Fourth consecutive quarter of accelerating
revenue growth
Fourth consecutive quarter of positive free
cash flow
Customer base increased by 21%
Similarweb Ltd. (NYSE: SMWB) ("Similarweb" or the "Company"), a
leading digital data and analytics company powering critical
business decisions, today announced financial results for its third
quarter ended September 30, 2024. The Company published a letter to
shareholders from management discussing these results, which can be
accessed at the link:
https://ir.similarweb.com/financials/quarterly-results, located on
the Company's investor relations website.
“Revenue growth in the third quarter accelerated to 18% YoY, the
fourth consecutive quarter of accelerating growth, driven by the
growing demand for our high quality digital data for a broad range
of applications including AI and Large Language Model training,”
stated Or Offer, Co-Founder and CEO of Similarweb. “We increased
our customer base by 21% YoY to more than 5,300 annual customers
and Remaining performance obligations increased by 27% YoY, faster
than customer growth. Our focus on disciplined execution has
resulted in another quarter of profitability and cash generation.”
Offer concluded, “We are just beginning to tap into the vast
potential of our data and the addressable markets we serve.”
Third Quarter 2024 Financial
Highlights
- Total revenue was $64.7 million, an increase of 18% compared to
$54.8 million for the third quarter of 2023.
- GAAP operating loss was $(2.5) million or (4)% of revenue,
compared to $(4.9) million or (9)% of revenue for the third quarter
of 2023.
- GAAP net loss per share was $(0.03), compared to $(0.06) for
the third quarter of 2023.
- Non-GAAP operating profit was $4.4 million or 7% of revenue,
compared to $1.1 million or 2% of revenue for the third quarter of
2023.
- Non-GAAP operating profit per share was $0.05, compared to
$0.01 for the third quarter of 2023.
- Cash and cash equivalents totalled $60.1 million as of
September 30, 2024, compared to $71.7 million as of December 31,
2023.
- Net cash provided by (used in) operating activities was $9.3
million, compared to $(4.8) million for the third quarter of
2023.
- Free cash flow was $8.7 million, compared to $(4.9) million for
the third quarter of 2023.
Recent Business
Highlights
- Grew number of customers to 5,308 as of September 30, 2024, an
increase of 21% compared to September 30, 2023.
- Grew number of customers with ARR of $100,000 or more to 395,
an increase of 11% compared to September 30, 2023.
- Customers with ARR of $100,000 or more contributed 60% of the
total ARR as of September 30, 2024, increased from 55% as of
September 30, 2023.
- Dollar-based net retention rate, or NRR, for customers with ARR
of $100,000 or more was 111% in the third quarter of 2024,
increased from 108% in the third quarter of 2023.
- Overall NRR was 101% in the third quarter of 2024, increased
from 99% in the third quarter of 2023.
- 45% of our overall ARR is contracted under multi-year
subscriptions as of September 30, 2024, increased from 43% as of
September 30, 2023.
- Remaining performance obligations, or RPO, increased 27%
year-over-year, to $212.5 million as of September 30, 2024, as
compared to $167.7 million as of September 30, 2023.
Financial Outlook
"New customer acquisition and improving retention rates
supported the acceleration in revenue growth in the quarter,”
stated Jason Schwartz, Chief Financial Officer of Similarweb. “The
overall NRR increased to 101% and to 111% for customers with more
than $100K of ARR following a series of internal initiatives and
the growing appreciation of the value of our unique digital data."
He further noted, “We achieved a fourth consecutive quarter of
positive free cash flow due to our continued focus on disciplined
execution. Following these results, which exceeded our
expectations, we are raising our revenue outlook for the full year
2024." Schwartz emphasized the company's progress, saying, “We
continue to make significant strides towards our long-term profit
and free cash flow targets.”
- Q4 2024 Guidance
- Total revenue estimated between $64.7 million and $65.7
million, representing approximately 15% growth year over year at
the mid-point of the range.
- Non-GAAP operating profit estimated between $1.5 million and
$2.5 million.
- FY 2024 Guidance
- Total revenue estimated between $249.0 million and $250.0
million.
- Non-GAAP operating profit estimated between $14.0 million and
$15.0 million.
The Company’s fourth quarter and full year 2024 financial
outlook is based upon a number of assumptions that are subject to
change and many of which are outside the Company’s control. Actual
results may vary from these assumptions, and the Company’s
expectations may change. There can be no assurance that the Company
will achieve these results.
The Company does not provide guidance for operating loss, the
most directly comparable GAAP measure to non-GAAP operating loss,
and similarly cannot provide a reconciliation of this measure to
their closest GAAP equivalent without unreasonable effort due to
the unavailability of reliable estimates for certain items. These
items are not within the Company’s control and may vary greatly
between periods and could significantly impact future financial
results.
Conference Call
Information
The financial results and business highlights will be discussed
on a conference call and webcast scheduled at 8:30 a.m. Eastern
Time on Wednesday, November 13, 2024. A live webcast of the call
can be accessed from Similarweb’s Investor Relations website at
https://ir.similarweb.com. An archived webcast of the conference
call will also be made available on the Similarweb website
following the call. The live call may also be accessed via
telephone at (877) 407-0726 toll-free and at +1 (201) 689-7806
internationally.
About Similarweb: Similarweb powers businesses to win
their markets with Digital Data. By providing essential web and app
data, analytics, and insights, we empower our users to discover
business opportunities, identify competitive threats, optimize
strategy, acquire the right customers, and increase monetization.
Similarweb products are integrated into users’ workflow, powered by
advanced technology, and based on leading comprehensive Digital
Data.
Learn more: Similarweb | Similarweb Digital Data Free Tools:
Analyze any website or app | Verify your website | Browser
extension Follow us: Blog | LinkedIn | YouTube | Instagram | X
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements relating to
our guidance for the fourth quarter and full year of 2024 described
under "Financial Outlook". Forward-looking statements include all
statements that are not historical facts. Such statements may be
preceded by the words “intends,” “may,” “will,” “plans,” “expects,”
“anticipates,” “projects,” “predicts,” “estimates,” “aims,”
“believes,” “hopes,” “potential” or similar words. These
forward-looking statements reflect our current views regarding our
intentions, products, services, plans, expectations, strategies and
prospects, which are based on information currently available to us
and assumptions we have made. Actual results may differ materially
from those described in such forward-looking statements and are
subject to a number of known and unknown risks, uncertainties,
other factors and assumptions that are beyond our control. Such
risks and uncertainties include, without limitation, risks and
uncertainties associated with: (i) our expectations regarding our
revenue, expenses and other operating results; (ii) our ability to
acquire new customers and successfully retain existing customers;
(iii) our ability to increase usage of our solutions and upsell and
cross-sell additional solutions; (iv) our ability to achieve or
sustain profitability; (v) anticipated trends, growth rates, rising
interest rates, rising global inflation and current macroeconomic
conditions, challenges in our business and in the markets in which
we operate, and the impact of Israel's war with Hamas and other
terrorist organizations and hostilities with Iran or Lebanon on
geopolitical and macroeconomic conditions or on our company and
business; (vi) future investments in our business, our anticipated
capital expenditures and our estimates regarding our capital
requirements; (vii) the costs and success of our sales and
marketing efforts and our ability to promote our brand; (viii) our
reliance on key personnel and our ability to identify, recruit and
retain skilled personnel; (ix) our ability to effectively manage
our growth, including continued international expansion; (x) our
reliance on certain third party platforms and sources for the
collection of data necessary for our solutions; (xi) our ability to
protect our intellectual property rights and any costs associated
therewith; (xii) our ability to identify and complete acquisitions
that complement and expand our reach and platform; (xiii) our
ability to comply or remain in compliance with laws and regulations
that currently apply or become applicable to our business,
including in Israel, the United States, the European Union, the
United Kingdom and other jurisdictions where we elect to do
business; (xiv) our ability to compete effectively with existing
competitors and new market entrants; and (xv) the growth rates of
the markets in which we compete.
These risks and uncertainties are more fully described in our
filings with the Securities and Exchange Commission, including in
the section entitled “Risk Factors” in our Form 20-F filed with the
Securities and Exchange Commission on February 28, 2024, and
subsequent reports that we file with the Securities and Exchange
Commission. Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not
possible for our management to predict all risks, nor can we assess
the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements we may make. In light of these risks, uncertainties and
assumptions, we cannot guarantee future results, levels of
activity, performance, achievements, or events and circumstances
reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions
only as of the date of this press release. Except as required by
law, we undertake no duty to update any forward-looking statements
contained in this release as a result of new information, future
events, changes in expectations or otherwise.
Non-GAAP Financial Measures
This press release contains certain financial measures that are
expressed on a non-GAAP basis. We use these non-GAAP financial
measures internally to facilitate analysis of our financial and
business trends and for internal planning and forecasting purposes.
We believe these non-GAAP financial measures, when taken
collectively, may be helpful to investors because they provide
consistency and comparability with past financial performance by
excluding certain items that may not be indicative of our business,
results of operations, or outlook. However, non-GAAP financial
measures have limitations as an analytical tool and are presented
for supplemental informational purposes only. They should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. Free cash flow
represents net cash provided by (used in) operating activities less
capital expenditures and capitalized internal-use software costs.
Normalized free cash flow represents free cash flow less capital
investments related to the Company's new headquarters, payments
received in connection with these capital investments and deferred
payments related to business combinations. Non-GAAP operating
income (loss), non-GAAP gross profit, non-GAAP gross margin,
non-GAAP operating margin, non-GAAP research and development
expenses, non-GAAP sales and marketing expenses and non-GAAP
general and administrative expenses represent the comparable GAAP
financial figure operating income (loss) or expense, less
share-based compensation, adjustments and payments related to
business combinations, amortization of intangible assets and
certain other non-recurring items, as applicable and indicated in
the below tables.
Other Metrics
Customer acquisition costs (CAC) represent the portion of sales
and marketing expenses allocated to acquire new customers. Customer
retention costs (CRC) represent the portion of sales and marketing
expenses allocated to retain existing customers and to increase
existing customers’ subscriptions. Annual recurring revenue (ARR)
represents the annualized subscription revenue we would
contractually expect to receive from customers assuming no
increases or reductions in their subscriptions. CAC payback period
is the estimated time in months to recover CAC in terms of
incremental gross profit that newly acquired customers generate.
Net retention rate (NRR) represents the comparison of our ARR from
the same set of customers as of a certain point in time, relative
to the same point in time in the previous year ago period,
expressed as a percentage.
Similarweb Ltd.
Consolidated Balance Sheets
U.S. dollars in thousands (except
share and per share data)
December 31,
September 30,
2023
2024
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
71,732
$
60,131
Restricted deposits
10,020
10,434
Accounts receivable, net
47,869
35,486
Deferred contract costs
11,165
10,570
Prepaid expenses and other current
assets
5,599
5,682
Total current assets
146,385
122,303
Property and equipment, net
28,630
26,449
Deferred contract costs, non-current
9,845
8,853
Operating lease right-of-use assets
36,007
35,945
Goodwill and Intangible assets, net
17,652
32,439
Other non-current assets
494
411
Total assets
$
239,013
$
226,400
Liabilities and shareholders'
equity
Current liabilities:
Borrowings under Credit Facility
$
25,000
$
—
Accounts payable
8,422
10,956
Payroll and benefit related
liabilities
20,437
18,352
Deferred revenue
99,968
98,557
Other payables and accrued expenses
23,263
26,247
Operating lease liabilities
7,095
8,510
Total current liabilities
184,185
162,622
Deferred revenue, non-current
878
624
Operating lease liabilities,
non-current
35,329
32,549
Other long-term liabilities
3,074
4,424
Total liabilities
223,466
200,219
Shareholders' equity
Ordinary Shares, NIS 0.01 par value
500,000,000 shares authorized as of December 31, 2023 and September
30, 2024 (unaudited), 78,653,046 and 81,665,784 shares issued as of
December 31, 2023 and September 30, 2024 (unaudited), 78,650,878
and 81,663,616 outstanding as of December 31, 2023 and September
30, 2024 (unaudited), respectively;
216
224
Additional paid-in capital
367,558
384,978
Accumulated other comprehensive income
872
115
Accumulated deficit
(353,099
)
(359,136
)
Total shareholders' equity
15,547
26,181
Total liabilities and shareholders'
equity
$
239,013
$
226,400
Similarweb Ltd.
Consolidated Statements of Comprehensive Income
(Loss)
U.S. dollars in thousands (except
share and per share data)
Nine Months Ended September
30,
Three Months Ended September
30,
2023
2024
2023
2024
(Unaudited)
(Unaudited)
Revenue
$
161,264
$
184,326
$
54,833
$
64,707
Cost of revenue
35,231
39,483
10,580
14,243
Gross profit
126,033
144,843
44,253
50,464
Operating expenses:
Research and development
42,452
40,238
14,199
14,460
Sales and marketing
79,362
77,903
24,274
26,806
General and administrative
31,941
32,806
10,665
11,665
Total operating expenses
153,755
150,947
49,138
52,931
Loss from operations
(27,722
)
(6,104
)
(4,885
)
(2,467
)
Finance income (expenses), net
3,026
1,235
1,061
(43
)
Loss before income taxes
(24,696
)
(4,869
)
(3,824
)
(2,510
)
Provision for income taxes
1,269
1,168
1,014
56
Net loss
$
(25,965
)
$
(6,037
)
$
(4,838
)
$
(2,566
)
Net loss per share attributable to
ordinary shareholders, basic and diluted
$
(0.33
)
$
(0.08
)
$
(0.06
)
$
(0.03
)
Weighted-average shares used in computing
net loss per share attributable to ordinary shareholders, basic and
diluted
77,521,361
80,404,216
78,121,824
81,279,239
Net loss
$
(25,965
)
$
(6,037
)
$
(4,838
)
$
(2,566
)
Other comprehensive (loss) income, net
of tax
Change in unrealized (loss) gain on
cashflow hedges
(365
)
(757
)
(133
)
123
Total other comprehensive (loss) income,
net of tax
(365
)
(757
)
(133
)
123
Total comprehensive loss
$
(26,330
)
$
(6,794
)
$
(4,971
)
$
(2,443
)
Share-based compensation costs
included above:
U.S. dollars in thousands
Nine Months Ended September
30,
Three months Ended September
30,
2023
2024
2023
2024
(Unaudited)
(Unaudited)
Cost of revenue
$
482
$
578
$
155
$
190
Research and development
4,303
4,181
1,453
1,378
Sales and marketing
4,051
3,101
1,321
1,109
General and administrative
4,849
5,232
1,658
1,830
Total
$
13,685
$
13,092
$
4,587
$
4,507
Similarweb Ltd.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
Nine Months Ended September
30,
Three Months Ended September
30,
2023
2024
2023
2024
(Unaudited)
(Unaudited)
Cash flows from operating
activities:
Net loss
$
(25,965
)
$
(6,037
)
$
(4,838
)
$
(2,566
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
7,688
8,012
2,576
2,873
Finance expense (income)
1,752
(211
)
883
(677
)
Unrealized loss (gain) from hedging future
transactions
26
41
22
(19
)
Share-based compensation
13,685
13,092
4,587
4,507
Gain from sale of equipment
(1
)
(10
)
(2
)
(3
)
Changes in operating assets and
liabilities:
Change in operating lease right-of-use
assets and liabilities, net
(3,938
)
(1,304
)
(1,523
)
1,209
Decrease (increase) in accounts
receivable, net
3,421
13,361
(2,212
)
3,742
Decrease in deferred contract costs
3,594
1,588
1,004
1,005
(Increase) decrease in other current
assets
(1,587
)
(754
)
(707
)
2,163
Decrease (increase) in other non-current
assets
408
83
(9
)
36
Increase in accounts payable
4,309
2,284
3,966
5,542
Decrease in deferred revenue
(3,957
)
(3,792
)
(6,898
)
(11,108
)
(Decrease) increase in other non-current
liabilities
(155
)
355
164
(265
)
(Decrease) increase in other liabilities
and accrued expenses
(6,051
)
48
(1,805
)
2,905
Net cash (used in) provided by operating
activities
(6,771
)
26,756
(4,792
)
9,344
Cash flows from investing
activities:
Purchase of property and equipment,
net
(1,377
)
(1,198
)
(62
)
(290
)
Capitalized internal-use software
costs
(788
)
(793
)
(81
)
(324
)
Increase in restricted deposits
(132
)
(414
)
(45
)
(125
)
Payment for business combinations, net of
cash acquired
—
(15,442
)
—
(11,609
)
Net cash used in investing activities
(2,297
)
(17,847
)
(188
)
(12,348
)
Cash flows from financing
activities:
Proceeds from exercise of stock
options
2,125
3,724
295
667
Proceeds from employee share purchase
plan
660
555
—
—
Repayment of Credit Facility
—
(25,000
)
—
—
Payments of contingent consideration,
net
(2,363
)
—
—
—
Net cash provided by (used in) financing
activities
422
(20,721
)
295
667
Effect of exchange rates on cash and cash
equivalents
(1,752
)
211
(883
)
677
Net decrease in cash and cash
equivalents
(10,398
)
(11,601
)
(5,568
)
(1,660
)
Cash and cash equivalents, beginning of
period
77,810
71,732
72,980
61,791
Cash and cash equivalents, end of
period
$
67,412
$
60,131
$
67,412
$
60,131
Supplemental disclosure of cash flow
information:
Interest received, net
$
(89
)
$
(848
)
$
(49
)
$
(291
)
Taxes paid
$
1,857
$
1,151
$
244
$
303
Supplemental disclosure of non-cash
financing activities:
Additions to operating lease right-of-use
assets and liabilities
$
1,048
$
6,064
$
268
$
1,611
Share-based compensation included in
capitalized internal-use software
$
36
$
62
$
3
$
29
Deferred proceeds from exercise of share
options included in other current assets
$
54
$
5
$
12
$
5
Deferred costs of property and equipment
incurred during the period included in accounts payable
$
63
$
92
$
22
$
92
Deferred payments in relation to business
combinations held in escrow
$
1,269
$
—
$
—
$
—
Schedule A: Business
combinations
Working capital (deficit), net (excluding
cash and cash equivalents)
—
(217
)
Property, plant and equipment
—
18
Goodwill and other intangible assets
—
4,684
Deferred taxes, net
—
(152
)
$
—
$
4,333
Less non-cash:
Deferred cash payments
$
—
$
(500
)
Total
$
—
$
3,833
Schedule B: Business
combinations
Working capital (deficit), net (excluding
cash and cash equivalents)
—
(1,474
)
Goodwill and other intangible assets
—
13,926
Deferred taxes, net
—
(843
)
$
—
$
11,609
Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measures
Reconciliation of GAAP gross
profit to non-GAAP gross profit
Nine Months Ended September
30,
Three months Ended September
30,
2023
2024
2023
2024
(In thousands)
(In thousands)
GAAP gross profit
$
126,033
$
144,843
$
44,253
$
50,464
Add:
Share-based compensation expenses
482
578
155
190
Retention payments related to business
combinations
306
44
—
19
Amortization of intangible assets related
to business combinations
3,504
3,376
1,169
1,152
Non-GAAP gross profit
$
130,325
$
148,841
$
45,577
$
51,825
Non-GAAP gross margin
81
%
81
%
83
%
80
%
Reconciliation of Loss from
operations (GAAP) to Non-GAAP operating (loss) income
Nine Months Ended September
30,
Three months Ended September
30,
2023
2024
2023
2024
(In thousands)
(In thousands)
Loss from operations
$
(27,722
)
$
(6,104
)
$
(4,885
)
$
(2,467
)
Add:
Share-based compensation expenses
13,685
13,092
4,587
4,507
Retention payments related to business
combinations
851
1,347
164
528
Amortization of intangible assets related
to business combinations
3,605
3,795
1,202
1,448
Non-recurring expenses related to
termination of lease agreement and others
17
—
4
—
Secondary offering costs
—
350
—
350
Non-GAAP operating (loss)
income
$
(9,564
)
$
12,480
$
1,072
$
4,366
Non-GAAP operating margin
(6
)%
7
%
2
%
7
%
Reconciliation of GAAP
operating expenses to non-GAAP operating expenses
Nine Months Ended September
30,
Three months Ended September
30,
2023
2024
2023
2024
(In thousands)
(In thousands)
GAAP research and development
$
42,452
$
40,238
$
14,199
$
14,460
Less:
Share-based compensation expenses
4,303
4,181
1,453
1,378
Retention payments related to business
combinations
—
27
—
11
Non-GAAP research and
development
$
38,149
$
36,030
$
12,746
$
13,071
Non-GAAP research and development
margin
24
%
20
%
23
%
20
%
GAAP sales and marketing
$
79,362
$
77,903
$
24,274
$
26,806
Less:
Share-based compensation expenses
4,051
3,101
1,321
1,109
Retention payments related to business
combinations
545
1,276
164
498
Amortization of intangible assets related
to business combinations
101
419
33
296
Non-recurring expenses related to
termination of lease agreement and others
17
—
4
—
Non-GAAP sales and marketing
$
74,648
$
73,107
$
22,752
$
24,903
Non-GAAP sales and marketing
margin
46
%
40
%
41
%
38
%
GAAP general and administrative
$
31,941
$
32,806
$
10,665
$
11,665
Less:
Share-based compensation expenses
4,849
5,232
1,658
1,830
Secondary offering costs
—
350
—
350
Non-GAAP general and
administrative
$
27,092
$
27,224
$
9,007
$
9,485
Non-GAAP general and administrative
margin
17
%
15
%
16
%
15
%
Reconciliation of Net cash
(used in) provided by operating activities (GAAP) to Free cash flow
and Normalized free cash flow
Nine Months Ended September
30,
Three months Ended September
30,
2023
2024
2023
2024
(In thousands)
(In thousands)
Net cash (used in) provided by operating
activities
$
(6,771
)
$
26,756
$
(4,792
)
$
9,344
Purchases of property and equipment,
net
(1,377
)
(1,198
)
(62
)
(290
)
Capitalized internal use software
costs
(788
)
(793
)
(81
)
(324
)
Free cash flow
$
(8,936
)
$
24,765
$
(4,935
)
$
8,730
Purchases of property and equipment
related to the new headquarters
1,127
—
27
—
Payments received from escrow in relation
to contingent consideration
(380
)
—
—
—
Deferred payments in relation to business
combinations
260
265
260
265
Normalized free cash flow
$
(7,929
)
$
25,030
$
(4,648
)
$
8,995
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241112608865/en/
Press Contact: David Carr
Similarweb press@similarweb.com
Investor Contact: Rami
Myerson Similarweb rami.myerson@similarweb.com
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