Possibly the most mispriced public B2B leader right now.
Klaviyo reported its latest FY2025 results, and the numbers are genuinely top decile. It should be a hot stock:
- $1.234 billion in revenue for the full year
- Up 32% year-over-year, with Q4 alone hitting $350 million — a 30% increase.
- The company beat Q4 revenue expectations by over 9%
- With EPS of $0.19 against a forecast of $0.15.
Profitable, at scale, top decline growth (albeit not accelerating). What more do the markets want? And yet the stock is trading at roughly $17. Down 41% over the past year, down 42% since the IPO in 2023, with a market cap around $5.4 billion.
That’s approximately 4-5x forward revenue for a business growing 30%+, with expanding margins and $1 billion in cash. Something is off. Or is this the New Normal?
Either the market is right about something structural, or AI is truly disrupting them (not yet), or this is one of the more interesting disconnects in public B2B and SaaS right now. Let’s dig in.
#1. The NRR is Quietly Moving in the Right Direction
NRR reached 110% as of December 31, 2025 — an increase of two percentage points year-over-year. That improvement matters enormously.
Most SaaS companies at $1B+ ARR see NRR drift down as they add more SMB customers and the law of large numbers kicks in. Klaviyo went the other direction. The reason: a deliberate push upmarket is working. Customers generating over $50,000 in ARR grew 37% year-over-year to 3,912, and the number of customers generating over $1 million in ARR doubled year-over-year.
Doubling the $1M+ ARR cohort is not a small thing. That’s the enterprise motion actually taking hold, not just a management talking point. When NRR rises while you’re simultaneously adding 26,000 net new customers in a year, your underlying retention economics are genuinely improving. That’s rare.
For context: 110% NRR at $1.2B in revenue typically commands a significant premium in the public markets. It isn’t getting one here.
#2. International Is Becoming a Real Story
The domestic Shopify/e-commerce narrative has been Klaviyo’s most persistent overhang. The market perception is that it’s a glorified Shopify add-on with a ceiling. International revenue grew 42% year-over-year in 2025, with revenue outside the Americas now representing more than one-third of the business.
The company opened new regional hubs in Dublin and Singapore specifically to support international growth, with notable country-level momentum including Italy growing 41% year-over-year in Q4.
When your international segment is growing faster than the overall business and it’s now a third of total revenue, you have a legitimate geographic diversification story. The “Shopify dependency” framing made more sense three years ago. The business has quietly outgrown it while investors are still pricing it in.
#3. The AI Agent Products Are Real Revenue, Not Just Roadmap
Klaviyo now offers a Marketing Agent — an autonomous marketing assistant for strategy, content, and campaign execution — and a Customer Agent for support and selling across digital channels.
Unlike most vendors who are still selling AI as a feature bundled into existing SKUs, Klaviyo has been monetizing it in a measurable way. The Q4 2025 earnings call highlighted strong AI-driven product adoption across both agents, with management citing meaningful customer success examples.
The SMS cross-sell tells the same multi-product story. The percentage of SMB+ customers using text messaging and WhatsApp grew to 29.6%, compared to 26.1% at the end of 2024. That’s nearly 30% of customers on a second product. The platform expansion from email-only to B2C CRM — with email, SMS, WhatsApp, reviews, AI agents, and a consumer-facing Customer Hub — is happening faster than the stock price reflects.
The real question on AI isn’t whether Klaviyo has it. It’s whether AI agents will expand or cannibalize their per-seat and usage economics. That question is genuinely unanswered for every company in this space right now.
#4. The Unit Economics Are Strong
Klaviyo generated $200.4 million in free cash flow for FY2025, with a non-GAAP operating income of $169.2 million and a 14% non-GAAP operating margin. Free cash flow margin for the full year was 16%. The company ended the year with over $1 billion in cash and cash equivalents.
Rule of 40: 32% revenue growth + 14% operating margin = 46. That’s solidly above the threshold. FCF margin of 16% at 32% growth puts you at 48. This is not a company burning cash to grow. It is a profitable, cash-generating business growing 30%+ with a billion dollars in the bank.
At $5 billion market cap, you’re paying roughly 25x free cash flow for a business growing at this rate with this NRR. In any normal SaaS market environment, that would be considered underpriced. The question is what “normal” means right now.
#5. The 2026 Guidance Implies Deceleration — That’s the Real Overhang
FY2026 guidance projects $1.501-1.509 billion in revenue, representing 21.5-22.5% growth, with non-GAAP operating margin of 14.5-15%.
There it is. The market is pricing in the deceleration, not the current results. Going from 32% to 22% growth in one year is meaningful. At $1.5B, Klaviyo moves from being a high-growth SaaS to being a mid-growth SaaS, and the multiple compression that follows that transition is well-documented.
But here’s the counterargument: the guidance has been consistently conservative. Klaviyo raised its full-year 2025 revenue guidance multiple times throughout the year. They guided 2025 initially for 23-24% growth coming out of 2024, then beat and raised every quarter on the way to 32%. If the same pattern holds in 2026, you could be looking at a $1.6B+ year while the market is pricing in $1.5B.
The deeper issue is that even at 22% growth with 14-15% operating margins and 110% NRR, this business probably deserves a higher multiple than 4x forward revenue. The only way it doesn’t is if there’s a structural concern about the total addressable market or a genuine platform risk from Shopify building competitive functionality.
A Few More Quick Data Points:
- The $1M+ ARR customer cohort doubled year-over-year. That’s the clearest signal yet that the upmarket motion is real, not just a slide-deck ambition. When your seven-figure customer count is doubling, the enterprise narrative graduates from “strategy” to “fact.”
- Free cash flow hit $200M. Full-year free cash flow reached $200.4 million for FY2025, with the company holding over $1 billion in cash on hand. For a company trading at roughly $5.8 billion, you’re buying $1 billion in cash plus a $1.2 billion ARR business generating 16% FCF margins. The balance sheet alone is a meaningful portion of the market cap.
- Only 7.4% of new ARR now flows through the Shopify App Store directly. While overall Shopify concentration remains high, only 7.4% of new ARR came through the Shopify App Store in 2025 — a declining referral percentage that may indicate Klaviyo is successfully building brand equity outside the Shopify ecosystem. Customers using Klaviyo because they’re on Shopify is very different from customers being actively referred to Klaviyo by Shopify. The latter is declining. That’s a good thing.
- Gross margins are quietly compressing. Gross margin fell from 76.4% in 2024 to 74.7% in 2025, driven by a $42 million increase in outbound communication costs as SMS and WhatsApp become a larger portion of revenue mix. Email is structurally higher-margin than SMS — carrier fees are real. As Klaviyo pushes harder on multi-channel, this headwind is going to be persistent, not temporary. Watch this number.
- Stock-based compensation is large. SBC reached $162 million in 2025, representing 13% of total revenue. This is one of the reasons GAAP profitability remains elusive while non-GAAP numbers look clean. At 13% of revenue in SBC, there’s real dilution happening. It’s a real cost, even if Wall Street habitually ignores it.
The Shopify Dependency: How Much Multiple Is It Actually Costing Klaviyo?
This is the central question. And the honest answer is: probably a lot. But the picture is more nuanced than the bear case suggests — and the comparison to Shopify’s own valuation is genuinely startling.
The dependency is real and deep. 78% of Klaviyo’s ARR is tied to Shopify customers. The primary bear case rests on extreme platform dependency — significant long-term risk if Shopify alters its recommended vendor status or builds native competing CRM functionality. The current collaboration agreement runs until 2029.
At IPO in 2023, 77.5% of total ARR came from Shopify-platform customers — so essentially nothing has changed in the concentration despite two years of public-company life and significant upmarket push. That stasis is legitimately concerning. When you set out to diversify a platform dependency and the headline number barely moves, the market is right to price in risk.
The specific fear: Shopify has every incentive to build its own native marketing automation. It already has Shopify Email. It has the customer data. It has the distribution. The day Shopify decides to truly compete with Klaviyo in email and SMS automation is the day Klaviyo’s growth story faces structural questions it can’t answer with NRR improvement or international expansion.
But here’s where the 2029 detail matters. Three years of contractual runway — which in SaaS terms is an eternity. Three years to keep pushing upmarket, growing international, adding AI products, and reducing the effective dependency even if the customer-count mix doesn’t change dramatically.
Shopify trades at 13x trailing revenue. Klaviyo at 4.7x. That’s not just a disconnect. It’s a fundamental rejection of the dependency
Shopify’s market cap stands at approximately $150 billion as of April 2026. Shopify’s trailing twelve-month revenue is approximately $11.55 billion. Shopify’s revenue growth is running at approximately 30%.
So Shopify is growing at roughly 30%. Klaviyo is growing at 32%. Shopify trades at roughly 13x trailing revenue. Klaviyo trades at roughly 4.7x trailing revenue.
The company whose growth is fueled in part by Klaviyo’s success — and whose ecosystem Klaviyo is supposedly dangerously dependent on — trades at nearly 3x the revenue multiple of Klaviyo, at a slower growth rate.
The logical counter-argument is that Shopify’s TAM is vastly larger, its platform economics are more defensible, and it’s not running 78% of its revenue through a single partner’s ecosystem. Those points are fair. But Klaviyo has better NRR (110% vs Shopify’s roughly 100% equivalent), better non-GAAP margins as a percentage, and is actually growing faster right now. The valuation gap is not explained by the fundamentals alone.
What the gap is explained by: investors believe Shopify’s independence and platform status justify a permanence premium that Klaviyo simply cannot claim. Shopify owns the layer. Klaviyo sits on top of it. In the market’s mental model, that structural position is worth roughly 8-9 turns of revenue multiple — even when the company sitting on top is performing comparably or better by most operating metrics.
The bitter irony: Klaviyo’s single biggest growth risk and its biggest multiple depressant are the same entity (Shopify) which is simultaneously its largest distribution channel, its largest shareholder segment, its biggest partnership, and its most plausible competitive threat. That kind of dependency doesn’t resolve itself quietly. Either Klaviyo escapes the gravity of that relationship through genuine product diversification and enterprise independence, or the 4-5x multiple is where it lives until 2029 and investors have to decide if 22-30% growth at 4x revenue is enough.
For many, it might actually be.
