Klaviyo (KVYO) risk factors, FY2025 10-K

Risks Relating to Our Business and Industry

1. 01Our rapid historical revenue growth is not indicative of our future revenue growth, and we may not be able to sustain our historical revenue growth rate, in the near term and in the future40% rewritten
2. 02Our business has experienced rapid growth, and if we fail to effectively manage our growth or anticipated growth, our business, results of operations, and financial condition could be adversely affected65% rewritten
3. 03We have a limited operating history in a rapidly changing industry, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment60% rewritten
4. 04We operate in a highly competitive industry, and if we do not compete effectively with established companies or new market entrants, our business, results of operations, and financial condition could be adversely affected27% rewritten
5. 05Our business and success depend, in part, on the success of our relationships with third parties, such as our marketing agency and technology partners
6. 06Unfavorable conditions in our industry or the global economy, or reductions in spending on marketing, could adversely affect our business, financial condition, and results of operations26% rewritten
7. 07We may not be able to add new customers, retain existing customers, or increase sales to existing customers, which could adversely affect our business, results of operations, and financial condition
8. 08We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and maintain profitability in the future
9. 09As we seek to move up-market, we expect our sales cycle with enterprise customers to be longer than with small-and-mid size businesses and we will be required to scale our operations, including by expanding our sales efforts, which may require considerable time and expense
10. 10If we fail to adapt and respond effectively to technological changes, evolving industry standards, changing regulations or changing customer or consumer needs, requirements or preferences, our platform may become less competitive24% rewritten
11. 11We depend on our senior management team, and the loss of one or more members of our senior management team or our key employees, or an inability to attract and retain highly skilled employees, could adversely affect our business
12. 12If we fail to maintain and enhance our brand, our ability to maintain or expand our customer base may be impaired and our business, financial condition, and results of operations could be adversely affected
13. 13Doing business internationally exposes us to significant risks, and our future success depends in part on our ability to navigate the international business environment and drive the adoption of our products by international customers
14. 14Our business and reputation could be adversely affected if our customers are not satisfied with the integration or implementation of our platform and products provided by us or our partners
15. 15Any one or more of the factors above may result in significant fluctuations in our quarterly results of operations
16. 16We rely upon a third-party provider of cloud-based infrastructure to host and sell our products. Any disruption in the operations of this provider or limitations on capacity or interference with our use could adversely affect our business, financial condition, and results of operations
17. 17We rely heavily on the reliability, security, and performance of our software. If our software contains serious errors or defects, or we have difficulty maintaining our software, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our customers
18. 18Any failure to offer high-quality technical support services may harm our relationships with our customers, our brand, and our results of operations34% rewritten
19. 19If we are unable to maintain our culture and core values as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success, and our business may be harmed
20. 20We may not realize the anticipated benefits of our efforts to streamline operations and improve cost efficiencies, including restructuring and reorganization activities, which may be disruptive to our operations and could adversely affect our business, results of operations, and financial conditionNew
21. 21Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations31% rewritten
22. 22If our judgments or estimates relating to our critical accounting estimates are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline of the trading price of our Series A common stock26% rewritten
23. 23We track and disclose certain operational metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition25% rewritten
24. 24If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
25. 25We face exposure to foreign currency exchange rate fluctuations, and such fluctuations could adversely affect our business, results of operations, and financial condition
26. 26Changes in tax law could adversely affect our business, financial condition, and results of operations46% rewritten
27. 27Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating, and other costs, as well as the costs of our products. In recent years, many such changes have been made, and changes are likely to continue to occur in the future
28. 28Our international operations and structure subject us to potentially adverse tax consequences
29. 29Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses
30. 30We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all
31. 31Partnerships, strategic investments, alliances or acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations28% rewritten
32. 32Any future litigation against us could be costly and time-consuming to defend
33. 33We agree to indemnify customers and other third parties pursuant to various contractual arrangements we enter into in the course of business, which exposes us to substantial potential liability
34. 34We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with these laws can subject us to criminal penalties or significant fines and adversely affect our business and reputation35% rewritten

Risks Relating to Privacy, Data Security, and Data Protection Laws

1. 35We collect, process, store, share, disclose, and use personal information and other data, which subjects us to legal obligations related to privacy and security, and our actual or perceived failure to comply with these obligations could harm our business
2. 36We are subject to stringent and changing laws and regulations related to privacy, data security, and data protection. The restrictions and costs imposed by these requirements, and our actual or perceived failure to comply with them, could harm our business20% rewritten
3. 37We are subject to new and evolving data processing and interoperability regulations, which may increase our compliance obligations and operational complexityNew
4. 38Our business offerings rely heavily on a variety of direct marketing techniques, including email marketing and marketing conducted via text message. These activities are regulated by legislation such as CAN-SPAM and the TCPA as well as state laws regulating marketing via telecommunication services
5. 39If our platform fails to function in a manner that allows our customers to operate in compliance with regulations and/or industry standards, our business, financial condition, and results of operations could be adversely affected32% rewritten
6. 40We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content sent through our platform (including AI-generated content) or the data they store on our servers
7. 41The standards that private entities and inbox service providers use to regulate and filter the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business

Risks Relating to Our Intellectual Property

1. 42Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business, financial condition, and results of operations
2. 43In the future we may be party to intellectual property rights claims, disputes, and other litigation brought by others which are expensive to support, and if resolved adversely, could have a significant impact on us
3. 44Our use of open source software could negatively affect our ability to sell our products and subject us to possible litigation24% rewritten
4. 45Our use of AI technology and the integration of AI technology with our products and services may subject us to increased risk, including security and other risks to our confidential and/or proprietary information, given the evolving nature of AI technology38% rewritten

Risks Relating to Ownership of Our Series A Common Stock

1. 46Our IPO occurred in September 2023
2. 47We cannot predict the effect our dual series structure may have on the trading price of our Series A common stock23% rewritten
3. 48If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the trading price of our Series A common stock and trading volume could be adversely affected44% rewritten
4. 49Sales of substantial amounts of our Series A common stock in the public markets, or the perception that sales might occur, could cause the trading price of our Series A common stock to decline56% rewritten
5. 50Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders and could negatively affect our results of operations50% rewritten
6. 51We do not intend to pay dividends on our Series A common stock in the foreseeable future and, consequently, the ability of Series A common stockholders to achieve a return on investment will depend on appreciation in the trading price of our Series A common stock
7. 52Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate. Even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all42% rewritten
8. 53Provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors, and limit the trading price of our Series A common stock
9. 54Moreover, Section 203 of the Delaware General Corporation Law (the “DGCL”) may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stockNew

General Risk Factors

1. 55We have incurred, and we will continue to incur, increased costs as a result of operating as a public company, and our management is required to devote substantial time to support compliance with our public company responsibilities and corporate governance practices
2. 56Our business is subject to the risks of earthquakes, fire, floods, and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, data security breaches, or terrorism
3. 57Climate change may have a long-term impact on our business