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What changed in Klaviyo, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Klaviyo, Inc.'s 2024 and 2025 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 2025 report.

+550 added−493 removedSource: 10-K (2026-02-10) vs 10-K (2025-02-19)

Top changes in Klaviyo, Inc.'s 2025 10-K

550 paragraphs added · 493 removed · 403 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

71 edited+65 added−44 removed37 unchanged
Biggest changeOur 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.
Biggest changeOur Customer Experience 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. • Our global support team provides 24/7 email and live chat support to ensure customers’ critical questions and issues are addressed quickly. • We offer proactive deliverability monitoring to ensure our customers’ messaging consistently reaches their consumers, as well as strategic audits to guide our customers to optimize the platform usage through shifting priorities and external environment changes. • We offer dedicated developer education and technical documentation as well as a developer-specific community to support and grow our developer ecosystem.
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.
We use our https://investors.klaviyo.com and www.klaviyo.com websites, as well as our blog posts, press releases, public conference calls, webcasts, X (formerly known as Twitter) feed, Instagram page, Facebook page, and LinkedIn page, as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
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.
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 success with that of our customers.
Optimized for Large Data Sets : Our data store is optimized for very large data sets with the capacity to combine and store our customers’ entire consumer history of profile and event data in real time without expiration of the ingested data.
Optimized for Large Data Sets : Our data store is optimized for large data sets with the capacity to combine and store our customers’ entire consumer history of profile and event data in real time without expiration of the ingested data.
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.
Our 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.
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 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.
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.
Analytics and Benchmarks: Our predictive analytics features use AI 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.
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.
Many of these partners develop in-house Klaviyo expertise, build 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.
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.
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 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.
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, 2025, we served over 193,000 customers, up from 167,000 customers as of December 31, 2024.
Because our platform was purpose-built to help customers understand their consumers, our customers can leverage consumer profiles, event data, and AI-powered predictive analytics to deliver highly personalized messages across relevant communication channels, rather than through disparate and disjointed channels.
Because our platform was purpose-built to help customers understand their consumers, our customers can leverage consumer profiles, event data, and 11 Table of Contents AI-powered predictive analytics to deliver highly personalized messages across relevant communication channels, rather than through disparate and disjointed channels.
These patents and patent applications are intended to protect our proprietary inventions relevant to our business. We continually review our development efforts to assess the existence and patentability of new intellectual property.
These patents and patent applications are intended to protect our proprietary 18 Table of Contents inventions relevant to our business. We continually review our development efforts to assess the existence and patentability of new intellectual property.
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.
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, 2025, we had a total of 2,368 employees located in six countries, with the substantial majority of our employees located in the United States. We supplement our workforce with contractors and consultants.
In addition, our competitors could merge or partner with one-another or strengthen cooperative relationships with strategic distribution and technology partners or other parties. Our market is fragmented, highly competitive, and continues to evolve.
In addition, our competitors could merge or partner with one-another or strengthen cooperative relationships with strategic distribution and technology partners or other parties. 17 Table of Contents Our market is fragmented, highly competitive, and continues to evolve.
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.
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 2025. We use this data to power personalization and send billions of messages each month across multiple channels, including email, text messaging, WhatsApp messaging, and push notifications.
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. 19 Table of Contents “Klaviyo” is our registered trademark in the United States, the European Union (the “EU”), the United Kingdom, Australia, and other jurisdictions.
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.
As of December 31, 2025, we had 6 registered trademarks and 5 pending trademarks in the United States and 101 registered trademarks and 42 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.
We offer pre-built templates for customers to choose from, and our platform has built-in generative artificial intelligence capabilities to allow users to auto-generate email and SMS content and build automations using natural language inputs.
We offer pre-built templates for customers to choose from, and our platform has built-in generative AI capabilities to allow users to auto-generate email, text messaging, and WhatsApp messaging content and build automations using natural language inputs.
Our platform combines our centralized data layer with our front-end application layer in one vertically-integrated technology stack. This offers our customers the ability to store and rapidly analyze consumer data in real-time, then send automated messages with targeting based on these analytics, all within one single platform.
Our platform combines our centralized data layer, our front-end action layer, and our powerful intelligence layer in one vertically-integrated technology stack. This offers our customers the ability to store and rapidly analyze consumer data in real-time and send automated messages with targeting based on our intelligence, all within one place.
In July 2022, we completed a series of transactions to memorialize our strategic partnership with Shopify, which established Klaviyo as the recommended email solution for all Shopify Plus merchants. We also partner with most other major commerce platforms, including BigCommerce, Centra, Magento, Nuvemshop, PrestaShop, Magento (Adobe), Salesforce Commerce Cloud, Square, Wix, and WooCommerce.
In July 2022, we completed a series of transactions to memorialize our strategic partnership with Shopify, which established Klaviyo as the recommended email solution for all Shopify Plus merchants. We also partner with most other major commerce platforms, including WooCommerce, Magento (Adobe), BigCommerce, Salesforce Commerce Cloud, PrestaShop, and Shopware. We have additionally integrated with Amazon Buy with Prime.
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.
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, Cloudbeds, and Mews in the events industry.
For advanced functionality, we offer a suite of tools to enable developers to build rapid automations for different use cases and quickly integrate with other systems efficiently, all from a simple and intuitive user interface. • Coordinated engagement across channels.
For advanced functionality, we offer a suite of tools to enable developers to build rapid automations for different use cases and quickly integrate with other systems efficiently, all from a simple and intuitive user interface. • A flexible platform as preferences evolve.
We also offer customers the ability to use our Flows AI functionality to use natural language to build and manage their flows. Our built-in attribution allows customers to quantify and understand the revenue impact of campaigns and flows.
We also offer customers the ability to use AI-assisted natural language inputs to build and manage their flows with minimal human input needed. Our built-in attribution allows customers to quantify and understand the revenue impact of campaigns and flows.
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.
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 easy-to-use platform gives business users of any technical skill level the ability to easily build consumer segments, personalize content, create new automations, run tests, engage with their consumers, and launch marketing campaigns with differentiated experiences.
Our platform gives business users of any technical skill level the ability to easily build consumer segments, personalize content, create new automations, run tests, engage with their consumers, and launch marketing campaigns with differentiated experiences. Our platform offers simple, one-click, drag-and-drop customizable templates for designing messages.
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.
As of December 31, 2025, we had 26 issued and allowed patents and 47 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 February 2044.
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.
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.
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.
As our customers grow, they use more active consumer profiles and send more messages like emails, text messages, and WhatsApp messages, which naturally increases their usage of our platform.
To ensure companies have the right information to engage with consumers effectively, our data store is optimized for very large data sets with the capacity to combine and store the entire consumer history of profile and event data of our customers in real time. • Vertical integration that enables fast execution.
To provide companies with the information needed to engage consumers effectively, our data store is architected to handle large data sets and can combine and store the complete history of consumer profile and event data in real time. • Vertical integration that enables fast execution.
We believe that we compare favorably on each of these factors relative to our competitors. However, some of our competitors and potential competitors may be larger and have greater brand awareness, longer operating histories, larger marketing budgets and established marketing relationships, access to larger customer bases, and significantly greater resources for product development.
However, some of our competitors and potential competitors may be larger and have greater brand awareness, longer operating histories, larger marketing budgets and established marketing relationships, access to larger customer bases, and significantly greater resources for product development, including integrating and developing AI technology.
As a result, when developers are using our platform to build and test code, they can do so without needing to set up separate hosting environments.
We offer several incremental features that serve developers, including the ability to run code hosted on our platform. As a result, when developers are using our platform to build and test code, they can do so without needing to set up separate hosting environments.
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.
Our partner ecosystem includes commerce platforms, other technology companies, marketing agencies, systems integrators, and developers. 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.
Customers can leverage our fast, easy-to-use integrations to synchronize real-time data from technology companies specializing in payments, credit cards, order management, support tickets, subscriptions, shipping, surveys, referrals, and reviews, among others.
We have built a robust suite of over 350 pre-built integrations and native data sources that customers want connected to their Klaviyo hub. Customers can leverage our fast, easy-to-use integrations to synchronize real-time data from technology companies specializing in payments, credit cards, order management, support tickets, subscriptions, shipping, surveys, referrals, and reviews, among others.
We built an application layer on top of our data layer, which provides a comprehensive set of tools and features that enable our customers to easily turn consumer learnings into insights and actions to drive revenue growth without the need to hire sophisticated and expensive in-house engineers.
On top of our data and intelligence layers sits a comprehensive set of tools, AI agents, and features that enable our customers to easily turn consumer insights into revenue-driving actions without the need to hire expensive in-house engineers.
With this ongoing feedback, we can continue to make impactful improvements to our platform and to the customer success and support experiences we offer.
With this ongoing feedback, we can continue to make impactful improvements to our platform and to the customer experiences we offer. Competition The market in which we compete is evolving and highly competitive.
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.
We grew our gross profit 28.7% year-over-year, from $716.2 million in 2024 to $921.5 million in 2025, representing gross profit margins of 76.4% and 74.7%, respectively. Our Actionable Infrastructure We built Klaviyo to provide businesses of all sizes powerful technology that captures, stores, analyzes, and predictively uses data to drive measurable, high-value outcomes.
Commerce Platforms Through our partnerships and data integrations with commerce platforms, we are able to aggregate and analyze our customers’ first-party consumer data in real-time to drive more and better insights for our customers. Our platform completes the technology stack for direct-to-consumer businesses, combining their commerce engines with our powerful solution to drive revenue growth through data-driven, highly personalized experiences.
Commerce Platforms Through our partnerships and data integrations with commerce platforms, we are able to aggregate and analyze our customers’ first-party consumer data in real-time to drive more and better insights for our customers.
Customer Experience and Customer Success As a customer-first organization, our customers are at the heart of everything we do. We believe that the customer experience, along with the value they derive from Klaviyo, differentiates us in the marketplace. We provide our customers a comprehensive set of capabilities and services that support their journey with us.
We believe that the customer experience, along with the value they derive from Klaviyo, differentiates us in the marketplace. We provide our customers a comprehensive set of capabilities and services that support their journey with us. As a partner that creates value, we earn our customers’ trust, and that trust helps drive net retention through renewals and expansion.
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.
From the beginning, it was designed to power many applications—starting with marketing—as well as intelligence use cases, beginning with machine learning and more recently generative AI. Our data layer is the core of the Klaviyo platform and the foundation on which we built all our functionality.
However, in some cases, such as notification of a flash sale, customers may choose to drive revenue through concise, action-oriented interactions delivered in real-time through SMS or push.
For example, some customers may choose to engage with consumers asynchronously through email with highly-segmented, personalized, and cost-effective messages. However, in some cases, such as notification of a flash sale, customers may choose to drive revenue through concise, action-oriented interactions delivered in real-time through text messaging, WhatsApp messaging, or push.
These integrations allow our customers to create a complete consumer source of record, bringing additional profile and event information into Klaviyo with minimal engineering effort. Segmentation: Our advanced audience segmentation allows businesses to create consumer segmentation based on all the consumer data they have available in Klaviyo, including purchase history, engagement levels, and Klaviyo-powered predicted customer lifetime value.
Segmentation: Our advanced audience segmentation allows businesses to create consumer segmentation based on all the consumer data they have available in Klaviyo, including purchase history, engagement levels, and Klaviyo-powered 12 Table of Contents predicted customer lifetime value.
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.
As our customers have scaled and become mid-market companies and larger enterprises themselves, 7 Table of Contents 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.
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 has enabled us to deliver the following key benefits: • Granular segmentation with real-time action by unifying profile and event data. 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.
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.
Reviews: Our Reviews add-on allows our customers to collect product reviews alongside consumer data and messaging in Klaviyo, delivering a more seamless experience across the customer lifecycle. Our AI tools also suggest review headlines for consumers based on their review content, and generate personalized review replies for our customers with the click of a button.
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.
Meanwhile, due to our advanced technological architecture and vertical integration, we can quantify the amount of revenue that our customers generate with specific engagements through our platform, quickly and easily measuring their success. AI-powered automation further accelerates time to value by reducing manual setup and ongoing operational effort.
Developers We provide many developer-friendly features, including a flexible data architecture, no data pre-configuration requirements, API reference documentation and guides, new SDKs and developer tools, a community forum for collaboration, and monthly newsletters to help developers stay informed on all upcoming releases. We offer several incremental features that serve developers, including the ability to run code hosted 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. 15 Table of Contents Developers We provide many developer-friendly features, including a flexible data architecture, no data pre-configuration requirements, API reference documentation and guides, new SDKs and developer tools, a community forum for collaboration, and monthly newsletters to help developers stay informed on all upcoming releases.
Our outbound sales motion and sales process for all customers is differentiated by the amount of tangible advice and recommendations we are able to provide. Using all available channels, including social, video, email, phone, and SMS, we are able to deliver actionable insights to prospective customers that help them drive revenue growth.
Our outbound sales motion and sales process for all customers is differentiated by the amount of tangible advice and recommendations we are able to provide.
The overarching architectural decision to use independent reusable primitives across the data layer, application layer, and messaging infrastructure was key to providing the level of scalability, reliability, and performance that our platform offers. Scalability Efficient Computation and Storage : Our vertically-integrated platform is built for massive scale using cloud computing.
The overarching architectural decision to use independent reusable primitives across the data, action, and intelligence layers was key to providing the level of scalability, reliability, and performance that our infrastructure offers.
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.
In January 2026, we also launched the Klaviyo application with OpenAI, allowing our customers to access their Klaviyo data right inside ChatGPT. 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.
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.
It also offers generative AI tools for creating content and targeting communications, allowing our customers to easily create impactful experiences customized to their unique brand.
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 do not price based on seats. We currently permit our customers to send unlimited push notifications, which are included as part of our email subscription plan.
Our Products Our vertically-integrated, highly-scalable and flexible platform unifies the data and application layers with our messaging infrastructure into one modern tech stack, providing all the features and automation tools necessary to drive personalized consumer engagement: Messaging Infrastructure Email: The core capability of our platform is to enable businesses to send personalized emails to their consumers.
Our vertically-integrated, highly-scalable and flexible platform unifies the data and action layers with our messaging infrastructure into one modern tech stack, providing all the capabilities and automation tools necessary to drive personalized consumer engagement: AI Agents Marketing Agent: Marketing Agent is an AI-driven, autonomous marketing assistant built into the Klaviyo B2C CRM platform.
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 Technology The Klaviyo infrastructure was engineered to be cloud-native, consisting of a set of reusable primitives that enable tight vertical integration while remaining independent and extensible.
As a partner that creates value, we earn our customers’ trust, and that trust helps drive net retention through renewals and expansion. We engage with our customers from large to small through dedicated programs, such as Customer Success at Scale, Voice of the Customer, and with dedicated Customer Success Managers for our largest customers.
Because we are always striving to raise the bar, we have a robust listening framework to engage with our customers from large to small through dedicated programs, such as Customer Success at Scale, Voice of the Customer, and dedicated Customer Success Managers for our largest customers.
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 intentionally separated our action 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. 14 Table of Contents Our Partner 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.
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 an extensible projection mechanism in real-time as billions of facts and actions are ingested, enabling us to store the processed data in multiple formats and easily add new use cases. This data layer feeds applications and agents that enable businesses to deploy predictive modeling and personalized engagement across the entire consumer journey without specialized engineering teams.
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.
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. When we first launched our platform, we intentionally focused on serving entrepreneurs and small and medium-sized businesses (“SMBs”).
Push: Our push notification channel allows customers to send personalized push notifications on iOS and Android devices to engage consumers with timely and relevant mobile app notifications to build omnichannel experiences. Our multi-channel approach allows our customers to communicate with their consumers in the manner that best serves their diverse business needs.
Mobile app marketing: Our push notification channel allows customers to send personalized push notifications on iOS and Android devices to engage consumers with timely and relevant mobile app notifications to build omnichannel experiences. Social: With Klaviyo’s acquisition of Gatsby in 2025, we enable companies to convert social media engagement into measurable growth.
Our CDP is built on the same infrastructure as Klaviyo’s marketing application and provides user-friendly tools to unify, enrich, and transform data, run more advanced reporting and predictive analysis, and sync data into and out of Klaviyo at scale. Our CDP is built for businesses of all sizes and gives customers access to powerful predictive analysis functionality.
The KDP unifies real-time and historical consumer data for marketing, customer service, and analytics—and it’s built into Klaviyo B2C CRM. It provides user-friendly tools to unify, enrich, transform data, run more advanced reporting and predictive analysis, and sync data into and out of Klaviyo at scale.
We purpose-built a centralized, scalable, and flexible cloud-native data store for our customers to intelligently aggregate and process first-party consumer profile and event data without friction.
This closed loop increasingly executes autonomously, giving businesses access to the unified consumer context and autonomous systems they need to drive real-time action. We purpose-built the KDP as a centralized, scalable, and flexible data store that allows our customers to intelligently aggregate and process first-party consumer profile and event data without friction.
By creating a single, holistic view of the consumer, we can help customers understand and communicate with their consumers across all channels. For example, some customers may choose to engage with consumers asynchronously through email with highly-segmented, personalized, and cost-effective messages.
Our omnichannel approach allows our customers to communicate with their consumers in the manner that best serves their diverse business needs. By creating a single, holistic view of the consumer, we can help customers understand and communicate with their consumers across all channels.
We have already seen organic adoption of our platform in verticals such as education, events and entertainment, restaurants, and travel, as well as from B2B companies.
While we started in the eCommerce vertical, we have expanded and found organic growth in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from business-to-business (“B2B”) companies.
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 grew our revenue 31.6% year-over-year, from $937.5 million in 2024 to $1,234.0 million in 2025. Our net losses for 2024 and 2025 were $(46.1) million and $(31.8) million, respectively, representing a year-over-year decrease of (31.2)%. This decrease in net loss year-over-year was mainly driven by an increase in revenue.
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.
Going forward, our vertically-integrated technology stack also gives us the ability to easily extend our platform into new channels and applications. • Closed-loop learning. Klaviyo incorporates AI and machine learning into this vertically-integrated stack to continuously improve outcomes for our customers.
We built a composite data store that aggregates effectively unlimited amounts of data in a way suitable for transactional, analytical, 11 Table of Contents and machine learning workloads. The extensible architecture of our data store runs an ingestion pipeline responsible for deduping, data augmentation, and identity resolution.
We built a composite data store that aggregates effectively unlimited amounts of data in a way suitable for transactional, analytical, and machine learning workloads. Event data allows customers to send behavior-triggered messages that keep consumers engaged with the right message at the right time.
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 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. We have built a large and growing ecosystem of major eCommerce platforms, agency partnerships, and developers, which helps us efficiently attract new customers.
This industry-agnostic, data-first approach represents a new foundational capability in our market and can be applied to new verticals in the future that require the combination of fast performance with real time, predictive intelligence. • Application Layer.
This industry-agnostic, data-first approach supports marketing, customer service, and analytics use cases and can be applied to any vertical that requires the combination of fast performance with real-time, predictive intelligence. The architecture of our data store runs an ingestion pipeline responsible for deduping, data augmentation, and identity resolution.
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.
Our email marketing solution includes a range of customizable drag-and-drop templates, automated campaign and workflow capabilities, Smart Send Time optimization to improve engagement, generative AI tools for content and subject line creation, and A/B testing to support performance optimization.
We built our data store from the ground up to be agile, unbound by specific schema or data structures. Our data store synchronizes unaggregated, historical profile data with real-time event data in a single system-of-record.
We built our data store from the ground up to be agile, unbound by specific schema or data structures. This industry-agnostic approach supports marketing, service, and analytics use cases and can be applied to new verticals in the future. Intelligence Layer.
Our vertically-integrated, highly-scalable, and flexible platform unifies the data and application layers with our messaging infrastructure into one modern tech stack. • Data Layer. Our highly-scalable platform is optimized for large volumes of data, delivers sub-second-level accessibility, and provides extremely high levels of personalization and attribution.
By keeping both types of information current in one system, businesses can group customers into audiences that update automatically and respond immediately when a customer takes an action. Our platform is optimized for large volumes of data, delivers sub-second-level accessibility, and provides extremely high levels of personalization and attribution.
Key Benefits of Our Platform We founded Klaviyo in 2012 with a data-first approach to enable our customers to effectively harness their first-party data to deliver impactful consumer experiences. This approach has enabled us to deliver the following key benefits: • Granular segmentation with real-time action by unifying profile and event data.
This closed loop is increasingly autonomous, giving businesses a unified, self-reinforcing system that drives intelligent, real-time action. 8 Table of Contents Key Benefits of Our Platform Klaviyo allows customers to effectively harness their first-party data to deliver valuable consumer experiences.
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Item 1. Business 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.
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Item 1. Business Overview Klaviyo is a B2C CRM that helps consumer companies create smarter, stronger, and more valuable customer experiences. We unify the data, intelligence, and actions that define a consumer relationship into an infrastructure built for autonomy and scale.
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Klaviyo enables businesses to drive revenue growth by making it easy to bring their first-party data together and use it to create and deliver highly personalized consumer experiences across digital channels. Our modern and intuitive SaaS platform combines our proprietary data and application layers into one vertically-integrated solution with advanced machine learning and artificial intelligence capabilities.
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Over 193,000 businesses, from emerging creators to global enterprises, rely on our Klaviyo Data Platform (“KDP”) as the product to turn real-time consumer data into personalized, revenue-driving experiences across marketing, service and beyond. Our B2C CRM provides a single source of truth for consumer profiles, allowing businesses to understand their customers and act on that understanding immediately.
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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.
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Built for the AI era and open by design, Klaviyo populates consumer profiles with data from first-party systems using over 350 third-party integrations. This unified knowledge about consumer identity, consent, behavior, preferences, and history helps companies grow higher customer lifetime value and build more durable revenue through more impactful consumer experiences.
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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.
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Our actionable infrastructure creates a flywheel of quality and personalization. Through our combined database, intelligence and action layers, businesses use Klaviyo to power digital marketing and service experiences across channels including email, text, and WhatsApp messaging. Then, those interactions create data that strengthens intelligence, making the next interaction smarter and higher ROI, leading to more interactions.
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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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the event that our service agreements with our third-party hosting provider are terminated or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity or damage to such provider’s facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our cloud solution for deployment on a different cloud infrastructure service provider, which would adversely affect our business, financial condition, and results of operations.
Biggest changeIn the event that our service agreements with our third-party hosting provider are terminated or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity or damage to such provider’s facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our cloud solution for deployment on a different cloud infrastructure service provider, which could be technically challenging, time-consuming, and expensive and could adversely affect our business, financial condition, and results of operations. 33 Table of Contents Our business depends on our ability to send consumer engagement messages, including emails, text messages and WhatsApp messages, 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.
We may fail to maintain and improve upon these integrations or relationships for many reasons, including due to our or the third parties’ failure to maintain, support, or secure their third-party platforms in general and our integrations in particular, or errors, bugs, or defects in our or their technology, or changes in our or their technology platforms or our relationship with such third parties due to actual or perceived competing platforms or offerings.
We may fail to maintain and improve upon these integrations or relationships for many reasons, including due to our or the third parties’ failure to maintain, support, or secure their third-party platforms in general and our integrations in particular, errors, bugs, or defects in our or their technology, or changes in our or their technology platforms or our relationship with such third parties due to actual or perceived competing platforms or offerings.
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.
These changes could subject us to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital services, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations.
Furthermore, the use of AI Technology has resulted in, and may result in, an increase in our risk with respect to intellectual property rights, privacy rights, publicity rights and cybersecurity incidents, including as it relates to personal data that we have in our possession or process on behalf of our customers.
Furthermore, the use of AI technology has resulted in, and may result in, an increase in our risk with respect to intellectual property rights, privacy rights, cybersecurity incidents, and publicity rights, including as it relates to personal data that we have in our possession or process on behalf of our customers.
Any failure or perceived failure by us to comply with our privacy-related policies and/or obligations to customers, respondents, users or other third parties, our data disclosure and consent obligations or our privacy or security-related legal obligations, or any compromise of security that results in the unauthorized disclosure, transfer or use of personal or other information, which may include personally identifiable information or other data, may result in governmental enforcement actions, litigation or public statements critical of us by consumer advocacy groups, competitors, the media or others and could cause our users to lose trust in us, which could have an adverse effect on our business.
Any actual or perceived failure by us to comply with our privacy-related policies and/or obligations to customers, respondents, users or other third parties, our data disclosure and consent obligations or our privacy or security-related legal obligations, or any compromise of security that results in the unauthorized disclosure, transfer or use of personal or other information, which may include personally identifiable information or other data, may result in governmental enforcement actions, litigation or public statements critical of us by consumer advocacy groups, competitors, the media or others and could cause our users to lose trust in us, which could have an adverse effect on our business.
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.
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 trade conflicts, 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; • 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.
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.
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 achieve and 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 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.
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 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.
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; 22 Table of Contents • 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 expect these legislative trends will continue and we may be required to devote significant attention and resources to address the frequently changing regulatory requirements, including by ensuring higher standards of data quality, transparency, and human oversight, as well as adhering to specific and potentially burdensome and costly ethical, accountability, and administrative requirements.
We expect these legislative trends to continue, and we may be required to devote significant attention and resources to address the frequently changing regulatory requirements, including by ensuring higher standards of data quality, transparency, and human oversight, as well as adhering to specific and potentially burdensome and costly ethical, accountability, and administrative requirements.
Under U.S. federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended (the “Code”).
Under U.S. federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended.
We also have integrations with other third-party eCommerce platforms, such as BigCommerce, Centra, Magento, Nuvemshop, PrestaShop, Salesforce Commerce Cloud, Square, Wix, and WooCommerce, and some of our customers transition from one third-party eCommerce platform to another while remaining on our platform.
We also have integrations with other third-party eCommerce platforms, such as BigCommerce, Centra, Magento, Nuvemshop, PrestaShop, Salesforce Commerce Cloud, Shopware, Square, Wix, and WooCommerce, and some of our customers transition from one third-party eCommerce platform to another while remaining on our platform.
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.
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; 62 Table of Contents • 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.
As the legal and regulatory framework relating to use of AI Technology continues to change, there may be an increase in our operational and development expenses that impact our ability to earn revenue from or utilize certain AI Technology.
As the legal and regulatory framework relating to the use of AI technology continues to change, there may be an increase in our operational and development expenses that could impact our ability to earn revenue from or utilize certain AI technology.
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.
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.
If any such disagreements were to occur (whether with the taxing authorities in jurisdictions where we currently do business or in those of jurisdictions where we may in the future operate) and our position were not sustained, we could be required to pay 35 Table of Contents additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.
If any such disagreements were to occur (whether with the taxing authorities in jurisdictions where we currently do business or in those of jurisdictions where we may in the future operate) and our position were not sustained, we could be required to pay 38 Table of Contents additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.
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.
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), which could increase our tax obligations in countries where we do business or cause us to change the way we operate our business.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of products that are competitive in our current or future markets or if we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our competitive advantage may be adversely affected, which could materially adversely affect our business, financial condition, and results of operations.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of products that are competitive in our current or future markets or if we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our competitive advantage may be adversely affected, which could materially adversely affect our business, financial condition, growth prospects, and results of operations.
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.
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, ransom or extortion payments, 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.
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.
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.
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”).
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”).
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We continue to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our cloud-based platform holds various security certifications from industry organizations, designed to meet, in all material respects, the International Organization for Standardization 27001 (“ISO 27001”) standards. Governments and industry organizations may also adopt new laws, regulations or requirements, or make changes to existing laws or regulations, that could impact the demand for, or value of, our applications.
Our cloud-based platform holds various security certifications from industry organizations, designed to meet, in all material respects, the International Organization for Standardization 27001 (“ISO 27001”) standards. Governments and industry organizations may also adopt new laws, regulations or requirements, or make changes to existing laws or regulations or their interpretations, that could impact the demand for, or value of, our applications.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the critical infrastructure of the United States, Europe, and other major regions, have the potential to disrupt our business, our third-party suppliers and/or the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the critical infrastructure of the United States, Europe, and other major regions, have the potential to disrupt our business, our third-party suppliers (including cloud infrastructure providers) and/or the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
Many of our key personnel are vested in a substantial amount of shares of our Series A common stock, Series B common stock, restricted stock units, and/or stock options.
Many of our key personnel are vested in a substantial amount of shares of our Series A common stock, Series B common stock, restricted stock units (“RSUs”), and/or stock options.
The size of our addressable market depends on a number of factors, including the desire of businesses to differentiate themselves through digital customer engagement, partnership opportunities, changes in the competitive landscape, technological changes, data security and privacy concerns, customer budgetary constraints, changes in business practices, changes in the regulatory environment, and changes in economic conditions.
The size of our addressable market depends on a number of factors, including the desire of businesses to differentiate themselves through digital customer engagement, partnership opportunities, changes in the competitive landscape, technological changes (including the adoption of AI), data security and privacy concerns, customer budgetary constraints, changes in business practices, changes in the regulatory environment, and changes in economic conditions.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgements by our management could significantly change or add significant volatility to our reported or expected financial performance. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred in the past, and may occur in the future.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change or add significant volatility to our reported or expected financial performance. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred in the past, and may occur in the future.
The federal Personal Information Protection and Electronic Documents Act (“PIPEDA”) and various provincial laws impose strict requirements on companies that handle personal information.
The federal Personal Information Protection and Electronic Documents Act and various provincial laws impose strict requirements on companies that handle personal information.
We expect that our incorporation of AI Technology in our business will require additional resources, including the incurrence of additional costs, to develop and maintain our products, services, and features to minimize potentially harmful, unintended or other adverse consequences, to comply with existing and new laws and regulations, to maintain or extend our competitive position, and to address any legal, reputational, technical, operational, ethical, competitive, and regulatory issues that may arise as a result of any of the foregoing.
We expect that our incorporation of AI technology in our business will require additional resources, including the incurrence of additional costs, to develop and maintain our products, services, and features to minimize potentially harmful, unintended or other 55 Table of Contents adverse consequences, to comply with existing and new laws and regulations, to maintain or extend our competitive position, and to address any legal, reputational, technical, operational, ethical, competitive, and regulatory issues that may arise as a result of any of the foregoing.
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.
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 expand internationally, 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.
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.
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.
We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
We also continue to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
Because data security is a critical competitive factor in our industry, we make numerous statements in our customer contracts, privacy policies, terms of service, and marketing materials, providing assurances about the security of our platform including detailed descriptions of security measures we employ.
Because data security is a critical competitive factor in our industry, we make numerous statements in our customer contracts, privacy policies, terms of service, security certifications, industry standards, and marketing materials, providing assurances about the security of our platform including detailed descriptions of security measures we employ.
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.
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, including AI features, 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; 32 Table of Contents • 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; • responses by domestic and international markets to tariffs and trade conflicts; and • general economic conditions in either domestic or international markets, including conditions resulting from geopolitical uncertainty and instability.
In particular, we intend to continue to expend substantial financial resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance, and security; • platform development, including investments in our platform development team and the development of new products and functionality for our platform as well as investments in further improving our existing platform and infrastructure; • international expansion; • our selling and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • acquisitions or strategic investments; and • general administration, including increased insurance, legal, and accounting expenses associated with being a public company.
In particular, we intend to continue to expend substantial financial resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance, and security; • platform development, including investments in our platform development team, AI and machine learning technologies, and the development of new products and functionality for our platform as well as investments in further improving our existing platform and infrastructure; • international expansion; • our selling and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • acquisitions or strategic investments; and • general administration, including increased insurance, legal, and accounting expenses associated with being a public company.
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.
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.
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.
To the extent that weak or volatile economic conditions, including due to public health crises, labor shortages, supply chain disruptions, inflation, government shutdowns, geopolitical developments (such as the Russia-Ukraine conflict, 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.
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.
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, including rapid advances in AI and machine learning technologies; • 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.
Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, prosecutions, loss of export privileges, suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, significant legal fees and fines, settlements, damages, severe criminal or civil sanctions, penalties or injunctions against us, our officers or our employees, disgorgement of profits, and other sanctions, enforcement actions and remedial measures, and prohibitions on the conduct of our business, any of which could have a materially adverse effect on our reputation, business, trading price, results of operations, financial condition, and prospects.
Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, prosecutions, loss of export privileges, suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, significant legal fees and fines, settlements, damages, severe criminal or civil sanctions, penalties, injunctions, or collateral consequences against us, our officers or our employees, disgorgement of profits, and other sanctions, enforcement actions and remedial measures, and prohibitions on the conduct of our business, 41 Table of Contents any of which could have a materially adverse effect on our reputation, business, trading price, results of operations, financial condition, and prospects.
Employees may be more likely to terminate their employment with us if the shares they own or the shares underlying their vested restricted stock units or options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise price of the options or grant date values of the restricted stock units, or, conversely, if the exercise price of the options that they hold are significantly above the trading price of our Series A common stock.
Employees may be more likely to terminate their employment with us if the shares they own or the shares underlying their vested RSUs or options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise price of the options or grant date values of the RSUs, or, conversely, if the exercise price of the options that they hold are significantly above the trading price of our Series A common stock.
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.
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.
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.
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 address, and phone number, for a subset of our customers.
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.
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.
Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, rules, regulations, and other obligations, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business, financial condition, results of operations and prospects.
Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, rules, regulations, and other obligations, could result in additional cost and 48 Table of Contents liability to us, damage our reputation, inhibit sales, and adversely affect our business, financial condition, results of operations and prospects.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the trading price of our Series A common stock and trading volume could be adversely affected.
As a result, the trading price of our Series A common stock could be adversely affected. If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the trading price of our Series A common stock and trading volume could be adversely affected.
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.
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; 56 Table of Contents • 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), incidents of terrorism, public health crises, government shutdowns, tariffs, trade wars or trade conflicts, 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 directors, officers and principal stockholders.
These competitors may also engage in more extensive research and development efforts or undertake more far-reaching marketing campaigns, which may allow them to attract customers or partners. For example, for our SMS offering, we do not currently separate carrier fees from the fees that our customers pay for our product.
These competitors may also engage in more extensive research and development efforts or undertake more far-reaching marketing campaigns, which may allow them to attract customers or partners. For example, for our text messaging offering, we do not currently separate carrier fees from the fees that our customers pay for our product.
For example, in order to transfer data outside of the European Economic Area or the United Kingdom to a non-adequate country, including the United States in certain circumstances, the GDPR requires us to enter into an appropriate transfer mechanism and may require us to take additional steps to ensure an essentially equivalent level of data protection, including carrying out a transfer impact assessment to assess whether the recipient is subject to local laws which allow a public authority access to personal data and assisting controllers with such assessments if we act as processors of personal data.
In order to transfer data outside of the European Economic Area or the United Kingdom to a non-adequate country, including the United States in certain circumstances, the GDPR requires us to enter into an appropriate transfer mechanism and may require us to take additional steps to ensure an essentially equivalent level of data protection, including carrying 46 Table of Contents out a transfer impact assessment to assess whether the recipient is subject to local laws which allow a public authority access to personal data and assisting controllers with such assessments if we act as processors of personal data.
Our use of AI technology and the integration of AI technology with our products and services may subject us to increased risk, including security and other risks to our confidential and/or proprietary information, given the emerging nature of AI technology.
Our use of AI technology and the integration of AI technology with our products and services may subject us to increased risk, including security and other risks to our confidential and/or proprietary information, given the evolving nature of AI technology.
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.
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.
Specifically, because we currently operate primarily in the retail and eCommerce space, any disruption caused to the customers in this space, such as a weak global economy causing a shift in the economic viability of the retail and eCommerce businesses, may require us to adapt our business model and our operations accordingly.
Specifically, because we currently operate primarily in the retail and eCommerce space, any disruption caused to the customers in this space, such as a weak global economy or the introduction of tariffs causing a shift in the economic viability of the retail and eCommerce businesses, may require us to adapt our business model and our operations accordingly.
Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions, and potential legal risk, 42 Table of Contents require additional investment of resources in compliance programs, impact strategies, and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment of resources in compliance programs, impact strategies, and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
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.
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.
In addition, a customer or supplier could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
In addition, a customer or supplier could be adversely affected by any of the liquidity or other risks that are described elsewhere in this section as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
In addition, we may experience cyberattacks, unavailable systems, unauthorized access to systems or data or disclosure due to wrongful conduct by insider employees or vendors, denial-of-service attacks, attacks from sophisticated nation-state and nation-state supported actors, and advanced persistent threat intrusions.
In addition, we may experience cyberattacks, unavailable systems, unauthorized access to systems or data or disclosure due to wrongful conduct by insider employees or vendors, denial-of-service attacks, attacks from sophisticated nation-state and nation-state supported actors, attacks enhanced or facilitated by AI, and advanced persistent threat intrusions.
We currently have offices in the United Kingdom, Australia, and Ireland, and we expect that we may in the future open additional offices internationally and hire employees to work at these offices in order to grow our business, reach new customers, and gain access to additional technical talent.
We currently have international offices in the United Kingdom, Australia, Ireland, Singapore, and France and we expect that we may in the future open additional offices internationally and hire employees to work at these offices in order to grow our business, reach new customers, and gain access to additional technical talent.
In addition, we may be subject to investigation or administrative fines from supervisory authorities or subject to individual claims that we failed to comply with the requirements of applicable privacy and data protection law or that we acted without or against the data controller’s lawful instructions.
In addition, we may be subject to investigation or administrative fines from supervisory authorities or subject to individual claims that we failed to comply with the requirements of applicable privacy and data protection law or that we acted without or against the data 42 Table of Contents controller’s lawful instructions.
Our business offerings rely heavily on a variety of direct marketing techniques, including email marketing and marketing conducted via SMS. These activities are regulated by legislation such as CAN-SPAM and the TCPA as well as state laws regulating marketing via telecommunication services.
Our business offerings rely heavily on a variety of direct marketing techniques, including email marketing and marketing conducted via text message. These activities are regulated by legislation such as CAN-SPAM and the TCPA as well as state laws regulating marketing via telecommunication services.
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.
Our international operations and structure subject us to potentially adverse tax consequences. We currently conduct our operations in the United Kingdom, Australia, Ireland, and other jurisdictions through subsidiaries.
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.
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.
Climate change may have a long-term impact on our business. We recognize that there are inherent climate-related risks wherever business is conducted. Any of our primary office locations may be vulnerable to the adverse effects of climate change.
Climate change may have a long-term impact on our business. We recognize that there are inherent climate-related risks wherever business is conducted. Any of our primary office locations and critical infrastructure may be vulnerable to the adverse effects of climate change.
Our SMS texting product is a potential source of risk for class-action lawsuits and liability for our company. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct call and SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs.
Our text messaging product is a potential source of risk for class-action lawsuits and liability for our company. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct call and text messaging programs, with many resulting in multi-million-dollar settlements to the plaintiffs.
We anticipate that our revenue growth rate will decelerate over time as a result of a variety of factors, including the maturation of our business, and you should not rely on our historical revenue growth as an indication of our future performance.
We anticipate that our revenue growth rate will decelerate over time as a result of a variety of factors, including the maturation of our business, and you 20 Table of Contents should not rely on our historical revenue growth as an indication of our future performance.
Our internal systems and tools are subject to a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose.
Our internal systems and tools are subject to a number of limitations, and our methodologies for tracking these metrics may change over 36 Table of Contents time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose.
Although we endeavor to comply with these agreements, we may at times fail to do so or may be perceived to have failed to do so, including due to the errors or omissions of our personnel and third-party service providers.
Although we endeavor to comply with these agreements and our security policies, we may at times fail to do so or may be perceived to have failed to do so, including due to the errors or omissions of our personnel, third-party service providers, or customers.
We also have offices in the United Kingdom, Australia, and Ireland. A significant natural disaster, such as an earthquake, fire, or flood, occurring at our headquarters, at one of our other facilities, or where a partner is located, could adversely affect our business, results of operations, and financial condition.
We also have offices in the United Kingdom, Australia, and Ireland. A significant natural disaster, such as an earthquake, fire, flood, or extreme weather event, occurring at our corporate headquarters, at one of our other facilities, or where a partner is located, could adversely affect our business, results of operations, and financial condition.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and platform capabilities, personnel or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us, their software is not easily adapted to work with our platform or our products, or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and platform capabilities, personnel or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us, their software is not easily adapted to work with our platform or our products, or if we experience difficulties in integrating their financial reporting and internal controls, or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.
Bad actors around the world are also using increasingly sophisticated methods, including the use of AI Technology, to engage in illegal activities involving the theft and misuse of personal 51 Table of Contents information, confidential information and intellectual property.
Bad actors around the world are also using increasingly sophisticated methods, including the use of AI technology, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property.
If our revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the trading price of our Series A common stock could decline substantially.
If our revenue or results of operations fall below the expectations of analysts or investors or below any guidance or forecasts we may provide to the market, or if the guidance or forecasts we provide to the market are below the expectations of analysts or investors or are subsequently adjusted, the trading price of our Series A common stock could decline substantially.
We depend in part on mobile operating systems and their respective infrastructures to send notifications through various applications that utilize our platform. As new email, mobile devices, and mobile and web platforms are released, existing email, mobile devices, and platforms may cease to support our platform or effectively roll out updates to our customers’ applications.
We depend in part on mobile operating systems and their respective infrastructures to send consumer engagement messages through various applications that utilize our platform. As new email, mobile devices, and mobile and web platforms are released, existing email, mobile devices, and platforms may cease to support our platform or effectively roll out updates to our customers’ applications.
Anti-corruption and anti-bribery laws have been interpreted broadly and enforced aggressively in recent years, and prohibit companies and their employees and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in the private sector to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business.
Anti-corruption and anti-bribery laws have been interpreted broadly and enforced aggressively in recent years, and prohibit companies and their employees and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in the private sector to influence official action, obtain necessary permits, licenses, and other regulatory approvals, direct business to any person, gain any improper advantage, or obtain or retain business.
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.
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.
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.
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.
We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and maintain profitability in the future. We incurred net losses of $46.1 million, $308.2 million, and $49.2 million in the years ended December 31, 2024, 2023, and 2022, respectively.
We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and maintain profitability in the future. We incurred net losses of $31.8 million, $46.1 million, and $308.2 million in the years ended December 31, 2025, 2024, and 2023, respectively.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, and our business, financial condition, and results of operations may be adversely affected.
A claim 40 Table of Contents brought against us that is uninsured or underinsured could result in unanticipated costs, and our business, financial condition, and results of operations may be adversely affected.
Since February 2024, Google and Yahoo have required bulk senders to authenticate their emails following certain industry standard authentication systems, enable recipients to easily unsubscribe, and ensure they only send wanted emails and stay under a certain spam rate threshold.
Since February 2024, Google and Yahoo have required bulk senders to authenticate their emails following certain industry standard 51 Table of Contents authentication systems, enable recipients to easily unsubscribe, and ensure they only send wanted emails and stay under a certain spam rate threshold.
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.
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.
We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content sent through our platform or the data they store on our servers.
We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content sent through our platform (including AI-generated content) or the data they store on our servers.
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.
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. 60 Table of Contents Moreover, Section 203 of the Delaware General Corporation Law (the “DGCL”) may discourage, delay, or prevent a change in control of our company.
Our rapid revenue growth has been driven by increases in our customer count, growth of existing customers, our expansion into international markets, our sales to mid-market businesses, and the cross-selling of our SMS offering alongside our data platform and email offering.
Our rapid revenue growth has been driven by increases in our customer count, growth of existing customers, our expansion into international markets, our sales to mid-market and enterprise businesses, and the cross-selling of our text messaging offering alongside our data platform and email offering.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur 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.
Biggest changeOur CISO leads our cybersecurity initiatives and is primarily responsible for the assessing, managing, and monitoring of the Company’s cybersecurity risks. Our CISO is a seasoned cybersecurity expert with over 20 years of experience and deep knowledge about our platform. His knowledge of cybersecurity, compliance, and risk assessment has been leveraged to develop our cybersecurity governance and risk strategy.
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.
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 co-Chief Executive Officers, 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 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.
We have implemented a process to address identified risks from cybersecurity threats in which our Security Risk 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.
To monitor and manage third-party risk, we have a dedicated Security Operations and Trust team that reviews service providers’ independent attestation reports and third-party certifications.
To monitor and manage third-party risk, we have a dedicated Security Risk team that reviews service providers’ independent attestation reports and third-party certifications.
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.
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 cybersecurity risks to be raised to our Audit Committee followed by notification to our board of directors. We engage third-party service providers in the operation of our business.
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.
For example, independent third-party experts and assessors perform our SOC 2 Type 2 examinations and 64 Table of Contents 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 our Security Operations and Trust team, as well as our cybersecurity related programs and matters, which are reported on regularly to our Audit Committee.
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.

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 2033. In January 2025, we amended the lease for our corporate headquarters to add approximately 96,744 square feet to the lease.
Biggest changeItem 2. Properties Our corporate headquarters is located in Boston, Massachusetts, where we currently lease approximately 256,604 square feet pursuant to a lease agreement that expires in 2033. We also lease or purchase service memberships to additional facilities in San Francisco, California; Palo Alto, California; Denver, Colorado; London, United Kingdom; Sydney, Australia; Dublin, Ireland; Singapore; and Paris, France.
Removed
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.
Added
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. 61 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. 65 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 changeThe 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.
Biggest changeThe stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. 66 Table of Contents 9/20/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 3/31/2025 6/30/2025 9/30/2025 12/31/2025 KVYO 100 85 83 118 137 101 112 92 108 108 S&P 500 Index 100 108 113 119 121 116 128 138 141 141 S&P 500 Information Technology Index 100 115 131 133 139 121 150 169 172 172 Recent Sale of Unregistered Equity Securities On November 14, 2025, 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.
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.
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 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
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.
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, 2025 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
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]
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. 67 Table of Contents Item 6. [Reserved]
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.
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 2, 2026, there were 36 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 14, 2025, there were 26 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 2, 2026, there were 26 holders of record of our Series A common stock.

Item 7. Management's Discussion & Analysis

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

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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 $698.1 million for the year ended December 31, 2023.
Biggest changeYear Ended December 31, 2025 2024 2023 ($ in thousands) Consolidated Statements of Operations Revenue $ 1,234,019 $ 937,464 $ 698,099 Cost of revenue (1) 312,523 221,305 177,888 Gross profit 921,496 716,159 520,211 Operating expenses: Selling and marketing (1) 506,241 404,209 394,369 Research and development (1) 291,209 238,459 262,177 General and administrative (1) 191,804 157,569 194,287 Total operating expenses 989,254 800,237 850,833 Operating loss (67,758) (84,078) (330,622) Other income (expense): Other (expense) income, net (2,162) 816 (470) Interest income 39,402 39,582 24,051 Total other income, net 37,240 40,398 23,581 Loss before income taxes (30,518) (43,680) (307,041) Provision for income taxes 1,250 2,462 1,192 Net loss $ (31,768) $ (46,142) $ (308,233) (1) Includes stock-based compensation expense as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 7,891 $ 8,917 $ 24,973 Selling and marketing 49,725 40,907 107,954 Research and development 68,178 50,693 120,184 General and administrative 36,237 34,695 87,688 Stock-based compensation, net of amounts capitalized 162,031 135,212 340,799 Capitalized stock-based compensation expense 4,416 3,555 1,349 Total stock-based compensation expense $ 166,447 $ 138,767 $ 342,148 75 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended December 31, 2025 2024 2023 Consolidated Statements of Operations Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 25.3 23.6 25.5 Gross profit 74.7 76.4 74.5 Operating expenses: Selling and marketing 41.0 43.1 56.5 Research and development 23.6 25.4 37.6 General and administrative 15.5 16.8 27.8 Total operating expenses 80.1 85.3 121.9 Operating loss (5.4) (8.9) (47.4) Other income (expense): Other (expense) income, net (0.2) 0.1 (0.1) Interest income 3.2 4.2 3.4 Total other income, net 3.0 4.3 3.3 Income (loss) before income taxes (2.4) (4.6) (44.0) Provision for income taxes 0.1 0.3 0.2 Net loss (2.5) % (4.9) % (44.2) % Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Revenue $ 1,234,019 $ 937,464 $ 296,555 31.6 % Revenue for the year ended December 31, 2025 increased by $296.6 million or 31.6%, to $1,234.0 million compared to $937.5 million for the year ended December 31, 2024.
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.
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 of purchases of property and equipment.
If not considered distinct, the goods or services promised by us are combined and accounted for as a combined performance obligation. Determining the distinct performance obligations in a contract requires judgment. Typically, our SaaS subscription agreements consist of a single performance obligation, and revenue is recognized over time as the performance obligation is satisfied.
If not considered distinct, the goods or services promised by us are combined and accounted for as a single performance obligation. Determining the distinct performance obligations in a contract requires judgment. Typically, our SaaS subscription agreements consist of a single performance obligation, and revenue is recognized over time as the performance obligation is satisfied.
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.
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 further into other industries, including education, events and entertainment, restaurants, wellness, and travel as well as from B2B companies.
Our single performance obligation primarily consists of access to our platform and professional services. Costs to Obtain Customers We capitalize incremental costs of obtaining revenue contracts, which primarily consist of sales commissions.
Our single performance obligation primarily consists of access to our platform and related professional services. Costs to Obtain Customers We capitalize incremental costs of obtaining revenue contracts, which primarily consist of sales commissions.
In preparing the consolidated financial statements, we make estimates and judgements that affect the reported amounts in the consolidated financial statements and related footnote disclosures included elsewhere in this filing. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We re-evaluate our estimates on an ongoing basis.
In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts in the consolidated financial statements and related footnote disclosures included elsewhere in this filing. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We re-evaluate our estimates on an ongoing basis.
We believe NRR is a key performance metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents the expansion in usage of our platform by our existing customers, which is an important measure of the health of our business and future growth prospects.
We believe NRR is a key performance metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents the expansion in usage of our platform by our existing customers, which is an 71 Table of Contents important measure of the health of our business and future growth prospects.
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.
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 73 Table of Contents management, and human resources, as well as allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
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.
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 offerings and capabilities, and the success of our selling and marketing efforts.
We diversify our cash deposits across a variety of well-established financial institutions based on ratings from nationally recognized rating organizations to reduce our exposure to counterparty and concentration risk. We expect a continued increase in our cash balances as our business continues to grow.
We diversify our cash deposits across a variety of well-established financial institutions based on ratings from nationally recognized rating organizations to reduce our exposure to counterparty and concentration risk. 81 Table of Contents We expect a continued increase in our cash balances as our business continues to grow.
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.
We expect to continue to diversify our cash management strategy to primarily include money market funds, highly-liquid debt instruments of the U.S. government and its agencies, senior corporate bonds, and commercial paper to reduce our global exposure on banking deposits.
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
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 of new accounting pronouncements adopted as of the date of this Annual Report on Form 10-K. 84 Table of Contents
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024, which is incorporated herein by reference.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025, which is incorporated herein by reference.
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.
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.
By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. The critical accounting estimates that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements included elsewhere in this filing include those noted below.
By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. The critical accounting estimates that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below.
We define Klaviyo Attributed Value (“KAV”) as the amount of revenue our customers generated through orders placed by consumers within a specified period of time after a message is sent using our platform, which in the case of email is five days from when the message is sent, and in the case of SMS is twenty-four hours from when the message is sent.
We define Klaviyo Attributed Value (“KAV”) as the amount of revenue our customers generated through orders placed by consumers within a specified period of time after a message is sent using our platform, which in the case of email is five days from when the message is sent, and in the case of text messages and WhatsApp messages is twenty-four hours from when the message is sent.
Financing Activities Net cash used in financing activities of $5.8 million for the year ended December 31, 2024 primarily consisted of approximately $23.7 million used for the payment of employee tax obligations related to the vesting of stock-based compensation awards offset by $9.7 million of proceeds from the exercise of stock options and $8.1 million of proceeds from the employee stock purchase plan.
Net cash used in financing activities of $5.8 million for the year ended December 31, 2024 primarily consisted of approximately $23.7 million used for the payment of employee tax obligations related to the vesting of stock-based compensation awards offset by $9.7 million of proceeds from the exercise of common stock options and $8.1 million of proceeds from the ESPP.
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.
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.
Contractual subscriptions for customers generally auto-renew on either a monthly, quarterly, or annual basis, and customers may elect not to renew by providing at least five days’ advance notice for contracts on a monthly billing cycle and thirty days’ advance notice for contracts with any other billing cycles.
Contractual subscriptions for customers generally auto-renew on either a monthly, quarterly, or annual basis, and customers may elect not to renew by providing at least five days’ advance 82 Table of Contents notice for contracts on a monthly billing cycle and thirty days’ advance notice for contracts with any other billing cycles.
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”).
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”).
Working capital consists of current assets (including cash, current portion of restricted cash, accounts receivable, current deferred contract acquisition costs, current prepaid expenses and other current assets), less current liabilities (including accounts payable, accrued expenses, current lease liabilities, and deferred revenue, all of which is current).
Working capital consists of current assets (including cash, current portion of restricted cash, accounts receivable, current deferred contract acquisition costs, current prepaid expenses and other current assets), less current liabilities (including accounts payable, accrued expenses, current lease liabilities, and current deferred revenue).
This section of this Annual Report on Form 10-K discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section of this Annual Report on Form 10-K discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
We continue to explore ways to serve these new verticals more intentionally. In the future, we intend to more actively invest in addressing new industry verticals and product use cases. Key Performance Metrics Customers . We define a customer as a distinct paid subscription to our platform.
We continue to explore ways to serve these new verticals more intentionally. We intend to continue actively investing in addressing new industry verticals and product use cases. Key Performance Metrics Customers . We define a customer as a distinct paid subscription to our platform.
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.
Our customers utilize the text messaging offering in particular during the holidays; as such, to the extent that the text messaging offering grows in proportion to our other channels, we expect that we would see further seasonality.
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 that depicts the transfer of control to our customers in an amount reflecting the consideration to which we expect to be entitled.
Subscription pricing is determined based on a customer’s profile count and monthly messaging quantities based on a tiered pricing structure and is considered fixed. Variable consideration 77 Table of Contents in our contracts is not material but represents the overage charges incurred by customers who exceed their allotments.
Subscription pricing is determined based on a customer’s profile count and messaging quantities based on a tiered pricing structure and is considered fixed. Variable consideration in our contracts is not material but represents the overage charges incurred by customers who exceed their allotments.
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 outflows from changes in operating assets and liabilities primarily consisted of a $34.4 million increase in deferred contract acquisition costs related to higher sales commissions resulting from our increased revenues, a $20.8 million increase in accounts receivable due to higher 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 on our operating lease obligations.
During the year ended December 31, 2024, stock-based compensation awards issued were in the form of RSUs subject to only service-based vesting conditions under our 2023 Plan.
During the years ended December 31, 2025 and 2024, stock-based compensation awards issued were in the form of RSUs subject to only service-based vesting conditions under our 2023 Plan.
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.
Due to the flexibility and adaptability of our technology, we have also seen 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, 2025, our platform had efficiently scaled to over 193,000 customers.
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 believe this is an important indicator of our ability to continue to successfully move up-market. As of December 31, 2025, we had 3,912 customers generating over $50,000 of ARR, compared to 2,850 customers generating over $50,000 of ARR as of December 31, 2024, representing growth of 37% year-over-year. Dollar-Based Net Revenue Retention Rate.
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.
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, 2025 were $150.8 million, with $25.5 million payable within 12 months. Other Contractual Obligations We enter into various noncancellable agreements with marketing vendors and service providers.
The cash outflow was offset by cash inflows primarily from a $36.3 million net increase in accrued expenses and accounts payable due to timing of vendor payments and introduction of the company-wide bonus program and a $24.4 million increase in deferred revenue resulting from increased billings for subscriptions.
These cash outflows were partially offset by cash inflows primarily from a $36.3 million net increase in accrued expenses and accounts payable due to the timing of vendor payments and the implementation of a company-wide bonus program and a $24.4 million increase in deferred revenue resulting from increased billings for subscriptions.
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.
Our noncancellable obligations as of December 31, 2025 were $929.2 million, with $215.0 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.
As technology and consumer preferences change, we believe that our ability to drive continuous product innovation will be critical to attract and retain customers and drive revenue growth. Increased Adoption of Our SMS Offering We have seen notable success in the expansion of our platform with our SMS offering, which launched in 2021.
As technology and consumer preferences change, we believe that our ability to drive continuous product innovation will be critical to attract and retain customers and drive revenue growth. Increased Adoption of Our Text Messaging and WhatsApp Messaging Offerings We have seen notable success in the expansion of our platform with our text messaging and WhatsApp messaging offerings.
As a result, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term as we scale our business.
As a result, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term as we scale our business. This percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses.
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.
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.
Growth with Larger Customers When we first launched our platform, we intentionally focused on serving entrepreneurs and SMBs based on the need we saw for a simple and easy-to-use, yet powerful solution for customers in this category, and the large market opportunity within this group of customers.
We expect these three forms of revenue expansion to continue in the future. 69 Table of Contents Growth with Larger Customers When we first launched our platform, we intentionally focused on serving entrepreneurs and SMBs based on the need we saw for a simple and easy-to-use, yet powerful solution for customers in this category, and the large market opportunity within this group of 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.
In doing so, we review and analyze our primary sources and uses of liquidity, including cash balances on hand and cash flows from operations. Since our inception through December 31, 2025, we have financed our operations primarily through payments received from our customers and sales of equity securities, including the completion of our IPO in September 2023.
Non-cash charges primarily consisted of $340.8 million of stock-based compensation expense, $52.9 million of prepaid marketing expense amortization, $15.8 million of deferred contract acquisition cost amortization, $13.7 million of depreciation and amortization expense, and $13.0 million of operating lease costs.
Non-cash charges primarily consisted of $162.0 million of stock-based compensation expense, $52.9 million of prepaid marketing expense amortization, $29.9 million of deferred contract acquisition cost amortization, $24.8 million of operating lease costs, and $18.6 million of depreciation and amortization expense.
Going forward, our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our solutions and the ability of our customers to attract new consumers. We expect these three forms of revenue expansion to continue in the future.
Going forward, our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our solutions and the ability of our customers to attract new consumers.
We expect our gross profit to increase over time due to an increase in revenue.
Gross Profit Our gross profit represents revenue, less all cost of revenue. We expect our gross profit to increase over time due to an increase in revenue.
We expect our gross margin to decline modestly in the near term as the volume of SMS messages sent through our platform increases, and it could fluctuate in the long term due to timing of investments and expected increases in our cloud-based infrastructure costs and outbound communication sending costs, including email and SMS, as our customers increase usage of our platform and capabilities.
We expect our gross margin to decline modestly in the near term as the volume of text messages and WhatsApp messages sent through our platform increases and as our cloud-based infrastructure costs and outbound communication sending costs increase as our customers increase usage of our platform and capabilities.
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.
The cash outflow was offset by cash inflows primarily from a $38.7 million increase in deferred revenue resulting from increased billings for subscriptions and a $29.6 million net increase in accrued expenses and accounts payable due to timing of vendor payments.
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.
Investing Activities Net cash used in investing activities of $30.5 million for the year ended December 31, 2025 consisted of $19.0 million of capitalized software costs, $9.5 million of purchases of property and equipment, and $2.0 million of business acquisition costs.
First, as our customers increase their usage of our platform through the number of active consumer profiles they store and email and SMS messages they send, they move to higher subscription tiers.
First, as our customers increase their usage of our platform through the number of active consumer profiles they store and email, text messages and WhatsApp messages they send, they move to higher subscription tiers. Second, we cross-sell additional use cases (e.g.
Provision for Income Taxes Provision for income taxes consists primarily of income taxes related to U.S. and foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
This increase was primarily due to favorable foreign exchange fluctuations.
This decrease was primarily due to unfavorable foreign exchange fluctuations.
The following table sets forth, for the periods indicated, our working capital: 74 Table of Contents As of December 31, 2024 2023 ($ 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.
The following table sets forth, for the periods indicated, our working capital: 79 Table of Contents As of December 31, 2025 2024 ($ in thousands) Cash $ 1,064,875 $ 881,473 Restricted cash, current (1) 738 375 Accounts receivable, net of allowance for doubtful accounts 60,714 43,095 Deferred contract acquisition costs 29,634 20,544 Prepaid expenses and other current assets 50,115 34,262 Accounts payable 29,072 14,579 Accrued expenses 125,159 99,828 Operating lease liabilities 24,757 20,989 Deferred revenue 103,245 64,497 Total Working Capital $ 923,843 $ 779,856 ______________ (1) Restricted cash related to our required collateral to fund payroll and credit card obligations in our Australia entity.
Cost of Revenue Our cost of revenue primarily consists of cloud-based infrastructure costs, outbound communication sending costs, employee-related costs including payroll, benefits, bonuses, and stock-based compensation expense related to our customer support team, amortization of capitalized internal-use software development costs, and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology.
Cost of Revenue Our cost of revenue primarily consists of cloud-based infrastructure costs, outbound communication sending costs, employee-related costs including payroll, benefits, bonuses, and stock-based compensation expense related to our customer support team, amortization of capitalized internal-use software development costs, and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. 72 Table of Contents 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.
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 $27.7 million from changes in operating assets and liabilities.
Year Ended December 31, 2025 2024 ($ in thousands) Net cash provided by (used in) Operating activities $ 218,007 $ 165,955 Investing activities (30,496) (17,226) Financing activities (4,485) (5,799) Net increase in cash, cash equivalents, and restricted cash $ 183,026 $ 142,930 Cash, cash equivalents, and restricted cash, beginning of period 882,587 739,657 Cash, cash equivalents, and restricted cash, end of period $ 1,065,613 $ 882,587 Operating Activities Net cash provided by operating activities of $218.0 million for the year ended December 31, 2025 was primarily attributable to a net loss of $31.8 million, adjusted for non-cash charges of $287.4 million and net cash outflows of $37.6 million from changes in operating assets and liabilities.
Based upon our current levels of operations, we believe our operating cash flows provide sufficient liquidity to support liquidity and financing needs for at least the next twelve months.
Our primary cash needs are for personnel-related expenses, selling and marketing expenses, third-party cloud infrastructure expenses, and outbound communication sending costs. Based upon our current levels of operations, we believe our operating cash flows provide sufficient liquidity to support liquidity and financing needs for at least the next twelve months.
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. Our continued success depends on our ability to sustain product and technology innovation to continue delivering value to our customers.
We have also introduced AI features that provide customers with AI-powered tools to streamline data segmentation, create and orchestrate campaigns, and drive better engagement, including our Marketing Agent and Customer Agent offerings as well as our MCP Server capability. Our continued success depends on our ability to sustain product and technology innovation to continue delivering value to our customers.
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.
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.
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.
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. 83 Table of Contents Under the stock purchase agreement, we issued and sold shares of common stock to Shopify and provided an investment option which allows Shopify to purchase additional shares of common stock at a fixed price, exercisable at any time at Shopify’s option until July 28, 2030.
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.
Credit card processing fees are also part of general and administrative expenses. We incur expenses as a result of operating as a public company, including expenses to comply with the rules and regulations governing public companies, such as Section 404 of the Sarbanes-Oxley Act, and expenses for legal, audit, insurance, investor relations, and related professional services.
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.
Other Income Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Other (expense) income, net $ (2,162) $ 816 $ (2,978) (365.0) % Other (expense) income, net for the year ended December 31, 2025 decreased by $3.0 million or 365.0%, to $(2.2) million compared to $0.8 million for the year ended December 31, 2024.
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.
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.
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.
Net cash outflows from changes in operating assets and 80 Table of Contents liabilities primarily consisted of a $54.3 million increase in deferred contract acquisition costs related to higher sales commissions resulting from our increased revenues, a $23.8 million decrease in operating lease liabilities due to payments on our operating lease obligations, a $19.7 million increase in accounts receivable due to higher customer billings, and a $6.8 million increase in prepaid expenses and other noncurrent assets.
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.
Selling and Marketing Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Selling and marketing $ 506,241 $ 404,209 $ 102,032 25.2 % Selling and marketing expenses for the year ended December 31, 2025 increased by $102.0 million or 25.2%, to $506.2 million compared to $404.2 million for the year ended December 31, 2024.
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.
Gross Profit Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Gross profit $ 921,496 $ 716,159 $ 205,337 28.7 % Gross profit for the year ended December 31, 2025 increased by $205.3 million or 28.7%, to $921.5 million compared to $716.2 million for the year ended December 31, 2024.
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.
We believe we will see our overall gross profit dollars increase as 70 Table of Contents customers send more text messages and WhatsApp messages if our text messaging and WhatsApp messaging offerings continue to gain traction.
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.
This increase was primarily due to increases of approximately $42.4 million in outbound communication sending costs on behalf of our customers, driven by increased 76 Table of Contents text message and WhatsApp usage, $31.0 million in cloud-based infrastructure costs, $8.6 million in salaries and personnel expenses resulting from increased headcount, $5.2 million in amortization from capitalized software costs, and $4.5 million in technology expenses.
We currently permit our customers to send unlimited push notifications, which are included as part of our email subscription plan. 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.
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 success with that of our customers.
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.
Financing Activities Net cash used in financing activities of $4.5 million for the year ended December 31, 2025 primarily consisted of approximately $18.0 million used for the payment of employee tax obligations related to the vesting of stock-based compensation awards offset by $11.3 million of proceeds from the Company’s 2023 Employee Stock Purchase Plan (the “ESPP”) and $2.2 million of proceeds from the exercise of stock options.
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.
Cost of Revenue Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Cost of revenue $ 312,523 $ 221,305 $ 91,218 41.2 % Cost of revenue for the year ended December 31, 2025 increased by $91.2 million or 41.2%, to $312.5 million compared to $221.3 million for the year ended December 31, 2024.
Our SaaS subscription agreements with customers offer personalized email and SMS marketing services through a cloud-based software platform, as well as add-ons, such as reviews and our CDP offering. Subscription fees are generated from customers accessing our hosted platform services and our subscription agreements do not provide our customers with the right to take possession of our software.
Subscription fees are generated from customers accessing our hosted platform services and our subscription agreements do not provide our customers with the right to take possession of our software.
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.
As of December 31, 2025, our principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $1.1 billion, with such amounts held for working capital purposes. Our cash equivalents were comprised of $325.9 million in money market funds.
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.
Research and Development Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) Research and development $ 291,209 $ 238,459 $ 52,750 22.1 % Research and development costs for the year ended December 31, 2025 increased by $52.8 million or 22.1%, to $291.2 million compared to $238.5 million for the year ended December 31, 2024.
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.
As our customers’ businesses grow, they utilize more active consumer profiles and send more emails, text messages and WhatsApp messages, which naturally increases their usage of our platform.
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.
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.
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.
This decrease was primarily due to excess tax deductions related to stock-based compensation. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities.
General and Administrative Year Ended December 31, 2024 2023 $ Change % Change ($ in thousands) General and administrative $ 157,569 $ 194,287 $ (36,718) (18.9) % 72 Table of Contents General and administrative expenses for the year ended December 31, 2024 decreased by $36.7 million or 18.9%, to $157.6 million compared to $194.3 million for the year ended December 31, 2023.
General and Administrative Year Ended December 31, 2025 2024 $ Change % Change ($ in thousands) General and administrative $ 191,804 $ 157,569 $ 34,235 21.7 % General and administrative expenses for the year ended December 31, 2025 increased by $34.2 million or 21.7%, to $191.8 million compared to $157.6 million for the year ended December 31, 2024.
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.
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 marketing channel.
Once customers adopt our SMS offering, they typically grow their usage over time as they gain comfort and confidence in the new channel. Our SMS offering has higher associated communication sending costs, and as the number of SMS messages sent by our customers increases, we expect our gross margin to decline modestly.
Our text messaging and WhatsApp messaging offerings have higher associated communication sending costs, and as the number of text messages and WhatsApp messages sent by our customers increases, we expect our gross margin to decline modestly.
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.
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. 74 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.
Sales to new customers represent the revenue recognized from new customers acquired in the 12 months prior to the period end.
For the year ended December 31, 2025, sales to existing customers accounted for approximately 42% of the increase in revenue while approximately 58% of the increase in revenue was related to new customers. Sales to new customers represent the revenue recognized from new customers acquired in the 12 months prior to the period end.
This increase was primarily due to an increase of approximately $51.7 million in salaries and personnel expenses as a result of increases in headcount and the introduction of a company-wide bonus program, $12.7 million in marketing related services, $10.2 million in partnership-related expenses across our ecosystem, and $3.7 million in technology expenses.
This increase was primarily due to increases of approximately $55.2 million in salaries and personnel expenses as a result of increased headcount, $14.5 million in marketing expenses associated with our advertising campaigns across multiple channels of media, $10.2 million in partnership-related expenses across our ecosystem, $8.8 million in stock-based compensation from the vesting of RSUs, $8.5 million in professional services, and $4.4 million in technology expenses.
As of the date of this Annual Report on Form 10-K, we offer SMS capabilities in more than 15 countries, and we offer our platform in English, French, German, Portuguese, Korean, Spanish and Italian. We believe that the introduction of additional languages to our platform will increase our efficacy and ease of use in other regions.
We also continue to expand our product offerings to better serve the international market. As of the date of this Annual Report on Form 10-K, we offer text messaging capabilities in more than 20 countries, and we offer our platform in English, French, German, Portuguese, Korean, Spanish, Italian, Dutch, Swedish, Spanish (Mexico), and Polish.
This decrease was primarily due to a decrease of approximately $69.5 million in stock-based compensation expense related to the vesting of RSUs in connection with our IPO in September 2023 and $2.6 million in restructuring expenses.
This increase was primarily due to increases of approximately $22.6 million in salaries and related personnel expenses as a result of increased headcount, $17.5 million in stock-based compensation expense from the vesting of RSUs, $8.8 million in technology expenses, and $4.8 million in severance expense primarily related to restructuring costs.
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.
Customer Agent, Marketing Analytics, etc.) and marketing channels (e.g. text messaging and WhatsApp) to customers who started on our platform with our email offering. Finally, we offer our platform to our customers’ other brands, business units, and geographies.

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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. Our operating expenses are denominated in the currencies of the countries in which our operations are located.
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.
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
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. 85 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, 2024, 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, 2025, we had no debt, and therefore no potential market risk for interest expense.
Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future as a result.
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.
Interest Rate Risk We had cash of $1.1 billion as of December 31, 2025, which consisted of cash, cash equivalents, and restricted cash held in deposit accounts at financial institutions, and money market funds. Our cash is held for working capital and general corporate purposes. We do not enter into investments for trading or speculative purposes.
Added
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, Australia, and Ireland.

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