diff --git a/libs/server-sdk/src/client_impl.cpp b/libs/server-sdk/src/client_impl.cpp
index 0c53440d7..64d9f17b3 100644
--- a/libs/server-sdk/src/client_impl.cpp
+++ b/libs/server-sdk/src/client_impl.cpp
@@ -186,11 +186,19 @@ AllFlagsState ClientImpl::AllFlagsState(Context const& context,
     std::unordered_map<Client::FlagKey, Value> result;
 
     if (!Initialized()) {
-        LD_LOG(logger_, LogLevel::kWarn)
-            << "AllFlagsState() called before client has finished "
-               "initializing. Data source not available. Returning empty state";
+        if (data_system_->CanEvaluateWhenNotInitialized()) {
+            LD_LOG(logger_, LogLevel::kWarn)
+                << "AllFlagsState() called before LaunchDarkly client "
+                   "initialization completed; using last known values "
+                   "from data store";
+        } else {
+            LD_LOG(logger_, LogLevel::kWarn)
+                << "AllFlagsState() called before client has finished "
+                   "initializing. Data source not available. Returning "
+                   "empty state";
 
-        return {};
+            return {};
+        }
     }
 
     AllFlagsStateBuilder builder{options};
@@ -418,7 +426,16 @@ EvaluationDetail<Value> ClientImpl::VariationInternal(
 std::optional<enum EvaluationReason::ErrorKind> ClientImpl::PreEvaluationChecks(
     Context const& context) const {
     if (!Initialized()) {
-        return EvaluationReason::ErrorKind::kClientNotReady;
+        if (data_system_->CanEvaluateWhenNotInitialized()) {
+            LD_LOG(logger_, LogLevel::kWarn)
+                << "Evaluation called before LaunchDarkly client "
+                   "initialization completed; using last known values "
+                   "from data store. The $inited key was not found in "
+                   "the store; typically a Relay Proxy or other SDK "
+                   "should set this key.";
+        } else {
+            return EvaluationReason::ErrorKind::kClientNotReady;
+        }
     }
     if (!context.Valid()) {
         return EvaluationReason::ErrorKind::kUserNotSpecified;
diff --git a/libs/server-sdk/src/data_interfaces/system/idata_system.hpp b/libs/server-sdk/src/data_interfaces/system/idata_system.hpp
index 0edf778db..73b1eefef 100644
--- a/libs/server-sdk/src/data_interfaces/system/idata_system.hpp
+++ b/libs/server-sdk/src/data_interfaces/system/idata_system.hpp
@@ -21,6 +21,22 @@ class IDataSystem : public IStore {
      */
     virtual void Initialize() = 0;
 
+    /**
+     * @brief Returns true if the data system is capable of serving
+     * flag evaluations even when Initialized() returns false.
+     *
+     * This is the case for Lazy Load (daemon mode), where data can be
+     * fetched on-demand from the persistent store regardless of whether
+     * the $inited key has been set. In contrast, Background Sync
+     * cannot serve evaluations until initial data is received.
+     *
+     * When this returns true, the evaluation path should log a warning
+     * (rather than returning CLIENT_NOT_READY) if Initialized() is false.
+     */
+    [[nodiscard]] virtual bool CanEvaluateWhenNotInitialized() const {
+        return false;
+    }
+
     virtual ~IDataSystem() override = default;
     IDataSystem(IDataSystem const& item) = delete;
     IDataSystem(IDataSystem&& item) = delete;
diff --git a/libs/server-sdk/src/data_systems/lazy_load/lazy_load_system.hpp b/libs/server-sdk/src/data_systems/lazy_load/lazy_load_system.hpp
index 9584f60d6..f1730fafa 100644
--- a/libs/server-sdk/src/data_systems/lazy_load/lazy_load_system.hpp
+++ b/libs/server-sdk/src/data_systems/lazy_load/lazy_load_system.hpp
@@ -58,6 +58,10 @@ class LazyLoad final : public data_interfaces::IDataSystem {
 
     bool Initialized() const override;
 
+    [[nodiscard]] bool CanEvaluateWhenNotInitialized() const override {
+        return true;
+    }
+
     // Public for usage in tests.
     struct Kinds {
         static integrations::FlagKind const Flag;
diff --git a/libs/server-sdk/tests/lazy_load_system_test.cpp b/libs/server-sdk/tests/lazy_load_system_test.cpp
index f908a8ac8..c2b99bd45 100644
--- a/libs/server-sdk/tests/lazy_load_system_test.cpp
+++ b/libs/server-sdk/tests/lazy_load_system_test.cpp
@@ -338,3 +338,15 @@ TEST_F(LazyLoadTest, InitializeCalledAgainAfterTTL) {
         ASSERT_TRUE(lazy_load.Initialized());
     }
 }
+
+TEST_F(LazyLoadTest, CanEvaluateWhenNotInitialized) {
+    built::LazyLoadConfig const config{
+        built::LazyLoadConfig::EvictionPolicy::Disabled,
+        std::chrono::seconds(10), mock_reader};
+
+    data_systems::LazyLoad const lazy_load(logger, config, status_manager);
+
+    // LazyLoad can always serve evaluations on demand, even if not
+    // initialized (i.e. $inited key not found in store).
+    ASSERT_TRUE(lazy_load.CanEvaluateWhenNotInitialized());
+}