Klaviyo filed their initial S1 statement today. This is the first S-1 we’ve seen in almost 2 years from a software company! A S-1 is a document companies file with the SEC in preparation for listing their shares on an exchange like the NYSE or NASDAQ. The document contains a plethora of information on the company including a general overview, up to date financials, risk factors to the business, cap table highlights and much more. The purpose of the detailed information is to help investors (both institutional and retail) make informed investment decisions. There’s a lot of info to digest, so in the sections below I’ll try and pull out the relevant financial information and benchmark it against current cloud businesses. As far as an expected timeline - typically companies launch their roadshow ~3 weeks after filing their initial S-1 (the roadshow launches with an updated S-1 that contains a price range). After the roadshow launch there’s typically ~2 weeks before the stock starts trading. So we’re looking at roughly 5 weeks before any retail investor can buy the stock.
loved the article
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.
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?
I switched our SMB organization from Listrak ESP to Klaviyo about a year and a half ago and found I saved about 80% of costs by switching. Listrak was a more managed solution and Klaviyo is more DIY. I find it to be an incredibly powerful solution, but, as a marketing department of 1, I found that I wasn't getting everything I needed out of it and, thus, I now have an Email agency on monthly retainer to help with triggered Flow setup and optimization as well as more robust Campaigns (Blast) emails and help with other growth strategies. I believe Klaviyo knows the DIY nature of their solution is an issue with SMB's and does a good job of providing a vetted range of Email agencies who can help Klaviyo clients get more out of their solution. My agency works very closely with Klaviyo account reps for a cohesive experience and integration. So now I'm only saving about 25% vs. Listrak :) but I feel my email strategy and execution is in a much better place with Klaviyo + Email agency vs. Listrak. I have no plans on switching from Klaviyo. For ecommerce, I do believe Klaviyo fills a needed and open gap in the market between the Listrak's of the world which are higher end, more managed solutions and the lower end Constant Contact's of the world. It's an incredibly robust solution and they seem to come out with new features and add-on (free) innovative solutions every few months.