What is the Future of Klaviyo Stock?

It is increasingly harder for organizations to reach consumers who are fragmented among various apps and platforms. For that reason, more companies are turning to marketing automation platforms, especially those that leverage artificial intelligence.

Falling squarely into this opportunity, Klaviyo (NYSE: KVYO) ignited excitement among investors prior to the company’s initial public offering in the fall of last year, but KVYO share price quickly sold off after the IPO.

Klaviyo has been on the upswing in the past few months, though, which has led to the stock climbing by 19.5% year-to-date.

There is good reason for the ascent. After all, the company has consistently smashed revenues and earnings expectations. Klaviyo also continues to expand its integrations with well-established brands.

In Q2, the company grew its user base, expanded its AI offerings, and made strategic partnerships. The most important of Klaviyo’s collaborations is its long-running relationship with e-commerce platform Shopify.

So what does future hold for investors in Klaviyo?

Why Did Klaviyo Stock Go Up?

After the company’s second quarter of 2024 earnings release in early August, KVYO shot up over 30%.

Klaviyo’s total revenues of $222.2 million represented an increase of 35% from last year’s figure of $164.6 million. It also beat analysts expectations by 4.66%.

The company did report a net loss of $4.9 million compared to net income of $10.9 million in Q2 of last year. Diluted earnings per share was -$0.02, but the EPS result was still 53% better than what analysts had expected.

On the balance sheet, Klaviyo management reported $794.6 million in cash and cash equivalents in the quarter.

The company was able to grow its user base from 130,000 customers last year to 151,000 in Q2. More importantly, it signed better-paying customers. To highlight that point, it was able to increase the number of its customers that generate $50,000 in annual recurring revenue by 64%, from 1,458 last year to 2,386 in Q2.

“We delivered another strong quarter, as businesses of all sizes turn to our platform to power smarter digital relationships and drive revenue,” said Andrew Bialecki, co-founder and CEO of Klaviyo in the earnings release. “Klaviyo continues to prove itself essential for our customers, providing them with a powerful data platform that’s not only fast, flexible, and intuitive, but also uses leading AI technology to give marketers an edge.”

Will Klaviyo Stock Keep Going Up?

The company leaned into artificial intelligence and expanded Klaviyo AI, its suite of AI tools and features. The goal of the platform is to use AI to give users insights like product recommendations in more personalized experiences.

Klaviyo AI can glean data from the flow of customer and product data in its larger operation which it uses to give organizations insights into prevailing trends. For businesses, the company’s Email AI allows marketing teams to input their campaign objectives and get customized branded emails.

Another aspect of the suite is Segments AI, which separates an target audience into segments based on a few key prompts. Klaviyo also offers similar functionality that allows companies to create customized SMS campaigns and optimized web forms.

In the 2nd quarter, the company added further features, such as Flows AI, which greatly increases the number of flows marketers can create from a single prompt.

Meanwhile, Review sentiment AI mines the data from user reviews to give business owners a centralized hub for review feedback on their products and services.

Klaviyo also added enhanced functionality for its A/B testing. In typical A/B testing, the winning version is sent to all subscribers. Deploying AI in A/B testing gives brands a more tailored approach and AI determines the winning version of an email or an SMS campaign and sends the appropriate message to each subscriber based on their likelihood to engage.

“We started with predictive analytics, to help anticipate consumer needs,” Bialecki said in a release. “We then expanded into generative capabilities to streamline work and accelerate content creation. Now we’re focused on autonomous AI, and creating a platform that continuously learns and adapts, refining strategies for the best outcomes in a fraction of the time.”

How Do Analysts Rate Klaviyo Stock?

The company’s powerful platform is one of the main reasons that investor sentiment is building behind the stock, and Wall Street seems to agree. Out of 17 analysts who have weighed in on KVYO, 14 rate it as a Buy. Two of those analysts believe the stock is set to outperform the market over the next 12 months.

The highest forecast is $42, which represents a 30.1% increase over the coming year. The average price target is $35.19, which would be a more modest 9% gain from where the stock currently trades.

Three hold ratings feature on KVYO, while the lowest forecast for the stock is $30 per share, which translates to a 7% drop over the next year.

Is Klaviyo Stock Undervalued?

All the sentiment is in Klaviyo’s favor, and the company had a strong quarter to back it up. After the recent run-up, KVYO now has a price-to-sales ratio of 9.9x. By comparison, competitor Salesforce has a P/S ratio of 6.8x.

Klaviyo does have a lower P/S ratio than its partner Shopify, which has a P/S value of 12.2. The two companies have been closely tied since Shopify took a $100 million investment in Klaviyo in 2022.

That deal made Klaviyo the recommended email product for Shopify’s premium merchant plan, Shopify Plus, and gave Klaviyo early access to new Shopify features.

What Is The Future Of Klaviyo Stock?

The future of Klaviyo stock appears bright with 9 analysts upgrading their earnings estimates for the upcoming quarter and placing a $35.19 per share price target on the stock.

The Shopify partnership in particular has been a boon for Klaviyo, and it is one of the main reasons the company is still rapidly expanding.

Klaviyo has also beaten revenue and earnings expectations for the past four quarters, and it has steadily grown its subscriber base. Still, the net loss might concern investors if it continues to deepen.

Wall Street is in Klaviyo’s corner, and the company has continued to expand its AI suite to include multiple aspects of automated marketing. Shopify bet big on Klaviyo, and it appears it is paying off. It’s probably fair to say that investors who follow the e-commerce giant’s lead could see the same results.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.