Klaviyo's stock is down 61% on an AI transformation story w/ compressing margins.

+ How I’m re-learning how to work

6 mos. ago, I'd block 2-4 hr deep work sessions to be as productive on 1 task as possible.

Now I spend my day running 5 different projects simultaneously across Claude, Claude Code, Claude in Browser, and OpenClaw. 

1 Day this week I had: 

All at the same time.

I'm not doing deep work anymore. I'm doing air traffic control.

Every 10 minutes I'm context switching.

The output volume is 10x what I could do alone, but the cognitive load is different. 

I’m constantly context switching, having to remember what I want to accomplish across each task. 

It’s a completely new way to work, where my mental effort isn’t going deep but getting to answers faster.

It’s an interesting challenge where I feel like I’m wasting time if I don’t push/unblock the agents to consistently work and improve.

I’ve never been more productive in my career while feeling less productive.

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Klaviyo (the “default” email marketing platform for Shopify) is tanking. Stock is -61% in the last year. Management mentioned "AI" 100+ times on the call, but AI contributes "minimal revenue" to FY26 guidance. 

2025 Financial Statements (YoY Comparison)

Rev: $1B (+32%) 💪

Gross Profits: $921m (+22%) 😟

OPEX: $989m (+23%) 👍

Net Income: -$31M (+32%)  🫤

FCF: $188M 👍

Link to Klaviyo's FY 2025 earnings: 

5 years ago, this would have been considered a strong SaaS biz that still needs to grow into itself. Today, it’s a potentially dead SaaS biz with a lot of cash on its balance sheet.

Weird considering they DOMINATE their market.

Founded: 

Aha Moment: 

Growth: 

Model: 

Collapse: 

Here are the 3 ways we’ll turn Klaviyo into a $10B juggernaut.

Problem: Shopify runs at 34% OPEX as a % of Rev. 

Klaviyo runs at 80%. 

Klaviyo's operating margin: -5.5%. Shopify's: +15%. 

You can't ride someone else's wave at half their efficiency.

Solution: Get OPEX from 80% to 62% in 18 months. 

Cut S&M from 41% to 32%—they added 26,000 customers, 25,000 are SMB who should come through Shopify's app store self-serve, not sales-assisted. 

Keep enterprise sellers for $1M+ accounts, kill mid-market teams. 

Shrink G&A from 16% to 12%. $192M is bloated.

Tell the market you're targeting 12% operating margin by Q4 FY27. 

Force the discipline.

Takeaway: Platform plays only work with platform economics. Otherwise, you're expensive middleware.

Problem: SMS cross-sells are compressing Gross margin (76% -> 74%). 

SMS adoption growing from 26% -> 29%. 

If SMS hits 50% of revenue mix, margin drops to 70%.

At 70% gross with 80% OPEX, you're at -10% operating margin. 

Biz breaks.

Solution: Launch Klaviyo Subscriptions (compete with Recharge, Bold). 

85%+ gross margin software, no infrastructure costs. Charge 1% of subscription GMV + platform fee. 

30-40% of DTC brands run subscriptions. If you capture 20% of $50K+ customers (782 brands) doing $5M avg subscription, they could add $51M in Rev at 85% margin. 

Adding 4% of revenue from Subscription moves blended margin to 76%+.

Strategic benefit: Subscriptions = highest switching cost. Once they run it through Klaviyo, they can't leave.

Takeaway: Only high margin products can lift your biz-wide GM %.

Problem: Klaviyo fights for 5-10% of marketing budget (retention). 

The other 90-95% goes to advertising. 

Solution: Use the $1.B cash to acquire our way into the advertising budget.

Buy Northbeam or Triple Whale ($300-500M price tag) to immediately install the winner into their base. Can easily add another $50-100m in ARR + add a defensible product that fulfills their CDP vision.

Then buy a top ad creative platform like Pencil ($50-150M) to create AI ad content within Klaviyo.

Combined: $78M - $150m in incremental revenue at 80%+ margin. 

Moves you from "retention vendor" to "advertising infrastructure." 

+ pulls up the Gross Margins.

After: Brands spend $174K/year on Klaviyo (attribution $100K + creative $24K + retention $50K) instead of just $50K. You go from 5% of budget to 15-20%.

Takeaway: Know where you live in your customers’ budgets. Go for the fattest piece.

Klaviyo's entire biz is a Shopify derivative. 

When Shopify merchants grow 25% GMV, Klaviyo grows 32%. 

Beautiful model. 

One problem: Shopify runs at 34% OPEX and 15% operating margin. 

Klaviyo runs at 80% OPEX and -5.5% operating margin. That 46-point gap is the whole ballgame.

You can't ride someone else's growth engine at half their efficiency. Especially when you're growing SLOWER (22% forecast vs Shopify's 25%).

The market's message: if you're running Shopify's playbook, match their economics. Otherwise, you’re expensive middleware that merchants will try to replace tomorrow.

It's absolutely Klaviyo’s market to lose.

The biggest question remaining for Klaviyo: 

Who do they want to be when they grow up?