in our customer churn, decreases in our customer renewals or our failure to convert customers from lower tiers to higher tier priced subscriptions; • perceived or actual security, availability, integrity, privacy, reliability, quality, or compatibility problems with our platform, including unscheduled downtime, outages, or security breaches; • changes in search engine ranking algorithms or in search terms used by potential customers; • our inability to market our platform in a cost-effective manner to new customers or to our existing customers due to changes in regulation, or changes in the enforcement of existing regulation, that would affect our marketing or pricing practices; • unexpected increases in the costs of acquiring new customers; • our ability to expand into new industry verticals and use cases; and • our ability to expand into new geographic regions.
Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident or will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
We cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident or will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
While we have taken steps designed to protect the proprietary, regulated, sensitive, confidential, and personal information in our control, our security measures or those of the third parties on which we rely may not be effective against current or future security risks and threats.
While we have taken steps designed to protect the proprietary, regulated, sensitive, confidential, and personal information in our control, our cybersecurity measures or those of the third parties on which we rely may not be effective against current or future security risks and threats.
These changes could subject us to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations.
These changes could subject us to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations.
We are not certain whether we will be able to achieve profitability in the future. Based on our current planned operations, we expect our cash and cash equivalents will enable us to fund our operating expenses for at least the next twelve months.
We are not certain whether we will be able to achieve and maintain profitability in the future. Based on our current planned operations, we expect our cash and cash equivalents will enable us to fund our operating expenses for at least the next twelve months.
We have incorporated, and may continue to incorporate, artificial intelligence technology (“AI Technology”) in our products and services, including our email, SMS, and reviews offerings, and this incorporation of AI Technology in our business and operations may become more significant over time.
We have incorporated, and may continue to incorporate, artificial intelligence technology (“AI Technology”) into our products and services, including our email, SMS, and reviews offerings, and this incorporation of AI Technology in our business and operations may become more significant over time.
Our quarterly results of operations may fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance, and comparing our results of operations on a period-to-period basis may not be meaningful.
Our quarterly results of operations may continue to fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance, and comparing our results of operations on a period-to-period basis may not be meaningful.
Any intellectual property claims, with or without merit, that we may become involved with may require us to do one or more of the following: • cease selling, licensing, or using products or features that incorporate the intellectual property rights that we allegedly infringe upon, misappropriate, or violate; • make substantial payments for legal fees, settlement payments, subscription fee refunds, or other costs or damages, including indemnification of third parties; • obtain a license or enter into a royalty agreement, either of which may not be available on reasonable terms or at all, in order to obtain the right to sell, offer to sell, import, make or use the relevant intellectual property; or • redesign certain portions of the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
Any intellectual property claims, with or without merit, that we may become involved with may require us to do one or more of the following: • cease selling, licensing, or using products or features that incorporate the intellectual property rights that we allegedly infringe upon, misappropriate, or violate; • make substantial payments for legal fees, settlement payments, subscription fee refunds, or other costs or damages, including indemnification of third parties; • obtain a license or enter into a royalty agreement, either of which may not be available on reasonable terms or at all, in order to obtain the right to sell, offer to sell, import, make or use the relevant intellectual property; or 49 Table of Contents • redesign certain portions of the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
We believe that our ability to compete depends upon many factors both within and beyond our control, including: • fast time-to-value and ROI for customers; • ease of deployment, implementation, and use; • unified data architecture, with the ability to synchronize unaggregated, historical customer profile data with real-time event data in a single system-of-record; • integrations with third-party applications, data sources, and open-source technologies; • breadth and depth of features and functionality; • quality and accuracy of data and predictive intelligence; • ability to support multiple use cases and verticals; • strength of sales & marketing and partnership efforts; • market vision and product strategy; • pace of innovation; • brand awareness and reputation; • performance, scalability, security, and reliability; and • quality of service and customer satisfaction.
We believe that our ability to compete depends upon many factors both within and beyond our control, including: • fast time-to-value and ROI for customers; 20 Table of Contents • ease of deployment, implementation, and use; • unified data architecture, with the ability to synchronize unaggregated, historical customer profile data with real-time event data in a single system-of-record; • integrations with third-party applications, data sources, and open-source technologies; • breadth and depth of features and functionality; • quality and accuracy of data and predictive intelligence; • ability to support multiple use cases and verticals; • strength of sales & marketing and partnership efforts; • market vision and product strategy; • pace of innovation; • brand awareness and reputation; • performance, scalability, security, and reliability; and • quality of service and customer satisfaction.
Overall growth of our revenue depends on several factors, including our ability to: • expand subscriptions to our platform for our existing customers; • increase the number of products we sell; • improve the functionality of our products and our platform and achieve and/or maintain market acceptance for them; • retain existing customers; • attract new customers; • succeed in selling our products in new verticals and in markets outside the United States; • keep pace with technological developments; • price our platform subscriptions competitively; 19 Table of Contents • increase pricing on sales of our products, which may differ from product to product; • provide our customers with support that meets their needs; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
Overall growth of our revenue depends on several factors, including our ability to: • expand subscriptions to our platform for our existing customers; • increase the number of products we sell; • improve the functionality of our products and our platform and achieve and/or maintain market acceptance for them; • retain existing customers; • attract new customers; • succeed in selling our products in new verticals and in markets outside the United States; • keep pace with technological developments; • price our platform subscriptions competitively; • increase pricing on sales of our products, which may differ from product to product; • provide our customers with support that meets their needs; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, financial condition, and results of operations. 37 Table of Contents Partnerships, strategic investments, alliances or acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, financial condition, and results of operations. 36 Table of Contents Partnerships, strategic investments, alliances or acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations.
Despite our efforts to implement these protections, these measures may not protect our business or provide us with a competitive advantage for a variety of reasons, including: • our failure to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • any inability by us to detect infringement or other misappropriation of our intellectual property rights by third parties; and • other practical, resource, or business limitations on our ability to enforce our rights.
Despite our efforts to implement these protections, these measures may not protect our business or provide us with a competitive advantage for a variety of reasons, including: • our failure to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets; • uncertainty in, and evolution of, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights; • potential invalidation of our intellectual property rights through administrative processes or litigation; • any inability by us to detect infringement or other misappropriation of our intellectual property rights by third parties; and 48 Table of Contents • other practical, resource, or business limitations on our ability to enforce our rights.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the sole and exclusive forum for any state law claims for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of fiduciary duty owed by any of our current or former directors, officers, other employees, or stockholders to us or our stockholders; • any action asserting a claim arising pursuant to the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (including the interpretation, validity or enforceability thereof); or • any action asserting a claim that is governed by the internal affairs doctrine (the “Delaware Forum Provision”).
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the sole and exclusive forum for any state law claims for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of fiduciary duty owed by any of our current or former directors, officers, other employees, or stockholders to us or our stockholders; 56 Table of Contents • any action asserting a claim arising pursuant to the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (including the interpretation, validity or enforceability thereof); or • any action asserting a claim that is governed by the internal affairs doctrine (the “Delaware Forum Provision”).
These could include, but may not be limited to, the following: • Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; • Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability, or reductions in our ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; • Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; • Potential or actual breach of financial covenants in our credit agreements or credit arrangements; • Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or • Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
These could include, but may not be limited to, the following: • Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; • Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability, or reductions in our ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; • Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; • Potential or actual breach of financial covenants in our credit agreements or credit arrangements; 58 Table of Contents • Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or • Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
Although our customer terms of use and our acceptable use policy (“AUP”) prohibit, among other things, (1) illegal use of our platform and our products by our customers, (2) the use of our products for certain activities that do not comply with industry standards and guidelines outlined in our AUP, and (3) the use of our products in any manner that would infringe, misappropriate or otherwise violate the intellectual property rights of third parties, customers may nonetheless engage in prohibited activities or upload or store content with us in violation of our 47 Table of Contents terms of use, our AUP, applicable law or the customer’s own policies, which could subject us to liability and/or harm our reputation.
Although our customer terms of use and our acceptable use policy (“AUP”) prohibit, among other things, (1) illegal use of our platform and our products by our customers, (2) the use of our products for certain activities that do not comply with industry standards and guidelines outlined in our AUP, and (3) the use of our products in any manner that would infringe, misappropriate or otherwise violate the intellectual property rights of third parties, customers may nonetheless engage in prohibited activities or upload or store content with us in violation of our terms of use, our AUP, applicable law or the customer’s own policies, which could subject us to liability and/or harm our reputation.
Our international operations and structure subject us to potentially adverse tax consequences. We currently conduct our operations in the United Kingdom and Australia through subsidiaries.
Our international operations and structure subject us to potentially adverse tax consequences. We currently conduct our operations in the United Kingdom, Australia, and Ireland through subsidiaries.
If we or our customers fail to comply with new inbox service provider requirements, if inbox service providers materially limit or halt the delivery of our customers’ emails, if we fail to deliver our customers’ emails in a manner compatible with inbox service providers’ email handling or authentication technologies or other policies, if the open, unsubscribe or spam rates of our customers’ emails are negatively impacted by the actions of inbox service providers to categorize or block emails or new requirements imposed by inbox service providers, or if our customers send fewer emails or send emails to or maintain fewer profiles on our platform as a result of new inbox service provider requirements, then customers may question the effectiveness of our platform and downgrade or cancel their subscriptions.
If we or our customers fail to comply with new inbox service provider requirements, if inbox service providers materially limit or halt the delivery of our customers’ emails, if we fail to deliver our customers’ emails in a manner compatible with inbox service providers’ email handling or authentication technologies or other policies, if the open, unsubscribe, spam rates, or other engagement metrics of our customers’ emails or the functionality of our platform are negatively impacted by the actions of inbox service providers to categorize or block emails or new policies or requirements imposed by inbox service providers, or if our customers send fewer emails or send emails to or maintain fewer profiles on our platform as a result of new inbox service provider requirements, then customers may question the effectiveness of our platform and downgrade or cancel their subscriptions.
This price increase also impacted the various measures we use to assess our usage and subscription levels based on revenue, such as NRR and our revenue growth rate, and following its implementation, those measures experienced corresponding increases as a result. As we have reached the one year anniversary of this price increase, these measures have seen a corresponding decrease.
This price increase also impacted the various measures we use to assess our usage and subscription levels based on revenue, such as NRR and our revenue growth rate, and following its implementation, those measures experienced corresponding increases as a result. As we have lapped the one year anniversary of this price increase, these measures have seen a corresponding decrease.
In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of operations, and financial condition.
In the past, stockholders of these companies have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of operations, and financial condition.
If we or our third-party service providers suffer, or are perceived to have suffered, a security breach or other security incident, we may experience a loss of customer confidence in the security of our platform and damage to our brand, reduced demand for our products and disruption of normal business operations.
If we or our third-party service providers suffer, or are perceived to have suffered, a data breach or other cybersecurity incident, we may experience a loss of customer confidence in the security of our platform and damage to our brand, reduced demand for our products and disruption of normal business operations.
The trading price of our Series A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology companies; • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; 52 Table of Contents • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of securities analysts or investors; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations; new products, services, or capabilities; acquisitions, strategic partnerships, or investments; joint ventures; or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to privacy and cybersecurity in the United States or globally; • lawsuits threatened or filed against us; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, products, services, or technologies by us or our competitors; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any major change in our board of directors, management, or key personnel; • other events or factors, including those resulting from war (including the Russia-Ukraine conflict and the conflict in the Gaza Strip), incidents of terrorism, pandemics (including the COVID-19 pandemic), or elections, or responses to these events; and • sales of additional shares of our Series A common stock by us or our stockholders.
The trading price of our Series A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology companies; • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of securities analysts or investors; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations; new products, services, or capabilities; acquisitions, strategic partnerships, or investments; joint ventures; or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to privacy and cybersecurity in the United States or globally; • lawsuits threatened or filed against us; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, products, services, or technologies by us or our competitors; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any major change in our board of directors, management, or key personnel; 52 Table of Contents • other events or factors, including those resulting from war (including the Russia-Ukraine conflict and the conflict in the Gaza Strip), incidents of terrorism, public health crises, tariffs, or elections and administration changes, or responses to these events; and • sales of additional shares of our Series A common stock by us or our stockholders.
While we continually improve our own technology and work closely with inbox 48 Table of Contents service providers and our customers to maintain our deliverability rates, the implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we or our customers are not given adequate notice of a change in policy or struggle to update our platform or products to comply with the changed policy in a reasonable amount of time.
While we continually improve our own technology and work closely with inbox service providers and our customers to maintain our deliverability rates, the implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we or our customers are not given adequate notice of a change in policy or struggle to update our platform or products to comply with the changed policy in a reasonable amount of time.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; • the discretionary nature of purchasing, budget cycles, and decisions; • the obstacles placed by customers’ procurement processes; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; 25 Table of Contents • the discretionary nature of purchasing, budget cycles, and decisions; • the obstacles placed by customers’ procurement processes; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
The contracts that we enter into with our customers and various other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to those parties for losses arising from alleged 38 Table of Contents infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our platform, technology, or obligations under such contracts.
The contracts that we enter into with our customers and various other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to those parties for losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our platform, technology, or obligations under such contracts.
If any of the third parties on which we rely fail to perform as expected, breaches or terminates their agreement with us, or becomes engaged in a dispute with us, our reputation could be adversely affected and our business could be harmed.
If any of the third parties on which we rely fails to perform as expected, breaches or terminates their agreement with us, or becomes engaged in a dispute with us, our reputation could be adversely affected and our business could be harmed.
In addition, we will face risks in doing business internationally that could adversely affect our business, including: • changes, which may be unexpected, in a specific country’s or region’s political, economic, or legal and regulatory environment, including pandemics, terrorist activities, tariffs, trade wars, or long-term environmental risks; • the need to adapt and localize our platform for specific countries, and the costs associated with adapting and localizing our platform; • longer payment cycles and greater difficulty enforcing contracts, collecting accounts receivable, or satisfying revenue recognition criteria, especially in emerging markets; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general market preferences for local vendors or domestic products; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • global health crises, such as COVID-19, that could decrease economic activity in certain markets, decrease use of our products, or decrease our ability to import, export, or sell our products to existing or new customers in international markets; • exposure to liabilities under export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws, including the Export Administration Regulations, the OFAC regulations, the U.S.
In addition, we will face risks in doing business internationally that could adversely affect our business, including: • changes, which may be unexpected, in a specific country’s or region’s political, economic, or legal and regulatory environment, including public health crises, geopolitical conflicts, terrorist activities, tariffs, trade wars, or long-term environmental risks; • the need to adapt and localize our platform for specific countries, and the costs associated with adapting and localizing our platform; • longer payment cycles and greater difficulty enforcing contracts, collecting accounts receivable, or satisfying revenue recognition criteria, especially in emerging markets; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; 28 Table of Contents • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general market preferences for local vendors or domestic products; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • public health crises that could decrease economic activity in certain markets, decrease use of our products, or decrease our ability to import, export, or sell our products to existing or new customers in international markets; • exposure to liabilities under export control, economic and trade sanctions, anti-corruption, and anti-money laundering laws, including the Export Administration Regulations, the OFAC regulations, the U.S.
These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, potentially resulting in continued uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, potentially resulting in continued uncertainty regarding compliance matters and higher 57 Table of Contents costs necessitated by ongoing revisions to disclosure and governance practices.
Under current law, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.
Under current law, federal NOLs generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.
We have encountered 20 Table of Contents and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as risks and uncertainties related to: • retention of customers; • adding new customers, particularly in the mid-market and enterprise categories; • competition; • our ability to control costs, particularly our operating expenses; • network outages or security breaches and any associated expenses; • foreign currency exchange rate fluctuations; • executing acquisitions and integrating the acquired businesses, technologies, products, and other assets; and • general economic and political conditions.
We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as risks and uncertainties related to: • retention of customers; • adding new customers, particularly in the mid-market and enterprise categories; • competition; • our ability to control costs, particularly our operating expenses; • network outages or security breaches and any associated expenses; • foreign currency exchange rate fluctuations; • executing acquisitions and integrating the acquired businesses, technologies, products, and other assets; and • general economic and political conditions.
At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
Additionally, members of our board or management team who have had experience as board members, officers, executives or employees of other companies have been, are currently, or may become, involved in litigation, investigations or other proceedings, including related to those companies or otherwise.
Additionally, members of our board of directors or management team who have experience as board members, officers, executives or employees of other companies have been, are currently, or may become, involved in litigation, investigations or other proceedings, including related to those companies or otherwise.
If we fail to meet or exceed such expectations for these or any other reasons, the trading price of our Series A common stock could fluctuate, and our business, financial condition, and results of operations could be adversely affected. We rely upon a third-party provider of cloud-based infrastructure to host and sell our products.
If we fail to meet or exceed such expectations for these or any other reasons, the trading price of our Series A common stock could fluctuate, and our business, financial condition, and results of operations could be adversely affected. 30 Table of Contents We rely upon a third-party provider of cloud-based infrastructure to host and sell our products.
Our business depends on our ability to send consumer engagement messages, including emails, SMS, and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating 31 Table of Contents systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition, and results of operations.
Our business depends on our ability to send consumer engagement messages, including emails, SMS, and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition, and results of operations.
The defense or prosecution of these matters could be time-consuming, and the potential outcomes of such actions may negatively affect our reputation. We agree to indemnify customers and other third parties pursuant to various contractual arrangements we enter into in the course of business, which exposes us to substantial potential liability.
The defense or prosecution of these matters could be time-consuming, and the potential outcomes of such actions may negatively affect our reputation. 37 Table of Contents We agree to indemnify customers and other third parties pursuant to various contractual arrangements we enter into in the course of business, which exposes us to substantial potential liability.
Such a circumstance may also require us to spend material resources to investigate, remediate or correct the issue and prevent recurrence, notify regulators, and affected customers and individuals, expose us to legal liabilities, including litigation, regulatory enforcement, indemnity obligations, fines, and penalties, and adversely affect our business, financial condition, and results of operations.
Such a circumstance may also require us to spend material resources to investigate, remediate or correct the issue and prevent recurrence, notify regulators, and affected stakeholders, expose us to legal liabilities, including litigation, regulatory enforcement, indemnity obligations, fines, and penalties, and adversely affect our business, financial condition, and results of operations.
We have historically invested significantly in research and development and expect this investment to continue. If these investments do not translate into new products or enhancements to our current products or product features, or if we do 26 Table of Contents not use those investments efficiently, our business, financial condition, and results of operations could be adversely affected.
We have historically invested significantly in research and development and expect this investment to continue. If these investments do not translate into new products or enhancements to our current products or product features, or if we do not use those investments efficiently, our business, financial condition, and results of operations could be adversely affected.
If we fail to maintain our current security certifications and/or to continue to meet security standards, or if we are unable to adapt our platform to changing legal and regulatory standards or other requirements in a timely manner, our customers may lose confidence in our platform, and our revenue, business, financial condition, and results of operations could be adversely affected.
If we fail to maintain our current security certifications and/or to continue to meet security standards, or if we are unable to adapt our 46 Table of Contents platform to changing legal and regulatory standards or other requirements in a timely manner, our customers may lose confidence in our platform, and our revenue, business, financial condition, and results of operations could be adversely affected.
A new regulation proposed in the EU, which would apply across the European Economic Area, known as the ePrivacy Regulation, if and when enacted, may further restrict the use of cookies and other online tracking technologies on which our platform relies, as well as increase restrictions on the types of direct marketing campaigns that our platform enables.
A new regulation proposed in the EU, which would apply across the European Economic Area, known as the ePrivacy Regulation, may further restrict the use of cookies and other online tracking technologies on which our platform relies, as well as increase restrictions on the types of direct marketing campaigns that our platform enables.
These technology partners may fail to maintain, support, or improve their integrations, which could reduce the utility of our platform and in turn could decrease demand for our platform and products, harm our reputation and brand, and have a negative effect on our business, financial condition, and operating results.
These technology partners may fail to maintain, support, or 22 Table of Contents improve their integrations, which could reduce the utility of our platform and in turn could decrease demand for our platform and products, harm our reputation and brand, and have a negative effect on our business, financial condition, and operating results.
Many of our current and potential competitors have or may have significantly greater financial, technical, marketing, and other resources than we do. They may secure better terms from partners, adopt more aggressive or alternative pricing 21 Table of Contents policies, or devote more resources to technology, infrastructure, sales, marketing, and customer service.
Many of our current and potential competitors have or may have significantly greater financial, technical, marketing, and other resources than we do. They may secure better terms from partners, adopt more aggressive or alternative pricing policies, or devote more resources to technology, infrastructure, sales, marketing, and customer service.
If we are unable to maintain or increase our revenue at a rate sufficient to offset the expected 25 Table of Contents increase in our costs, our business, financial condition, and results of operations could be adversely affected, and the trading price of our Series A common stock could decline as a result.
If we are unable to maintain or increase our revenue at a rate sufficient to offset the expected increase in our costs, our business, financial condition, and results of operations could be adversely affected, and the trading price of our Series A common stock could decline as a result.
If we fail to attract new personnel or fail to retain and motivate our current personnel, it could adversely affect our business and future growth prospects. If we fail to maintain and enhance our brand, our ability to maintain or expand our customer base may be impaired and our business, financial condition, and results of operations could be adversely affected.
If we fail to attract new personnel or fail to retain and motivate our current personnel, it could adversely affect our business and future growth prospects. 27 Table of Contents If we fail to maintain and enhance our brand, our ability to maintain or expand our customer base may be impaired and our business, financial condition, and results of operations could be adversely affected.
Even though we do not control the security measures of third parties who may have access to our customer data, our data, or our platform, we may be responsible for any breach of such measures or suffer reputational harm even where we do not have recourse to the third party that caused the breach.
Even though we do not control the security measures of third parties who may have access to our customer data, our data, or our platform, we may be responsible for any cybersecurity incident or data breach impacting such measures or suffer reputational harm even where we do not have recourse to the third-party that caused the breach.
Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other 60 Table of Contents obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws.
Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws.
Unauthorized disclosure of or access to or security breaches of our platform could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, damage to our brand, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other liabilities.
Unauthorized disclosure of or access to or cybersecurity incidents, data breaches or other compromises of our platform could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, damage to our brand, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, including regulatory fines, and significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other liabilities.
The trading market for our Series A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If few securities analysts cover us, or if industry analysts cease coverage of us, the trading price for our Series A common stock would be negatively affected.
The trading market for our Series A common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If few securities analysts cover us, or if industry analysts cease coverage of us, the trading price for our Series A common stock would be negatively affected.
As a result of any of these events, our reputation and our brand could be harmed, and our business, results of operations, and financial condition may be adversely affected. 32 Table of Contents Any failure to offer high-quality technical support services may harm our relationships with our customers, our brand, and our results of operations.
As a result of any of these events, our reputation and our brand could be harmed, and our business, results of operations, and financial condition may be adversely affected. Any failure to offer high-quality technical support services may harm our relationships with our customers, our brand, and our results of operations.
Even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all. Market estimates and growth forecasts are uncertain and based on assumptions and estimates that may be inaccurate.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate. Even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all. Market estimates and growth forecasts are uncertain and based on assumptions and estimates that may be inaccurate.
Our business is subject to the risks of earthquakes, fire, floods, and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, data security breaches, or terrorism. Our corporate headquarters are located in Boston, Massachusetts, and we have employees elsewhere in the United States. We also have offices in the United Kingdom and Australia.
Our business is subject to the risks of earthquakes, fire, floods, and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, data security breaches, or terrorism. Our corporate headquarters are located in Boston, Massachusetts, and we have employees elsewhere in the United States.
The use of generative AI, a newer and emerging technology in the early stages of commercial use, may expose us to additional risk, such as damage to our reputation, competitive position, additional costs, and other business, legal and regulatory risks.
The use of generative AI, a newer and emerging 50 Table of Contents technology in the early stages of commercial use, may expose us to additional risk, such as damage to our reputation, competitive position, additional costs, and other business, legal and regulatory risks.
As a result, it is possible that one or more of the persons or entities holding our Series B common stock could gain significant voting control as other holders of Series B common stock sell or otherwise convert their shares into Series A common stock.
As a result, it is possible 53 Table of Contents that one or more of the persons or entities holding our Series B common stock could gain significant voting control as other holders of Series B common stock sell or otherwise convert their shares into Series A common stock.
To the extent that weak or volatile economic conditions, including due to the COVID-19 pandemic, labor shortages, supply chain disruptions, inflation, a government shutdown, geopolitical developments (such as the Russia-Ukraine conflict and the conflict in the Gaza Strip, as well as the implementation of, or changes to or further expansions of, trade sanctions, export restrictions, tariffs, and embargoes), deterioration of the financial services industry and other events outside of our control, result in a reduced volume of business for our customers and prospective customers, demand for, and use of, our platform and our products may decline.
To the extent that weak or volatile economic conditions, including due to public health crises, labor shortages, supply chain disruptions, inflation, a government shutdown, geopolitical developments (such as the Russia-Ukraine conflict and the conflict in the Gaza Strip, as well as the implementation of, or changes to or further expansions of, trade sanctions, export restrictions, tariffs, and embargoes), deterioration of the financial services industry and other events outside of our control, result in a reduced volume of business for our customers and prospective customers, demand for, and use of, our platform and our products may decline.
For the years ended December 31, 2023, 2022, and 2021, our research and development expenses were 37.6%, 22.0%, and 22.6% of our revenue, respectively. Research and development projects can be technically challenging and expensive, particularly as we work to expand both the channels through which we offer our products and the use cases for our products beyond marketing.
For the years ended December 31, 2024, 2023, and 2022, our research and development expenses were 25.4%, 37.6%, and 22.0% of our revenue, respectively. Research and development projects can be technically challenging and expensive, particularly as we work to expand both the channels through which we offer our products and the use cases for our products beyond marketing.
Our business could be adversely affected by health crises in regions where we operate or otherwise do business. For example, the policies and regulations implemented in response to the outbreak of the novel coronavirus disease (“COVID-19”) have had a significant impact, both directly and indirectly, on businesses and commerce.
Our business could be adversely affected by health crises in regions where we operate or otherwise do business. For example, the policies and regulations implemented in response to the outbreak of the novel coronavirus disease 38 Table of Contents (“COVID-19”) had a significant impact, both directly and indirectly, on businesses and commerce.
Our failure to successfully accomplish any of the above activities and goals could adversely affect our business, results of operations, and financial condition. 33 Table of Contents Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations.
Our failure to successfully accomplish any of the above activities and goals could adversely affect our business, results of operations, and financial condition. Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations.
In addition, certain states, and foreign jurisdictions, such as Australia, Canada, the United Kingdom, and the European Union, have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws.
In 45 Table of Contents addition, certain states, and foreign jurisdictions, such as Australia, Canada, the United Kingdom, and the European Union, have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws.
Further, the use of machine learning and artificial intelligence is becoming increasingly prevalent in our industry, and, although we intend to continue developing our platform’s machine learning and artificial intelligence capabilities to meet the needs of our customers and partners, we may be unable to accurately or efficiently integrate machine learning and artificial intelligence features or functionalities of the quality or type sought by our customers and partners or offered by our competitors.
Further, the use of machine learning and artificial intelligence has become increasingly prevalent in our industry, and, although we intend to continue developing our platform’s machine learning and artificial intelligence capabilities to meet the needs of our customers and partners, we may be unable to accurately or efficiently integrate machine learning and artificial intelligence features or functionalities of the quality or type sought by our customers and partners or offered by our competitors.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC.
Additionally, factors that may impact these fluctuations include, but are not limited to: • demand for our platform and products by our customers; • our success in retaining existing customers and attracting new customers; • the timing and success of new capabilities by us or by our competitors or any other change in the competitive landscape of our market; • the amount and timing of operating expenses and capital expenditures, as well as entry into operating leases, that we may incur to maintain and expand our business and operations and remain competitive; • the timing of expenses and recognition of revenue; • reduction in certain customers’ usage of our platform that is subject to seasonal fluctuations; • security breaches, and technical difficulties involving our platform or interruptions or disruptions of our platform; • adverse litigation judgments, other dispute-related settlement payments, or other litigation- related costs; 30 Table of Contents • changes in, and continuing uncertainty in relation to, the legislative or regulatory environment; • the timing of hiring new employees; • the rate of expansion and productivity of our sales force; • the timing of the grant or vesting of equity awards to employees, directors, consultants, or advisors and the recognition of associated expenses; • fluctuations in foreign currency exchange rates; • costs and timing of expenses related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; • the impact of tax charges as a result of non-compliance with federal, state, or local tax regulations in the United States; • changes to generally accepted accounting standards in the United States; • health pandemics, such as the COVID-19 pandemic, influenza, and other highly communicable diseases or viruses; and • general economic conditions in either domestic or international markets, including conditions resulting from geopolitical uncertainty and instability.
Additionally, factors that may impact these fluctuations include, but are not limited to: • demand for our platform and products by our customers; • our success in retaining existing customers and attracting new customers; • the timing and success of new capabilities by us or by our competitors or any other change in the competitive landscape of our market; • the amount and timing of operating expenses and capital expenditures, as well as entry into operating leases, that we may incur to maintain and expand our business and operations and remain competitive; • the timing of expenses and recognition of revenue; • reduction in certain customers’ usage of our platform that is subject to seasonal fluctuations; • security breaches, and technical difficulties involving our platform or interruptions or disruptions of our platform; • adverse litigation judgments, other dispute-related settlement payments, or other litigation-related costs; • changes in, and continuing uncertainty in relation to, the legislative or regulatory environment; • the timing of hiring new employees; • the rate of expansion and productivity of our sales force; • the timing of the grant or vesting of equity awards to employees, directors, consultants, or advisors and the recognition of associated expenses; • fluctuations in foreign currency exchange rates; • costs and timing of expenses related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; • the impact of tax charges as a result of non-compliance with federal, state, or local tax regulations in the United States; • changes to generally accepted accounting standards in the United States; • public health crises, such as pandemics, epidemics, and outbreaks of infectious diseases; and • general economic conditions in either domestic or international markets, including conditions resulting from geopolitical uncertainty and instability.
In addition, our tax expense could be affected depending on the applicability of withholding and other taxes (including withholding and indirect taxes on software licenses and related intercompany transactions) under the United Kingdom and Australian laws. The relevant revenue and taxing authorities may also disagree with positions we have taken generally.
In addition, our tax expense could be affected depending on the applicability of withholding and other taxes (including withholding and indirect taxes on software licenses and related intercompany transactions) under applicable laws. The relevant revenue and taxing authorities may also disagree with positions we have taken generally.
Our business and our growth are dependent on our ability to continue to attract and acquire new customers while retaining existing customers and expanding both their usage of our platform and the products we sell to them.
Our business and our growth are dependent on our ability to continue to attract and acquire new customers 23 Table of Contents while retaining existing customers and expanding both their usage of our platform and the products we sell to them.
Accordingly, we have invested substantial time and resources in building a team that reflects our culture and core values. As we continue to grow and develop our infrastructure as a public company, our operations are likely to become increasingly complex, and we may find it difficult to maintain these important aspects of our culture and core values.
Accordingly, we have invested substantial time and resources in building a team that reflects our culture and core values. As we continue to grow, our operations are likely to become increasingly complex, and we may find it difficult to maintain these important aspects of our culture and core values.
The companies that operate these third-party platforms generally dictate, to varying degrees, the terms of use of their respective platforms, including the manner and procedure by which we integrate with their respective platforms.
The companies that operate these third-party 21 Table of Contents platforms generally dictate, to varying degrees, the terms of use of their respective platforms, including the manner and procedure by which we integrate with their respective platforms.
While we believe we have taken reasonable steps to protect our data, the techniques used to sabotage or to obtain unauthorized access to our platform, systems, networks, or physical facilities in which data is stored or through which data is transmitted change frequently, and we may be unable to implement adequate preventative measures or stop security breaches while they are occurring.
While we believe we have taken reasonable steps to protect our data, the techniques used to sabotage or to obtain unauthorized access to our platform, systems, networks, or physical facilities in which data is stored or through which data is transmitted change frequently, and we may be unable to implement adequate preventative measures or stop cybersecurity incidents, data breaches or other compromises while they are occurring.
These third-party providers and technologies may not have adequate measures in place, and could experience or cause a security incident that compromises the confidentiality, integrity or availability of the systems or technologies they provide to us or the information they process on our behalf.
These third-party providers and technologies may not have adequate measures in place, and could experience or cause a cybersecurity incident or data breach that compromises the confidentiality, integrity or availability of the systems or technologies they provide to us or the information they process on our behalf.
While shares held by directors, executive officers, and other affiliates are subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements, we are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our Series A common stock.
While shares held by directors, executive officers, and other affiliates are subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) and various vesting agreements, we are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our Series A common stock.
Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our platform and products, offer new features as part of our existing products, offer new products, and increase adoption and usage of our platform and products.
Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our platform and products, offer new features as part of our existing products, offer 26 Table of Contents new products, and increase adoption and usage of our platform and products.
Additionally, in July 2022, we were the victim of an attack whereby an unauthorized third party compromised an employee’s credentials and gained access to our internal systems, including email as well as some of our internal support tools, and, as a result, accessed certain information, including name, email address, and phone number, for a subset of our customers.
Specifically, in July 2022, we were the victim of an attack whereby an unauthorized third-party compromised an employee’s credentials and gained access to our internal systems, including email as well as some of our internal support tools, and, as a result, accessed certain information, including name, email 40 Table of Contents address, and phone number, for a subset of our customers.
If we fail to detect or remediate a security breach in a timely manner, or a breach otherwise affects a large amount of data of one or more customers, or if we suffer a cyberattack that impacts our ability to operate our platform, we may suffer damage to our reputation and our brand, and our business, financial condition and results of operations may be materially adversely affected.
If we fail to detect or remediate a cybersecurity incident, data breach or other compromise in a timely manner, or a cybersecurity incident, data breach or other compromise otherwise affects a large amount of data of one or more customers, or if we suffer a cyberattack that impacts our ability to operate our platform, we may suffer damage to our reputation and our brand, and our business, financial condition and results of operations may be materially adversely affected.
For example, many countries are actively considering or have proposed or enacted changes to their tax laws based on the model rules adopted by The Organization for Economic Cooperation and Development defining a 15% global minimum tax (commonly referred to as Pillar Two) that could increase our tax obligations in countries where we do business or cause us to change the way we operate our business.
For example, many countries are actively considering or have proposed or enacted changes to their tax laws based on the model rules adopted by The Organisation for Economic Co-operation and Development (“OECD”) defining a 15% global minimum tax (commonly referred to as Pillar Two) that could increase our tax obligations in countries where we do business or cause us to change the way we operate our business.
Our agreements with certain customers may require us to use industry-standard or reasonable measures to safeguard personal information or confidential information. A security breach could lead to claims by our customers, their end-users, or other relevant stakeholders that we have failed to comply with such legal or contractual obligations.
Our agreements with certain customers may require us to use industry-standard or reasonable measures to safeguard personal information or confidential information. A cybersecurity incident, data breach or other compromise could lead to claims by our customers, their end-users, or other relevant stakeholders that we have failed to comply with such legal or contractual obligations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Information Security Officer (“CISO”) provides updates on the cybersecurity risks we face and our processes to address those risks to our Audit 61 Table of Contents Committee on a periodic, but at least quarterly, basis.
Biggest changeOur Chief Information Security Officer (“CISO”) provides updates on the cybersecurity risks we face and our processes to address those risks to our Audit Committee on a periodic, but at least quarterly, basis. These updates may include, but are not limited to, reports of identified cybersecurity risks, status of our risk management processes, and updates regarding regulatory requirements and policies.
Our Audit Committee comprises members of our board of directors with extensive experience in the technology sector who have held leadership positions at other publicly listed companies and have expertise in various aspects of our business. Cybersecurity matters are formally raised to the Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer through their attendance of Audit Committee meetings.
Our Audit Committee comprises members of our board of directors with extensive experience in the technology sector who have held leadership positions at other publicly listed companies and have expertise in various aspects of our business. Cybersecurity matters are formally raised to our Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer through their attendance of Audit Committee meetings.
We have implemented a process to address identified risks from cybersecurity threats in which the Security Operations and Trust team works in consultation with management and other key stakeholders, as appropriate, to determine the associated risks, potential impact, and the recommended course of action to address those risks.
We have implemented a process to address identified risks from cybersecurity threats in which our Security Operations and Trust team works in consultation with management and other key stakeholders, as appropriate, to determine the associated risks, potential impact, and the recommended course of action to address those risks.
For example, independent third-party experts and assessors assist with our SOC 2 Type 2 examinations and penetration testing. Our internal audit function also periodically conducts an assessment of different systems to provide the Audit Committee with information on our cybersecurity risk management processes.
For example, independent third-party experts and assessors assist with our SOC 2 Type 2 examinations and penetration testing. Our internal audit function also periodically conducts an assessment of different systems to provide our Audit Committee with information on our cybersecurity risk management processes.
His knowledge of cybersecurity, compliance, and risk assessment has been leveraged to develop our cybersecurity governance and risk strategy. Our CISO oversees the Security Operations and Trust team, as well as our cybersecurity related programs and matters, which are reported on regularly to the Audit Committee.
His knowledge of cybersecurity, compliance, and risk assessment has been leveraged to develop our cybersecurity governance and risk strategy. Our CISO oversees our Security Operations and Trust team, as well as our cybersecurity related programs and matters, which are reported on regularly to our Audit Committee.
While we have been the target and victim of cyberattacks by third parties, as of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity incidents that may have materially affected or are reasonably likely to 62 Table of Contents materially affect the Company, including our business strategy, results of operations, or financial condition.
While we have been the target and victim of cyberattacks by third parties, as of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity incidents that may have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
Our CISO leads our cybersecurity initiatives and is primarily responsible for the assessing, managing, and monitoring of the Company’s cybersecurity risks. Our CISO has over 20 years of experience in the technology sector, including as CISO of other publicly listed technology companies.
Our CISO leads our cybersecurity initiatives and is primarily responsible for the assessing, managing, and monitoring of the Company’s cybersecurity risks. Our CISO has over 25 years of experience in the technology sector, including as CISO of other publicly listed technology companies.
These individuals are also informed of significant events and updates through direct communication from our CISO as needed. We have a process for significant decisions over the Company’s cybersecurity framework and identified incidents to be escalated to the board of directors for disclosure and oversight.
These individuals are also informed of significant events and updates through direct communication from our CISO as needed. We have a process for significant decisions over identified incidents to be escalated to our board of directors for disclosure and oversight.
We have an incident response plan that is designed to set out escalation procedures for informing management and other key stakeholders. Our process calls for significant incidents and significant cyber risks to be raised to the Audit Committee followed by notification to our board of directors. We engage third-party service providers in the operation of our business.
We have an incident response plan that includes escalation procedures for informing management and other key stakeholders. Our process calls for significant incidents and significant cyber risks to be raised to our Audit Committee followed by notification to our board of directors. 60 Table of Contents We engage third-party service providers in the operation of our business.
Removed
These updates may include, but are not limited to, reports of identified cybersecurity risks, status of our risk management processes, and updates regarding regulatory requirements and policies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Boston, Massachusetts, where we currently lease approximately 159,860 square feet pursuant to a lease agreement that expires in 2028. We also lease or purchase service memberships to additional facilities in Denver, Colorado; London, United Kingdom; and Sydney, Australia. We believe our facilities are adequate for our current needs.
Biggest changeItem 2. Properties Our corporate headquarters is located in Boston, Massachusetts, where we currently lease approximately 159,860 square feet pursuant to a lease agreement that expires in 2033. In January 2025, we amended the lease for our corporate headquarters to add approximately 96,744 square feet to the lease.
Added
We currently do not occupy the additional space and have excluded this square footage from the total leased space for our corporate headquarters stated above. We also lease or purchase service memberships to additional facilities in San Francisco, California; Denver, Colorado; London, United Kingdom; Sydney, Australia; and Dublin, Ireland. We believe our facilities are adequate for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not aware of any governmental inquiries or investigations into our business. Item 4. Mine Safety Disclosures Not Applicable. 63 Table of Contents Part II
Biggest changeWe are not aware of any governmental inquiries or investigations into our business. Item 4. Mine Safety Disclosures Not Applicable. 61 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUse of Proceeds from Initial Public Offering of Our Series A Common Stock On September 19, 2023, the Registration Statement on Form S-1 (File No. 333-274211) (the “Registration Statement”) relating to our IPO was declared effective by the SEC and we priced our IPO.
Biggest changeThe issuance of shares of Series B common stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. Use of Proceeds from Initial Public Offering of Our Series A Common Stock On September 19, 2023, our Registration Statement on Form S-1 (File No. 333-274211) relating to our IPO was declared effective by the SEC.
The following graph shows the cumulative total return to our stockholders between September 20, 2023 (the date that our Series A common stock commenced trading on the New York Stock Exchange) through December 31, 2023 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
The following graph shows the cumulative total return to our stockholders between September 20, 2023 (the date that our Series A common stock commenced trading on the New York Stock Exchange) through December 31, 2024 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference herein to our definitive Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference herein to our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024.
Stock Performance Graph The following performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
Stock Performance Graph The following performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.
The actual number of shareholders of our Series A common stock is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. As of February 23, 2024, there were 83 holders of record of our Series B common stock.
The actual number of shareholders of our Series A common stock is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. As of February 14, 2025, there were 40 holders of record of our Series B common stock.
Our Series B common stock is neither listed on any stock exchange nor traded on any public market. Holders of Record As of February 23, 2024, there were 120 holders of record of our Series A common stock.
Our Series B common stock is neither listed on any stock exchange nor traded on any public market. Holders of Record As of February 14, 2025, there were 26 holders of record of our Series A common stock.
The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. 64 Table of Contents 9/20/2023 9/30/2023 10/31/2023 11/30/2023 12/31/2023 KVYO 100 105 87 90 85 S&P 500 Index 100 97 95 104 108 S&P 500 Information Technology Index 100 99 99 111 115 Recent Sale of Unregistered Equity Securities On October 31, 2023, Shopify Strategic partially exercised the Shopify Warrants in cash for 344,381 shares of our Series B common stock at a price per share of $0.01 for an aggregate purchase price of $3,443.81.
The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. 62 Table of Contents 9/20/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 KVYO 100 105 85 78 76 108 126 S&P 500 Index 100 97 108 119 124 131 134 S&P 500 Information Technology Index 100 99 115 130 147 150 157 Recent Sale of Unregistered Equity Securities On October 28, 2024, Shopify partially exercised the Shopify Warrants (as defined below) in cash for 344,381 shares of our Series B common stock at a price per share of $0.01 for an aggregate purchase price of $3,443.81.
There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus, dated September 19, 2023, filed with the SEC on September 20, 2023 pursuant to Rule 424(b) (the “Final Prospectus”). Issuer Purchase of Equity Securities None. Item 6. [Reserved] Not applicable.
There has been no material change in the use of proceeds from our IPO as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 29, 2024. Issuer Purchase of Equity Securities None. Item 6. [Reserved]
Removed
The issuance of Series B common stock shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act.
Removed
Pursuant to the Registration Statement, we registered an aggregate of 22,080,000 million shares of our Series A common stock, inclusive of the underwriters’ option to purchase additional shares from the selling stockholders.
Removed
On September 22, 2023, we closed our IPO of 19,200,000 shares of our Series A common stock, including the sale by us of 11,507,693 of shares, at a price to the public of $30.00 per share. We received net proceeds of approximately $320.1 million, after deducting approximately $17.7 million in underwriting discounts and commissions, and $7.4 million in offering-related expenses.
Removed
Goldman Sachs & Co. LLC, Morgan Stanley & Co, LLC and Citigroup Global Markets Inc. acted as representatives of the underwriters for the offering.
Removed
No payments were made to our directors or officers or their associates, holders of 10% or more of any class of our equity securities or any affiliates, other than to directors or holders of 10% or more of our equity securities that were selling stockholders in the IPO, as described below.
Removed
The IPO also included the sale of 7,692,307 shares of our Series A common stock by selling stockholders. We did not receive any proceeds from the sale of Series A common stock by the selling stockholders. The selling stockholders granted the underwriters an option to purchase up to 2,880,000 additional shares of Series A common stock.
Removed
The option was 65 Table of Contents exercised for 2,764,066 additional shares on October 19, 2023. Jennifer Ceran, one of our directors, and entities affiliated with Summit Partners, L.P., a holder of more than 10% of our equity securities, were selling stockholders in our IPO.
Removed
We used $62.9 million of the net proceeds from our IPO to satisfy the tax withholding and remittance obligations related to the settlement of outstanding RSUs in connection with the offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+17 added−35 removed68 unchanged
Biggest changeYear Ended December 31, 2023 2022 2021 ($ in thousands) Consolidated Statements of Operations Revenue $ 698,099 $ 472,748 $ 290,640 Cost of revenue (1) 177,888 128,025 84,696 Gross profit 520,211 344,723 205,944 Operating expenses: Selling and marketing (1) 394,369 213,848 156,342 Research and development (1) 262,177 104,077 65,599 General and administrative (1) 194,287 81,834 63,236 Total operating expenses 850,833 399,759 285,177 Operating loss (330,622) (55,036) (79,233) Other income (expense): Other income (expense), net (470) 388 28 Interest income 24,051 5,538 139 Interest expense — — (8) Total other income (expense), net 23,581 5,926 159 Loss before income taxes (307,041) (49,110) (79,074) Provision for income taxes 1,192 83 319 Net loss $ (308,233) $ (49,193) $ (79,393) (1) Includes stock-based compensation expense as follows (in thousands): Year Ended December 31, 2023 2022 2021 Cost of revenue $ 24,973 $ 129 $ 960 Selling and marketing 107,954 985 29,713 Research and development 120,184 1,230 8,193 General and administrative 87,688 5,958 13,123 Stock-based compensation, net of amounts capitalized 340,799 8,302 51,989 Capitalized stock-based compensation expense 1,349 — 2 Total stock-based compensation expense $ 342,148 $ 8,302 $ 51,991 73 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Consolidated Statements of Operations Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 25.5 27.1 29.1 Gross profit 74.5 72.9 70.9 Operating expenses: Selling and marketing 56.5 45.2 53.8 Research and development 37.6 22.0 22.6 General and administrative 27.8 17.3 21.8 Total operating expenses 121.9 84.6 98.1 Operating income (loss) (47.4) (11.6) (27.3) Other income (expense): Other income (expense), net (0.1) 0.1 — Interest income 3.4 1.2 — Interest expense — — — Total other income (expense), net 3.3 1.3 0.1 Income (loss) before income taxes (44.0) (10.4) (27.2) Provision for income taxes 0.2 — 0.1 Net income (loss) (44.2) % (10.4) % (27.3) % Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Revenue $ 698,099 $ 472,748 $ 225,351 47.7 % Revenue for the year ended December 31, 2023 increased by $225.4 million or 47.7%, to $698.1 million compared to $472.7 million for the year ended December 31, 2022.
Biggest changeYear Ended December 31, 2024 2023 2022 ($ in thousands) Consolidated Statements of Operations Revenue $ 937,464 $ 698,099 $ 472,748 Cost of revenue (1) 221,305 177,888 128,025 Gross profit 716,159 520,211 344,723 Operating expenses: Selling and marketing (1) 404,209 394,369 213,848 Research and development (1) 238,459 262,177 104,077 General and administrative (1) 157,569 194,287 81,834 Total operating expenses 800,237 850,833 399,759 Operating loss (84,078) (330,622) (55,036) Other income (expense): Other income (expense), net 816 (470) 388 Interest income 39,582 24,051 5,538 Total other income (expense), net 40,398 23,581 5,926 Loss before income taxes (43,680) (307,041) (49,110) Provision for income taxes 2,462 1,192 83 Net loss $ (46,142) $ (308,233) $ (49,193) (1) Includes stock-based compensation expense as follows (in thousands): Year Ended December 31, 2024 2023 2022 Cost of revenue $ 8,917 $ 24,973 $ 129 Selling and marketing 40,907 107,954 985 Research and development 50,693 120,184 1,230 General and administrative 34,695 87,688 5,958 Stock-based compensation, net of amounts capitalized 135,212 340,799 8,302 Capitalized stock-based compensation expense 3,555 1,349 — Total stock-based compensation expense $ 138,767 $ 342,148 $ 8,302 70 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Consolidated Statements of Operations Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 23.6 25.5 27.1 Gross profit 76.4 74.5 72.9 Operating expenses: Selling and marketing 43.1 56.5 45.2 Research and development 25.4 37.6 22.0 General and administrative 16.8 27.8 17.3 Total operating expenses 85.3 121.9 84.6 Operating income (loss) (8.9) (47.4) (11.6) Other income (expense): Other income (expense), net 0.1 (0.1) 0.1 Interest income 4.2 3.4 1.2 Total other income (expense), net 4.3 3.3 1.3 Income (loss) before income taxes (4.6) (44.0) (10.4) Provision for income taxes 0.3 0.2 — Net loss (4.9) % (44.2) % (10.4) % Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Revenue $ 937,464 $ 698,099 $ 239,365 34.3 % Revenue for the year ended December 31, 2024 increased by $239.4 million or 34.3%, to $937.5 million compared to $698.1 million for the year ended December 31, 2023.
The cash outflow was offset by cash inflows primarily from a $15.0 million increase in deferred revenue resulting from increased billings for subscriptions and a $31.2 million net increase in accrued expenses and accounts payable due to timing of vendor payments and the implementation of a company-wide sabbatical program.
The cash outflow was offset by cash inflows primarily from a $31.2 million net increase in accrued expenses and accounts payable due to timing of vendor payments and the implementation of a company-wide sabbatical program and a $15.0 million increase in deferred revenue resulting from increased billings for subscriptions.
General and Administrative Our general and administrative expenses consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation in general corporate functions; procurement, accounting and finance, tax, legal, project management, and human resources, as well as allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
General and Administrative Our general and administrative expenses consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation in general corporate functions, such as procurement, accounting and finance, tax, legal, project management, and human resources, as well as allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
Second, we cross-sell additional communication channels, such as SMS to customers who started on our platform with our email offering, as well as add-ons, such as reviews and our CDP offering. Finally, we sell our platform to our customers’ other brands, business units, and geographies.
Second, we cross-sell additional communication channels, such as SMS to customers who started on our platform with our email offering, as well as add-ons, such as reviews and our CDP offering. Finally, we offer our platform to our customers’ other brands, business units, and geographies.
We determined that the purchase price equals the fair market value of the instruments issued as Shopify Strategic was an outside investor at the time we entered into the stock purchase agreement and the purchase represented an arms-length transaction.
We determined that the purchase price equals the fair market value of the instruments issued as Shopify was an outside investor at the time we entered into the stock purchase agreement and the purchase represented an arms-length transaction.
During the year ended December 31, 2023, stock-based compensation awards issued were in the form of RSUs subject to both service-based and performance-based vesting conditions under the 2015 Plan and RSUs subject to only service-based vesting conditions under the 2023 Plan.
During the year ended December 31, 2023, stock-based compensation awards issued were in the form of RSUs subject to both service-based and performance-based vesting conditions under our 2015 Plan and RSUs subject to only service-based vesting conditions under our 2023 Plan.
Financing Activities Net cash provided by financing activities of $242.7 million for the year ended December 31, 2023 primarily consisted of approximately $320.1 million of IPO proceeds net of issuance costs and $4.2 million of proceeds from the exercise of stock options offset by $81.6 million used for the payment of employee tax obligations related to the net share settlement of stock-based compensation awards.
Net cash provided by financing activities of $242.7 million for the year ended December 31, 2023 primarily consisted of approximately $320.1 million of our IPO proceeds net of issuance costs and $4.2 million of proceeds from the exercise of common stock options offset by $81.6 million used for the payment of employee tax obligations related to the net share settlement of stock-based compensation awards.
We expect to continue to diversify our cash management strategy to primarily include money market funds, highly-liquid debt instruments 79 Table of Contents of the U.S. government and its agencies, senior corporate bonds, and commercial paper to reduce our global exposure on banking deposits.
We expect to continue to diversify our cash management strategy to primarily include money market funds, highly-liquid debt instruments 76 Table of Contents of the U.S. government and its agencies, senior corporate bonds, and commercial paper to reduce our global exposure on banking deposits.
In doing so, we review and analyze our primary sources and uses of liquidity to include cash balances on hand and cash flows from operations. Since our inception through December 31, 2023, we have financed our operations primarily through sales of equity securities and payments received from our customers.
In doing so, we review and analyze our primary sources and uses of liquidity to include cash balances on hand and cash flows from operations. Since our inception through December 31, 2024, we have financed our operations primarily through sales of equity securities and payments received from our customers.
We calculate our number of customers generating over $50,000 of ARR as those customers that have an average ARR of greater than $50,000 over the prior twelve months (or the entire duration of the customer’s paying relationship, if it is less than twelve months) as of the date of determination.
We calculate our number of customers generating over $50,000 of ARR (as defined below) as those customers that have an average ARR of greater than $50,000 over the prior twelve months (or the entire duration of the customer’s paying relationship, if it is less than twelve months) as of the date of determination.
Our reviews add-on allows our customers (as defined below) to collect product reviews within our platform to provide a seamless experience across the customer lifecycle, and our CDP offering gives customers user-friendly ways to track new types of data, transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data in to and out of Klaviyo at scale.
Our reviews add-on allows our customers to collect product reviews within our platform to provide a seamless experience across the customer lifecycle, and our CDP offering gives customers user-friendly ways to track new types of data, transform and cleanse data, run more advanced reporting and predictive analysis to drive revenue growth, and sync data in to and out of Klaviyo at scale.
In addition to service requirements, RSUs granted under the 2015 Plan prior to the Company’s IPO are subject to a liquidity-based vesting condition, which we have concluded represents a performance condition. Fair value of such awards is measured on the grant date and recognized over the vesting term when the performance condition is considered probable of being achieved.
In addition to service requirements, RSUs granted under our 2015 Plan prior to our IPO are subject to a performance-based vesting condition, which we have concluded represents a performance condition. Fair value of such awards is measured on the grant date and recognized over the vesting term when the performance condition is considered probable of being achieved.
Net cash outflows from changes in operating assets and liabilities primarily 78 Table of Contents consisted of a $26.9 million increase in deferred contract acquisition costs related to increase in sales commissions resulting from our increase in revenues, a $15.2 million decrease in operating lease liabilities due to payments related to our operating lease obligations, and a $12.9 million increase in accounts receivable due to an increase in customer billings.
Net cash outflows from changes in operating assets and liabilities primarily consisted of a $26.9 million increase in deferred contract acquisition costs related to increase in sales commissions resulting from our increase in revenues, a $15.2 million decrease in operating lease liabilities due to payments related to our operating lease obligations, and a $12.9 million increase in accounts receivable due to an increase in customer billings.
This performance condition was achieved when the Company’s registration statement on Form S-1 filed with the SEC in connection with the IPO became effective on September 19, 2023.
This performance condition was achieved when our registration statement on Form S-1 filed with the SEC in connection with our IPO became effective on September 19, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 63 Table of Contents The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K.
We have successfully grown our retail and eCommerce customer base and believe we have significant room to expand within this vertical as well as expand into other industries, including education, events and entertainment, restaurants, and travel as well as from B2B customers.
We have successfully grown our retail and eCommerce customer base and believe we have significant room to expand within this vertical as well as expand into other industries, including education, events and entertainment, restaurants, wellness, and travel as well as from B2B companies.
All other research and development costs are expensed as incurred. We believe continued investment and innovation in our platform, capabilities, and offerings are important for our growth and, as such, expect our research and development costs to continue to increase in dollar amount but remain consistent as a percentage of revenue for the foreseeable future.
We believe continued investment and innovation in our platform, capabilities, and offerings are important for our growth and, as such, expect our research and development costs to continue to increase in dollar amount but remain consistent as a percentage of revenue for the foreseeable future.
We then calculate the Annualized Recurring Revenue (“ARR”) from this customer cohort as of twelve months prior to the date of determination (the “Prior Period ARR”) and the ARR from this customer cohort as of the date of determination (the “Current Period ARR”).
We then calculate the 66 Table of Contents Annualized Recurring Revenue (“ARR”) from this customer cohort as of twelve months prior to the date of determination (the “Prior Period ARR”) and the ARR from this customer cohort as of the date of determination (the “Current Period ARR”).
This section of this Annual Report on Form 10-K discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Annual Report on Form 10-K discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The vast majority of our subscription plans today are monthly. Our land-and-expand strategy is designed to align our success with that of our customers. As our customers’ businesses grow, they utilize more active consumer profiles and send more emails and SMS messages, which naturally increases their usage of our platform.
The vast majority of our subscription plans today are monthly. Our land-and-expand strategy aligns our success with that of our customers. As our customers’ businesses grow, they utilize more active consumer profiles and send more emails and SMS messages, which naturally increases their usage of our platform.
This percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term due to increased costs in connection with our initial public offering and heightened compliance requirements associated with operating as a public company.
This percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term due to heightened compliance requirements associated with operating as a public company.
We started by serving customers in North America and, in 2019, we expanded our operations to London, England to penetrate the European region. In 2022, we opened our office in Sydney, Australia to capitalize on the opportunities in Asia Pacific.
We started by serving customers in North America and, in 2019, we expanded our operations to London, England to penetrate the European region. In 2022, we opened our office in Sydney, Australia to capitalize on the opportunities in Asia Pacific. In 2024, we expanded our presence in the European region by adding operations in Dublin, Ireland.
We expect our cost of revenue to increase in dollar amount as we continue to invest in our platform infrastructure and support, acquire new customers, and existing customers increase their usage of our platform. 70 Table of Contents Gross Profit Our gross profit represents revenue, less all cost of revenue.
We expect our cost of revenue to increase in dollar amount as we continue to invest in our platform infrastructure and support, acquire new customers, and drive existing customers to expand their usage of our platform. Gross Profit Our gross profit represents revenue, less all cost of revenue.
Summary of Significant Accounting Policies in the notes to our consolidated financial statements included elsewhere in this filing for a discussion about new accounting pronouncements adopted as of the date of this Annual Report on Form 10-K. 85 Table of Contents
Recent Accounting Pronouncements See Note 2. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included elsewhere in this filing for a discussion about new accounting pronouncements adopted as of the date of this Annual Report on Form 10-K. 79 Table of Contents
We believe this is an important indicator of our ability to continue to successfully move up market. As of December 31, 2023, we had 1,958 customers generating over $50,000 of ARR, compared to 1,085 customers generating over $50,000 of ARR as of December 31, 2022, representing growth of 80% year-over-year. Dollar-Based Net Revenue Retention Rate.
We believe this is an important indicator of our ability to continue to successfully move up-market. As of December 31, 2024, we had 2,850 customers generating over $50,000 of ARR, compared to 1,958 customers generating over $50,000 of ARR as of December 31, 2023, representing growth of 46% year-over-year. Dollar-Based Net Revenue Retention Rate.
We measure dollar-based net revenue retention rate to measure this growth. 69 Table of Contents As of December 31, 2023 and 2022, our NRR was 117% and 119%, respectively. We implemented a price increase in September 2022, which positively increased revenue growth in 2022.
We measure Dollar-Based Net Revenue Retention Rate to measure this growth. As of December 31, 2024 and 2023, our NRR was 108% and 117%, respectively. We implemented a price increase in September 2022, which positively increased revenue growth in 2023.
We define a customer as a distinct paid subscription to our platform. A single organization could have multiple discrete contracting divisions or subsidiaries or brands each with paid subscriptions to our platform, which would, in general, constitute multiple distinct customers.
A single organization could have multiple discrete contracting divisions or subsidiaries or brands each with paid subscriptions to our platform, which would, in general, constitute multiple distinct customers.
This increase was primarily due to an increase in profits before taxes in our international entities. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities.
The increase was primarily due to the increase in profits before taxes in our international entities and an increase in our U.S. taxable income. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities.
Our noncancellable obligations as of December 31, 2023 were $346.2 million, with $117.7 million payable within 12 months. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this filing, which have been prepared in accordance with GAAP.
Our noncancellable obligations as of December 31, 2024 were $225.5 million, with $102.5 million payable within 12 months. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this filing, which have been prepared in accordance with GAAP.
Credit card processing fees are also part of general and administrative expenses. 71 Table of Contents We expect general and administrative expenses to increase in the near term as a result of operating as a public company, including expenses associated with compliance with the rules and regulations governing public companies, such as Section 404 of the Sarbanes-Oxley Act, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.
We expect general and administrative expenses to increase in the near term as a result of operating as a public company, including expenses associated with compliance with the rules and regulations governing public companies, such as Section 404 of the Sarbanes-Oxley Act, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.
As of December 31, 2023, our principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $739.7 million, with such amounts held for working capital purposes. Our cash equivalents were comprised of $314.5 million in money market funds. Our primary cash needs are for personnel-related expenses, selling and marketing expenses, and third-party cloud infrastructure expenses.
As of December 31, 2024, our principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $882.6 million, with such amounts held for working capital purposes. Our cash equivalents were comprised of $278.2 million in money market funds. Our primary cash needs are for personnel-related expenses, selling and marketing expenses, and third-party cloud infrastructure expenses.
Lease Obligations We enter into various noncancellable lease agreements for certain office space and equipment used in the normal course of business. Our noncancellable lease obligations as of December 31, 2023 were $56.9 million, with $14.4 million payable within 12 months. Other Contractual Obligations We enter into various noncancellable agreements with marketing vendors and various service providers.
Lease Obligations We enter into various noncancellable lease agreements for certain office space and equipment used in the normal course of business. Our noncancellable lease obligations as of December 31, 2024 were $57.2 million, with $21.5 million payable within 12 months. Other Contractual Obligations We enter into various noncancellable agreements with marketing vendors and various service providers.
This price increase also impacted the various measures we use to assess our usage and subscription levels based on revenue, such as NRR and our revenue growth rate, and following its implementation, those measures experienced corresponding increases as a result. As we have reached the one year anniversary of this price increase, these measures have seen a corresponding decrease.
This price increase also impacted the various measures we use to assess our usage and subscription levels based on revenue, such as NRR and our revenue growth rate, and following its implementation, those measures experienced corresponding increases as a result.
This increase was primarily due to an increase in interest rates, greater cash balances due to the IPO, and the volume of newly opened interest-bearing accounts, including money market funds, as part of our diversified cash management strategy. 76 Table of Contents Provision for Income Taxes Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Provision for income taxes $ 1,192 $ 83 $ 1,109 NM ______________ NM - Not meaningful Income tax expense for the year ended December 31, 2023 increased by $1.1 million to $1.2 million compared to $0.1 million for the year ended December 31, 2022.
This increase was primarily due to an increase in interest rates, greater cash balances due to our IPO, and the volume of newly opened interest-bearing accounts, including money market funds, as part of our diversified cash management strategy. 73 Table of Contents Provision for Income Taxes Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Provision for income taxes $ 2,462 $ 1,192 $ 1,270 106.5 % Income tax expense for the year ended December 31, 2024 increased by $1.3 million or 106.5% to $2.5 million compared to $1.2 million for the year ended December 31, 2023.
Pursuant to our 2015 Plan, we have issued stock options, RSUs, and restricted stock awards (“RSAs”); however, all equity grants issued subsequent to the Company’s IPO will be made pursuant to the 2023 Plan, which was approved by our Board effective as of September 19, 2023.
Pursuant to our 2015 Plan, we have issued stock options, RSUs, and restricted stock awards (“RSAs”); however, all equity grants issued subsequent to our IPO are made pursuant to our 2023 Stock Option and Incentive Plan (“2023 Plan”), which was approved by our board of directors effective as of September 19, 2023.
Our customers utilize the SMS offering in particular during the holidays; as such, to the extent that the SMS offering grows in proportion to our other channels, we expect that we would see further seasonality. We believe seasonality may continue to impact our quarterly results going forward.
Our customers utilize the SMS offering in particular during the holidays; as such, to the extent that the SMS offering grows in proportion to our other channels, we expect that we would see further seasonality.
Overview We founded Klaviyo in 2012 to provide businesses of all sizes with powerful technology that captures, stores, analyzes, and predictively uses their own data to drive measurable, high-value outcomes.
The period‑to‑period comparison of financial results is not necessarily indicative of future results. Overview We founded Klaviyo in 2012 to provide businesses of all sizes with powerful technology that captures, stores, analyzes, and predictively uses their own data to drive measurable, high-value outcomes.
We focused on marketing automation within eCommerce as our first application use case, and we believe our software is highly extensible across a broad range of functions and verticals. As of December 31, 2023, our platform had efficiently scaled to over 143,000 customers. Today, our customers primarily operate within the retail and eCommerce vertical.
We focused on marketing automation within eCommerce as our first application use case, and we believe our software is highly extensible across a broad range of functions and verticals. Today, our customers primarily operate within the retail and eCommerce vertical.
In accordance with relevant accounting policies, we recognize a prepaid marketing expense in connection with the Shopify Warrants. This prepaid marketing expense represents the probable future economic benefit being amortized over a seven-year expected benefit period and is recorded based on the fair value of the warrants on the grant date.
This prepaid marketing expense represents the probable future economic benefit being amortized over a seven-year expected benefit period and is recorded based on the fair value of the warrants on the grant date.
On July 28, 2022, we entered into a collaboration agreement and strategic partnership with Shopify pursuant to which we issued warrants to Shopify (and certain of its affiliates) (the “Shopify Warrants”), in exchange for promotion of our marketing services with customers within the Shopify ecosystem.
On July 28, 2022, we entered into a collaboration agreement and strategic partnership with Shopify pursuant to which we issued warrants to Shopify (the “Shopify Warrants”), in exchange for promotion of our marketing services with customers within the Shopify ecosystem. In accordance with relevant accounting policies, we recognize a prepaid marketing expense in connection with vesting of the Shopify Warrants.
Compensation expense for these awards with both a service and performance condition are expensed under the accelerated attribution method which includes a cumulative catch up recorded upon the IPO for services that had been completed as of the IPO. The remaining expense for these awards is being recognized using the accelerated attribution method over the remaining service period.
Compensation expense for these awards with both service-based and performance-based vesting conditions is expensed under the accelerated attribution method, which includes a cumulative catch up recorded upon the satisfaction of the performance-based vesting condition for services that had been completed as of the satisfaction of the performance-based vesting condition.
We focus on expansion in three primary ways. First, as our customers increase their usage of our platform through the number of active consumer profiles they have and email and SMS messages they send, they move to higher subscription tiers.
First, as our customers increase their usage of our platform through the number of active consumer profiles they store and email and SMS messages they send, they move to higher subscription tiers.
Selling and Marketing Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Selling and marketing $ 394,369 $ 213,848 $ 180,521 84.4 % Selling and marketing expenses for the year ended December 31, 2023 increased by $180.5 million or 84.4%, to $394.4 million compared to $213.8 million for the year ended December 31, 2022.
Selling and Marketing Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Selling and marketing $ 404,209 $ 394,369 $ 9,840 2.5 % Selling and marketing expenses for the year ended December 31, 2024 increased by $9.8 million or 2.5%, to $404.2 million compared to $394.4 million for the year ended December 31, 2023.
Non-cash charges primarily consisted of $22.0 million of prepaid marketing expense amortization, $9.0 million of depreciation and amortization expense, $10.6 million of deferred contract acquisition cost amortization expense, $6.8 million of stock-based compensation expense, and $11.8 million of operating lease costs.
Non-cash charges primarily consisted of $135.2 million of stock-based compensation expense, $52.9 million of prepaid marketing expense amortization, $19.8 million of deferred contract acquisition cost amortization, $17.7 million of depreciation and amortization expense, and $12.7 million of operating lease costs.
Net cash used in investing activities of $18.7 million for the year ended December 31, 2022 consisted of $15.8 million purchases of property and equipment, $2.4 million of capitalized software costs, and $0.5 million cash paid for an acquisition.
Net cash used in investing activities of $9.4 million for the year ended December 31, 2023 consisted of $5.7 million of capitalized software costs and $3.7 million purchases of property and equipment.
Due to the flexibility and adaptability of our technology, we also see organic demand 66 Table of Contents growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies.
Due to the flexibility and adaptability of our technology, we also see organic growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies. As of December 31, 2024, our platform had efficiently scaled to over 167,000 customers.
We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
Provision for Income Taxes Provision for income taxes consists primarily of income taxes related to U.S. and foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
This decrease was primarily due to unfavorable foreign exchange fluctuations.
This increase was primarily due to favorable foreign exchange fluctuations.
The following table sets forth, for the periods indicated, our working capital: 77 Table of Contents As of December 31, 2023 2022 ($ in thousands) Cash $ 738,562 $ 385,820 Restricted cash, current (1) 409 409 Accounts receivable, net of allowance for doubtful accounts 23,076 10,723 Deferred contract acquisition costs 15,198 11,215 Prepaid expenses and other current assets 26,244 19,336 Accounts payable 13,597 8,890 Accrued expenses 62,838 36,126 Operating lease liabilities 14,081 14,864 Deferred revenue 40,100 25,109 Total Working Capital $ 672,873 $ 342,514 ______________ (1) Restricted cash related to our required collateral to fund payroll and credit card obligations in the Australia entity.
The following table sets forth, for the periods indicated, our working capital: 74 Table of Contents As of December 31, 2024 2023 ($ in thousands) Cash $ 881,473 $ 738,562 Restricted cash, current (1) 375 409 Accounts receivable, net of allowance for doubtful accounts 43,095 23,076 Deferred contract acquisition costs 20,544 15,198 Prepaid expenses and other current assets 34,262 26,244 Accounts payable 14,579 13,597 Accrued expenses 99,828 62,838 Operating lease liabilities 20,989 14,081 Deferred revenue 64,497 40,100 Total Working Capital $ 779,856 $ 672,873 ______________ (1) Restricted cash related to our required collateral to fund payroll and credit card obligations in our Australia entity.
Net cash outflows from changes in operating assets and liabilities primarily consisted of $20.2 million increase in deferred contract acquisition costs related to increase in sales commissions resulting from our increase in revenues, $9.3 million decrease in operating lease liabilities due to payments related to our operating lease obligations, $5.2 million increase in accounts receivable due to an increase in customer billings, $5.2 million increase in prepaid expenses due to prepayments for cloud infrastructure and hosting costs, and a $5.7 million net decrease in accrued expenses and accounts payable due to timing of vendor payments.
Net cash outflows from changes in operating assets and liabilities primarily consisted of a $34.4 million increase in deferred contract acquisition costs related to increase in 75 Table of Contents sales commissions resulting from our increase in revenues, a $20.8 million increase in accounts receivable due to an increase in customer billings, a $17.3 million increase in prepaid expenses and other noncurrent assets, and a $16.7 million decrease in operating lease liabilities due to payments related to our operating lease obligations.
Net cash used in operating activities of $23.6 million for the year ended December 31, 2022 was primarily attributable to a net loss of $49.2 million adjusted for non-cash charges of $61.1 million and net cash outflows of $35.5 million from changes in operating assets and liabilities.
Net cash provided by operating activities of $119.4 million for the year ended December 31, 2023 was primarily attributable to a net loss of $308.2 million adjusted for non-cash charges of $433.5 million and net cash outflows of $5.9 million from changes in operating assets and liabilities.
Components of Results of Operations Revenue A significant majority of our revenues are derived from sales of subscriptions, which are comprised of fees paid by customers to access our cloud-based software platform for storing consumer’s first-party data and using it to create and deliver personalized and targeted email and SMS marketing services.
We believe seasonality may continue to impact our quarterly results going forward. 67 Table of Contents Components of Results of Operations Revenue A significant majority of our revenues are derived from sales of subscriptions, which are comprised of fees paid by customers to access our cloud-based software platform for storing first-party consumer data and using it to create and deliver personalized and targeted consumer experiences across digital channels.
Gross Profit Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Gross profit $ 520,211 $ 344,723 $ 175,488 50.9 % Gross profit for the year ended December 31, 2023 increased by $175.5 million or 50.9%, to $520.2 million compared to $344.7 million for the year ended December 31, 2022.
Gross Profit Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Gross profit $ 716,159 $ 520,211 $ 195,948 37.7 % Gross profit for the year ended December 31, 2024 increased by $195.9 million or 37.7%, to $716.2 million compared to $520.2 million for the year ended December 31, 2023.
The increase was primarily due to expansion with existing customers driven by expanded usage of our platform as well as our SMS channel. For the year ended December 31, 2023, sales to existing customers accounted for approximately 68% of the increase in revenue.
The increase was primarily due to expansion with existing customers driven by expanded usage of our platform as well as our SMS channel.
During the year ended December 31, 2022, all of the stock-based compensation awards issued were in the form of RSUs subject to both service-based and performance-based vesting conditions. Stock-based compensation awards that contain only service-based vesting conditions are recognized as expense, on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.
Stock-based compensation awards that contain only service-based vesting conditions are recognized as expense, on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.
Interest Income Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Interest income $ 24,051 $ 5,538 $ 18,513 334.3 % Interest income for the year ended December 31, 2023 increased by $18.5 million or 334.3%, to $24.1 million compared to $5.5 million for the year ended December 31, 2022.
Interest Income Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Interest income $ 39,582 $ 24,051 $ 15,531 64.6 % Interest income for the year ended December 31, 2024 increased by $15.5 million or 64.6%, to $39.6 million compared to $24.1 million for the year ended December 31, 2023.
For option awards granted in prior years, we estimate grant date fair value using the Black-Scholes option pricing model. The grant date fair value of RSUs and RSAs is estimated based on fair value of the underlying common stock. Additional information regarding such estimates is provided below.
The remaining expense for these awards is being recognized using the accelerated attribution method over the remaining service period. For option awards granted in prior years, we estimate grant date fair value using the Black-Scholes option pricing model. The grant date fair value of RSUs and RSAs is estimated based on fair value of the underlying common stock.
Factors Affecting Our Future Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including the following factors: Growth in New Customers Attracting new customers to our platform is a key driver of our revenue growth strategy.
Our revenue also expands when our customers add additional channels, such as SMS, and additional use cases, such as reviews and our CDP offering, or when their other brands, business units, and geographies start using our platform. 64 Table of Contents Factors Affecting Our Future Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including the following factors: Growth in New Customers Attracting new customers to our platform is a key driver of our revenue growth strategy.
Selling and Marketing Our selling and marketing costs primarily consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation; sales commissions, partnership expenses for revenue sharing agreements, including to Shopify Inc.
Selling and Marketing Our selling and marketing costs primarily consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation; sales commissions and partnership expenses for revenue sharing agreements, including to Shopify, other commerce platform partners, and agency partners; costs associated with advertising and marketing activities; and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
Year Ended December 31, 2023 2022 ($ in thousands) Net cash provided by (used in) Operating activities $ 119,371 $ (23,552) Investing activities (9,358) (18,745) Financing activities 242,728 101,300 Net increase (decrease) in cash and restricted cash $ 352,741 $ 59,003 Cash, cash equivalents, and restricted cash, beginning of period 386,916 327,913 Cash, cash equivalents, and restricted cash, end of period $ 739,657 $ 386,916 Operating Activities Net cash provided by operating activities of $119.4 million for the year ended December 31, 2023 was primarily attributable to a net loss of $308.2 million adjusted for non-cash charges of $433.5 million and net cash outflows of $5.9 million from changes in operating assets and liabilities.
Year Ended December 31, 2024 2023 ($ in thousands) Net cash provided by (used in) Operating activities $ 165,955 $ 119,371 Investing activities (17,226) (9,358) Financing activities (5,799) 242,728 Net increase in cash, cash equivalents, and restricted cash $ 142,930 $ 352,741 Cash, cash equivalents, and restricted cash, beginning of period 739,657 386,916 Cash, cash equivalents, and restricted cash, end of period $ 882,587 $ 739,657 Operating Activities Net cash provided by operating activities of $166.0 million for the year ended December 31, 2024 was primarily attributable to a net loss of $46.1 million adjusted for non-cash charges of $239.8 million and net cash outflows of $27.7 million from changes in operating assets and liabilities.
Other Income Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Other income (expense), net $ (470) $ 388 $ (858) (221.1) % Other income for the year ended December 31, 2023 decreased by $0.9 million or 221.1%, to $(0.5) million compared to $0.4 million for the year ended December 31, 2022.
Other Income Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Other income (expense), net $ 816 $ (470) $ 1,286 (273.6) % Other income for the year ended December 31, 2024 increased by $1.3 million or 273.6%, to $0.8 million compared to $(0.5) million for the year ended December 31, 2023.
We recognize a prepaid marketing expense asset associated with the Shopify Warrants over a straight-line five-year vesting period. Pursuant to the common stock warrant agreement, upon the Company’s IPO, 25% of the total number of warrants were accelerated, and the remaining unvested portion vests quarterly over the remaining vesting term.
Pursuant to the common stock warrant agreement, upon our IPO, 25% of the total number of warrants were accelerated, and the remaining unvested portion vests quarterly over the remaining vesting term.
The prepaid marketing expense asset is amortized into selling and marketing expense on a straight-line basis over the expected benefit period, which we determine to be the seven-year term of the collaboration agreement as the core activities and deliverables of the collaboration agreement will remain in place for seven years and Shopify does not have the right to terminate the collaboration agreement for convenience. 81 Table of Contents Under the stock purchase agreement, we issued and sold shares of common stock to Shopify Strategic Holdings 3 LLC (“Shopify Strategic”) and provided an Investment Option which allows Shopify Strategic to purchase additional shares of common stock at a fixed price, exercisable at any time at Shopify Strategic’s option until July 28, 2030.
The prepaid marketing expense asset is amortized into selling and marketing expense on a straight-line basis over the expected benefit period, which we determine to be the seven-year term of the collaboration agreement as the core activities and deliverables of the collaboration agreement will remain in place for seven years and Shopify does not have the right to terminate the collaboration agreement for convenience.
Research and Development Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Research and development $ 262,177 $ 104,077 $ 158,100 151.9 % Research and development costs for the year ended December 31, 2023 increased by $158.1 million or 151.9%, to $262.2 million compared to $104.1 million for the year ended December 31, 2022.
Research and Development Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Research and development $ 238,459 $ 262,177 $ (23,718) (9.0) % Research and development costs for the year ended December 31, 2024 decreased by $23.7 million or 9.0%, to $238.5 million compared to $262.2 million for the year ended December 31, 2023.
Our ability to attract new customers will depend on a number of factors, including our ability to innovate, the effectiveness and pricing of our new and existing products and capabilities, and the success of our selling and marketing efforts. 67 Table of Contents Expansion of Revenue From Our Existing Customer Base We believe our product-led growth strategy enables us to efficiently expand penetration within our existing customer base.
Our ability to attract new customers will depend on a number of factors, including our ability to innovate, the effectiveness and pricing of our new and existing products and capabilities, and the success of our selling and marketing efforts.
Variable consideration in our contracts is not material but represents the overage charges incurred by customers who exceed their allotments. 80 Table of Contents We recognize revenue under the core principle to depict the transfer of control to our customers in an amount reflecting the consideration to which we expect to be entitled.
We recognize revenue under the core principle to depict the transfer of control to our customers in an amount reflecting the consideration to which we expect to be entitled.
We believe we will see our overall gross profit dollars increase as customers send more SMS messages if our SMS offering continues to gain traction. 68 Table of Contents Expansion into New Industry Verticals and Use Cases As more customers use our platform, we are seeing organic demand from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies.
Expansion into New Industry Verticals and Use Cases As more customers use our platform, we are seeing organic growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies.
Cost of Revenue Year Ended December 31, 2023 2022 $ Change % Change ($ in thousands) Cost of revenue $ 177,888 $ 128,025 $ 49,863 38.9 % 74 Table of Contents Cost of revenue for the year ended December 31, 2023 increased by $49.9 million or 38.9%, to $177.9 million compared to $128.0 million for the year ended December 31, 2022.
Cost of Revenue Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) Cost of revenue $ 221,305 $ 177,888 $ 43,417 24.4 % Cost of revenue for the year ended December 31, 2024 increased by $43.4 million or 24.4%, to $221.3 million compared to $177.9 million for the year ended December 31, 2023.
Although we only recently expanded to these regions, we have already experienced significant growth with international sales outside of the Americas accounting for 31.0% of our revenue for the year ended December 31, 2023.
We have already experienced significant growth with international sales outside of the Americas accounting for 32.6% of our revenue for the year ended December 31, 2024. We also continue to expand our product offerings to better serve the international market.
(“Shopify”), other commerce platform partners, and agency partners; costs associated with advertising and marketing activities; and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. Sales commissions are considered an incremental cost to obtain contracts with customers and these costs are deferred and amortized over the expected benefit period.
Sales commissions are considered an incremental cost to obtain contracts with customers and these costs are deferred and amortized over the expected benefit period.
In the short term, we expect selling and marketing costs to increase as we increase headcount in our go-to-market team, grow into new markets, and pay more in partnership fees to Shopify and other partners as we continue to grow.
In the short term, we expect selling and marketing costs to increase as we increase headcount in our go-to-market team, grow into new markets, and pay more in partnership fees to Shopify and other partners as we continue to grow. 68 Table of Contents Research and Development Our research and development costs primarily consist of employee-related costs associated with research and development staff, including payroll, benefits, bonuses, stock-based compensation, and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
Customers do not include persons or entities that use our platform on a free trial basis. We define customers outside of retail as those customers who have an identified industry outside of retail, either through in-product selection or as part of the sales process. Customers Generating Over $50,000 of ARR .
Customers do not include persons or entities that use our platform on a free trial basis. Customers Generating Over $50,000 of ARR .
This increase was primarily due to an increase of approximately $81.7 million of stock-based compensation mainly due to the vesting of Double-Trigger RSUs upon and subsequent to the IPO, $15.5 million in salaries and personnel expenses as a result of increases in headcount and the implementation of a company-wide sabbatical program, $6.4 million in payment processing fees, $5.1 million in professional expenses, primarily attributed to the IPO and public company readiness efforts, and $2.7 million in technology expenses, primarily attributed to an increase in licenses as a result of the aforementioned increases in headcount.
The decrease was offset by an increase of approximately $10.4 million in salaries and personnel expenses as a result of increases in headcount and the introduction of a company-wide bonus program, $6.6 million in payment processing fees, $3.6 million in professional expenses, primarily attributed to expenses incurred to operate as a public company, and $2.2 million in technology expenses, primarily attributed to an increase in licenses as a result of the aforementioned increases in headcount.
The cash outflow was offset by cash inflows primarily from a $10.0 million increase in deferred revenue resulting from increased billings for subscriptions. Investing Activities Net cash used in investing activities of $9.4 million for the year ended December 31, 2023 consisted of $3.7 million purchases of property and equipment and $5.7 million of capitalized software costs.
Investing Activities Net cash used in investing activities of $17.2 million for the year ended December 31, 2024 consisted of $11.3 million of capitalized software costs and $5.9 million purchases of property and equipment.
Investment in Innovation and Product Development Since our inception, we have been focused on product innovation, seeking to create what we believe is the best software solution for our customers. We originally launched our platform with email messaging as our first channel.
We also currently only bill in U.S. Dollars, and we believe that adding additional currencies to our platform will help us further our international expansion efforts. Investment in Innovation and Product Development Since our inception, we have been focused on product innovation, seeking to create what we believe is the best software solution for our customers.
The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for time periods approximately equal to the expected term of the Shopify Warrants. Expected dividend yield is 0.0% as we have not paid and do not anticipate paying dividends on our common stock.
We estimate the volatility based upon an average historical volatility of several peer public companies over a period equivalent to the term of the Shopify Warrants. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for time periods approximately equal to the expected term of the Shopify Warrants.
We estimate our price increase in September 2022 represented a low-double digit increase of incremental revenue dollars in 2023. For the year ended December 31, 2023, approximately 32% of the increase in revenue was related to new customers, particularly in the mid-market and outside of the Americas.
For the year ended December 31, 2024, sales to existing customers accounted for approximately 54% of the increase in revenue while approximately 46% of the increase in revenue was related to new customers, particularly in the mid-market and outside of the Americas.
Segments We operate our business through one reportable segment, as well as one business activity, providing software that brings consumers’ first-party data together and uses it to create and deliver highly personalized consumer experiences across digital channels. 72 Table of Contents Results of Operations The following tables set forth our results of operations for the fiscal years presented and express the relationship of certain line items as a percentage of revenue for those periods.
As additional jurisdictions enact such legislation, we expect our effective tax rate and cash tax payments could increase in future years. 69 Table of Contents Segments We operate our business through one reportable segment, as well as one business activity, providing software that brings first-party consumer data together and uses it to create and deliver highly personalized consumer experiences across digital channels.
This increase was primarily due to an increase of approximately $24.8 million of stock-based compensation mainly due to the vesting of Double-Trigger RSUs upon and subsequent to the IPO, $17.4 million in outbound communication sending costs on behalf of our customers, and $7.3 million in salaries and personnel expenses as a result of increases in headcount and the implementation of a company-wide sabbatical program.
This increase was primarily due to an increase of $24.5 million in cloud-based infrastructure costs, $24.2 million in outbound communication sending costs on behalf of our customers, $8.6 million in salaries and personnel expenses as a result of increases in headcount, and $2.8 million in 71 Table of Contents amortization related to capitalized software development costs.
Since then, we have successfully added other channels, such as SMS and push notifications, as well additional use cases, such as reviews and our CDP offering. Our continued success depends on our ability to sustain product and technology innovation to continue delivering value to our customers.
We originally launched our platform with email messaging as our first channel. Since 65 Table of Contents then, we have successfully added other channels, such as SMS and push notifications, as well additional use cases, such as reviews and our CDP offering.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe reporting and functional currency of our wholly-owned foreign subsidiaries is the U.S. dollar. All of our sales are denominated in U.S. dollars, and therefore our revenue is not subject to significant foreign currency risk.
Biggest changeThe reporting and functional currency of our wholly-owned foreign subsidiaries is the U.S. dollar. All of our sales are denominated in U.S. dollars, and therefore our revenue is not subject to significant foreign currency risk. Our operating expenses are denominated in the currencies of the countries in which our operations are located.
To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar would not have a material impact on our operating results. 86 Table of Contents
To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar would not have a material impact on our operating results. 80 Table of Contents
Our cash holdings in interest bearing accounts are exposed to market risk due to fluctuations in interest rates, which may affect our interest income. As of December 31, 2023, we had no debt, and therefore no potential market risk for interest expense.
Our cash holdings in interest bearing accounts are exposed to market risk due to fluctuations in interest rates, which may affect our interest income. As of December 31, 2024, we had no debt, and therefore no potential market risk for interest expense.
Interest Rate Risk We had cash of $739.7 million as of December 31, 2023, which consisted of cash, cash equivalents, and restricted cash held in deposit accounts at financial institutions, and money market funds held with financial institutions. Our cash is held for working capital and general corporate purposes. We do not enter into investments for trading or speculative purposes.
Interest Rate Risk We had cash of $882.6 million as of December 31, 2024, which consisted of cash, cash equivalents, and restricted cash held in deposit accounts at financial institutions, and money market funds held with financial institutions. Our cash is held for working capital and general corporate purposes. We do not enter into investments for trading or speculative purposes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We have operations within the United States, United Kingdom and Australia, and are exposed to market risk in the ordinary course of our business.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We have operations within the United States and several international jurisdictions, and are exposed to market risk in the ordinary course of our business.
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Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the United States, the United Kingdom, and Australia.

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