Klaviyo jumps 23% in debut after software vendor priced IPO at $30

Klaviyo shares jumped 23% to $36.75 in their New York Stock Exchange debut on Wednesday after the marketing automation company held the first notable IPO for a U.S. venture-backed software company since late 2021.

Klaviyo priced 19.2 million shares late Tuesday at $30 a piece, valuing the company at just over $9 billion on a fully diluted basis. Of those shares, 11.5 million were sold by the company, resulting in $345 million in cash added to the balance sheet. Klaviyo was valued at $9.5 billion in a private financing round in 2021.

The listing, under the ticker symbol “KVYO,” comes a day after grocery delivery company Instacart hit the Nasdaq and saw its stock close up 12% following an initial 40% pop. Instacart and Klaviyo are trying to crack open a tech IPO market that’s been virtually shuttered for 21 months. Chip designer Arm went public last week, but that company is based in the U.K. and controlled by Japan’s SoftBank.

The last venture-backed software companies to hold IPOs in the U.S. were HashiCorp and Samsara, which both debuted in December 2021, when the Nasdaq was near its peak and investors were paying a premium for growth stocks. Inflation spiked and interest rates rose in 2022, leading to a turn away from risk and the worst year for tech stocks since the 2008 financial crisis.

The Nasdaq has rebounded this year, but less mature and unprofitable businesses are still valued well below their levels from two years ago. Instacart closed on Tuesday with a valuation of just over $11 billion, down from $39 billion at its height, and the stock fell 5% on its second day of trading.

Founded in 2012, Klaviyo helps companies store user data and build profiles to target them with marketing via email, text messages and other channels. It got its start in the e-commerce industry by primarily serving online businesses, though Klaviyo said it’s seeing growing demand from companies in other verticals like restaurants, travel, and events and entertainment.

In its prospectus, Klaviyo reported revenue growth of 51% in the latest quarter to $164.6 million. The company has swung to profitability, reporting net income of $10.9 million after losing $11.7 million a year earlier.

One of Klaviyo’s biggest backers and sources of business is Shopify. The e-commerce software vendor owns roughly 11% of Klaviyo’s shares, and invested $100 million in the company last year. As of the end of 2022, about 78% of Klaviyo’s annualized recurring revenue, or value of its existing paid subscriptions, was derived from customers who also use Shopify, the company said.

“We love working with the market-leading platforms,” said Klaviyo CEO Andrew Bialecki, in an interview with CNBC on Wednesday. “When we decided in the early days we were going to focus on retail businesses, consumer businesses first, we said who are the best platforms out there, the most innovative. Obviously Shopify was at the top of that list.”

Bialecki said Klaviyo lets those platforms deal with payment and back office functions, and “we try to help with the customer experience on the front end.”

Klaviyo said it had more than 130,000 customers as of June 30, up from 105,000 customers a year ago.

— CNBC’s Annie Palmer contributed to this report

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