The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2026. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A within this Quarterly Report on Form 10-Q. Overview 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. Today, Klaviyo enables over 205,000 businesses around the globe to efficiently drive revenue growth by making it easy to bring their first-party data together and use it to create and deliver highly personalized, omnichannel consumer experiences at scale. Our platform combines our proprietary data, intelligence, and action layers into one vertically-integrated solution with advanced machine learning and AI capabilities and over 350 integrations, enabling businesses to create and store unified consumer profiles, derive new insights, and rapidly segment their consumers. Klaviyo began as a database designed for speed, flexibility, and unlimited data storage. The Klaviyo Data Platform (“KDP”) generates unified, highly granular consumer profiles populated with data from customers’ own systems and over 350 third-party integrations, and provides customers user-friendly ways to track new types of data, sync data in and out of Klaviyo at scale, and drive revenue growth. Building upon our robust data infrastructure, we developed tools, initially focusing on marketing automation, where we revolutionized email practices. Our innovation shifted the industry paradigm away from batch and blast practices with a fast, data-rich marketing tool. In addition to our email offering, we now incorporate text messaging and WhatsApp channels, Reviews, Klaviyo Service, Klaviyo Analytics, and others. In February 2025, we announced Klaviyo B2C CRM, establishing Klaviyo as a unified CRM built for B2C brands and positioning Klaviyo to address a critical gap in the market: providing consumer brands with a system designed for their unique, high-volume, fast-paced needs across marketing, service and analytics. In September 2025, we launched Marketing Agent and Customer Agent, establishing Klaviyo as the AI-first B2C CRM. In June 2026, we announced the public beta of Composer, our next generation agent for marketing and analysis. Taken together, this is a natural evolution of our journey – from a leading marketing automation platform to a comprehensive consumer engagement solution. Powered by the KDP and AI, we combine marketing, service, analytics, and our data platform into a single solution designed to meet the high-volume, fast-paced needs of our customers. Klaviyo Service is an AI-powered customer service offering that integrates with marketing and data to help businesses provide seamless customer support via Customer Hub, Customer Agent and Helpdesk. Marketing Analytics gives brands real-time AI-powered insight into customer and purchase behavior so they can take action faster. Our Advanced KDP offering unlocks advanced features for even more powerful ways to track, transform, cleanse, and analyze data as well as run more advanced reporting and predictive analytics to drive revenue growth for our customers. These offerings leverage Klaviyo’s unified platform to deliver an integrated, AI-first customer experience that enhances automation, personalization, and efficiency across channels. Today, our customers primarily operate within the retail and eCommerce vertical. Due to the flexibility and adaptability of our technology, we have also seen organic growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies. As of June 30, 2026, our platform had efficiently scaled to over 205,000 customers. See the section titled “Key Performance Metrics – Customers” for additional information on how we define customers. 28 We generate revenue through the sale of subscriptions to our customers for the use of our platform. Our subscription plans are tiered based on the number of active consumer profiles stored on our platform and the number of emails, text messages and WhatsApp messages sent as well as tickets and conversations executed through Klaviyo Service. We currently permit our customers to send unlimited push notifications, which are included as part of our email subscription plan. Active consumer profiles are identified profiles that can be reached via at least one enabled marketing channel in Klaviyo; this means the profile is not suppressed, either by revoking consent or being rendered undeliverable. The vast majority of our subscription plans today are monthly. Our land-and-expand strategy aligns our success with that of our customers. As our customers’ businesses grow, they utilize more active consumer profiles and send more emails, text messages and WhatsApp messages, which naturally increases their usage of our platform. Our revenue also expands when our customers add additional marketing channels, such as text messaging, WhatsApp messaging, and mobile push and additional use cases, such as Customer Agent, Composer, Marketing Analytics, and Advanced KDP, or when their other companies, business units, and geographies start using our platform. Factors Affecting Our Future Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including the following factors: Growth in New Customers Attracting new customers to our platform is a key driver of our revenue growth strategy. We have successfully grown our retail and eCommerce customer base and believe we have significant room to expand within this vertical as well as expand further into other industries, including education, events and entertainment, restaurants, wellness, and travel as well as with B2B companies. Our ability to attract new customers will depend on a number of factors, including our ability to innovate, the effectiveness and pricing of our new and existing offerings and capabilities, and the success of our selling and marketing efforts. Expansion of Revenue From Our Existing Customer Base We believe our product-led growth strategy enables us to efficiently expand penetration within our existing customer base. We focus on expansion in three primary ways. First, as our customers increase their usage of our platform through the number of active consumer profiles they store and email, text messages and WhatsApp messages they send, they move to higher subscription tiers. Second, we cross-sell additional use cases (e.g. Customer Agent, Marketing Analytics, etc.) and marketing channels (e.g. text messaging and WhatsApp) to customers who started on our platform with our email offering. Finally, we offer our platform to our customers’ other brands, business units, and geographies. Going forward, our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our solutions and the ability of our customers to attract new consumers. We expect these three forms of revenue expansion to continue in the future. Growth with Larger Customers When we first launched our platform, we intentionally focused on serving entrepreneurs and SMBs based on the need we saw for a simple and easy-to-use, yet powerful solution for customers in this category, and the large market opportunity within this group of customers. As our customers have scaled and become mid-market companies and larger enterprises themselves, their success with Klaviyo has attracted more interest from similarly sized businesses that are looking to drive better engagement with their consumers. Our ability to continue to move up-market is dependent on a number of factors, including our ability to further adapt our platform to the needs of larger accounts, the effectiveness of our sales team, and pricing. 29 International Expansion We believe we have significant expansion opportunities in international markets. We started by serving customers in North America and, in 2019, we expanded our operations to London, England to penetrate the European region. In 2022, we opened our office in Sydney, Australia to capitalize on the opportunities in Asia Pacific. In 2024, we expanded our presence in the European region by adding operations in Dublin, Ireland. In 2025, we continued our expansion into the Asia Pacific and European regions by adding operations in Singapore and France, respectively. In 2026, we further expanded our North American presence by adding operations in Canada. We have already experienced significant growth with international sales outside of the Americas accounting for 36.8% of our revenue for the six months ended June 30, 2026. We also continue to expand our product offerings to better serve the international market. As of the date of this Quarterly Report on Form 10-Q, we offer text messaging capabilities in more than 20 countries, and we offer our platform in English, French, German, Portuguese, Korean, Spanish, Italian, Dutch, Swedish, Spanish (Mexico), and Polish. We believe that the introduction of additional languages to our platform increases our efficacy and ease of use in other regions. We also currently only bill in U.S. Dollars, and we believe that adding additional currencies to our platform will help us further our international expansion efforts. Investment in Innovation and Product Development Since our inception, we have been focused on product innovation, seeking to create what we believe is the best software solution for our customers. We originally launched our platform with email messaging as our first marketing channel. Since then, we have successfully added other marketing channels, such as text messaging, mobile push, and WhatsApp messaging, and additional use cases, such as Customer Agent, Composer, Marketing Analytics, and Advanced KDP. We have also introduced AI features that provide customers with AI-powered tools to streamline data segmentation, create and orchestrate campaigns, and drive better engagement, including our Composer and Customer Agent offerings as well as our MCP Server capability. Our continued success depends on our ability to sustain product and technology innovation to continue delivering value to our customers. As technology and consumer preferences change, we believe that our ability to drive continuous product innovation will be critical to attract and retain customers and drive revenue growth. Increased Adoption of Our Text Messaging and WhatsApp Messaging Offerings We have seen notable success in the expansion of our platform with our text messaging and WhatsApp messaging offerings. Once customers adopt our text messaging and WhatsApp messaging offerings, they typically grow their usage over time as they gain comfort and confidence in the new channel. Our text messaging and WhatsApp messaging offerings have higher associated communication sending costs, and as the number of text messages and WhatsApp messages sent by our customers increases, we expect our gross margin to decline modestly. Text messaging and WhatsApp messaging are particularly concentrated in the fourth quarter of each year due to the holiday shopping season, and as a result, we expect our gross margin to be most heavily impacted in that quarter. This gross margin impact could be partially offset by gaining further leverage on costs with our increased scale, increased usage of higher margin products by our customers, and ongoing efforts to drive infrastructure efficiency. We believe we will see our overall gross profit dollars increase as customers send more text messages and WhatsApp messages if our text messaging and WhatsApp messaging offerings continue to gain traction. Expansion into New Industry Verticals and Use Cases As more customers use our platform, we are seeing organic growth from customers in other verticals, such as education, events and entertainment, restaurants, and travel, as well as from B2B companies. While we started with consumer engagement as our initial use case in the retail and eCommerce vertical, we see a large opportunity into other products and verticals. Without an active sales motion, we have attracted customers from verticals other than retail and eCommerce, which indicates the strong interest and applicability of our platform to new verticals. We continue to explore ways to serve these new verticals more intentionally. We intend to continue actively investing in addressing new industry verticals and product use cases. 30 Key Performance Metrics Customers. We define a customer as a distinct paid subscription to our platform. A single organization could have multiple discrete contracting divisions or subsidiaries or brands each with paid subscriptions to our platform, which would, in general, constitute multiple distinct customers. In some cases at the customer’s request, we allow subscriptions under the same parent organization to be consolidated into a single paid subscription in which case such consolidated paid subscriptions would constitute a single customer. We measure our total number of customers as a point-in-time calculation measured as of the end of a particular period. Customers do not include persons or entities that use our platform on a free trial basis. Customers Generating Over $50,000 of ARR. We calculate our number of customers generating over $50,000 of ARR (as defined below) as those customers that have an average ARR of greater than $50,000 over the prior twelve months (or the entire duration of the customer’s paying relationship, if it is less than twelve months) as of the date of determination. We believe the number of customers generating over $50,000 of ARR is a key performance metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it is an indicator of our ability to grow the number of customers that are exceeding this ARR threshold, both from our existing customers expanding their usage of our platform and from our sales to larger customers. We believe this is an important indicator of our ability to continue to successfully move up-market. As of June 30, 2026, we had 4,477 customers generating over $50,000 of ARR, compared to 3,291 customers generating over $50,000 of ARR as of June 30, 2025, representing growth of 36% year-over-year. Dollar-Based Net Revenue Retention Rate. We calculate our Dollar-Based Net Revenue Retention rate (“NRR”) by first identifying the cohort of customers as of twelve months prior to the date of determination. We then calculate the Annualized Recurring Revenue (“ARR”) from this customer cohort as of twelve months prior to the date of determination (the “Prior Period ARR”) and the ARR from this customer cohort as of the date of determination (the “Current Period ARR”). ARR, for any date of determination, is the annualized value of existing paid subscriptions, which we calculate by taking the amount of revenue that we expect to receive in the next monthly period for our existing paid subscriptions, assuming no changes to such subscriptions in the next month, as of that date of determination, and multiplying that amount by twelve. Current Period ARR includes any expansion, price increases, and customer subscriptions that are deactivated and subsequently reactivated during the applicable twelve-month period and reflects contraction or attrition over the last twelve months from this customer cohort, but excludes any ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time NRR. We then calculate the weighted average point-in-time NRR as of the last day of each month in the current trailing twelve-month period to arrive at the NRR, with the weightings determined by the total ARR at the end of each period. We believe NRR is a key performance metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents the expansion in usage of our platform by our existing customers, which is an important measure of the health of our business and future growth prospects. We measure Dollar-Based Net Revenue Retention Rate to measure this growth. As of June 30, 2026 and 2025, our NRR was 109% and 108%, respectively. The increase in this metric from June 30, 2025 to June 30, 2026 was largely driven by expansion of existing customer plans and cross-selling additional offerings. Klaviyo Attributed Value. We define Klaviyo Attributed Value (“KAV”) as the amount of revenue our customers generated through orders placed by consumers within a specified period of time after a message is sent using our platform, which in the case of email is five days from when the message is sent, and in the case of text messages and WhatsApp messages is twenty-four hours from when the message is sent. For email, the message also needs to be opened or clicked in order for the transaction to fall within our definition. KAV excludes orders placed with customers that do not opt-in to sharing data on placed orders, orders for which we cannot determine the currency or value, or unusual orders that appear to us to be anomalies. Since our definition of a customer does not include persons or entities that use our platform on a free trial basis, any revenue generated through orders placed with these persons or entities is also excluded from our definition 31 of KAV. We do not net chargebacks or sales refunds from our calculation of KAV. If a customer leaves Klaviyo, we stop counting that customer’s KAV after their last contracted month. We believe KAV serves as a measure of the return-on-investment that we help generate for our customers and illustrates the value our platform can drive to our customers, which we believe enhances our ability to maintain existing customers and attract new customers. We use KAV as an internal estimate to track the value we drive to customers through our platform. KAV is an operational measure, does not represent revenue earned by us, and does not directly correlate to our pricing, revenue, or results of operations. Further, KAV is not a forecast of future revenue, and investors should not place undue reliance on KAV as an indicator of our future or expected results. Seasonality Generally, demand for our services increases during the fourth quarter as our customers run more marketing campaigns and deploy marketing spend as a result of increased consumer spending patterns during the holiday shopping season. This is specifically prominent within the retail and eCommerce sector in which the majority of our customers operate today. Given our revenue model allows our customers to scale usage as needed, our sequential revenue growth has been historically stronger in the fourth quarter of each year compared to the revenue growth we see in other quarters. Our customers utilize the text messaging offering in particular during the holidays; as such, to the extent that the text messaging offering grows in proportion to our other channels, we expect that we would see further seasonality. While our profile-based pricing structure helps reduce the impact of seasonality on our revenue, we believe seasonality may continue to impact our quarterly results. Components of Results of Operations Revenue A significant majority of our revenues are derived from sales of subscriptions, which are comprised of fees paid by customers to access our cloud-based software platform for storing first-party consumer data and using it to create and deliver personalized and targeted consumer experiences across digital channels. A small portion of our revenue is currently derived from professional services. For more information on how we recognize our revenues, see Note 2. Summary of Significant Accounting Policies within the Notes to the Consolidated Financial Statements. Cost of Revenue Our cost of revenue primarily consists of cloud-based infrastructure costs, outbound communication sending costs, employee-related costs including payroll, benefits, bonuses, and stock-based compensation expense related to our customer support team, amortization of capitalized internal-use software development costs, and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. We expect our cost of revenue to increase in dollar amount as we continue to invest in our platform infrastructure and support, acquire new customers, and drive existing customers to expand their usage of our platform. Gross Profit Our gross profit represents revenue, less all cost of revenue. We expect our gross profit to increase over time due to an increase in revenue. We expect our gross margin to decline modestly in the near term as the volume of text messages and WhatsApp messages sent through our platform increases and as our cloud-based infrastructure costs and outbound communication sending costs increase as our customers increase usage of our platform and capabilities. This gross margin impact could be partially offset by gaining further leverage on costs with our increased scale, increased usage of higher margin offerings by our customers, and ongoing efforts to drive infrastructure efficiency. 32 Selling and Marketing Our selling and marketing costs primarily consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation; sales commissions and partnership expenses for revenue sharing agreements, including to Shopify, other commerce platform partners, and agency partners; costs associated with advertising and marketing activities; and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. Sales commissions are considered an incremental cost to obtain contracts with customers and these costs are deferred and amortized over the expected benefit period. On July 28, 2022, we entered into a collaboration agreement and strategic partnership with Shopify pursuant to which we issued warrants to Shopify (the “Shopify Warrants”), in exchange for promotion of our marketing services with customers within the Shopify ecosystem. In accordance with relevant accounting policies, we recognize a prepaid marketing expense in connection with vesting of the Shopify Warrants. This prepaid marketing expense represents the probable future economic benefit being amortized over a seven-year expected benefit period and is recorded based on the fair value of the warrants on the grant date. We expect to continue to make investments in our selling and marketing organization, and expect selling and marketing expense to remain our largest operating expense in dollar amount. Selling and marketing expense may fluctuate from period to period depending on the extent and timing of our marketing initiatives. We expect selling and marketing expense to increase in dollar amount but decrease as a percentage of revenue over the longer term. In the short term, we expect selling and marketing costs to increase as we increase headcount in our go-to-market team, grow into new markets, and pay more in partnership fees to Shopify and other partners as we continue to grow. Research and Development Our research and development costs primarily consist of employee-related costs associated with research and development staff, including payroll, benefits, bonuses, stock-based compensation, and allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. We capitalize a portion of our research and development costs that meet the criteria for capitalization of internal-use software. All other research and development costs are expensed as incurred. We believe continued investment and innovation in our platform, capabilities, and offerings are important for our growth and, as such, expect our research and development costs to continue to increase in dollar amount but remain consistent as a percentage of revenue for the foreseeable future. This percentage may fluctuate from period to period depending on the timing and amount of these expenses. General and Administrative Our general and administrative expenses consist of employee-related costs including payroll, benefits, bonuses, and stock-based compensation in general corporate functions, such as procurement, accounting and finance, tax, legal, project management, and human resources, as well as allocated overhead costs, including rent, facilities, depreciation, and costs related to information technology. Credit card processing fees are also part of general and administrative expenses. We incur expenses as a result of operating as a public company, including expenses to comply with the rules and regulations governing public companies, such as Section 404 of the Sarbanes-Oxley Act, and expenses for legal, audit, insurance, investor relations, and related professional services. Further, we expect an increase in dollar amount of credit card processing fees in line with the expected increase in revenue for the foreseeable future. As a result, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term as we scale our business. This percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses. Interest Income Interest income consists of income and dividends earned from our cash deposits held in interest-bearing accounts and money market funds. 33 Provision for Income Taxes Provision for income taxes consists primarily of income taxes related to U.S. and foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. The Organization for Economic Cooperation and Development (“OECD”) introduced an international tax framework that provides for a global minimum tax of 15% for large multinational companies. The framework and guidance do not have a material impact on our effective rates for income taxes or cash taxes paid, due to the safe harbor relief during the transition period. We continue to closely monitor developments. Segments We operate our business through one reportable segment, as well as one business activity, providing software that brings first-party consumer data together and uses it to create and deliver highly personalized consumer experiences across digital channels. Results of Operations The following tables set forth our results of operations for the fiscal periods presented and express the relationship of certain line items as a percentage of revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 ($ in thousands) Consolidated Statements of Operations Revenue $ 370,576 $ 293,117 $ 728,581 $ 572,944 Cost of revenue(1) 101,474 71,236 190,586 138,936 Gross profit 269,102 221,881 537,995 434,008 Operating expenses: Selling and marketing(1) 139,300 126,632 273,355 250,159 Research and development(1) 91,932 72,459 171,964 141,808 General and administrative(1) 52,833 54,116 105,894 97,117 Total operating expenses 284,065 253,207 551,213 489,084 Operating loss (14,963) (31,326) (13,218) (55,076) Other income: Other expense, net (505) (898) (941) (1,562) Interest income 8,362 9,743 17,773 19,002 Total other income, net 7,857 8,845 16,832 17,440 (Loss) income before income taxes (7,106) (22,481) 3,614 (37,636) Provision for income taxes 1,743 1,800 3,425 734 Net (loss) income $ (8,849) $ (24,281) $ 189 $ (38,370) 34 (1)Includes stock-based compensation expense as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenue $ 2,665 $ 1,955 $ 4,763 $ 3,712 Selling and marketing 13,822 14,329 24,342 26,426 Research and development 19,892 18,643 36,877 34,831 General and administrative 14,968 10,477 27,168 18,762 Stock-based compensation, net of amounts capitalized 51,347 45,404 93,150 83,731 Capitalized stock-based compensation expense 1,093 1,480 1,947 2,587 Total stock-based compensation expense $ 52,440 $ 46,884 $ 95,097 $ 86,318 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue 100.0 % 100.0 % 100.0 % 100.0 % Cost of revenue 27.4 24.3 26.2 24.2 Gross profit 72.6 75.7 73.8 75.8 Operating expenses: Selling and marketing 37.6 43.2 37.5 43.7 Research and development 24.8 24.7 23.6 24.8 General and administrative 14.2 18.5 14.5 17.0 Total operating expenses 76.6 86.4 75.6 85.5 Operating loss (4.0) (10.7) (1.8) (9.7) Other income: Other expense, net (0.1) (0.3) (0.1) (0.3) Interest income 2.2 3.3 2.4 3.3 Total other income, net 2.1 3.0 2.3 3.0 (Loss) income before income taxes (1.9) (7.7) 0.5 (6.7) Provision for income taxes 0.5 0.6 0.5 0.1 Net (loss) income (2.4) % (8.3) % — % (6.8) % 35 Three and Six Months Ended June 30, 2026 Compared to the Three and Six Months Ended June 30, 2025 Revenue - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Revenue $ 370,576 $ 293,117 $ 77,459 26.4 % Revenue for the three months ended June 30, 2026 increased by $77.5 million or 26.4%, to $370.6 million compared to $293.1 million for the three months ended June 30, 2025. The increase was due to new business, including new customers, geographic expansion, expanded usage of our platform, including our text messaging and WhatsApp messaging channels, and new offerings. For the three months ended June 30, 2026, sales to existing customers accounted for approximately 42% of the increase in revenue while approximately 58% of the increase in revenue was related to new customers. Sales to new customers represent the revenue recognized from new customers acquired in the 12 months prior to the period end. Revenue - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Revenue $ 728,581 $ 572,944 $ 155,637 27.2 % Revenue for the six months ended June 30, 2026 increased by $155.6 million or 27.2%, to $728.6 million compared to $572.9 million for the six months ended June 30, 2025. The increase was due to new business, including new customers, geographic expansion, expanded usage of our platform, including our text messaging and WhatsApp messaging channels, and new offerings. For the six months ended June 30, 2026, sales to existing customers accounted for approximately 43% of the increase in revenue while approximately 57% of the increase in revenue was related to new customers. Sales to new customers represent the revenue recognized from new customers acquired in the 12 months prior to the period end. Cost of Revenue - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Cost of revenue $ 101,474 $ 71,236 $ 30,238 42.4 % Cost of revenue for the three months ended June 30, 2026 increased by $30.2 million or 42.4%, to $101.5 million compared to $71.2 million for the three months ended June 30, 2025. This was primarily due to an increase of approximately $14.6 million in outbound communication sending costs on behalf of our customers, driven by increased text message and WhatsApp usage, $8.0 million in cloud-based infrastructure costs, $3.0 million in salaries and related personnel expenses as a result of an increase in salaries, allocatable costs, and increased target bonus percentages for our Company-wide bonus program in 2026, $2.0 million in amortization from capitalized software costs, and $2.0 million in technology expenses. Cost of Revenue - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Cost of revenue $ 190,586 $ 138,936 $ 51,650 37.2 % 36 Cost of revenue for the six months ended June 30, 2026 increased by $51.7 million or 37.2%, to $190.6 million compared to $138.9 million for the six months ended June 30, 2025. This was primarily due to an increase of approximately $26.3 million in outbound communication sending costs on behalf of our customers, driven by increased text message and WhatsApp usage, $10.7 million in cloud-based infrastructure costs, $6.6 million in salaries and related personnel expenses as a result of an increase in salaries, allocatable costs, and increased target bonus percentages for our Company-wide bonus program in 2026, $3.9 million in amortization from capitalized software costs, and $3.3 million in technology expenses. Gross Profit - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Gross profit $ 269,102 $ 221,881 $ 47,221 21.3 % Gross profit for the three months ended June 30, 2026 increased by $47.2 million or 21.3%, to $269.1 million compared to $221.9 million for the three months ended June 30, 2025. This increase was primarily due to revenue growth offset by an increase in cost of revenue due to increased usage. Gross Profit - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Gross profit $ 537,995 $ 434,008 $ 103,987 24.0 % Gross profit for the six months ended June 30, 2026 increased by $104.0 million or 24.0%, to $538.0 million compared to $434.0 million for the six months ended June 30, 2025. This increase was primarily due to revenue growth offset by an increase in cost of revenue due to increased usage. Selling and Marketing - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Selling and marketing $ 139,300 $ 126,632 $ 12,668 10.0 % Selling and marketing expenses for the three months ended June 30, 2026 increased by $12.7 million or 10.0%, to $139.3 million compared to $126.6 million for the three months ended June 30, 2025. This increase was primarily due to an increase of approximately $5.6 million in salaries and related personnel expenses as a result of increased salaries as well as a bonus plan change to increase target bonus percentages, $3.3 million in marketing expenses associated with our advertising campaigns across multiple channels of media, $2.2 million in partnership-related expenses across our ecosystem, and $1.5 million in professional services. Selling and Marketing - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Selling and marketing $ 273,355 $ 250,159 $ 23,196 9.3 % Selling and marketing expenses for the six months ended June 30, 2026 increased by $23.2 million or 9.3%, to $273.4 million compared to $250.2 million for the six months ended June 30, 2025. This increase was primarily due to an increase of approximately $16.0 million in salaries and related personnel expenses as a result of increased salaries as well 37 as a bonus plan change to increase target bonus percentages, $3.9 million in partnership-related expenses across our ecosystem, and $3.1 million in professional services, $1.2 million in marketing expenses associated with our advertising campaigns across multiple channels of media, $1.2 million in technology expenses, partially offset by a decrease of $2.1 million in stock-based compensation driven by forfeitures of unvested equity awards and the completion of vesting of certain equity awards. Research and Development - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Research and development $ 91,932 $ 72,459 $ 19,473 26.9 % Research and development costs for the three months ended June 30, 2026 increased by $19.5 million or 26.9%, to $91.9 million compared to $72.5 million for the three months ended June 30, 2025. This increase was primarily due to an increase of approximately $9.3 million in salaries and related personnel expenses as a result of increased allocatable costs and a bonus plan change to increase target bonus percentages, $8.9 million in technology expenses, and $1.2 million in stock-based compensation due to the vesting of RSUs. Research and Development - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Research and development $ 171,964 $ 141,808 $ 30,156 21.3 % Research and development costs for the six months ended June 30, 2026 increased by $30.2 million or 21.3%, to $172.0 million compared to $141.8 million for the six months ended June 30, 2025. This increase was primarily due to an increase of approximately $14.1 million in salaries and related personnel expenses as a result of increased allocatable costs and a bonus plan change to increase target bonus percentages, $13.8 million in technology expenses, and $2.0 million in stock-based compensation due to the vesting of RSUs. General and Administrative - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) General and administrative $ 52,833 $ 54,116 $ (1,283) (2.4) % General and administrative expenses for the three months ended June 30, 2026 decreased by $1.3 million or 2.4%, to $52.8 million compared to $54.1 million for the three months ended June 30, 2025. This decrease was primarily due to a decrease of $12.8 million in salaries and related personnel expenses as a result of lower payroll taxes from decreased option exercises and decreased allocatable costs, partially offset by an increase of approximately $4.5 million in stock-based compensation from the vesting of RSUs and issuance of PSUs, $2.1 million in technology expenses, $2.1 million in professional services, and $1.9 million in payment processing fees related to increased volume of customer transactions. General and Administrative - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) General and administrative $ 105,894 $ 97,117 $ 8,777 9.0 % 38 General and administrative expenses for the six months ended June 30, 2026 increased by $8.8 million or 9.0%, to $105.9 million compared to $97.1 million for the six months ended June 30, 2025. This increase was primarily due to an increase of approximately $8.4 million in stock-based compensation from the vesting of RSUs and issuance of PSUs, $4.2 million in technology expenses, $4.2 million in professional services, and $3.7 million in payment processing fees related to increased volume of customer transactions, partially offset by a decrease of $11.4 million in salaries and related personnel expenses as a result of lower payroll taxes from decreased option exercises and decreased allocatable costs. Other Expense, Net - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Other expense, net $ (505) $ (898) $ 393 (43.8) % Other expense, net, for the three months ended June 30, 2026 decreased by $0.4 million or 43.8% to $(0.5) million compared to $(0.9) million for the three months ended June 30, 2025. This decrease was primarily due to favorable foreign exchange fluctuations. Other Expense, Net - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Other expense, net $ (941) $ (1,562) $ 621 (39.8) % Other expense, net, for the six months ended June 30, 2026 decreased by $0.6 million or 39.8% to $(0.9) million compared to $(1.6) million for the six months ended June 30, 2025. This decrease was primarily due to favorable foreign exchange fluctuations. Interest Income - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Interest income $ 8,362 $ 9,743 $ (1,381) (14.2) % Interest income for the three months ended June 30, 2026 decreased by an immaterial amount compared to the three months ended June 30, 2025. Interest Income - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Interest income $ 17,773 $ 19,002 $ (1,229) (6.5) % Interest income for the six months ended June 30, 2026 decreased by an immaterial amount compared to the six months ended June 30, 2025. 39 Provision for Income Taxes - Three Month Change Three Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Provision for income taxes $ 1,743 $ 1,800 $ (57) (3.2) % Income tax expense for the three months ended June 30, 2026 decreased by an immaterial amount to $1.7 million compared to $1.8 million for the three months ended June 30, 2025. Provision for Income Taxes - Six Month Change Six Months Ended June 30, 2026 2025 $ Change % Change ($ in thousands) Provision for income taxes $ 3,425 $ 734 $ 2,691 366.6 % Income tax expense for the six months ended June 30, 2026 increased by $2.7 million or 366.6% to $3.4 million compared to $0.7 million for the six months ended June 30, 2025. This was primarily due to an increase in foreign operations. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. In doing so, we review and analyze our primary sources and uses of liquidity, including cash balances on hand and cash flows from operations. Since our inception through June 30, 2026, we have financed our operations primarily through payments received from our customers and sales of equity securities, including the completion of our IPO in September 2023. As of June 30, 2026, our principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $833.4 million, with such amounts held for working capital purposes. Our cash equivalents were comprised of $605.0 million in money market funds. Our primary cash needs are for personnel-related expenses, selling and marketing expenses, third-party cloud infrastructure expenses, and outbound communication sending costs. Based upon our current levels of operations, we believe our operating cash flows provide sufficient liquidity to support liquidity and financing needs for at least the next twelve months. Our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow from operations, and our ability to manage costs and working capital successfully. Additionally, our cash flow generation ability is subject to general economic, financial, competitive, legislative, and regulatory factors, and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. 40 The following table sets forth, for the periods indicated, our working capital: As of, June 30, December 31, 2026 2025 ($ in thousands) Cash $ 832,639 $ 1,064,875 Restricted cash, current(1) 738 738 Accounts receivable, net of allowance for doubtful accounts 79,393 60,714 Deferred contract acquisition costs 37,768 29,634 Prepaid expenses and other current assets 57,869 50,115 Accounts payable 38,502 29,072 Accrued expenses 140,761 125,159 Operating lease liabilities 23,325 24,757 Deferred revenue 119,539 103,245 Total Working Capital $ 686,280 $ 923,843 ______________ (1)Restricted cash related to our required collateral to fund payroll and credit card obligations in our Australia entity. Working capital consists of current assets (including cash, current portion of restricted cash, accounts receivable, current deferred contract acquisition costs, current prepaid expenses and other current assets), less current liabilities (including accounts payable, accrued expenses, current lease liabilities, and current deferred revenue). Statement of Cash Flows The following table sets forth, for the periods indicated, our beginning balance of cash, net cash flows provided by operating, investing and financing activities, and our ending balance of cash. For additional detail, see our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Six Months Ended June 30, 2026 2025 ($ in thousands) Net cash provided by (used in) Operating activities $ 128,157 $ 70,087 Investing activities (26,731) (15,048) Financing activities (333,662) (1,372) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (232,236) $ 53,667 Cash, cash equivalents, and restricted cash, beginning of period 1,065,613 882,587 Cash, cash equivalents, and restricted cash, end of period $ 833,377 $ 936,254 Operating Activities Net cash provided by operating activities of $128.2 million for the six months ended June 30, 2026 was primarily attributable to a net income of $0.2 million adjusted for non-cash charges of $169.0 million and net cash outflows of $41.1 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $93.2 million of stock-based compensation expense, $26.4 million of prepaid marketing expense amortization, $20.4 million of amortization related to deferred contract acquisition costs, $14.3 million of operating lease costs, and $13.6 million of depreciation and amortization expense. Net cash outflows from changes in operating assets and liabilities primarily consisted of a $40.5 million increase in deferred contract acquisition costs related to higher sales commissions resulting from our increased revenues, a $19.7 million increase in accounts receivable due to an increase in customer billings, a $12.7 million decrease in operating lease liabilities due to payments related to our operating lease obligations, and a 41 $6.4 million increase in prepaid expenses and other assets. The cash outflow was offset by cash inflows primarily from a $23.4 million increase in accrued expenses and accounts payable due to timing of payments and a $16.3 million increase in deferred revenue resulting from increased billings for subscriptions. Net cash provided by operating activities of $70.1 million for the six months ended June 30, 2025 was primarily attributable to a net loss of $38.4 million adjusted for non-cash charges of $146.5 million and net cash outflows of $38.0 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $83.7 million of stock-based compensation expense, $26.4 million of prepaid marketing expense amortization, $13.8 million of amortization related to deferred contract acquisition costs, $12.4 million of operating lease costs, $8.7 million of depreciation and amortization expense, and $1.5 million of bad debt expense. Net cash outflows from changes in operating assets and liabilities primarily consisted of a $22.6 million increase in deferred contract acquisition costs related to an increase in sales commissions resulting from the increase in revenues, a $17.3 million increase in accounts receivable due to an increase in customer billings, a $11.3 million decrease in operating lease liabilities due to payments related to our operating lease obligations, a $4.5 million increase in prepaid expenses and other assets, and a $0.3 million decrease in accrued expenses and accounts payable due to timing of payments. The cash outflow was offset by cash inflows primarily from a $18.2 million increase in deferred revenue resulting from increased billings for subscriptions. Investing Activities Net cash used in investing activities of $26.7 million for the six months ended June 30, 2026 consisted primarily of $18.2 million purchases of property and equipment and $8.0 million of capitalized software development costs. Net cash used in investing activities of $15.0 million for the six months ended June 30, 2025 consisted of $10.3 million of capitalized software development costs and $4.7 million purchases of property and equipment. Financing Activities Net cash used in financing activities was $333.7 million for the six months ended June 30, 2026 and primarily consisted of approximately $333.6 million used for payments relating to our share repurchase program, including the accelerated share repurchase, and $4.9 million used for the payment of employee tax obligations related to the net share settlement of stock-based compensation awards upon vesting offset by $4.0 million of proceeds from our employee stock purchase plan and $0.8 million of proceeds from the exercise of stock options. Net cash used in financing activities was $1.4 million for the six months ended June 30, 2025 and primarily consisted of approximately $6.1 million of proceeds from our employee stock purchase plan and $1.5 million of proceeds from the exercise of stock options offset by $8.9 million used for the payment of employee tax obligations related to the net share settlement of stock-based compensation awards upon vesting. Cash Management We manage our operating cash management activities through banking relationships with our domestic and international subsidiaries and all of our cash requirements were serviced by the operating cash flows of our business. We diversify our cash deposits across a variety of well-established financial institutions based on ratings from nationally recognized rating organizations to reduce our exposure to counterparty and concentration risk. We expect a continued increase in our cash balances as our business continues to grow. We expect to continue to diversify our cash management strategy to primarily include money market funds, highly-liquid debt instruments of the U.S. government and its agencies, senior corporate bonds, and commercial paper to reduce our global exposure on banking deposits. Share Repurchase Authorization On March 2, 2026, the Company announced that its Board of Directors authorized a share repurchase program (the “Share Repurchase Program”), pursuant to which the Company may repurchase up to $500.0 million of its issued and outstanding shares of Series A common stock. Repurchases under the Share Repurchase Program may be made from time 42 to time in the open market, through privately negotiated transactions or other means, including pursuant to 10b5-1 plans, or any combination of the foregoing, and in compliance with applicable securities laws and other applicable requirements. As part of the Share Repurchase Program, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party investment bank (the “Dealer”) to repurchase $100.0 million of shares of its Series A common stock. Under the ASR Agreement, on March 3, 2026, the Company paid the Dealer $100.0 million and received an initial delivery of 4,307,869 shares of Series A common stock at a price of $18.87 per share, representing approximately 75% of the total value of shares to be received under the ASR Agreement. On April 10, 2026, as final settlement of the ASR Agreement, the Company received a final delivery of 1,039,238 shares of Series A common stock at a price of $16.40 from the Dealer. The shares received upon initial delivery and final settlement were recorded as treasury stock, resulting in a reduction to stockholders’ equity. The share repurchase pursuant to the ASR Agreement resulted in an estimated excise tax liability of $0.2 million, which was recorded as a cost of the repurchase transaction and reflected as a reduction to stockholders’ equity. In total, the Company repurchased approximately 5,347,107 shares of Series A common stock under the ASR Agreement at a price of $19.14 per share, which represents the volume-weighted average share price of the Company’s Series A common stock during the term less a discount. As of June 30, 2026, pursuant to non-overlapping 10b5-1 plans entered into with third-party investment banks, the Company had repurchased 15,132,757 shares of Series A common stock at a weighted average price of $15.68 per share. The shares repurchased were recorded as treasury stock, resulting in a reduction of stockholders’ equity. As of June 30, 2026, approximately $162.7 million remained available for repurchase under the Share Repurchase Program. Lease Obligations We enter into various noncancellable lease agreements for certain office space and equipment used in the normal course of business. Our noncancellable lease obligations as of June 30, 2026 were $140.0 million, with $23.9 million payable within 12 months. Other Contractual Obligations We enter into various noncancellable agreements with marketing vendors and various service providers. Our noncancellable obligations as of June 30, 2026 were $816.6 million. Critical Accounting Policies and Estimates There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2026 as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 10, 2026. Recent Accounting Pronouncements See Note 2. Summary of Significant Accounting Policies in the notes to our condensed consolidated financial statements included elsewhere in this filing for a discussion about new accounting pronouncements adopted as of the date of this Quarterly Report on Form 10-Q.