Klaviyo’s Carrier Fee Pass-Through Timing and Monetization Model Claims Clash in 2026 Q2 Earnings Call

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $370.6 million, up 26% year-over-year
• Gross Margin: 73.4% (non-GAAP), down three points year over year
• Operating Margin: 13.7% (non-GAAP operating margin)

Guidance:

• Full year 2026 revenue guidance raised by $12M at midpoint, projected between $1.526B and $1.534B, representing 24% YOY growth.
• Full year 2026 non-GAAP operating income guidance revised down to $212-$218M, with operating margin ~14%.
• Q3 revenue expected in range of $377-$381M, ~21.5-22.5% growth.
• Q3 non-GAAP operating income expected $40-$43M, margin 10.5-11%.
• Q3 non-GAAP gross margin expected down slightly vs Q2.

Business Commentary:

Revenue Growth and Scaling:

• Klaviyo reported nearly $1.5 billion in annualized revenue run rate with 26% year-on-year quarterly revenue growth.
• The growth was driven by the signing of the largest deal ever, an eight-figure multi-product contract with a leading e-commerce brand, and an increase in the number of brands relying on Klaviyo's autonomous B2C CRM platform.

Data Infrastructure and AI Integration:

• Klaviyo's data infrastructure stores more than 9 billion consumer profiles and processes a quarter of a trillion data points every quarter.
• The improvement in scalability and versatility is attributed to the integration of AI models and agents, which enhances personalization and marketing message delivery efficiency.

Product Adoption and Customer Engagement:

• Marketing flows saw a 48% increase in messages and decision point actions, and multi-channel campaigns increased nearly 50% quarter over quarter.
• This trend is due to customers leveraging Klaviyo's marketing platform for greater flexibility and scalability, as well as the adoption of AI agents like Composer for campaign optimization.

International Expansion and Market Share:

• Klaviyo's revenue outside the Americas grew 35% year-on-year, with EMEA revenue excluding the UK up 41%.
• The growth is attributed to strategic investments in international markets, including the establishment of a new France office and an EU data center, alongside strong multi-product adoption and enterprise momentum.

Customer Agent and Composer Adoption:

• Composer agent saw over 95,000 users with nearly a quarter becoming weekly users, and Customer Agent adoption grew 40% quarter-over-quarter.
• The adoption is driven by the agents' ability to enhance marketing campaign creation, optimize customer interactions, and deliver substantial ROI, as evidenced by increased attributed revenue and improved customer resolution rates.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted strong quarterly performance: 'Q2 was a strong quarter, with revenue... ahead of our guidance, driven by notable strength.' They raised full-year revenue guidance, citing broad momentum. New products like Composer and Customer Agent are gaining traction rapidly, with Composer seeing over 95,000 users and strong adoption growth. The enterprise motion is described as 'working as designed' with wins like Warner Music Group and Claire's. International revenue grew 35% YOY. Forward-looking statements express confidence in agents representing 'the very start of our next S-curve' and in the business model delivering 'compounding growth.'

Q&A:

• Question from Elizabeth Porter (Morgan Stanley): What have you seen from early adopters of Composer regarding campaign creation velocity and how that translates to higher customer contract volumes and incremental platform usage?
  Response: Composer is accelerating campaign creation and research/optimization, leading to increased Klaviyo usage and attributed revenue, with early users showing higher engagement and expansion.

• Question from Arjun Bhatia (William Blair & Co.): Is the solid traction in SMS due to an inflection or enterprise success? Also, quantify carrier fee impact on gross margin this quarter.
  Response: Growth in text/WhatsApp is driven by customers seeking a unified platform and enterprise consolidation; multi-channel campaigns increased ~50% QoQ. Gross margin drivers were carrier fees, infrastructure investment, and text growth; carrier fee impact will be neutral for 2026.

• Question from Tyler Radke (Citi): How are you thinking about the right framework for investing in growth and margin expansion beyond 2026?
  Response: Investments in product innovation and the agency acquisition are driving growth; excluding agency impact, the business achieved over a percentage point of leverage YOY and can continue to grow while investing.

• Question from Samad Samana (Jefferies): What does the agency acquisition add, especially with Elias as Chief Product Officer, and how will divisional labor work?
  Response: The acquisition accelerates agent development; Elias brings deep AI agent expertise. Collaboration between Andrew and Elias will focus on advancing Composer and Customer Agent, leveraging combined technical and customer-facing strengths.

• Question from Barclay's: How does Klaviyo's broader agent vision help in enterprise conversations, especially with legacy replacements?
  Response: The agent vision enables a 'better together' story, helping win enterprise deals by replacing multiple legacy platforms and demonstrating innovative, revenue-driving outcomes with a strong infrastructure to handle scale.

• Question from Matt VanVliet: How should we think about the monetization of agents like Composer and Customer Agent over the next year or two?
  Response: Composer uses a credit-based model with early payers emerging; Customer Agent is outcome/resolution-based, driving volume and value through higher resolution rates and enterprise pilots.

• Question from Terry Tillman (Truist): What about sales capacity for enterprise, and is there anything missing in product market fit?
  Response: Sales capacity is adequate with improved productivity; enterprise motion is early but promising with strong deals and pipeline, supported by new leadership and agency partnerships.

• Question from DJ Hynes (Canaccord Genuity): With improving gross retention and multi-product strength, should net revenue retention (NRR) start to inflect up given profile enforcement is winding down?
  Response: NRR was offset by lapping profile enforcement; as its impact winds down through Q1, underlying strength in gross retention, text expansion, and cross-sell should drive NRR improvement over the long term.

• Question from Derek Wood (TD Cowen): What are the next phases for international expansion on product and go-to-market sides?
  Response: Focus is on scaling multi-market capabilities, expanding data centers (e.g., EU), growing local teams in Europe, and leveraging WhatsApp to open new markets; goal is for majority of revenue to come ex-North America.

Contradiction Point 1

Carrier Fee Pass-Through Timing and Financial Impact

Timing difference in when carrier fee increases are passed to customers affects gross margin reporting.

Arjun Bhatia (William Blair & Co.) - Arjun Bhatia (William Blair & Co.)

2026Q2: Carrier fee increases are now being passed through to customers starting in Q3; this change is neutral to 2026 revenue and gross margin due to timing. - [Amanda Whalen](CFO)

Can you quantify the carrier fee impact on this quarter’s gross margin? - Arjun Bhatia (William Blair & Co.)

2026Q2: Q2 gross margin was impacted by three factors: 1) Carrier fee increases (now being passed through to customers starting Q3, neutral to full-year revenue/gross margin), 2) Infrastructure investments... - [Amanda Whalen](CFO)

Contradiction Point 2

Customer Agent Monetization Model

Contradiction in describing whether Customer Agent uses a per-resolved-conversation model or an outcome-based model.

Matt VanVliet - Matt VanVliet

2026Q2: Customer Agent is outcome-based pricing: customers pay per resolved conversation (not for proxied ones). Enterprise pilots are showing high single-digit conversion rates... - [Andrew Bialecki](CEO)

How do you expect the monetization of Composer and Customer Agents to impact ARR growth over the next year or two? - Matt VanVliet

2026Q2: Customer Agent uses an outcome-based model (paid per resolved conversation). Improvements in resolution rates... drive volume and value. - [Andrew Bialecki](CEO)

Contradiction Point 3

SMS Carrier Fee Strategy and Gross Margin Impact

Contradiction on whether carrier fee increases are absorbed or passed through to customers.

Arjun Bhatia (William Blair & Co.) - Arjun Bhatia (William Blair & Co.)

2026Q2: Carrier fee increases are now being passed through to customers starting in Q3; this change is neutral to 2026 revenue and gross margin due to timing. - [Amanda Whalen](CFO)

What was the impact of carrier fees on this quarter's gross margin? - Raimo Lenschow (Barclays)

2026Q1: Klaviyo has chosen to absorb the increases to maintain customer predictability and trust... The ability to absorb fees while holding gross margins steady in Q1 demonstrates the company can balance customer predictability with margin expansion. - [Amanda Whalen](CFO)

Contradiction Point 4

Timeline for Profile Enforcement Impact on NRR

Contradiction on when the negative impact of lapping profile enforcement will wind down.

DJ Hynes (Canaccord Genuity) - DJ Hynes (Canaccord Genuity)

2026Q2: The impact of profile enforcement will wind down through Q1 next year. - [Amanda Whalen](CFO)

Given improving gross retention, SMS strength, and multi-product adoption, should we expect net revenue retention (NRR) to inflect upward, and how much is profile enforcement overhanging it? - Siti Panigrahi (Mizuho)

2026Q1: There will be some negative impact from lapping profile enforcement, but this will be offset by positive contributions... Looking ahead: There will be some negative impact from lapping profile enforcement... - [Amanda Whalen](CFO)

Contradiction Point 5

Monetization Model for Customer Agent

Inconsistent characterization of revenue recognition for the customer agent product.

Matt VanVliet - Matt VanVliet

2026Q2: Customer Agent is outcome-based pricing: customers pay per resolved conversation (not for proxied ones). Enterprise pilots are showing high single-digit conversion rates... - [Andrew Bialecki](CEO), [Chano Fernandez](CEO)

How should we think about the monetization of agents (Composer & Customer Agent) over the next year or two, and what uplift in ARR are you seeing? - Elizabeth Porter (Morgan Stanley)

20260211-2025 Q4: The 2026 guidance assumes minimal revenue contribution from the new service product. It is considered 'embedded upside' in the model, with traction expected to build throughout the year. - [Andrew Bialecki](CEO), [Amanda Whalen](CFO)