Klaviyo Q4 2025 Earnings Confirm Decelerating Growth Amid Persistent Margin and Shopify Risks

What happened

Klaviyo reported its Q4 2025 earnings, delivering revenue growth of approximately 24% year-over-year, in line with prior guidance of 23-24%. Non-GAAP operating margins held at 13-14%, meeting expectations but reflecting ongoing gross margin compression from higher SMS and infrastructure costs. Dollar-based net revenue retention (NRR) remained stable around 108-109%, indicating continued expansion but at a moderated pace compared to historical levels. Management highlighted the rollout of AI agents like Marketing Agent and Customer Agent but provided no quantitative metrics on adoption or ARR contribution, raising questions about their near-term impact. The call reinforced concerns over Shopify concentration, with 77.7% of ARR still tied to the platform, and no material updates on diversification efforts.

Implication

Klaviyo's ability to meet Q4 guidance supports the base-case scenario of mid-20s growth with stable margins, but the lack of NRR improvement suggests expansion is facing headwinds from pricing changes and competition. Persistent gross margin pressure from SMS costs could limit long-term profitability if not mitigated by pricing adjustments or operational efficiencies. The continued heavy reliance on Shopify remains a critical vulnerability, with any partnership changes posing significant downside risk to revenue and growth. Management's qualitative focus on AI agents, without disclosed metrics, leaves the upside narrative unproven and dependent on future execution. At current valuations, the stock offers a balanced risk-reward, but investors must closely watch upcoming filings for NRR stability and Shopify fee trends to avoid potential downside.

Thesis delta

The Q4 earnings call did not shift the core investment thesis; it confirmed the anticipated growth deceleration and margin pressures highlighted in the master report. However, the stability in meeting guidance provides mild reassurance that execution is on track, though no new positive catalysts emerged to alter the base-case valuation of $36 or mitigate key risks like Shopify dependence.