Klaviyo (KVYO) and Soleno Therapeutics (SLNO) Report
Klaviyo (KVYO), one of our marketing technology names, is seeing shares trade down today despite the company beating Q3 expectations and raising guidance. Revenue grew 33.7% to $235.1 million (beating by 3.9%) while EPS grew 62% to $0.15 and beat by $0.04.
Full-year 2024 guidance (only one quarter left) calls for revenue of $923 - $925 million (+32%) vs. prior guide of $910 - $918 million.
On the call management talked about strong growth in the entrepreneur segment, helped by Shopify (SHOP) and digital marketing efforts, good performance in mid-market and enterprise markets, and subdued performance in the more value-oriented small- and mid-sized business (SMB) market. No big surprises there.
Klaviyo’s growth plan is relatively straightforward: expand in the entrepreneur and mid-market enterprise spaces, as well as internationally (41% in Q3), and broaden out the portfolio.
This leaves the middle market (SMB) a bit of a question market. It has been a drag on revenue retention. To be clear, Klaviyo isn’t the only one with SMB weakness, it’s an industry thing. But coupled with a modest beat (even for a company growing north of 30% this matters) and a first glance at 2025 that implies revenue growth slightly below 30%, and you have a stock that’s trading down.
Stepping back, it’s worth considering that (1) Klaviyo is still growing very quickly, (2) the SMB market may well improve, especially under a growth-oriented Trump administration, and (3) marketing technology is an increasingly important piece of the tech stack for anybody selling online (which is everybody).
Taking it all in, I think KVYO is more of a buy than a sell on this downside move. Keeping at buy and will be watching closely. BUY
Soleno Therapeutics (SLNO) gave a business update after the close yesterday that held zero surprises because the only thing that matters now is a thumbs up or down from the FDA regarding Soleno’s drug candidate, DCCR (diazoxide choline), for the treatment of Prader-Willi syndrome (PWS). This is for an extended-release tablet. Recall that the FDA has accepted Soleno’s New Drug Application (NDA) and granted Priority Review, with a Prescription Drug User Fee Act (PDUFA) target action date of December 27. The company continues to plan for a U.S. market launch and is preparing an NDA submission to the European Medicines Agency (EMA) as well. We are up about 30%. Continue to hold as we march toward the PDUFA date, which is now just seven weeks away. HOLD HALF
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