The IPO Buzz: Klaviyo Prices IPO at $30 – $1 Above Its Recently Raised Range

Tech unicorn Klaviyo, Inc. (KVYO) priced its IPO at $30.00 – $1.00 above its recently increased price range – to raise $576 million on Tuesday night (Sept. 19, 2023). The Boston-based marketing and data automation software company’s IPO consisted of 19.2 million shares – the same number in the prospectus. The above-range pricing at $30.00 gave Klaviyo a valuation of about $7.56 billion. The valuation on a fully diluted basis was pegged at about $9 billion. (A unicorn is a privately  held company with a valuation or a market cap of at least $1 billion.)

Klaviyo’s stock began trading at $36.75 – up $6.75 or 22.5 percent – at 12:44 p.m. EDT today – Wednesday, Sept. 20, 2023 – on the New York Stock Exchange. Volume on that opening trade was about 1.9 million shares, NYSE records showed.  Klaviyo’s stock closed at $32.70, up $2.70 from its $30.00 IPO price, for a 9 percent gain in its first day of NYSE trading.

IPO investors flocked to Klaviyo’s IPO – the third tech unicorn to go public in less than a week. Klaviyo’s initial public offering followed the successful IPOs of British chip CPU designer Arm Holdings Ltd. (ARM), which is still 90 percent controlled by SoftBank Group Corp., and Instacart (CART), the San Francisco online grocery delivery pioneer, which has developed an advertising and marketing business as well.

Goldman Sachs and Morgan Stanley led the joint book-runners’ team, which included Citigroup, Barclays, Mizuho, William Blair, Piper Sandler and Truist Securities.

Shopify-backed Klaviyo increased its IPO price range to $27.00 to $29.00 – up from $25.00 to $27.00 originally – and kept the number of shares at 19.2 million in an S-1/A filing on Monday (Sept. 18, 2023).

Cornerstone investors, including certain funds and accounts managed by BlackRock Inc., and entities affiliated with AllianceBernstein L.P., had indicated an interest in buying an aggregate of up to $100 million – or about 18.6 percent – of the stock in the IPO, according to the prospectus.

Klaviyo provides a SaaS (Software-as-a-Service) platform that caters to the retail sector. The marketing and data automation software enables online merchants and other retailers to mine their data to ensure that they are sending the right message at the right time to their customers.

Of the 19.2 million shares in the IPO, Klaviyo offered 11.51 million shares and the selling stockholders offered 7.69 million shares. Klaviyo will not receive any proceeds from the sale of the selling stockholders’ shares.

Turning a Profit

As it turned out, IPO investors warmed up to Klaviyo’s story – and its ability to turn a profit in the first half of this year.

Klaviyo was not profitable on a trailing 12-months basis. The company reported a net loss of $9.5 million on revenue of $585.1 million for the 12 months that ended June 30, 2023.

The company, however, did swing to a profit from a loss for the six months that ended June 30, 2023, compared with the year-earlier period.

Klaviyo earned net income of $15.17 million for the six-month period that ended June 30, 2023 –  in sharp contrast to a net loss of $24.57 million for the six-month period that ended June 30, 2022, according to the prospectus.

The prospectus also showed that Klaviyo reported steady revenue growth on a year-end and a six-months comparable basis.

CEO Andrew Bialecki and Ed Hallen, the chief product officer, described the company in their founders’ letter, which was included in the prospectus:

We founded Klaviyo in 2012 to provide businesses of all sizes with powerful technology that captures, stores, analyzes, and predictively uses their own data to drive measurable, high-value outcomes,” Bialecki and Hallen wrote. “Klaviyo enables businesses to drive revenue growth by making it easy to bring their first-party data together and use it to create and deliver highly personalized consumer experiences across digital channels.

“Our modern and intuitive SaaS platform combines our proprietary data and application layers into one vertically integrated solution with advanced machine learning and artificial intelligence (AI) capabilities.” they continued in their founders’ letter. “This enables business users of any skill level to harness their data in order to send the right message at the right time across email, SMS, and push notifications, more accurately measure and predict performance, and deploy the specific actions and campaigns that drive the highest impact.”

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Disclosure: Nobody on the staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The staff does not issue advice, recommendations or opinions.

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