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Vit Mee's avatar

This fascinating article analyzes the breakdown of the first tech IPO in the last two years - the Kalviyo email platform.

First, I think we can name it as the vanilla metrics:

- The email marketing market in the US is worth $34B.

- Klaviyo has about 130k customers, with an ACV of ~$5k.

- Revenue for the last 12 months is $585M, which ranks 50th among public software companies and slightly below the median of $818M.

- Klaviyo's net retention is 119%, one of the most. Critical indicators for the land and expansion of SAAS are that current customers grow by more than twice a year. This is again the median.

And now, onto the more exciting parts:

- The CAC payback period is 29 months. This is a tough one! 29-month payback period for an acquired customer. However, nothing is said about the LTV. How long does the customer live, and how much does it bring? A big question.

- LTM GAAP Gross Margin is 75%, which is usually the median.

- But, the operating margin (LTM GAAP Operating Margin) is only 4%.

How to increase the margin with such a high customer acquisition cost is unclear. The email marketing market is super competitive, as evidenced by the CAC Payback. And it seems that they managed to pull out a four percent margin for the IPO, and that's at the limit.

Conclusion:

It is necessary to build an ecosystem of products, like Hubspot, Salesforce, and Intercom, to earn much more from a customer through a group of integrated products. CAC is growing, and an ACV of ~$5k is already the limit for a single product.

What do you think about their LTV and CAC ratios and future improvement opportunities?

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Mayank Tiwari's avatar

loved the article

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