The Cheap Investor Editorial Team

Here’s a name that doesn’t come up enough at the dinner table: Klaviyo (NYSE: KVYO). While everyone else is racing to buy the same five AI mega-caps, this B2C CRM company just posted one of the cleaner growth stories in the mid-cap software space – and the stock is still being priced like it’s on clearance.

Let me set the scene.

What actually happened: Klaviyo closed out 2025 with full-year revenue of $1.234 billion – up 32% year-over-year from $937 million in 2024. Q4 alone printed $350.2 million, growing 30% year-over-year. Operating cash flow came in at $218 million, up from $166 million the prior year, and free cash flow hit $200.4 million. The company exited the year with $1.065 billion in cash and equivalents – the first time it has ever crossed the $1B cash threshold. That’s not a speculative growth story. That’s a business with actual money in the bank.

The 2026 revenue guidance – $1.501B to $1.509B – implies roughly 21.5–22.5% growth. Management framed it as conservative, noting the guidance deliberately excludes upside from newer AI and service product lines that are still in early innings.

Then, shortly after earnings, the board approved a $500 million share repurchase program – including a $100 million accelerated buyback to begin immediately. Management called it a direct reflection of confidence in the business model and cash generation. That’s not a company hedging. That’s a company leaning in.

What it actually does: Klaviyo is what you get if you took a marketing automation platform, rebuilt it entirely around first-party data, and then layered AI agents on top. It’s the infrastructure layer for e-commerce brands that want to know their customers in real time and act on that knowledge instantly. Think autonomous email campaigns, personalized push notifications, AI-driven customer service – all running off one data spine. The platform now serves more than 193,000 paying customers across 100+ countries. It recently launched a Klaviyo App inside ChatGPT, letting marketers access their data and generate campaigns without leaving the AI environment. It also struck a strategic partnership with Google in February 2026, linking Google Search, Ads, and RCS with Klaviyo’s real-time data layer.

Slight tangent, but it matters: the regulatory shift toward first-party data – driven by cookie deprecation and privacy laws – is quietly creating a structural tailwind here. Brands can’t rely on third-party targeting the way they used to. Klaviyo’s model is built for exactly this world. And its data platform now processes 3.4 billion daily interactions across more than 8 billion profiles. That moat is not easy to replicate.

The numbers that matter:

• FY2025 revenue: $1.234B (+32% YoY)
• Q4 2025 revenue: $350.2M (+30% YoY, beat estimates by ~9%)
• Non-GAAP operating margin: 14% (up from 12% in 2024)
• Operating cash flow: $218M (up from $166M)
• Free cash flow: $200.4M (free cash flow margin: 16%)
• Cash and equivalents: $1.065B as of Dec 31, 2025
• Gross margin: 74.7%
• NRR (net revenue retention): 110% – up 200bps YoY
• Customers >$50K ARR: 3,912, up 37% YoY
• Customers >$1M ARR: doubled year-over-year
• International revenue growth: 42% YoY (outside Americas)
• FY2026 guidance: $1.501B–$1.509B revenue, 14.5–15.0% non-GAAP operating margin

The valuation angle: Consensus analyst rating across 22 analysts is “Strong Buy,” with an average 12-month price target in the $34–36 range – implying roughly 60–80% upside from recent trading levels depending on the source. Morgan Stanley, which raised its price target to $50 in September 2025 before later revising to $38, remains constructive. Non-GAAP operating margin improved from 12% to 14% in 2025, with 2026 guidance calling for further expansion to 14.5–15%. The trajectory is moving in the right direction, and the $500M buyback gives the stock a floor mechanism that wasn’t there before.

The risks: Competition from HubSpot, Salesforce, and increasingly AI-native challengers is real. The 2026 guidance deceleration – from 32% growth down to ~22% – will pressure multiples if management can’t beat and raise. Gross margins slipped modestly from 76.4% to 74.7% in 2025, driven by higher outbound costs from SMS and WhatsApp channel expansion. Macro softness could crimp e-commerce spending and slow customer adds. And stock-based compensation remains elevated at $162 million (roughly 13% of revenue), which continues to delay GAAP profitability. These are real items, not just boilerplate disclaimers.

But here’s where I’m at: when a company with $1B+ in cash, 32% revenue growth, record operating cash flow, a 110% NRR, a $500M buyback program, and a clear AI product roadmap – including partnerships with Google and a ChatGPT integration – is trading at a significant discount to peers, and 22 analysts are calling it a Strong Buy, that disconnect is worth paying attention to.

Q1 2026 results drop May 5. That’s the next catalyst. Watch the beat-and-raise cadence closely.