On Wednesday, KeyBanc initiated coverage on Klaviyo Inc (NYSE:KVYO), assigning the stock a Sector Weight rating. The firm's analysis pointed to Klaviyo's successful expansion from a first-party customer database platform to a broader marketing suite, including email, text, and push notifications, as well as a Customer Data Platform (CDP).
Despite a strong growth trajectory following their 2023 IPO, fueled by the company's first pricing increase in years, KeyBanc anticipates a slowdown in revenue growth.
Klaviyo's revenue growth was notable at 38% exiting the year without the aid of pricing increases. However, projections suggest a deceleration to mid-20% by the end of 2024. KeyBanc expressed limited optimism for significant upside potential.
The management at Klaviyo has committed to providing accurate guidance without substantial cushions, a strategy seen as more about managing expectations than reflecting fundamental business strengths.
The company's strategic shift towards capturing a larger share of the upmarket segment is recognized, but KeyBanc foresees that this transition will require time to yield tangible results. The latter half of 2024 is expected to demonstrate material benefits from this strategic move, though such expectations are considered aggressive by the firm.
Moreover, this move upmarket is likely to increase competition with established players, contrasting with Klaviyo's previous focus on point solutions.
At present, Klaviyo's shares are trading at 6.5 times the calendar year 2025 enterprise value to revenue, which is below their initial public offering price of $30. According to KeyBanc, the pricing set by the syndicate at the time of the IPO was appropriate for the company. However, for public shareholders, the current sentiment is to wait for a more opportune moment to invest.
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