- Second quarter revenue of $74.7 million, up
19% year-over-year
- Surpasses $300 million of ARR, delivering 20%
year-over-year growth in the second quarter
- Raises full year 2023 guidance
Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility
management SaaS platform, today reported financial results for the
second quarter ended June 30, 2023.
"In the second quarter, we experienced steady growth, achieving
double digit gains in revenue and paying customers year-over-year.
I am pleased with our results this quarter - reporting revenue
growth of 19%, ARR growth of 20% and customer growth of 14%,” said
Oleg Shchegolev, CEO and Co-Founder of Semrush. “We returned to our
roots, and have a healthy business focused on both growth and
profitability. As a result of our strong execution, improved cost
structure and continued leverage as we scale, we are raising our
full year 2023 guidance.
“Our impressive results are a testament to the value we provide
customers and our strategic positioning. We are continuously
expanding our product offerings, investing in cutting-edge
technology, particularly in Artificial Intelligence (AI), and are
focused on driving new customer growth. I want to thank our growing
customer base for their loyalty and support - our commitment to
help businesses grow online remains unwavering," added Mr.
Shchegolev.
Second Quarter Financial Highlights
- Second quarter revenue of $74.7 million, up 19%
year-over-year.
- ARR of $302.4 million as of June 30, 2023, up 20%
year-over-year.
- Dollar-based net revenue retention of 112% as of June 30, 2023,
compared to 116% in the previous quarter.
- Over 104,000 paying customers as of June 30, 2023, up
approximately 14% from a year ago.
- Net loss of $0.3 million for the second quarter, compared with
a net loss of $8.3 million from a year ago.
- Non-GAAP net income of $3.5 million for the second quarter,
compared with non-GAAP net loss of $6.1 million from a year
ago.
See “Non-GAAP Financial Measures & Definitions of Key
Metrics” below for how Semrush defines ARR, dollar-based net
revenue retention, non-GAAP net income (loss), and the financial
tables that accompany this release for reconciliations of each
non-GAAP financial measure to its closest comparable GAAP financial
measure.
Second Quarter 2023 Business Highlights
We are committed to empowering our customers with the
best-in-class tools and services needed to boost their online
presence and gain an edge in the market. In the second quarter, we
advanced and expanded many of our offerings:
- Continued investments in Generative AI to provide enhanced,
more efficient content creation capabilities through Semrush’s
platform and App Center:
- Launched Accessibility Scan & Monitor, a website
accessibility app that uses AI to identify accessibility compliance
issues – improving usability and removing barriers to entry for
existing and potential customers, regardless of disability
status.
- Introduced Kompyte GPT, cutting-edge tracking technology that
uses AI-driven automation to streamline the creation and
maintenance of Battlecards, providing organizations with a
strategic advantage to competitors.
- Released two new AI-powered features within the SEO Writing
Assistant including the Summarizer and “Compose with AI” functions
that substantially reduce research and writing time for
customers.
- Added “Ask AI” feature to the ContentShake app, enabling
customers to consistently produce high-quality content by entering
a detailed text prompt.
- Semrush customers who pay more than $10,000 annually grew by
more than 34% year-over-year.
- Ended the quarter with more than 951,000 registered free active
customers, up 35% year-over-year.
Business Outlook
“Looking at the second half of 2023, I am confident in the
underlying trends in the business and capabilities of our team to
deliver profitability,” said Brian Mulroy, CFO of Semrush. “We
expect revenue growth to reaccelerate with increasing adoption of
our expanding product portfolio, tools, and add-ons. Importantly,
we are committed to maintaining a disciplined and balanced approach
to optimizing costs and improving efficiency and profitability
while continuing to invest in future growth opportunities that we
expect will drive long-term value.”
Based on information as of today, August 3, 2023, we are issuing
the following financial guidance:
Third Quarter 2023 Financial Outlook
- For the third quarter, we expect revenue in a range of $78.0 to
$79.0 million, which at the mid-point would represent growth of
approximately 19% year-over-year.
- We expect third quarter non-GAAP net income of $3.0 to $4.0
million.
Full-Year 2023 Financial Outlook
- For the full-year, we are raising our prior revenue guidance to
$307.0 to $309.0 million, from $306.0 to $309.0 million, which
would represent growth at the midpoint of approximately 21%
year-over-year.
- We are raising our non-GAAP net income guidance to $2.0 to $4.0
million, up from our prior guidance of breakeven to $3.0 million,
for the full year 2023.
Reconciliation of non-GAAP net income guidance to the most
directly comparable GAAP measure is not available without
unreasonable efforts on a forward-looking basis due to the high
variability, complexity and low visibility with respect to the
charges excluded from this non-GAAP measure, in particular the
measures and effects of share-based compensation expense, employer
taxes and tax deductions specific to equity compensation awards
that are directly impacted by future hiring, turnover and retention
needs. We expect the variability of the above charges to have a
significant, and potentially unpredictable, impact on our future
GAAP financial results.
Governance Update
We are delighted to announce that Mark Vranesh will transition
from Semrush’s Lead Independent Director to serve as Chairperson of
the Board effective as of today. Mark will remain on the Audit
Committee however Anna Baird will Chair the committee effective as
of today. This transition is a result of Mr. Shchegolev’s desire to
focus more on day to day management as our Chief Executive Officer.
Mr Shchegolev will continue to hold a position as a director of the
board.
Mark Vranesh has served as a member of our board of directors
since December 2019 and as an advisor from November 2017 to
December 2019. Ms. Baird has served as a member of our Board since
March 2023.
Conference Call Details
Semrush will host a conference call and webcast to discuss its
financial results, business highlights, outlook and other matters,
the details for which are provided below.
Date: Friday, August 4, 2023 Time: 8:30 a.m. ET Hosts: Oleg
Shchegolev, CEO, Eugene Levin, President, and Brian Mulroy, CFO
Conference ID: 3520221 Participant Toll Free Dial-In Number: 1
(888) 350-3436 Participant International Dial-In Number: 1 (646)
960-0185
Registration: The live webcast of the conference call as well as
the replay can be accessed for a limited time from the Semrush
investor relations website at http://investors.semrush.com/.
About Semrush
Semrush is a leading online visibility management SaaS platform
that enables businesses globally to run search engine optimization,
pay-per-click, content, social media and competitive research
campaigns and get measurable results from online marketing. Semrush
offers insights and solutions for companies to build, manage, and
measure campaigns across various marketing channels. Semrush, with
over 104,000 paying customers, is headquartered in Boston and has
offices in Philadelphia, Trevose, Austin, Dallas, Amsterdam,
Barcelona, Belgrade, Berlin, Limassol, Prague, Warsaw, and
Yerevan.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws, which are statements
that involve substantial risks and uncertainties. Forward-looking
statements generally relate to future events or our future
financial or operating performance. In some cases, you can identify
forward-looking statements because they contain words such as
“may,” “will,” “shall,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans or
intentions. Forward-looking statements include, but are not limited
to, guidance on financial results for the third quarter and full
year of 2023, including revenue and non-GAAP net income; statements
about future operating results, business trends, capability to
deliver profits, cost reduction and structures, product development
and consumer growth.
The forward-looking statements contained in this release are
also subject to other risks and uncertainties, including those more
fully described in our filings with the Securities and Exchange
Commission (“SEC”), including in the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations'' in our filings with the
Securities and Exchange Commission ("SEC"), including our most
recent annual report on form 10-K, and our subsequently filed
quarterly reports and other SEC filings. Although we believe that
our plans, intentions, expectations, strategies and prospects as
reflected in or suggested by those forward-looking statements are
reasonable, we can give no assurance that the plans, intentions,
expectations or strategies will be attained or achieved. The
forward-looking statements in this release are based on information
available to us as of the date hereof, and we disclaim any
obligation to update any forward-looking statements, except as
required by law. These forward-looking statements should not be
relied upon as representing our views as of any date subsequent to
the date of this press release.
Additional information regarding these and other factors that
could affect our results is included in our SEC filings, which may
be obtained by visiting our Investor Relations page on its website
at investors.semrush.com or the SEC's website at www.sec.gov.
Non-GAAP Financial Measure & Definitions of Key
Metrics
Semrush has provided in this release the non-GAAP financial
measure of non-GAAP net income (loss). Semrush uses this non-GAAP
financial measure internally in analyzing its financial results and
believes it is useful to investors, as a supplement to GAAP
measures, in evaluating Semrush’s ongoing operational performance.
Semrush believes that the use of this non-GAAP financial measure
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing its financial
results with other companies in Semrush’s industry, many of which
present similar non-GAAP financial measures to investors.
Non-GAAP financial measures have limitations as an analytical
tool and should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. Investors are encouraged to review the reconciliation of
non-GAAP measures to their most directly comparable GAAP financial
measures. A reconciliation of our non-GAAP financial measures to
their most directly comparable GAAP measures has been provided in
the financial statement tables included below in this press
release.
ARR is defined as of a given date as the monthly
recurring revenue that we expect to contractually receive from all
paid subscription agreements that are actively generating revenue
as of that date multiplied by 12. We include both monthly recurring
paid subscriptions, which renew automatically unless canceled, as
well as the annual recurring paid subscriptions so long as we do
not have any indication that a customer has canceled or intends to
cancel its subscription and we continue to generate revenue from
them.
We updated our definition of ARR as of September 30, 2022. Prior
to September 30, 2022, we defined ARR as the daily revenue of all
paid subscription agreements that were actively generating revenue
as of the last day of the reporting period multiplied by 365,
except that we calculated the ARR from Prowly's customers as the
monthly recurring revenue as of the last month of the reporting
period multiplied by 12. We made this change because it simplifies
the calculation and internal reporting of ARR, eliminates the
impact of the number of days in a given month on ARR, and we
believe the updated definition is a more widely used methodology in
our industry.
Dollar-Based Net Revenue Retention is defined as (a) the
revenue from our customers during the twelve-month period ending
one year prior to such period as the denominator and (b) the
revenue from those same customers during the twelve months ending
as of the end of such period as the numerator. This calculation
excludes revenue from new customers and any non-recurring
revenue.
Non-GAAP net income (loss). We define non-GAAP net income
(loss) as GAAP net income (loss), excluding stock-based
compensation expense. We believe non-GAAP net income (loss)
provides our management and investors consistency and comparability
with our past financial performance and facilitates
period-to-period comparisons of operations, as it eliminates the
effect of stock-based compensation, which is often unrelated to
overall operating performance.
SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
74,693
$
62,610
$
145,563
$
119,738
Cost of revenue
12,972
12,598
25,611
24,185
Gross profit
61,721
50,012
119,952
95,553
Operating expenses
Sales and marketing
30,237
30,894
65,733
56,724
Research and development
14,116
9,671
27,996
17,809
General and administrative
19,388
14,218
38,028
28,381
Exit costs
309
3,485
1,292
3,485
Total operating expenses
64,050
58,268
133,049
106,399
Loss from operations
(2,329
)
(8,256
)
(13,097
)
(10,846
)
Other income, net
2,919
711
4,624
870
Income (loss) before income taxes
590
(7,545
)
(8,473
)
(9,976
)
Provision for income taxes
869
739
1,666
879
Net loss
$
(279
)
$
(8,284
)
$
(10,139
)
$
(10,855
)
Net loss per share attributable to common
stockholders:
Basic and diluted
$
0.00
$
(0.06
)
$
(0.07
)
$
(0.08
)
Weighted-average number of shares of
common stock used in computing net loss per share attributable to
common stockholders:
Basic and diluted
142,239
141,042
141,946
140,921
includes stock-based compensation expense
as follows:
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
Cost of revenue
$
32
$
21
$
49
$
32
Sales and marketing
840
277
1,368
410
Research and development
542
358
885
507
General and administrative
2,351
1,548
4,259
2,187
Total stock-based compensation
$
3,765
$
2,204
$
6,561
$
3,136
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
Reconciliation of Non-GAAP net income
(loss)
Net loss
$
(279
)
$
(8,284
)
$
(10,139
)
$
(10,855
)
Stock-based compensation expense
3,765
2,204
6,561
3,136
Non-GAAP net income (loss)
$
3,486
$
(6,080
)
$
(3,578
)
$
(7,719
)
SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
As of
June 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
24,072
$
79,765
Short-term investments
199,678
157,774
Accounts receivable
4,286
3,559
Deferred contract costs, current
portion
7,404
6,974
Prepaid expenses and other current
assets
16,898
9,307
Total current assets
252,338
257,379
Property and equipment, net
6,534
8,076
Operating lease right-of-use assets
11,188
12,009
Intangible assets, net
12,209
10,286
Goodwill
7,853
6,529
Deferred contract costs, net of current
portion
2,565
2,082
Other long-term assets
1,202
2,329
Total assets
$
293,889
$
298,690
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
10,246
$
15,495
Accrued expenses
16,469
17,847
Deferred revenue
55,937
49,354
Current portion of operating lease
liabilities
3,770
3,694
Other current liabilities
2,411
2,311
Total current liabilities
88,833
88,701
Deferred revenue, net of current
portion
263
122
Deferred tax liability
100
11
Operating lease liabilities, net of
current portion
8,125
8,929
Other long-term liabilities
674
1,023
Total liabilities
97,995
98,786
Commitments and contingencies (Note
16)
Stockholders' equity
Undesignated preferred stock
—
—
Class A common stock
1
—
Class B common stock
—
1
Additional paid-in capital
281,184
274,057
Accumulated other comprehensive loss
(2,204
)
(1,206
)
Accumulated deficit
(83,087
)
(72,948
)
Total stockholders’ equity
195,894
199,904
Total liabilities and stockholders'
equity
$
293,889
$
298,690
SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2023
2022
Operating Activities
Net loss
$
(10,139
)
$
(10,855
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities
Depreciation and amortization expense
3,135
4,221
Amortization of deferred contract
costs
4,855
4,763
Non-cash income on investments
(3,201
)
—
Non-cash lease expense
1,886
—
Stock-based compensation expense
6,561
3,136
Non-cash interest expense
105
53
Change in fair value of convertible debt
securities
(380
)
(1,028
)
Deferred taxes
81
202
Other non-cash items
649
—
Changes in operating assets and
liabilities
Accounts receivable
(422
)
109
Deferred contract costs
(5,768
)
(6,033
)
Prepaid expenses and other current
assets
(5,869
)
(4,874
)
Accounts payable
(5,184
)
(2,714
)
Accrued expenses
(1,390
)
4,818
Other current liabilities
—
1,589
Deferred revenue
6,958
7,240
Other long-term liabilities
—
(38
)
Change in operating lease liability
(1,800
)
—
Net cash (used in) provided by operating
activities
(9,923
)
589
Investing Activities
Purchases of property and equipment
(957
)
(2,798
)
Purchases of short-term investments
(172,687
)
—
Purchases of convertible debt
securities
(323
)
(2,000
)
Capitalization of internal-use software
development costs
(2,630
)
(782
)
Proceeds from sales and maturities of
short-term investments
132,741
—
Cash paid for acquisition of businesses,
net of cash acquired
(1,082
)
(13,993
)
Purchases of other investments
(150
)
—
Net cash used in investing activities
(45,088
)
(19,573
)
Financing Activities
Proceeds from exercise of stock
options
302
1,194
Proceeds from issuance of shares in
connection with Employee Stock Purchase Plan
264
—
Payment of finance leases
(1,209
)
(1,445
)
Net cash used in financing activities
(643
)
(251
)
Effect of exchange rate changes on cash
and cash equivalents
(39
)
(1,513
)
Decrease in cash, cash equivalents and
restricted cash
(55,693
)
(20,748
)
Cash, cash equivalents and restricted
cash, beginning of period
79,765
269,841
Cash, cash equivalents and restricted
cash, end of period
$
24,072
$
249,093
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803168815/en/
INVESTOR Brinlea C. Johnson Managing Director The
Blueshirt Group brinlea@blueshirtgroup.com MEDIA Jesse Platz
VP of Analyst and Public Relations Semrush Holdings, Inc.
jesse.platz@semrush.com
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