What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-19 compared with 2024-02-29 · 297 added, 218 removed, 773 unchanged (40% of the section changed)

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We have audited the accompanying consolidated balance sheets of Klaviyo, Inc.

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in redeemable common stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in redeemable common stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company’s revenue is comprised primarily of subscription fees made up of a large volume of low-dollar subscription transactions, sourced from various applications and supporting databases.

The processing and recording of revenue is highly automated and is based on the contractual terms with customers.

Because of the nature of the Company’s subscription fees, the Company uses automated systems to process and record its revenue transactions.

Given the Company’s systems to process and record revenue are highly automated, auditing revenue is complex and challenging due to the extent of audit effort required and involvement of professionals with expertise in information

technology (“IT”) necessary to identify, test, and evaluate the Company’s systems, software applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems that process revenue transactions included the following procedures, among others:

• With the assistance of our IT specialists, we:

◦ Identified the significant systems used to process revenue transactions and tested the effectiveness of general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

◦ Performed testing of system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.

• We tested internal controls over the Company’s relevant revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.

• We created data visualizations to evaluate recorded revenue and evaluate trends in the transactional revenue data.

• For a sample of revenue transactions, we compared the recorded revenue to source documents and tested the accuracy of the recorded revenue.

• For the revenue billed through a payment processor, we tested the reconciliation of the recorded revenue to total cash received during the year.

/s/ Deloitte & Touche LLP

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Total assets $ 1,273,308 $ 1,089,050

Liabilities, Redeemable Common Stock, and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities:

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Total liabilities 239,321 174,273

Redeemable Common Stock (Note 11)

Redeemable common stock, $ 0.001 par value, 0 and 64,046,223 shares issued and outstanding at December 31, 2023 and 2022, respectively.

$ — $ 1,531,853

Stockholders’ Equity (Deficit)

Stockholders’ Equity

Preferred stock:

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3,000,000,000 and 3,000,000,000 shares authorized;

40,841,834 and 0 shares issued;

40,841,834 and 0 shares outstanding at December 31, 2023 and 2022, respectively.

88,956,301 and 40,841,834 shares issued and outstanding at December 31, 2024 and 2023, respectively.

Series B common stock:

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350,000,000 and 350,000,000 shares authorized;

218,524,009 and 170,882,108 shares issued;

218,524,009 and 170,855,313 shares outstanding at December 31, 2023 and 2022, respectively.

183,801,332 and 218,524,009 shares issued and outstanding at December 31, 2024 and 2023, respectively.

Additional paid-in capital 1,878,899 1,713,560

Accumulated deficit ( 845,185 ) ( 799,043 )

Total stockholders’ equity (deficit) 914,777 ( 1,036,183 )

Total liabilities, redeemable common stock, and stockholders’ equity (deficit) $ 1,089,050 $ 629,079

Total stockholders’ equity 1,033,987 914,777

Total liabilities and stockholders’ equity $ 1,273,308 $ 1,089,050

The accompanying notes are an integral part of these consolidated financial statements

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Other income (expense):

Other (expense) income ( 470 ) 388 28

Other income (expense)

816 ( 470 ) 388

Interest income 39,582 24,051 5,538

Interest expense — — ( 8 )

Total other income

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Issuance of common stock upon exercise of common stock options — — — — 1,551,963 2 1,632 — 1,634

Issuance of redeemable common stock, net of issuance costs of $ 79

3,025,625 100,921 — — — — — — —

Accretion of redeemable common stock to redemption value — ( 1,034,479 ) — — — — 1,034,479 — 1,034,479

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— — — — 2,951,846 3 69,117 — 69,120

Repurchase and retirement of common stock — — — — ( 4,967,420 ) ( 5 ) ( 140,408 ) — ( 140,413 )

Stock-based compensation expense — — — — — — 35,248 — 35,248

Vesting of restricted common stock — — — — 35,727 — 100 — 100

Vesting of restricted stock units — — — — 33,333 — — — —

Net loss — — — — — — — ( 79,393 ) ( 79,393 )

Balance as of December 31, 2021 64,046,223 $ 2,566,332 — $ — 161,756,287 $ 162 $ — $ ( 2,236,226 ) $ ( 2,236,064 )

Issuance of common stock upon exercise of common stock options — — — — 1,551,963 2 1,632 — 1,634

Accretion of redeemable common stock to redemption value — ( 1,034,479 ) — — — — 1,034,479 — 1,034,479

Issuance of common stock, net of issuance costs of $ 307

— — — — 2,951,846 3 69,117 — 69,120

Issuance of investment option, net of issuance costs of $ 135

— — — — — — 30,438 — 30,438

Vested warrants related to collaboration agreement — — — — — — 106,455 — 106,455

Issuance of common stock upon exercise of collaboration agreement warrants — — — — 4,526,157 4 41 — 45

Vested warrants related to the collaboration agreement

— — — — — — 106,455 — 106,455

Stock-based compensation expense — — — — — — 6,802 — 6,802

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Balance as of December 31, 2022 64,046,223 $ 1,531,853 — $ — 170,855,313 $ 171 $ 1,249,065 $ ( 2,285,419 ) $ ( 1,036,183 )

Klaviyo, Inc.

Consolidated Statements of Changes in Redeemable Common Stock and Stockholders’ Equity (Deficit) (cont.)

( In Thousands, Except Share and Per Share Data)

Issuance of common stock upon exercise of common stock options — — — — 2,419,308 3 4,141 — 4,144

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Issuance of common stock upon exercise of collaboration agreement warrants — — — — 6,051,285 6 56 — 62

Vested warrants related to the collaboration agreement — — — — — — 142,326 — 142,326

Stock-based compensation expense — — — — — — 342,148 — 342,148

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— — — — 26,795 — 75 — 75

Vested warrants related to the collaboration agreement — — — — — — 142,326 — 142,326

Issuance of common stock in connection with Initial Public Offering, net of underwriters’ discounts, commissions and offering costs of $ 25,135

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Balance as of December 31, 2023 — $ — 40,841,834 $ 41 218,524,009 $ 219 $ 1,713,560 $ ( 799,043 ) $ 914,777

Klaviyo, Inc.

Consolidated Statements of Changes in Redeemable Common Stock and Stockholders’ Equity (Deficit) (cont.)

( In Thousands, Except Share and Per Share Data)

Redeemable Common Stock Series A Common Stock Series B Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Number of Shares Amount Number of Shares $ 0.001 Par Value

Number of Shares $ 0.001 Par Value

Balance as of December 31, 2023 — $ — 40,841,834 $ 41 218,524,009 $ 219 $ 1,713,560 $ ( 799,043 ) $ 914,777

Issuance of common stock upon exercise of common stock options — — — — 6,567,334 7 9,705 — 9,712

Issuance of common stock upon vesting of restricted stock units — — 1,663,016 2 4,176,480 4 ( 6 ) — —

Issuance of common stock upon exercise of collaboration agreement warrants — — — — 1,377,528 1 13 — 14

Issuance of common stock under the employee stock purchase plan — — 387,773 — — — 8,125 — 8,125

Vested warrants related to the collaboration agreement — — — — — — 32,399 — 32,399

Stock-based compensation expense — — — — — — 138,767 — 138,767

Tax withholdings on settlement of stock-based awards

— — ( 139,996 ) — ( 640,345 ) ( 1 ) ( 23,664 ) — ( 23,665 )

Conversion of Series B common stock to Series A common stock upon shareholder election and vesting of certain equity awards

— — 46,203,674 46 ( 46,203,674 ) ( 46 ) — — —

Net loss — — — — — — — ( 46,142 ) ( 46,142 )

Balance as of December 31, 2024 — $ — 88,956,301 $ 89 183,801,332 $ 184 $ 1,878,899 $ ( 845,185 ) $ 1,033,987

The accompanying notes are an integral part of these consolidated financial statements

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Net loss $ ( 46,142 ) $ ( 308,233 ) $ ( 49,193 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense 17,717 13,651 9,040

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Capitalization of software development costs ( 11,305 ) ( 5,705 ) ( 2,424 )

Purchase of indefinite-lived intangible assets — — ( 222 )

Acquisition of business — — ( 500 )

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Cash paid for finance leases ( 19 ) ( 21 ) ( 21 )

Cash paid to repurchase shares of common stock — — ( 140,413 )

Proceeds from exercise of warrants 14 62 45

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Employee taxes paid related to net share settlement of stock-based awards ( 23,665 ) ( 81,625 ) —

Net cash provided by financing activities 242,728 101,300 211,262

Proceeds from employee stock purchase plan

Net cash (used in) provided by financing activities

( 5,799 ) 242,728 101,300

Net increase in cash, cash equivalents, and restricted cash 142,930 352,741 59,003

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Supplemental disclosures of cash flow information:

Cash paid for income taxes $ 283 $ 204 $ 70

Cash paid for interest $ — $ — $ 8

Cash paid for operating lease liabilities, net of tenant incentives received $ 15,197 $ 9,272 $ 10,824

Cash paid for income taxes, net of refunds

$ 4,691 $ 283 $ 204

Non-cash investing and financing activities

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(the “Company”) is a technology company that provides a software-as-a-service (“SaaS”) platform to enable its customers to send the right messages at the right time across email, short message service (“SMS”) and push notifications, more accurately measure and predict performance, and deploy specific actions and campaigns.

Our reviews add-on allows for the collection of product reviews within our platform and our Customer Data Platform (“CDP”) offering gives user-friendly ways to track, transform, and cleanse data as well as run more advanced reporting and predictive analysis to drive revenue growth.

The Company’s reviews add-on allows for the collection of product reviews within its platform and its Customer Data Platform (“CDP”) offering gives user-friendly ways to track, transform, and cleanse data as well as run more advanced reporting and predictive analysis to drive revenue growth.

The platform combines proprietary data and application layers into one solution with machine learning and artificial intelligence capabilities.

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The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on September 14, 2012.

The Company has three wholly-owned subsidiaries located in the United Kingdom, Australia, and the United States.

Initial Public Offering

On September 22, 2023, the Company completed its initial public offering of 19,200,000 shares of our Series A common stock at a price to the public of $ 30.00 per share.

The Company sold 11,507,693 of such shares and certain existing stockholders sold an aggregate of 7,692,307 of such shares.

We received net proceeds from the IPO of approximately $ 320.1 million, after deducting approximately $ 17.7 million in underwriting discounts and commissions, and $ 7.4 million in offering-related expenses.

In connection with the IPO, all shares of the Company’s redeemable common stock automatically converted into 64,046,223 shares of Series B common stock.

In connection with and immediately subsequent to the IPO, 21,233,074 shares of Series B common stock were converted to shares of Series A common stock.

On October 19, 2023, the underwriters for the IPO exercised their option to purchase additional shares granted in connection with the IPO, with respect to 2,764,066 shares of Series A common stock of a possible 2,880,000 shares.

The Company received no proceeds from this transaction, as the option was an option to purchase additional shares of Series A common stock from certain existing stockholders.

All restricted stock units (“RSUs”) granted to employees prior to the IPO vested upon the satisfaction of both a service condition and a liquidity event condition.

These RSUs with both a service condition and liquidity event condition are collectively referred to as “Double-Trigger Awards” and are described in more detail within Note 12.

Stock-Based Compensation.

Upon the IPO, the vesting of certain warrants issued under the Shopify Collaboration Agreement accelerated.

Specifically, the vesting associated with 3,935,793 of the outstanding warrants was accelerated resulting in an increase to Prepaid Marketing Expense of $ 92.6 million.

Summary of Significant Accounting Policies for additional detail on the warrants issued in connection with the Shopify Collaboration Agreement.

The Company has several wholly-owned subsidiaries in the United States and international jurisdictions.

Summary of Significant Accounting Policies

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The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Any reference in these notes to applicable guidance is

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The Company expects to use the extended transition period for any other new or revised accounting standards during the period in which it remains an emerging growth company.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Principles of Consolidation

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Significant items subject to such estimates and assumptions include, but are not limited to, the allowance for doubtful accounts, determination of revenue recognition under ASC 606, estimated benefit period of deferred contract acquisition costs, estimated life of prepaid marketing expense, and historical valuation of common stock and stock-based compensation, including fair value of the investment option and warrants.

Significant items subject to such estimates and assumptions include, but are not limited to, the allowance for doubtful accounts, determination of revenue recognition under ASC 606, Revenue from Contracts with Customers (“ASC 606”), estimated benefit period of deferred contract acquisition costs, estimated life of prepaid marketing expense, and historical valuation of common stock and stock-based compensation, including fair value of the investment option and warrants.

The Company evaluates estimates based on historical and anticipated results, trends, and various other assumptions.

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The Company’s CODM is its Chief Executive Officer.

The Company has determined that it operates in one operating segment and one reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

has determined that it operates in one operating segment and one reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The key measure of segment profit or loss that the CODM uses to make operating decisions, allocate resources and evaluate financial performance is the Company’s consolidated net income, as reported in the Consolidated Statements of Operations and Comprehensive Loss.

Net income is used to plan and forecast for future periods, design and implement key marketing strategies, expand into new markets, and launch new products.

Significant expense categories regularly provided to the CODM are those disclosed in the Consolidated Statements of Operations and Comprehensive Loss.

Information related to the geographical distribution of the Company’s revenues and long-lived assets is disclosed in Note 14.

Segment Information and Geographic Data .

Revenue Recognition

The Company provides a SaaS solution for personalized email and SMS marketing services through a cloud-based analytics platform.

The core functionalities of the software are segmentation of users’ customer lists to facilitate targeted messaging via email and SMS and the use of data science and analytics to evaluate historical sales and predict consumer activity.

The core functionalities of the software are segmentation of users’ customer lists to facilitate targeted messaging via email, SMS, and push messaging, and the use of data science and analytics to evaluate historical sales and predict consumer activity.

Revenues are derived primarily from subscription revenues, which are comprised of subscription fees from customers accessing its hosted platform services for targeted messaging.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

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 cycle.

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Stand-alone selling prices are determined based on the prices at which the Company separately sells subscriptions.

Sales taxes collected from customers and remitted to government authorities are excluded from revenue.

The Company incurs fees based on transaction volume and dollars processed through its credit card processor which are classified as general and administrative expense.

Sales and VAT taxes collected from customers and remitted to government authorities are excluded from revenue.

The Company incurs fees based on transaction volume and dollars processed through its credit card processor which are

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

classified as general and administrative expense.

Through the Company’s credit card processor, all receivables related to credit cards are collected within three business days.

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Deferred revenue primarily consists of billings in advance of revenue recognition from subscription services and is recognized as the revenue recognition criteria is met.

The Company generally bills its subscription customers monthly on the first day of the subscription term.

Deferred revenue that is expected to be recognized during the succeeding 12-month period is recorded as deferred revenue.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

The Company generally bills its subscription customers in advance of their subscription term.

Revenue that is expected to be recognized during future periods is recorded as deferred revenue.

Deferred Contract Acquisition Costs

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In connection with the collaboration agreement, the Company entered into 3 separate agreements including a revenue sharing agreement, common stock warrant agreement, and stock purchase agreement.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Under the revenue sharing agreement, the Company will make payments to Shopify in exchange for marketing services received under the collaboration agreement, which are comprised of payments for the Shopify Core Revenue Share and payments for the Shopify Plus Integration Fee.

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and (c) the Company’s application received a webhook request and/or made any Application Programming Interface calls against one or more of the Shopify Plus Merchant’s covered stores in the relevant month (i.e., the Company’s application is integrated with the Shopify platform and data is flowing between them).

The Company determined that Shopify is a vendor and not a customer, as the collaboration agreement is a services contract under which the Company is receiving marketing services from Shopify in exchange for payments under the

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

revenue sharing agreement.

The revenue sharing agreement is a mechanism for Shopify to be compensated for the customer acquisition and marketing services Shopify is providing to the Company.

Shopify is not a reseller or distributor of the Company’s platform, nor does Shopify provide any services on the Company’s behalf.

During the year ended December 31, 2023, the Company incur red $ 21.9 million related to fees paid under the revenue sharing agreement.

During the year ended December 31, 2022, the Company incurred an aggregate of $ 16.2 million fees paid to Shopify pursuant to revenue sharing arrangements, inclusive of $ 7.7 million paid to Shopify pursuant to the terms of the Shopify revenue sharing agreement and $ 8.5 million paid to Shopify pursuant to the terms of our prior agreement with Shopify that was in place prior to, and replaced by, the Shopify revenue sharing agreement.

During the years ended December 31, 2024 and 2023, the Company incurred $ 27.4 million and $ 21.9 million, respectively, related to fees paid under the revenue sharing agreement.

During the year ended December 31, 2022, the Company incurred an aggregate of $ 16.2 million fees paid to Shopify pursuant to revenue sharing arrangements, inclusive of $ 7.7 million paid to Shopify pursuant to the terms of the Shopify revenue sharing agreement and $ 8.5 million paid to Shopify pursuant to the terms of the Company’s prior agreement with Shopify that was in place prior to, and replaced by, the Shopify revenue sharing agreement.

As of December 31, 2024 and 2023, the Company had $ 2.6 million and $ 4.5 million, respectively, in accrued expenses owed to Shopify for fees payable under the revenue sharing agreement.

As consideration for the collaboration agreement, the Company also issued warrants that allow Shopify to purchase up to 15,743,174 shares of common stock at a price of $ 0.01 per share, of whic h 25 % of the warrants vested on the grant date on July 28, 2022, and the remaining 75 % of the warrants vest quarterly over the remaining 5 year period.

The aggregate grant date fair value of the warrants was $ 370.3 million and will be capitalized to prepaid marketing expense as the warrants vest.

The aggregate grant date fair value of the warrants was $ 370.3 million and is being capitalized to prepaid marketing expense as the warrants vest.

The prepaid marketing ex pense asset is amortized into selling and marketing expense on a straight-line basis over the expected benefit period, which is the 7 year term of the collaboration agreement .

Pursuant to the common stock warrant agreement, upon the Company’s IPO, 25 % of the total number of warrants were accelerated, and the remaining unvested portion vests quarterly over the remaining term.

Pursuant to the common stock warrant agreement, upon the Company’s initial public offering (“IPO”) in September 2023, 25 % of the total number of warrants were accelerated, and the remaining unvested portion vests quarterly over the remaining term.

Specifically, the vesting associated with 3,935,793 of the outstanding warrants was accelerated resulting in an increase to prepaid marketing expense of $ 92.6 million.

During the years ended December 31, 2024 and 2023, the Company capitalized prepaid marketing expense of $ 32.4 million and $ 142.3 million related to the vested warrants, respectively.

For the years ended December 31, 2023 and 2022 , the Company recorded marketing expense o f $ 52.9 million and $ 22.0 million, respectively, in the Consolidated Statements of Operations and Comprehensive Loss as a component of selling and marketing expense related to the amortization of the prepaid marketing expense.

As of December 31, 2023 and 2022, the Company’s prepaid marketing expense is $ 173.8 million and $ 84.4 million, respectively.

As of December 31, 2023 , there is $ 295.4 million of unrecognized marketing expense related to the warrants that will be recognized over 5.6 years.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded marketing expense of $ 52.9 million, $ 52.9 million and $ 22.0 million, respectively, in the Consolidated Statements of Operations and Comprehensive Loss as a component of selling and marketing expense related to the amortization of the prepaid marketing expense.

As of December 31, 2024 and 2023, the Company’s prepaid marketing expense were $ 153.3 million and

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

$ 173.8 million, respectively.

As of December 31, 2024, there was $ 242.4 million of unrecognized marketing expense related to the warrants that will be recognized over 4.6 years.

Refer to Note 11.

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The stock purchase agreement gives Shopify the right to purchase 15,743,174 additional shares of common stock for $ 88.93 per share (the “Investment Option”).

The common stock and Investment Option were determined to be freestanding financial instruments purchased at fair value and were accounted for separately from the collaboration agreement, revenue sharing agreement, and common stock warrant.

Refer to Note 11.

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Research and development costs are expensed as incurred, unless they qualify as capitalized internal-use software development costs.

Research and development costs consist primarily of personnel-related expenses associated with the Company’s research and development staff, including salaries, benefits, bonuses, and stock-based compensation.

Research and development costs consist primarily of personnel-related expenses associated with the Company’s research and development staff, including payroll, benefits, bonuses, and stock-based compensation.

Advertising Costs

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During the years ended December 31, 2024, 2023 and 2022, the Company incurred advertising expenses, which are included within selling and marketing expenses on the Consolidated Statements of Operations and Comprehensive Loss, in the amount of $ 45.9 million, $ 41.6 million, and $ 40.3 million, respectively.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Stock-Based Compensation

The Company recognizes stock-based compensation on awards granted under two stock compensation plans, which are described in more detail in Note 12.

The Company recognizes stock-based compensation on awards granted under stock compensation plans, which are described in more detail in Note 12.

Stock-Based Compensation .

The Company measures stock-based compensation awards, including stock options and RSUs, based on the estimated fair value of the awards on the date of grant.

The Company measures stock-based compensation awards, including stock options and restricted stock units (“RSUs”), based on the estimated fair value of the awards on the date of grant.

Stock-based compensation expense is recorded for awards issued to employees and non-employees at fair value with a corresponding increase in additional paid-in capital.

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Forfeitures are recognized when they occur.

RSUs granted under the Company’s 2015 Stock Incentive Plan are subject to both service-based and performance-based vesting conditions, whereby the performance condition is satisfied upon occurrence of a liquidity event.

Compensation cost related to awards with liquidity-based vesting conditions has been recognized through December 31, 2023, as the Company’s registration statement on Form S-1 filed with the SEC in connection with the IPO became effective on September 19, 2023, which satisfied the liquidity-based vesting condition of the Double-Trigger RSUs.

Compensation expense for these awards with both a service and performance condition are expensed under the accelerated attribution method which includes a cumulative catch up recorded upon the IPO for services that had been completed as of the IPO.

The remaining expense for these awards is recognized using the accelerated attribution method over the remaining service period.

RSUs granted under the Company’s 2015 Stock Incentive Plan (the “2015 Plan”) are subject to both service-based and performance-based vesting conditions, whereby the performance condition is satisfied upon occurrence of a liquidity event.

Upon the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC in connection with its IPO in September 2023, the performance vesting condition was satisfied and cumulative compensation cost was recognized using the accelerated attribution method.

Compensation costs continue to be recognized under this method as the RSUs vest over the remaining service period.

Generally, 2015 Plan awards vest or are exercisable into shares of Series B common stock and are immediately reclassified to shares of Series A common stock based upon the employee’s conversion election made at the time of the Company’s IPO.

The fair value of each RSU grant is calculated based on the estimated fair value of the Company’s common stock on the date of grant, or, if modified, the date of modification.

RSUs granted under the Company’s 2023 Stock Option and Incentive Plan are for shares of Series A common stock and are currently subject to service-based vesting conditions only.

RSUs granted under the Company’s 2023 Stock Option and Incentive Plan (the “2023 Plan”) are for shares of Series A common stock and are subject to service-based vesting conditions only.

Compensation costs related to these awards are recognized using the straight-line method over the service period of the award.

The fair value of each RSU grant is calculated based on the fair value of the Company’s Series A common stock on the date of grant, or, if modified, the date of modification.

Until our IPO, given the absence of an active market for the Company’s common stock, management and the Company’s Board of Directors (the “Board”) were required to estimate the fair value of the Company’s common stock at the time of each grant of a stock-based compensation award.

The Company and the Board utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation to estimate the fair value of its common stock.

Each valuation methodology includes estimates and assumptions that require the Company’s judgment.

These estimates and assumptions include a number of objective and subjective factors in determining the value of the Company’s common stock at each grant date, including the following factors:

• prices paid for the Company’s capital stock, which the Company has sold to outside investors in arm’s-length transactions, considering the rights and privileges of the securities sold relative to the common stock;

• prices paid for shares of its common stock sold in secondary market transactions;

• valuations performed by an independent valuation specialist;

• the Company’s stage of development and revenue growth;

• the market performance of comparable publicly traded companies;

• adjustments necessary to recognize a lack of marketability for the common stock underlying the granted options and RSUs;

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

• the likelihood of achieving a liquidity event for the common stock underlying the stock-based awards, such as an IPO or sale of the Company, given prevailing market conditions;

and global economic and capital market conditions and outlook.

Following the Company’s IPO, there is an active market for its Series A common stock which is utilized to measure the fair value of the Company’s underlying shares.

Rights granted to employees to purchase shares of Series A common stock under the Company’s 2023 Employee Stock Purchase Plan (the “ESPP”) are subject to service-based vesting conditions only.

Compensation costs related to the ESPP are recognized using the straight-line method over the service period of the award.

The fair value of the estimated shares of Series A common stock to be purchased is computed as the sum of (a) 15 % purchase discount off the grant date quoted trading price of the Company’s Series A common stock and (b) the fair value of the look-back feature of the Company’s Series A common stock on the grant date which consists of a call option on 85 % of a share of Series A common stock and a put option on 15 % of a share of Series A common stock.

Redeemable Common Stock

Redeemable common stock represents shares of the Company’s common stock that are redeemable at the option of the investor after a specified date.

Redeemable common stock represents shares of the Company’s common stock that were redeemable at the option of the investor after a specified date.

The initial carrying amount of redeemable common stock is equal to the respective issuance date fair value of the common stock subject to redemption, less issuance costs.

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The resulting changes in the redemption value are recorded with corresponding adjustments against retained earnings, if available, additional paid-in capital or accumulated deficit.

Redeemable common stock is classified outside of permanent equity on the Consolidated Balance Sheets as the redemption option is outside of the Company’s control.

As the redemption feature applicable to certain shares of the Company’s common stock was terminated upon the IPO, all shares of the Company’s redeemable common stock converted into 64,046,223 shares of Series B common stock upon the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC on September 19, 2023.

Redeemable common stock is classified outside of permanent equity on the Consolidated Balance Sheets as the redemption option was outside of the Company’s control.

As the redemption feature applicable to certain shares of the Company’s common stock was terminated upon the Company’s IPO, all shares of the Company’s redeemable common stock converted into 64,046,223 shares of Series B common stock upon the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC on September 19, 2023.

Refer to Note 11.

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Interest and penalties related to uncertain tax positions are included as a component of income tax expense.

As of December 31, 2023 and 2022, the Company has no recorded liabilities for uncertain tax positions and has no accrued interest or penalties related to uncertain tax positions.

As of December 31, 2024, the liability for income taxes associated with uncertain tax positions was $ 1.3 million.

As of December 31, 2023, the Company had no recorded liabilities for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions.

Klaviyo, Inc.

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The Company considers all highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents.

As of December 31, 2023, the Company had cash equivalents of $ 314.5 million in money market funds.

As of December 31, 2022, the Company did not have cash equivalents.

As of December 31, 2024 and 2023, the Company had cash equivalents of $ 278.2 million and $ 314.5 million, respectively, in money market funds.

As of December 31, 2024 and 2023, the Company had a current restricted cash balance of $ 0.4 million and $ 0.4 million, respectively.

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As of December 31, 2024 and 2023, no individual customer accounted for more than 10% of accounts receivable.

Additionally, there were no customers that represented 10% or more of the Company’s revenue for the fiscal years ended December 31, 2023, 2022, and 2021.

Additionally, there were no customers that represented 10% or more of the Company’s revenue for the years ended December 31, 2024, 2023, and 2022.

The Company had certain vendors who individually represented 10% or more of the Company’s total vendor expenditures.

For the year ended December 31, 2023, three vendors represented 19 %, 14 %, and 12 % of total vendor expenditures, respectively.

For the year ended December 31, 2022, two vendors represented 19 % and 13 % of total vendor expenditures, respectively.

For the year ended December 31, 2021, one vendor represented 25 % of total vendor expenditures, and no other vendors represented 10% or more of total expenditures for the year.

For the year ended December 31, 2024 , three vendors represented 17 %, 16 %, and 12 % of total vendor expenditures.

For the year ended December 31, 2023, three vendors represented 19 %, 14 %, and 12 % of total vendor expenditures.

For the year ended December 31, 2022, two vendors represented 19 % and 13 % of total vendor expenditures.

Property and Equipment

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The lease agreement requires the Company to incur the costs required to restore the leased space to its original condition.

During fiscal year 2020, on the lease commencement date, the Company established an ARO based on the present value of

During fiscal year 2020, on the lease commencement date, the Company established an ARO based on the present value of contractually required estimated future costs to retire long-lived assets at the termination or expiration of a lease and to

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

contractually required estimated future costs to retire long-lived assets at the termination or expiration of a lease and to return the space to its original condition.

return the space to its original condition.

The asset associated with the ARO is amortized over the lease term or 5 years to operating expense, and the ARO is accreted to the end of lease obligation value over the same term.

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Costs related to preliminary project activities and post-implementation stages of software development are expensed as incurred.

Costs capitalized as internal-use software development costs include eligible salaries, stock-based compensation, and other compensation-related costs of employees and costs incurred in developing new features and enhancements when the costs will result in additional functionality.

Costs capitalized as internal-use software development costs include eligible salaries, stock-based compensation, and other compensation-related costs of employees incurred in developing new features and enhancements when the costs will result in additional functionality.

Capitalized internal-use software development costs are amortized on a straight-line basis over their estimated useful life of 3 years.

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At the commencement date, the Company will perform the classification tests to determine whether its leases are operating or financing and recognize the related lease liability and right-of-use (“ROU”) asset.

The Company, as the lessee, recognizes in the Consolidated Balance Sheets a liability to make lease payments and an ROU asset representing the right to use the underlying asset for both finance and operating leases with a lease term longer than twelve months.

The Company, as the lessee, recognizes on the Consolidated Balance Sheets a liability to make lease payments and an ROU asset representing the right to use the underlying asset for both finance and operating leases with a lease term longer than twelve months.

Lease liabilities and their corresponding ROU assets are recognized based on the present value of unpaid lease payments over the expected lease term.

The Company has elected the following practical expedients:

(1) not to separate lease and non- lease components for all asset classes and (2) not to recognize leases with a term of 12 months or less on the Consolidated Balance Sheets for all asset classes.

(1) not to separate lease and non- lease components for all asset classes and (2) not to recognize leases with a term of 12 months or less at commencement on the Consolidated Balance Sheets for all asset classes.

If there is a change in the Company’s assessment of the lease term and, as a result, the remaining lease term extends more than 12 months from the end of the previously determined lease term, the lease no longer meets the definition of a short-term lease and is accounted for as either an operating or finance lease and recognized on the Consolidated Balance Sheets.

The Company leases office space and office equipment under non-cancelable operating leases ranging from 1 to 8 years.

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At the date that such transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in USD using the exchange rate in effect at that date.

At each balance sheet date, recorded monetary balances denominated in a currency other than the USD are adjusted to USD using the exchange rate at the balance sheet date, with gains or losses recognized in other, net in the consolidated statements of operations.

Foreign currency translation gains and losses were immaterial for the periods presented.

Foreign currency transaction gains were $ 1.0 million for the year ended December 31, 2024.

The Company recognized an immaterial foreign currency transaction loss for the year ended December 31, 2023 and an immaterial foreign currency transaction gain for the year ended December 31, 2022.

Fair Value Measurements

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

As of December 31, 2023 and 2022, the Company’s carrying amounts of financial instruments, including cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short-term maturities.

Certain non-financial assets, such as intangible assets, right of use assets, and property and equipment, are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized.

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If the carrying amount of an asset or asset group exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset.

There was no impairment identified during the years ended December 31, 2023, 2022, and 2021.

There was no impairment recorded during the years ended December 31, 2024, 2023, and 2022.

Recent Accounting Pronouncements

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Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an interim and annual basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

There are no other new accounting pronouncements that have been issued that would have a material impact on its financial position or results of operations.

The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 effective December 31, 2024, with no material impact to its consolidated financial statements and disclosed accordingly within the Segment Information section of Note 2.

Summary of Significant Accounting Policies and Note 14.

Segment Information and Geographic Data .

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses .

The new guidance requires additional disclosure related to the disaggregation of income statement expense categories.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements.

There are no other new accounting pronouncements that have been issued that would have a material impact on the Company's financial position or results of operations.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Revenue Recognition

Disaggregation of Revenue

Revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands):

Year Ended December 31,

2023 2022 2021

United States $ 443,471 $ 307,222 $ 197,263

Other Americas (1)

38,180 26,790 15,758

72,797 47,905 27,574

143,651 90,831 50,045

Total Revenue $ 698,099 $ 472,748 $ 290,640

(1) Other than the United States, no other individual country accounted for 10% or more of total revenue for any of the periods presented.

(2) Asia-Pacific

(3) Europe, the Middle East and Africa

The Company provides disaggregation of revenue based on geographic region in Note 14.

Segment Information and Geographic Data.

Deferred Revenue

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The following table summarizes the changes in the balance of deferred revenue during the periods presented (in thousands):

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Year Ended December 31,

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Total $ 278,235 $ — $ — $ 278,235

As of December 31, 2023, certain of the Company’s cash equivalents were held in money market funds.

As of December 31, 2023

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 314,511 $ — $ — $ 314,511

Total $ 314,511 $ — $ — $ 314,511

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

As of December 31, 2024 and 2023, certain of the Company’s cash equivalents were held in money market funds.

The Company’s investments in money market funds are classified within Level 1 of the fair value hierarchy as they are valued using quoted market prices in active markets.

As of December 31, 2022, the Company did not have assets or liabilities carried at fair value.

As of December 31, 2024 and 2023, the Company’s carrying amounts of financial instruments, including cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short-term maturities.

Klaviyo, Inc.

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In the years ended December 31, 2024, 2023 , and 2022 , d epreciation and amortization expense related to property and equipment was approximately $ 17.7 million, $ 13.7 million, and $ 8.9 million, respectively.

During the years ended December 31, 2023 and 2022, the Company capitalized $ 7.0 million and $ 2.4 million of internal-use software development costs, respectively.

Of the $ 7.0 million internal-use software development costs capitalized during the year ended December 31, 2023, $ 1.3 million is attributable to stock-based compensation expense.

During the year ended December 31, 2022, the Company did not capitalize any stock-based compensation expense related to services performed on capitalized software development projects.

The Company recorded amortization expense associated with its capitalized internal-use software development costs of $ 1.8 million, $ 0.7 million, and $ 0.4 million for the years ended December 31, 2023, 2022, and 2021.

During the years ended December 31, 2024, 2023 and 2022, the Company capitalized $ 14.9 million, $ 7.0 million, and $ 2.4 million of internal-use software development costs, respectively.

The Company recorded amortization expense associated with its capitalized internal-use software development costs of $ 4.6 million , $ 1.8 million, and $ 0.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Amortization expense is included in cost of revenue in the Consolidated Statements of Operations and Comprehensive Loss.

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The Company’s effective tax rates for the years ended December 31, 2024, 2023, and 2022 are less than the U.S.

federal statutory income tax rate of 21.0% primarily due to the valuation allowance on the U.S.

federal and state deferred tax assets and excess tax deductions related to stock-based compensation awards.

federal statutory income tax rate of 21.0% primarily due to valuation allowance on the U.S.

federal and state deferred tax assets.

Year Ended December 31,

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Valuation allowance ( 225,135 ) ( 170,076 )

Net deferred tax assets (liabilities)

Net deferred tax assets

$ 2,536 $ 3,096

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The Company is not subject to an annual limitation of its NOL and research and development credit attributes as of December 31, 2024, but subsequent ownership changes may affect the limitation in future years.

The net changes in the total valuation allowance for the year ended December 31, 2023, was an increase of $ 100.9 million, primarily as a result of the generation of additional net operating losses and federal research and development credits.

The net changes in the total valuation allowance for the year ended December 31, 2024, was an increase of $ 55.1 million, primarily as a result of the increase in IRC Section 174 R&D capitalization and federal research and development credits offset by the utilization of net operating losses.

The net changes in the total valuation allowance for the year ended December 31, 2023 was an increase of $ 100.9 million, primarily as a result of the generation of additional net operating losses and federal research and development credits.

The Company has not recognized any liabilities for uncertain tax positions or unrecognized benefits as of December 31, 2023 and 2022.

The Company does not expect any material change in uncertain tax benefits within the next 12 months.

As of December 31, 2024 and 2023, the Company had an immaterial amount of earnings from its wholly-owned non-U.S.

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The Company does not intend to repatriate these earnings or realize the outside basis differences in its foreign subsidiaries, and accordingly, the Company has not provided any taxes for those amounts, given the indefinite reinvestment and it is not practicable to estimate the amount of deferred tax liability that would be incurred.

Uncertain Tax Positions

The Company has not recognized any liabilities for uncertain tax positions or unrecognized benefits as of December 31, 2023 and 2022.

The changes in the balance of gross unrecognized tax benefits as of December 31, 2024, excluding accrued net interest and penalties, is as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Unrecognized tax benefits, beginning balance

Gross increases for tax positions taken in prior years

Unrecognized tax benefits, ending balance

$ 1,334 $ — $ —

The unrecognized tax benefits as of December 31, 2024, if recognized, would not affect the effective income tax rate due to the valuation allowance that currently offsets the deferred tax assets.

The Company had no interest and penalties accrued related to uncertain tax positions as of December 31, 2024, 2023 and 2022.

The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

The Company files income tax returns in the United States and in foreign jurisdictions.

All periods since inception are subject to examination in most jurisdictions.

Employee Benefit Plans

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During the years ended December 31, 2024, 2023, and 2022 , the Company made contributions to the plan of $ 11.2 million, $ 7.4 million, and $ 6.6 million respectively.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

The Company contributes to defined contribution savings plans for its employees in the United Kingdom and Australia who satisfy certain eligibility requirements.

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Redeemable Common Stock, Common Stock, and Stockholders’ Equity (Deficit)

Initial Public Offering

On September 22, 2023, the Company completed its IPO of 19,200,000 shares of its Series A common stock at a price to the public of $ 30.00 per share.

The Company sold 11,507,693 of such shares and certain existing stockholders sold an aggregate of 7,692,307 of such shares.

The Company received net proceeds from the IPO of approximately $ 320.1 million, after deducting approximately $ 17.7 million in underwriting discounts and commissions, and $ 7.4 million in offering-related expenses.

In connection with the IPO, all shares of the Company’s redeemable common stock automatically converted into 64,046,223 shares of Series B common stock.

In connection with and immediately subsequent to the IPO, 21,233,074 shares of Series B common stock were converted to shares of Series A common stock.

The Company received no proceeds from this transaction, as the option was an option to purchase additional shares of Series A common stock from certain existing stockholders.

All RSUs granted to employees prior to the IPO vested upon the satisfaction of both a service condition and a liquidity event condition.

These RSUs with both a service condition and liquidity event condition are collectively referred to as “Double-Trigger Awards” and are described in more detail within Note 12.

Stock-Based Compensation.

Redeemable Common Stock

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In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within control of the Company require classification of the associated instrument outside of permanent equity.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

During the year ended December 31, 2021, the Company entered into the 2021 Stock Purchase agreement.

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The remaining 7,339,392 shares were classified in permanent equity as they did not contain the right of redemption after November 6, 2029.

As of December 31, 2022 and 2021, the Company determined that the redeemable shares were probable of becoming redeemable.

Prior to the IPO, the Company determined that the redeemable shares were probable of becoming redeemable.

In accordance with ASC 480-10-S99, the Company elected to recognize changes in redemption value immediately as they occur.

The per-share redemption value is equal to the fair market value of a single share of the Company’s common stock subject to a floor of the initial carrying value.

Immediately prior to the IPO, the redeemable common stock was accreted to the IPO issuance price of $ 30.00 per share.

Immediately prior to the Company’s IPO in September 2023, the redeemable common stock was accreted to the IPO issuance price of $ 30.00 per share.

Upon the IPO, the redemption right of these shares was terminated and all shares of the Company’s redeemable common stock automatically converted into 64,046,223 shares of Series B common stock.

This transaction resulted in a reclassification of $ 1,931.5 million in redeemable common stock to stockholder’s equity including an increase to additional paid-in capital of $ 136.9 million and Accumulated Deficit of $ 1,794.6 million to reverse accretion recorded to these accounts.

Immediately following the effectiveness of the registration statement relating to our IPO, we filed our Amended and Restated Certificate of Incorporation, which authorized a total of 3,000,000,000 shares of Series A common stock, 350,000,000 shares of Series B common stock, and 100,000,000 shares of undesignated preferred stock.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

transaction resulted in a reclassification of $ 1,931.5 million in redeemable common stock to stockholder’s equity including an increase to additional paid-in capital of $ 136.9 million and Accumulated Deficit of $ 1,794.6 million to reverse accretion recorded to these accounts.

Immediately following the effectiveness of the registration statement relating to the Company’s IPO in September 2023, the Company filed its Amended and Restated Certificate of Incorporation, which authorized a total of 3,000,000,000 shares of Series A common stock, 350,000,000 shares of Series B common stock, and 100,000,000 shares of undesignated preferred stock.

All shares of common stock then outstanding were reclassified as Series B common stock.

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Shares of the Company’s Series B common stock will also automatically convert into shares of Series A common stock upon certain transfers and other events.

Upon the seventh anniversary of our IPO, all outstanding shares of Series A common stock and Series B common stock will convert automatically into shares of a single series of common stock.

Upon the seventh anniversary of the Company’s IPO, all outstanding shares of Series B common stock will automatically convert into shares of Series A common stock.

Preferred Stock

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Common Stock Warrants

On July 28, 2022, the Company granted warrants to purchase up to 15,743,174 shares of common stock in connection with the collaboration agreement and strategic partnership with Shopify as compensation for marketing services.

On July 28, 2022, the Company granted warrants to purchase up to 15,743,174 shares of Series B common stock in connection with the collaboration agreement and strategic partnership with Shopify as compensation for marketing services.

25 % of the shares subject to the warrants vested on the grant date, and the remaining 75 % of the shares subject to the warrants vest quarterly in equal amounts until July 28, 2027.

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These common stock warrants are included as a component of additional paid-in capital within the Consolidated Balance Sheets upon vesting.

The Company valued the warrants at the grant date using the Black-Scholes

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

option pricing model with the following assumptions:

The Company valued the warrants at the grant date using the Black-Scholes option pricing model with the following assumptions:

fair value of common stock, a dividend yield of zero , contractual terms of 10 years, volatility of 55.00 %, and a risk-free rate of 2.85 %.

3 unchanged sentences

Warrants outstanding at December 31, 2023

5,165,732 $ 0.01 8.58

Granted — — —

2 unchanged sentences

Warrants outstanding at December 31, 2024

3,788,204 $ 0.01 7.58

During the years ended December 31, 2024, 2023, and 2022 , 1,377,528 , 6,051,285 , and 4,526,161 warrants vested, respectively.

The Company has no vested but not exercised warrants outstanding as of December 31, 2024.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Restricted Stock

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Upon termination of employment of the restricted stockholder, the Company has the right to repurchase, at the original purchase price, any unvested restricted shares.

Accordingly, the Company has recorded the proceeds from the issuance of restricted stock as a liability on the Consolidated Balance Sheets as a component of other current liabilities, given the implicit repurchase feature.

As of December 31, 2022, the Company has recognized a restricted stock liability of approximately $ 0.1 million as a component of accrued expenses.

The Company reclassified an immaterial amount of restricted stock liability to stockholders’ deficit upon vesting of restricted shares during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, all restricted stock has been fully vested.

The following is a summary of the non-vested restricted common stock activity during the year ended December 31, 2023:

Number of Shares Weighted Average Grant Date

Unvested and outstanding at December 31, 2022 26,795 $ 2.84

Vested ( 26,795 ) $ 2.84

Unvested and outstanding at December 31, 2023 — $ —

The aggregate fair value of restricted stock that vested was $ 0.7 million and $ 1.2 million during the years ended December 31, 2023 and 2022, respectively.

Accordingly, the Company recorded the proceeds from the issuance of restricted stock as a liability given the implicit repurchase feature.

The Company reclassified an immaterial amount of restricted stock liability to stockholders’ deficit upon vesting of restricted shares during the years ended December 31, 2023 and 2022.

During the years ended December 31, 2023 and 2022 , t he aggregate fair value of restricted stock that vested was $ 0.7 million and $ 1.2 million, respectively.

All restricted stock became fully vested during the year ended December 31, 2023.

Stock Purchase and Investment Option

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The Investment Option is exercisable at any time at Shopify’s option until July 28, 2030.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

As of December 31, 2024, the Investment Option has not been exercised.

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The Company incurred $ 0.4 million of issuance costs which were allocated to the common stock and Investment Option based on their relative fair values.

The proceeds allocated to the Investment Option, net of issuance costs, are included as a component of additional paid-in capital within the Consolidated Balance Sheets.

The proceeds allocated to the Investment Option, net of issuance costs, are included as a component of additional paid-in capital presented in the Consolidated Statements of Changes in Redeemable Common Stock and Stockholders’ Equity (Deficit).

Stock-Based Compensation

Equity Incentive Plans

On September 1, 2015, the Board adopted the 2015 Stock Incentive Plan (the “2015 Plan”).

On September 1, 2015, the Company’s board of directors (the “Board”) adopted the 2015 Plan.

The Board or, at its sole discretion, a committee of the Board, is responsible for the administration of the 2015 Plan.

All equity grants subsequent to the IPO will be made pursuant to the Company’s 2023 Stock Option and Incentive Plan (the “2023 Plan”), which was approved by the Board effective as of September 19, 2023.

Subsequent to the IPO, generally 2015 Plan awards vest into shares of Series B common stock and are immediately reclassified to Series A common stock based upon the employee’s conversion election made at the time of the IPO.

As of December 31, 2024, outstanding awards under the 2015 Plan include stock options and RSUs.

Generally, 2015 Plan awards vest or are exercisable into shares of Series B common stock and are immediately reclassified to shares of Series A common stock based upon the employee's conversion election made at the time of the IPO.

All equity grants subsequent to the IPO are made pursuant to the 2023 Plan, which was approved by the Board effective as of September 18, 2023.

The Board or, at its sole discretion, a committee of the Board, is responsible for the administration of the 2023 Plan.

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The 2015 Plan provides for the grant of various types of stock-based compensation awards including, but not limited to, RSUs, incentive stock options (“ISOs”), non-qualified stock options (“NSOs,” referred to collectively with ISOs as “Options”) and restricted stock awards (“RSAs”) to directors, consultants, employees, and officers of the Company.

ISOs may only be granted to employees, and the exercise price thereon cannot be less than the fair value of the Company’s common stock on the date of grant or less than 110 % of the fair value in the case of employees holding 10% or more of the voting stock of the Company.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

voting stock of the Company.

The exercise price on NSOs must be at least equal to the fair value of the Company’s common stock on the date of grant.

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Stock Options

Stock Options (“Options”) generally vest over 4 years with the first 25 % of the award vesting upon the 12-month anniversary of the vesting commencement date and the remaining 75 % vesting monthly over the following 3 years.

Options generally vest over 4 years with the first 25 % of the award vesting upon the 12-month anniversary of the vesting commencement date and the remaining 75 % vesting monthly over the following 3 years.

Grants of Options shall not be exercisable after expiration of 10 years from the date of grant or such shorter period specified in the associated award agreement.

2 unchanged sentences

The Company did not grant any Options during the years ended December 31, 2024, 2023 and 2022.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Option activity for the year ended December 31, 2024 is as follows (in thousands, except per share data):

2 unchanged sentences

Outstanding at January 1, 2024

31,734,725 $ 0.54 2.65 $ 864,605

Exercised ( 6,567,334 ) 1.48

1 unchanged sentence

Outstanding at December 31, 2024

25,164,415 $ 0.29 1.21 $ 1,030,511

Exercisable at December 31, 2024

Expected to vest at December 31, 2023 31,734,725 0.54 2.65 $ 864,605

25,164,415 $ 0.29 1.21 $ 1,030,511

The total intrinsic value of Options exercised during the years ended December 31, 2024, 2023 and 2022 amounted to $ 177.7 million, $ 54.7 million and $ 53.2 million, respectively.

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During the years ended December 31, 2024, 2023 and 2022, the Company granted RSUs to employees under the 2015 Plan and 2023 Plan.

In general, RSUs granted under the 2015 Plan vest upon the satisfaction of both a service condition and a liquidity condition (“Double-Trigger”).

Generally, the service condition requires the grantee to remain an eligible participant, as that term is defined in the 2015 Plan, for a period of 4 years.

In general, RSUs granted under the 2015 Plan vest upon the satisfaction of both a service-based vesting condition and a performance-based vesting condition.

Generally, the service-based vesting condition requires the grantee to remain an eligible participant, as that term is defined in the 2015 Plan, for a period of 4 years.

Generally, RSUs vest quarterly over the entire 4-year period or vest 25 % after 1 year, with the remainder vesting quarterly over the following 3 years.

The liquidity condition was satisfied upon the occurrence of the IPO.

In general, RSUs granted after the IPO under the 2023 Plan vest upon the satisfaction of a service condition only.

These service conditions are consistent with those under the 2015 Plan detailed above.

The performance-based vesting condition was satisfied upon the occurrence of the IPO.

In general, RSUs granted after the IPO under the 2023 Plan vest upon the satisfaction of service-based vesting conditions only.

These service-based vesting conditions are consistent with those under the 2015 Plan detailed above.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Restricted stock unit activity for the year ended December 31, 2024 is as follows (in thousands, except per share data):

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Unvested and outstanding at January 1, 2024

14,690,417 $ 27.44

Granted 10,763,741 28.49

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Unvested and outstanding at December 31, 2024

17,421,450 $ 28.33

The fair value of the RSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $ 158.1 million, $ 214.7 million and $ 1.3 million, respectively.

Employee Stock Purchase Plan

On August 24, 2023, the Board adopted the ESPP pursuant to which eligible employees may contribute up to 15 % of their base compensation to purchase shares of the Company’s Series A common stock at a price equal to 85 % of the lower of (1) the fair market value of a share of the Company’s Series A common stock at the beginning of the offering period and (2) the fair market value of a share of the Company’s Series A common stock on the purchase date.

The ESPP provides for 12 -month offering periods beginning January 1 and July 1 of each year, or the next trading date thereafter.

Each offering period consists of two six -month purchase periods.

As of December 31, 2024, the Company has 8,405,885 shares of Series A common stock available for issuance pursuant to purchase rights granted to the Company’s eligible employees under the ESPP.

The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2024, by the least of 6,200,000 shares of the Company’s Series A common stock, 1 % of the outstanding number of shares of the Company’s Series A common stock and Series B common stock on the immediately preceding December 31, or such lesser number of shares as determined by the administrator of the ESPP.

The fair value of employee options granted under the ESPP is based on a 15 % purchase discount off the grant date quoted trading price of the Company’s Series A common stock and the underlying value of the awards as estimated using the Black-Scholes option-pricing model with the following assumptions:

Year Ended December 31,

Risk-free rate

4.79 % - 5.33 %

Expected term 0.5 - 1.0 years

Volatility 45.90 % - 64.12 %

Expected dividends —

The interest rate is based on the U.S.

Treasury bond rate at the date of grant with a maturity approximately equal to the expected term.

The expected term is based on the term of the offering period.

The expected volatility for the common stock is based on the average of the Company's historical volatility over the expected term of the award.

The assumed dividend yield is based upon the Company's expectation of not paying dividends in the foreseeable future.

The fair value of the common stock is the closing price of the stock on the date the offering period starts.

The Company recognized stock-based compensation expense related to the ESPP of $ 4.3 million during the year ended December 31, 2024.

As of December 31, 2024, $ 2.2 million of unrecognized stock-based compensation expense related to the ESPP is expected to be recognized on a straight-line basis over the subsequent 0.5 years.

The weighted average grant date fair value of ESPP awards granted during the year ended December 31, 2024 was $ 9.28 per share.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

During the year ended December 31, 2024, the Company issued 387,773 shares of Series A common stock under the ESPP.

Modifications

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The extension of the expiration date impacted 1,004,667 granted stock options, resulting in incremental stock-based compensation expense of $ 0.8 million during the year ended December 31, 2023.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

During the year ended December 31, 2023, the Company accelerated the vesting start dates of two employees’ RSUs.

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Additionally, the Company provided two terminated employees with accelerated vesting on the service-based vesting condition of 22,029 Double-Trigger RSUs held.

Because satisfaction of the liquidity-based vesting condition was not probable, the Company did not record the incremental stock-based compensation expense resulting from the modifications.

Such amounts will be recorded upon vesting (that is, upon occurrence of a qualifying liquidity event).

During the year ended December 31, 2021, the Board approved a modification to three executives who were terminated during 2021.

These modifications resulted in the accelerated vesting of tranches beyond the termination date as well as extension of the exercise window for these employees.

The modification covered 1,326,461 options and resulted in incremental stock-based compensation of $ 9.9 million during the year.

Additionally, during the year ended December 31, 2021, the Board approved a modification to a former executive’s stock-based compensation awards who was terminated

Because satisfaction of the liquidity-based vesting condition was not probable, the Company did not record the incremental stock-based compensation expense

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

The Company prorated the expense for the years ended December 31, 2022 and 2021, which was $ 3.8 million and $ 1.1 million, respectively, as the modification impacted both years presented as services were provided by the employee in both years as part of the terms of the award modification.

resulting from the modifications.

Such amounts will be recorded upon vesting (that is, upon occurrence of a qualifying liquidity event).

Secondary Transactions

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During the years ended December 31, 2023 and 2022 secondary investors purchased 912,187 and 1,002,968 shares of common stock from certain employees, respectively.

Stock-based compensation expense related to these transactions, representing amounts paid in excess of then current fair value, totaled $ 0.8 million and $ 21.5 million and during the year ended December 31, 2022 and 2021, respectively, and is recorded in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss.

There were no secondary market transactions during the year ended December 31, 2024.

Stock-based compensation expense related to secondary market transactions, representing amounts paid in excess of then current fair value, totaled $ 0.8 million during the year ended December 31, 2022, and is recorded in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss.

No stock-based compensation expense was recorded during the year ended December 31, 2023 related to secondary transactions.

Stock-Based Compensation Expense

During the year ended December 31, 2023, the Company capitalized $ 1.3 million of stock compensation expense related to services performed on capitalized software development projects.

During the year ended December 31, 2022, the Company did not capitalize any stock compensation expense related to services performed on capitalized software development projects, and during the year ended December 31, 2021 , the Company had an immaterial amount of capitalized stock compensation expense related to services performed on capitalized software development projects.

During the years ended December 31, 2024 and 2023 , the Company capitaliz ed $ 3.6 million and $ 1.3 million of stock-based compensation expense related to services performed on capitalized internal-use software, respectively.

During the year ended December 31, 2022, the Company did not capitalize any stock compensation expense related to services performed on capitalized software development projects.

Stock-based compensation included in the Consolidated Statements of Operations and Comprehensive Loss is as follows (in thousands):

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This is included within general and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

During the year ended December 31, 2021, stock-based compensation expense included $ 16.7 million paid in cash for the repurchasing and retirement of common stock, of which $ 8.8 million is included within selling and marketing expense, $ 5.8 million within research and development expense, and $ 2.1 million within general and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

As of December 31, 2023, total unrecognized compensation cost related to unvested Options was $ 0.1 million, which will be recognized on a ratable basis over a weighted-average remaining period of 0.4 years.

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

As of December 31, 2023, total unrecognized compensation cost related to unvested RSUs was $ 257.5 million, which will be recognized on a ratable basis over a weighted-average remaining period of 3.3 years.

As of December 31, 2024, total unrecognized compensation cost related to unvested RSUs was $ 371.8 million, which will be recognized over a weighted-average remaining period of 3.1 years.

Loss Per Share

Basic net loss per share attributable to Series A and Series B common stockholders is computed by dividing the net loss by the number of weighted-average outstanding common shares.

Diluted net loss per share attributable to Series A and Series B common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result, and is calculated using the treasury stock method.

Diluted net loss per share attributable to Series A and Series B common stockholders is determined by giving effect to all potential common equivalents during the reporting

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

period, unless including them yields an antidilutive result, and is calculated using the treasury stock method.

The Company considers its warrants, Investment Option, restricted stock units and stock options as potential common equivalents, but excluded them from the computation of diluted earnings per share attributable to common stockholders in the periods presented, as their effect was antidilutive during the years ended December 31, 2024, 2023 and 2022.

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Total 62,375,276 67,334,048 72,906,986

Restructuring Costs

Segment Information and Geographic Data

As described in the Company's Summary of Significant Accounting Policies, the Company operates as one operating segment.

Revenue and long-lived assets by geographic region are as follows:

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

Disaggregation of Revenue

Revenue by geographic area, based on the location of the Company’s customers, is as follows (in thousands):

Year Ended December 31,

2024 2023 2022

United States $ 584,844 $ 443,471 $ 307,222

Other Americas (1)

47,461 38,180 26,790

95,920 72,797 47,905

209,239 143,651 90,831

Total Revenue $ 937,464 $ 698,099 $ 472,748

(1) Other than the United States, no other individual country accounted for 10% or more of total revenue for any of the periods presented.

(2) Asia-Pacific

(3) Europe, the Middle East and Africa

Disaggregation of Long-lived Assets

Long-lived assets consist of property and equipment and ROU assets.

Long-lived assets by geographical region are as follows:

Year Ended December 31,

$ 71,894 $ 75,659

Total Long-lived Assets

$ 91,117 $ 80,437

(1) Asia-Pacific

(2) Europe, the Middle East and Africa

Restructuring Costs

On March 15, 2023, the Company announced a restructuring plan that resulted in a reduction of approximately 8 % of the Company’s full time workforce.

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Restructuring costs included in the Consolidated Statements of Operations and Comprehensive Loss is as follows (in thousands):

Klaviyo, Inc.

Notes to the Consolidated Financial Statements

December 31, 2023

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There were no unpaid restructuring costs as of December 31, 2023.

Subsequent Events

On January 10, 2025, the Company entered into a sublease agreement for new office space in San Francisco, California.

The lease commenced on January 21, 2025 and has a term of approximately six years with an option to terminate after year three .

The aggregate lease payments due over the term of the lease are $ 15.3 million.

On January 31, 2025, the Company amended the lease agreement for its corporate headquarters located in Boston, Massachusetts.

The amendment (i) modifies the lease term and payment terms for the existing leased premises and (ii) expands the leased premises under the lease.

The newly leased premises have phased lease commencement dates ranging from February 2025 to June 2026.

Following the amendment, the lease term for the existing and newly leased premises ends in March 2033.

The aggregate lease payments due over the amended term of the lease are $ 139.1 million.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data