Shares of Klaviyo plunged as much as 12.7% on Thursday, cratering to a day-low of $15.50, after the marketing-automation company delivered second-quarter results that topped analyst estimates on both revenue and earnings — yet simultaneously warned investors that profits are about to shrink. Despite posting $370.6 million in quarterly revenue, up 26% year-over-year and ahead of the $362 million consensus, shares fell sharply as the company lowered full-year operating income guidance and signaled continued gross margin pressure. The disconnect reveals a market no longer willing to trade revenue beats for profit retreats.

  • The Profit Downgrade That Spooked the Street

For full-year 2026, Klaviyo raised its revenue target to $1.526–$1.534 billion (roughly 24% growth) but cut non-GAAP operating income expectations to $212–$218 million, implying a margin of about 14%.

CFO Amanda Whalen attributed the $10–$12 million operating income reduction to costs from the Agency acquisition and continued spending on AI product development. Investors are being asked to accept lower near-term returns to fund bets that may not pay off for years.

  • Next Quarter Looks Even Tighter

Q3 guidance implies a non-GAAP operating margin of just 10.5–11%, down sharply from 13.7% in Q2, due to strategic investments.

Meanwhile, Q3 revenue guidance implies 21.5–22.5% growth — suggesting deceleration from the 26% just reported — a combination that gives the market little to anchor optimism on.

  • Text Messaging Growth Is a Double-Edged Sword

Klaviyo expects gross margins to decline further in Q3 and see a steeper-than-usual seasonal dip in Q4, as its text messaging business continues to grow faster than the rest of the company. SMS carries lower margins than email. The company plans to pass through higher carrier fees to customers, which management says will be neutral to 2026 revenue and margins but may create friction as clients absorb price increases.

  • Analysts Are Cutting Targets, One Firm Downgraded

KeyCorp slashed its price target from $35 to $29.

Benchmark downgraded Klaviyo to Hold, citing approaching topline deceleration, while Barclays cut to $22 and Jefferies to $21.

Trading volume hit 14.7 million shares — more than double the average of 6 million — a signal that institutional holders, not just retail traders, were repositioning. For a stock already down from its 52-week high of $36.22, the question is whether Klaviyo's AI and enterprise ambitions can eventually translate into the expanding profits shareholders clearly now demand.