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Amanda Whalen

Thanks, Andrew. Klaviyo drove a strong first quarter to kick off 2025 as we continue to deliver efficient growth at scale. Revenue grew 33% year-over-year to $280 million, and we delivered a non-GAAP operating margin of 11.6%. We are really pleased with these results. Our first quarter results were continued proof of the value we deliver to customers and reflect the successful execution of our growth strategy.
We are adding new customers, growing in the mid-market, expanding with existing customers, and expanding internationally. We ended Q1 with more than 169,000 customers, up 16% year-over-year. This was better than our expectations, as our customer retention was stronger than anticipated following the pricing updates we announced during the quarter and remained consistent with prior quarters. In fact, our customer retention rates coming off the holiday season were consistent with the trends we saw in Q1 last year. Our success in attracting larger customers is evident as we ended the quarter with 3,030 customers with over $50,000 in ARR, up 40% year-over-year.
And we now have more than 1,000 customers paying us more than $100,000 in ARR. We continue to see a strong trend of new lands in this cohort, demonstrating the payoff from our investments in the mid-market and above. We delivered a Q1 NRR of 108%, in line with last quarter, driven by consistent gross revenue retention, improvement in e-mail expansion, and, to a lesser extent, benefit from the pricing changes. While we don't forecast or guide to this number, we are pleased with the consistency we're seeing. We are continuing to drive progress in our cross-sell motion, and we're seeing more of our larger customers land on Klaviyo with multiple products.
In Q1, our SMS penetration within SMB and mid-market customers increased again. We saw strong adoption of our marketing analytics application, and we are seeing a lot of interest from customers for our new Customer Hub service offering. As you heard from Andrew, our investments made towards expanding internationally on both the go-to-market and product fronts are delivering returns as our strong international growth continued in the first quarter. EMEA revenue grew 47% year-over-year, and total EMEA and APAC revenue grew 42% year-over-year. Our Q1 revenue overperformance was driven by broad-based strength.
Consistent with our expectations, the pricing updates that went live in February contributed an immaterial amount to first-quarter revenue. We continue to believe that the pricing changes will have a minimal impact on full-year growth rates, and we will only provide further updates if our view changes. Moving on, first quarter non-GAAP gross margin was 77%, down approximately 3 points year-over-year, primarily due to increased infrastructure costs and the continued growth of our SMS product. A portion of the incremental infrastructure costs supported the expansion of important feature capabilities for larger customers and new verticals, and our ongoing commitment to provide infrastructure to serve businesses of all sizes. Turning to non-GAAP operating expenses.
As a reminder, in Q1, we began accruing for our employee cash bonus program on a quarterly basis, resulting in an increase in each line item year-over-year. G&A as a percentage of revenue declined year-over-year as a result of smaller one-time items compared to last year. R&D as a percentage of revenue also declined due to an increase in capitalized software. Sales and marketing as a percentage of revenue increased year-over-year as a result of the timing of marketing program spend and incremental investments for B2C CRM. For the first quarter, our non-GAAP operating income was $32 million, representing a non-GAAP operating margin of 11.6%.
This came in better than our guidance, primarily as a result of the revenue upside we saw in the quarter. We generated free cash flow of $6.6 million during the quarter, which was better than expected due to the higher collections and timing of payments. As a reminder, we paid out our employee cash bonus program in Q1, which impacted free cash flow. Before turning to guidance, let me briefly discuss the macro environment. While potential tariffs and consumer sentiment are top of mind for our customers and for Klaviyo, thus far, we have not seen a material impact on our business.
Klaviyo drives revenue for our customers from their existing consumers, which is typically a highly efficient and profitable growth channel. Should they need to scale back, many customers have told us that retention would be one of the last areas where they would reduce spending. Instead, they would be more likely to pull back on new consumer acquisition costs such as ad spending. Klaviyo's position as a high ROI must-have revenue generator for brands of all sizes gives us greater stability through a range of economic cycles. Our business performed well in Q1 and remains strong.
However, we are also paying close attention to the macro environment and the impact it may have on our business. As a result, our guidance reflects a balance between the strength of our business and the uncertainty of the macro environment. We believe this is a prudent approach as it factors in some potential economic risk. As we look ahead, we remain optimistic about 2025 and beyond. For Q2, we expect revenue of $276 million to $280 million, representing year-over-year growth of 24% to 26%, driven by continued strength upmarket and internationally.
We expect second quarter non-GAAP operating income of $28.5 million to $31.5 million, representing a non-GAAP operating margin of 10% to 11%. For the full year 2025, we are raising revenue guidance to $1.171 billion to $1.179 billion for year-over-year growth of 25% to 26%. We expect non-GAAP operating income of $133 million to $139 million, representing a non-GAAP operating margin of 11% to 12%. In closing, we are off to a strong start this year, and our growth strategy is bearing fruit as we're delivering balanced top and bottom line growth efficiently and at scale. Our position in the market continues to strengthen.
We are the only CRM for consumer brands that can power personalized engagement with our marketing automation, customer service, and marketing analytics application built on top of the Klaviyo data platform. This vertically integrated offering is establishing a foundation of sustainable growth for both Klaviyo and our customers. And with that, I'll open the call up for Q&A. Operator?

Question and Answer Session

Operator

(Operator Instructions) Raimo Lenschow, Barclays.

Raimo Lenschow

Perfect. Congrats from me. A simple question, you addressed it on the call already a little bit. Like if you think about uncertain times, AB and Amanda, what have you seen before like we've just had like 2022, 2023, where it was a little bit more uncertain. Can you compare kind of what you saw there and customer behavior at the moment that you're seeing there?
Congrats from me again.

Andrew Bialecki

Yes. Thanks for the question, Raimo. So the first thing we'll say is we're very happy about the quarter. Thanks to our customers to Klaviyo for making it all possible. And it's because Klaviyo is mission-critical to the businesses that we work with.
We are a revenue engine for these businesses, and we help connect them to their most important asset, which is their customers, their existing customers. So I think when the economic environment is a little more uncertain, as I've talked to customers in the last few weeks, the last few months, they're doubling down on existing consumer relationships. They know there's very high ROI from our products. They're leaned into that. And as the economic cycle kind of waxes and wanes, we built Klaviyo to really be an all-weather company and all-weather set of products.
So when businesses are growing the number of customers, new customers, we can help with acquisition. And on the flip side, when it's more challenging, I think a lot of businesses turn back to focusing on their existing customers and those relationships that they already have, and Klaviyo is the source of truth for all that. So I think we're happy with where we are. Also, as we've talked to our customers, we mentioned in the opening remarks, our customers are cautious, but they're optimistic because of those relationships they have with their customers and their ability to grow off of that. And we've also talked to a lot of businesses, and they're very resilient.
Our customer base is very diverse. There's a variety of folks with different business models, different supply chains. And I think collectively, I think we've been there to support them, and we think that they've been working through this cautiously, but I think they're optimistic about what's ahead. And just to add a couple of points to what AB had to say there.

Amanda Whalen

First, as we shared, we're really pleased with the ongoing strength and resilience that we've seen not only in our business, but in our customers as well. We are closely monitoring the key metrics in our business like customer sales cycle, which remains stable and KAV, which is continuing to grow. And as we think about Klaviyo over multiple economic cycles, it's important to remember that we index to digital relationships, those profiles and relationships that a brand has with their consumers and not to GMV. So our business tends to experience less volatility both in good times and in bad, and that's illustrated recently by the trends that we're seeing of KAV growth outpacing GMV growth as our customers focus on, as AB said, on those loyal existing customer relationships. And then from our business perspective, we are focused on controlling the things that we can control and leaning into the strengths that have long defined Klaviyo.
And this includes, just like A.B. was talking about, staying close to our customers, investing in strategic growth priorities and operating the business prudently, just as we always have.

Operator

Jackson Ader, KeyBanc Capital Markets.

Jackson Ader

First one is, can you just give us a sense for maybe your overall exposure or end customers' exposure to either China or other tariff countries in terms of the goods that they sell on their platform that run through Klaviyo.

Amanda Whalen

Sure. Thanks for the question, Jackson. There are many different ways to be exposed to China, especially with a customer base that's as large and diverse as ours. So it's a bit of a complex situation. But as AB mentioned, we've been having many conversations with our customers over the last month.
As you might imagine, our customer base sells many diverse products. And because of that, their supply chains are very diverse as well. We've heard from many of them that they've been already diversifying their supply chain away from China over the last several quarters as tariff potential started to emerge. And then we've also heard from some brands who have no exposure to China, and they're viewing this point in time as an opportunity where they're thinking about doubling down, acquiring increased inventory and even potentially going on the offensive to win market share. Overall, what they're telling us, as we said earlier, is that they're tentative but they're really optimistic in this dynamic environment.
And from our business perspective, we're very confident that we drive high ROI for our customers, and we're essential for both their growth and their retention, which makes us an incredibly important partner to them in both good and challenging macro times.

Jackson Ader

Okay. Great. That's helpful. And then a quick follow-up. If we think about all the new products that have been launched, whether it's CRM or Customer Hub or certain, what kind of growth or expectation for contribution from those new products are baked into 2025 at this point?

Andrew Bialecki

Yes, I can take that. So the first is we haven't baked in a lot of revenue into our guidance and our projections for this year to give ourselves time to tune those products and make sure we've really got them right for customers before we scale them out. But I'll tell you, since the launch in February, we broadened out Klaviyo's vision from just marketing and e-mail and SMS to well beyond that to say, Hey, what are all the aspects of the customer experience that Klaviyo can help with? And we believe the core three apps for the consumer, the B2C CRM stack are marketing, service and analytics. I can tell you that like we launched the first product within the within our service portfolio, customer hub, and that's been in a beta for the last few months. We've got hundreds of businesses using it.
It's a way to extend onto your website, the customer experience, allow people to log in, get help with past orders, get recommendations, get service, right, get questions answered. And the feedback there has been really strong. And I think most importantly, just like our marketing products, we're able to tie back actual attributed revenue, additional sales that customers are seeing from those consumers, those website visitors that are taking advantage of this new functionality. And that's the tune of I've talked to a couple of brands where it's generating these are small and medium-sized businesses that are generating incremental tens of thousands of dollars in sales. So they can see the ROI from these new products.
And what we're excited about is marketing and service, we think about those as the proactive and reactive sides of the customer experience. We're excited to bring those together and show that service can be more than just answering questions, but can actually drive a better engagement so much that it leads to additional sales. So we're off to a good start there. We're working on pricing and packaging for that, but critically, the feedback has been really strong. And then on the analytics side, we launched a marketing analytics product, SKU in February.
And that was based on talking to customers and realizing that the analytics that Klaviyo was providing as part of our -- formerly our CDP product, it's actually applicable to a lot more businesses that we're excited to use some of our RFM analysis, some of our funnel analysis, to help them figure out which customers were at what stage of the life cycle and connect that directly back into marketing. And again, to drive incremental revenue, right? And that makes the overall ROI of Klaviyo, their investment in Klaviyo higher. We realized that wasn't just something for larger enterprise brands, but actually, our entrepreneurs, our smaller SMBs, our SMBs also benefit from that. So we're very happy with the progress we've made in the sales we've seen for that product in Q1, and we expect that, that's going to be a revenue driver as well.
So we didn't bake a lot of revenue expectation into the year from those new products, but we're excited about the potential they're going to have in 2026 and future years.

Amanda Whalen

And one thing we're particularly excited about with marketing analytics is just as AB said, the power of the results that it drives for our customers. One of my favorite stories from the quarter was Karakara, a growing D2C brand, long-time Klaviyo e-mail customer. They recently consolidated their tech stack onto Klaviyo, adding SMS and marketing analytics because they wanted to get new insight into which messaging was resonating with which customers. And by using this really data-driven multichannel approach, they were able to achieve 170x ROI in just three months and over 48% of their Klaviyo revenue came from repeat purchaser segments who they identified using that RFM modeling in marketing analytics.

Operator

Gabriela Borges, Goldman Sachs.

Gabriela Borges

Amanda, just on Jackson's earlier question, is there a way to think about the relative sizing of those 2 cohorts that you mentioned, the cautiously optimistic diversifying cohort versus the intensive cohort. And as you looked at the second half of the year, you mentioned taking into account macroeconomic risk. Maybe just a little bit on your forecasting approach there. When we calculate the math, it feels like the second half revenue guide is about the same as it was before. So just a little bit on how you thought about that.

Amanda Whalen

Yes. Great question. So as we said, there's an incredible amount of diversity across our customer base. And so therefore, not sizing the specifics. But as you think about the revenue guidance and the outlook that we've built in, we raised the revenue guidance on the back of strong Q1 performance as well as robust customer demand signals that we're seeing.
And these conversations that we're having with our customers indicate that they are very clearly focused on retention and growth with their loyal consumers as well as focused on efficiency, which is exactly where our platform helps them to deliver value. As we looked at the back half of the year, we undertook extensive scenario planning and a deep analysis of our business just given the macro backdrop, and that includes looking closely at trends in operational metrics like customer KAV trends, looking at sales cycle length, all of which have remained consistent through the end of April. Overall, we've got a lot of confidence in the trajectory of the business. And while it remains healthy, we're mindful of the current macro environment. And so we built a healthy dose of prudence into the guidance for the back half of the year that gives us flexibility to adjust for unforeseen risks throughout the year.
So as we look forward, we will continue to monitor the macro environment, and we will remain agile in responding to any changes that we see out there. We are going to plan to continue to invest behind our growth strategy because we've seen great returns from those investments thus far. And we're confident that our platform's value proposition, combined with disciplined approach to execution positions us really well for continued success.

Operator

Parker Lane, Stifel.

Parker Lane

Amanda, maybe just to stay on the same theme of the prudent guidance in light of the uncertainty out there. When you look at things like SMS attach, international traction, messaging volume, are there any particular areas you feel like would be most sensitive or have been accounted for, for greater sensitivity in light of what we're seeing out there?

Amanda Whalen

Yes, it's a great question. In this type of environment where you're seeing lots of uncertainty, we looked at multiple different scenarios, what might happen under multiple different views of the economy, how customers might respond. If anyone has a crystal ball out there, it's fairly challenging to see, but we wanted to make sure that we are prepared for a variety of different scenarios. And so as we've mentioned before, what we've seen in the past in our business is that because we index to digital relationships as opposed to GMV, we tend to have less volatility, both on the upside and the downside. And that gives us some confidence in what we expect to see in the back half of the year.

Andrew Bialecki

And maybe I'll add one other thing. As Amanda talked about the ROI of our products. even with SMS, where there's a slightly higher cost basis to our customers, we're able to show the ROI of SMS campaigns, obviously, as well as e-mail campaigns, all of this marketing directly in Klaviyo. And as long as that ROI continues to be very positive, even if there's a little bit of variance to that, it's so good that we find as I talk to businesses, they're not constraining budgets so long as they're seeing that performance. And that's one of the things that gives us confidence about Klaviyo going forward.
As said, because you're not marketing to customers you don't know and have to acquire, there customers you already know and are getting to come back. And that obviously helps the ROI. It also means that sort of the budget of the marketing you can deploy is already somewhat known. It's already in your Klaviyo account. And I think that also gives us some confidence.

Operator

Brent Bracelinm, Piper Sandler.

Brent Bracelin

I wanted to go back to the new service and analytics products. AB, what's the sweet spot relative to size of customer that is responding most favorably to the new products? And then Amanda, could you maybe frame the potential ARPU uplift as you see some early customers consolidate the tech stacks? Is it a 10%, maybe 20%, more than 20% uplift to ARPU? Just love to hear those 2 things.
Any color there would be helpful.

Andrew Bialecki

Yes. So I'll touch on each of the 2 new product categories. Let's take analytics first. As we mentioned, we actually think that has wide applicability. I mean there's maybe some subset of our smallest entrepreneurs are just starting out.
They don't have enough data mass to use our marketing analytics product. But for the vast majority of Klaviyo customers, we actually think it's a great. It's an easy add-on. It's an easy attach product. So we think that will apply to the vast majority of our customers.
And then for service, it's interesting. Customer Hub, we actually think is applicable to all businesses. It's a way to extend the personalization and use the data that's already in your Klaviyo data platform, a way to use that now extend it onto your website. So that also applies to all market segments. We've designed it's interesting, we started service really focused on, okay, let's work with SMBs and make sure the product market fit is really good there.
I think based on, as Amanda talked about, some of the opportunities that we're seeing in the mid-market and enterprise, that's making us think harder about how we can make sure that our service products scale to the enterprise more quickly. We think there's a moment right now with service where obviously there's a big focus on automation and how to do more with that using AI and obviously, using the Klaviyo data that backs that and combining that with AI is very powerful. So we're really thinking about how we can bring that to a larger swath of our customers faster than just our SMBs. And the last thing I'll say is like the story of, hey, all of the entire consumer experience, you want one brain, one Klaviyo data platform, one data platform that undergirds all that. You want all of the applications that interface with your end consumers, our customers' customers.
You want all that driven from one comprehensive platform. That resonates a ton with SMBs and actually more than we expected. It resonates a lot with enterprise. So we're very much leaning into that opportunity. And yes, I'll let Amanda talk a little bit about some of the ARPU uplift that we're thinking about.

Amanda Whalen

Yes. In terms of the ARPU uplift, service, as AB mentioned, is early days. We are still in beta. So more to come on service and service pricing, both as we approach GA later this year and also as we continue to build out the suite of offerings related to service. Marketing analytics has a nice ARPU uplift associated with it.
It's a portion of e-mail. So it's not necessarily the same ARPU uplift that you would see from a product like SMS. But also one of the wonderful things about both marketing analytics and service is that they are leveraging the same underlying data the same consumer relationships, in other words, largely the same cost structure associated with our e-mail and data platform. They don't necessarily come with the same per message sending cost that a product like SMS does. And therefore, they also come with a nice gross margin profile that's more akin to what we see in our e-mail plus data product.

Operator

Arjun Bhatia, William Blair.

Arjun Bhatia

Perfect. And maybe I'll stick to the same theme. In terms of the new solutions, obviously, a pretty exciting kind of add-on to the core platform here. But when you're thinking about the service solution, maybe, I'm curious, for customers, does it necessitate the replacement of some sort of an incumbent solution? Maybe I'm thinking of like a Zendesk that might be in there?
Or given where you're positioned, can it sit alongside for now? Like how are you thinking about those dynamics? And then similarly, on the go-to-market side, should we expect this to be a little bit more of a higher touch go-to-market motion? Or can you sell these solutions through the low-touch self-serve type of approach as well?

Andrew Bialecki

Yes. Great. Happy to comment on both. So when talking about service, like let's break it into a couple of different products, piece of functionality that we're building into our case service product group. So the Customer Hub that we've released, we actually just think is novel and new.
It's a new experience embedded on a business' website. It makes it easy for consumers to log in to see past purchases, past orders, and then get recommendations. So there's a marketing element to it as well as then ask questions, right, get help. And interestingly, that help could be more service, hey, I have questions about the thing I bought. It can also just be more of a marketing, sales use case of, hey, I'm curious what size should I buy of this thing that I'm interested in.
That we think is totally novel, and that can sit alongside existing service products. The second thing that we're really focused on is this idea of, hey, automating more of those conversations, let's say, right? I think that, as you look at that as a product category, it's obviously been around for a few years, but it's really leveled up because of AI native solutions. And this is where I think with Klaviyo, we're happy if you want to plug into our Customer Hub, if you want to use something you already have adopted our Customer Hub first, that's great. But we think we have the ability because of our ability to build really usable products, really scalable products as well as the fact that we have the source of truth about your customer, and giving that context to our service, kind of AI chat agents that that's going to make our product really compelling.
So in that case, I think there may be a little bit of like running side by side, baking things off. But I think the [indiscernible], Hey, look, if you can consolidate all this together so that there's one consumer experience that stitches that spans marketing, service, helps me know who my customers are with your analytics product, that sounds great. And so I think our customers are looking for this unified set of applications. The second thing around like, hey, is this going to be higher touch or not? For service, I think for our SMB customers, again, we take a lot of pride in the quality of the products we build and how adoptable they are without needing to necessarily talk to somebody on the Klaviyo end.
So I expect a lot of SMBs were designing workflows and patalving such that they can adopt these all on their own. One of the great parts about our Customer Hub project is it's literally after you kind of review the design of it, since it's embedded on your website, it's one click to turn on. It's so fast. It doesn't require any engineering, any coding. It's just easy to turn on right away.
And I think our service agent will be similar. Now we expect, similar with marketing, there will be customers that have more questions that have more complex implementations, data feeds they want to pull in. And we're excited to do that. We obviously, we know how to do that with marketing and all the marketing channels we support, and we'll provide the exact same great experience for those more mid-market enterprise customers or for folks that need it.

Operator

Terrell Tillman, Truist.

Terrell Tillman

So, congrats on the international traction. It's a single question, but multiparter. What are you seeing in terms of the international traction in terms of when you're signing new customers, are they kind of similar personas as how your business has been in the US, and/or are they buying kind of multiple products at one time? And the second part of this is, where are you in, actually, kind of field sales reps or kind of outbound investments versus harvesting those investments?

Andrew Bialecki

Yes, happy to take this one. Yes, Charles, I think that's spot on. Like I think what we found as we've expanded into internationally and especially in Europe, very proud of over 40% growth year-on-year in Europe. Europe is now over 34%, or international now 34% of our total business. Yes, what we're finding is as we've expanded added language capabilities, we've added SMS, we've added support and Klaviyos that speak people's native tongue, lag.
That's made a lot easier to enter some of those large European markets, France, Germany, Spain, all of which we talked about growing at over 100% year-on-year. The persona is pretty similar. It started out largely as SMBs. And so we're very excited about that progress. And actually, we think that if you look at if you kind of compare it to our growth, say, in the US, where we also started with SMBs and then growing into mid-market and now enterprise, I think we have the opportunity to do the exact same thing in Europe, but just on a faster time line.
So we've started this year, we made some decisions to make some investments in local sales teams, and starting to test that. We also launched just last week, the full Klaviyo website and experience in German and Spanish, and Italian, in addition to France, which we launched last year, French. So we think that, that is going to lay the groundwork for more growth there. And I think we'll continue to see that in SMB, and I actually think we'll see that even sort of a faster acceleration into the mid-market than maybe if you look at like Klaviyo's overall growth, where we were same time period here in the US

Operator

Rob Oliver, Baird.

Robert Oliver

I appreciate it. I had 2. AB, for you. I was wondering if you could give us or frame for us a little bit where we are with the Meta and TikTok integrations on the platform. They both seem like potentially meaningful opportunities, particularly as you continue to fill out the product portfolio at the low to mid-range.
And then, Amanda, just a follow-up for you. You had mentioned how you saw better-than-expected retention off of the price increases in the wake of the price increases, clearly very encouraging. I was wondering if you could just comment relative to kind of why you thought that was? And what sort of confidence that gives you guys relative to appetite, not just for additional price increases down the road, but receptivity of additional products from Klaviyo and additional value from Klaviyo?

Andrew Bialecki

So on Meta and TikTok, if you think about Klaviyo marketing, obviously, our primary focus has been on the direct channels between a business and its end customers, consumers. So e-mail, SMS, things where the business has kind of complete control and direct connection. We're obviously putting a lot of product and engineering investment towards continuing to build out other channels there. We've launched for mobile applications, also owned and operated by a business. But now in the last 12 months, we've taken a look at, hey, what are other places, digital places on the Internet that businesses and consumers are meeting.
And obviously, a big part of that is social platforms, Meta, and TikTok. So, a couple of things that we're doing there. What we've launched in the last few months is better, tighter integrations into the ad networks and some of the shopping capabilities of those platforms. So, for example, with Meta, on Instagram shops, you can now take some of the reviews and the content that you're collecting from customers, and you can use that not just as social proof in e-mail, in SMS on your website, you can actually also use that inside of Instagram. So it's deepening the connection between Playiyo and these platforms.
And so that's the way you can look at our reviews, product, functionality, and leveraging those assets beyond just e-mail, SMS, mobile. And for TikTok, that's one where we're excited for every social network, they often have a variety of different ad units. And one of the things that we're excited about is a lot of those advertising networks have a way to not just drive click-through traffic, but actually collect some information about who that end consumer is. So for TikTok, they have lead ad units that allow somebody, rather than just acquiring clicks for traffic, you can actually also acquire some of these names, phone numbers, e-mail address. And obviously, that inside of Klaviyo is very powerful.
It basically gives them a way to collect more subscribers directly from those other platforms. So we're going to continue to invest in these social networks, other major Internet applications. We're doing obviously some work with WhatsApp, building a tighter integration there. So I think, our primary focus is still on these kind of owned and operated channels like e-mail, SMS, mobile, but I think we're going to try to round out our entire marketing portfolio with some of these other channels that we know are important for brands and consumers.

Amanda Whalen

And to your question on pricing, thank you so much. We were very pleased by the higher-than-expected retention rates that we saw following the February pricing changes because it validates the important role that we play as a must-have revenue-driving platform for brands who are serious about their growth and serious about their retention. And the key difference that we saw from pilot into GA was that our team took and applied the learnings from the pilot to get out ahead of and mitigate the churn risks as we moved into GA. We went out and very proactively communicated with customers about the tools and the resources that we had put in place to help them clean up their active profiles, which allows them to more effectively target the right customers and drive high ROI from those highly engaged profiles who remain. And the consistent retention in Q1 shows the stickiness of the platform and the value that customers get from having all of their data on Klaviyo's vertically integrated platform, where they can easily take action and build lasting customer relationships.
And in fact, in some cases, we have already seen customers who left Klaviyo earlier in the year because of profile enforcement coming back to us because of the value and the ease of use of our platform. And to your question on new products and how this fits in as we think about pricing going forward, as we mentioned last quarter, these changes that we made in February are very important because they anchor the pricing and the value of the consumer profile and the power of the data that it contains. There also, if you recall, were some parts of it that reduced pricing friction for our customers. so that Klaviyo can be as easy to buy as we are easy to use. But it's that anchoring on consumer profiles that's really important as we think going forward, because consumer profiles are also the driver of pricing for, for instance, our new marketing analytics.
So having this change, while it provides very little minimal, as we said, uplift to revenue, it's very important strategically because it provides that foundation for growth in the future.

Operator

Elizabeth Porter, Morgan Stanley.

Elizabeth Porter

The commentary on existing customers and Klaviyo being the last thing that they're willing to cut is really encouraging. And I was hoping you just could provide additional color on what you're seeing on more of the new customer top-of-funnel demand side. So could you just talk to what you saw from the gross ads? Is WooCommerce starting to become a bigger contributor to customer acquisition? And just lastly, how top of funnel has trended kind of thus far into Q2?

Andrew Bialecki

Yes. Okay. So what we're seeing on the demand side is on the top of the funnel side. So as Amanda mentioned, look, the fact that we have such great retention, which I think then translates into word of mouth from customers, I mean, that's a key part of how we thought about driving demand. So I'll give you a quick rundown is what we're seeing, a little bit by a different type of customer.
I mentioned for our smallest customers, for just starting out entrepreneurs, as we call them, we're actually seeing quite a bit of strength in that cohort. We think that's a testament to, again, businesses loving Klaviyo. When they spin up a new venture, they're either using Klaviyo because they've used it in the past life or referring it to friends. And that's been something we've really been investing in, and we're very excited to see that kind of continued growth in that smaller SMB segment. In our core SMB segment, we continue to see that those customers are growing with us.
Interestingly, there, like I think we're seeing increasing demand, both internationally. We knew about that, also a little bit more outside of pure retail. other use cases, travel, hospitality, restaurants, et cetera. So that in that core kind of SMB segment, still seeing very good growth there. And then we mentioned in the mid-market and enterprise, Ma already talked about measuring deal cycles.
We're not seeing any real lengthening there. We're very excited about some of the milestones we've hit, having over 1,000 customers now at $100,000 in ARR. We think there's a lot of opportunity there. And I mentioned how sharing our product vision of this B2C CRM and building it all AI-first from the ground up, attached to our Klaviyo data platform. So all of these applications work together, that has gotten a lot of folks' attention in that mid-market and enterprise segment.
And so I think a lot of folks are excited for us to deliver on that, and we do see some good leading indicators in terms of pipeline growth and then obviously, customer additions.

Amanda Whalen

And we're clearly early in Q2, so we're not going to specifically disclose metrics related to April. But I will say that we look at all of our key operational metrics and indicators on a daily basis. And through the end of April, those remained consistent. And we took those trends that we're seeing in the business into account when we were building our outlook, and we have really strong confidence in the Q2 guide.

Operator

DJ Hynes, Canaccord.

David Hynes

On the nice quarter. AB, I was hoping you could talk a little bit about how you're thinking about sequencing or prioritizing investment dollars these days. I feel like from the time of the IPO, you've been very explicit. It's kind of new customer acquisition or new logo adds first, then upmarket, then international. Now the surface area has greatly expanded with all the new product introductions.
Just talk about kind of prioritization of investments these days and where you're focused.

Andrew Bialecki

Sure. Well, in general, we're going to be a very ambitious company. And for us, that means aiming at the biggest opportunities. Where is the place we can drive the most value for customers and not restrict ourselves to just the markets or the products we have today? So let me touch on a couple of things there that I think we're very excited about.
The first is what we're doing around machine learning and artificial intelligence. I've talked in the past about like the fact that we can help businesses use their data to do better personalization and do that automatically. We actually, increasingly over the last few months, think that the opportunity is even larger than we previously thought. I think there's an opportunity to use some of the technology that's come out, the improvements in some of the large language models, to actually help businesses automate more of the content creation, even without personalization and the amount of leveling up that does. We think that a lot of the businesses that work with Klaviyo give them very powerful tools, but they're actually rate-limited by how fast they can dream up and create content.
A lot of those barriers are going away. So that technological lead, plus the fact that we have all of this data to provide as context into that content creation process and that we can measure the results and iterate and help businesses improve, we think there's a massive opportunity there. We think that's both an opportunity to strengthen our product market fit with existing customers, but we also think there are large monetization opportunities because there's incremental value we can provide to businesses. So we're putting a lot of focus on that. We already talked about the mid-market, and now moving into the enterprise.
We think that there are a lot of businesses there, some of which still aren't aware of Klaviyo, that when they find out that Klaviyo exists and that we've built sort of marketing and now other applications with this data-first, AI-first point of view, they're eager to level up. The technologies, the marketing technology from 10 years, 15 years ago, are not state-of-the-art anymore. They're looking for best-in-breed. And we think that we can fill that and do a great job there. So we're putting a lot of effort there.
And then finally, obviously, the B2C CRM, this expansion of new marketing channels, as well as these other applications of service and analytics. I think service is a very interesting use case. We think about marketing as kind of how do you help customers and consumers, remind them what's top of mind in a very personal way. We think the other side of that is like when people need help, how are we doing that in a way that answers your question more quickly? We think that's a huge market and very important.
So all 3 of those, we think, match our criteria of, hey, the market is very large. When we talk to customers, there's a lot of willingness to try. They want to level up what they're doing. They know AI is its new age. And I think we have teams that are very committed, working really hard to build great products and great experiences for all those opportunities.

Operator

And we have time for one more question. Your final question comes from the line of Brett Huff from Stephens.

Congrats on a nice quarter. Digging in a little bit on international, which we've been excited about. How did international perform relative to your expectations vis-Ã -vis what's built in the guidance? And the thrust of the question is trying to understand, as we look at the raised guidance, which is great, how much of that is being buoyed by international, because that seems like it's a net new market you all are going after, right? It's just it's new stuff that maybe has less to do with macro.

Amanda Whalen

Yes. Great question. Thanks so much, Brett. So the international trends that we're seeing are, as you said, incredibly strong. We made investments last year in launching new languages and expanding SMS to multiple markets, and we're seeing those paid off this year.
The fact that I think we're particularly proud of is France, Germany, and Spain, each growing their new business in the quarter by over 100% year-over-year, which was 4 to 10x faster than those markets were growing last year. So it certainly is an important accelerator, and it's an accelerator that we continue to invest behind, making investments like AB spoke about earlier of last year, we launched the product in new languages. This year, we're launching an important part of the customer journey by making local websites in German, Spanish, and Italian. So built into the guidance is an assumption that we're going to continue to see results from those strong investments that we've made. And then also that we will start to see some benefit that comes through later in the year from some of the investments that we're making now in go-to-market and localization of that customer journey, which really helps to build upon the investments that we started last year.

Operator

And this concludes today's conference call. Thank you for your participation. You may now disconnect.