Klaviyo, Inc. (KVYO) Cash Flow Statement

The gap between net income and operating cash flow appears driven primarily by non-cash items, with stock-based compensation of $42.1M in the quarter accounting for a large share of the difference. Because net income is near breakeven, the ratio itself is distorted, and the more informative read is that cash generation has been positive across most recent quarters while GAAP earnings have oscillated around zero. Investors should monitor whether the SBC add-back continues to account for the bulk of the cash-to-earnings gap, since that reliance would make the cash profile more dependent on equity compensation than on operating economics.

The swing in FCF margin appears largely explained by working capital timing, which moved from a $41.9M drag in Q1 2025 to a $15.9M contribution in Q4 2025 and a $35.8M drag in Q3 2026. Underlying operating cash generation looks more stable than the headline FCF margin, which suggests the reported volatility may be partly seasonal and partly timing-related rather than a structural deterioration. The trajectory warrants continued observation, as the recent Q3 2026 margin of 10.4% sits below the prior-year Q4 peak even though revenue has grown.

CapEx of $12.6M in Q3 2026 against D&A of $12.7M implies that reinvestment roughly matches depreciation, consistent with maintaining the existing asset base rather than expanding it materially. The step-up in capital intensity during 2026 may reflect infrastructure or capitalized development spending, though the data does not disclose its composition, so the intent cannot be confirmed from these figures. Investors should watch whether capex remains near depreciation levels or continues to rise, as sustained growth in capex would reduce the cash conversion advantage of the software model.

Combined buybacks of $384.5M across the two most recent quarters exceed the free cash flow generated in the same period, suggesting the company is returning capital in excess of its internal cash generation and potentially drawing down its existing cash balance. Reported figures do not reveal the funding source or the remaining authorization, so the sustainability of this pace cannot be assessed from the data provided. Investors should monitor whether repurchases continue at this level relative to free cash flow, since a persistent gap would indicate that capital returns are not being funded organically.