- Second quarter revenue of $91.0 million, up 22%
year-over-year
- ARR of $377.7 million, up 25% year-over-year
- Second quarter net cash provided by operating activities of
$12.1 million
- Raises full year 2024 revenue guidance
- Company announces Analyst Day on October 1st, 2024
Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility
management SaaS platform, today reported financial results for the
second quarter ended June 30, 2024.
“We delivered a strong second quarter, exceeding our guidance
and positioning us to raise our full year 2024 revenue guidance.
Revenue increased 22% year-over-year and ARR grew 25%
year-over-year as we focused on continuing to grow our core
business, upselling and cross selling our offerings, and expanding
our platform. We are also confident in our ability to continue
growing and scaling our business as demonstrated by increasing
average ARR per customer year-over-year. Notably, our Enterprise
SEO product is gaining traction in the market with new deals such
as Digital Ocean, HSBC, and the Royal Bank of Canada. We look
forward to hosting our first Analyst Day on October 1st to provide
more details on our growth initiatives and long-term strategy,”
said Oleg Shchegolev, CEO and Co-Founder of Semrush.
Second Quarter 2024 Financial Highlights
- Second quarter revenue of $91.0 million, up 22%
year-over-year.
- Income from operations of $3.4 million for the second quarter,
compared to a loss from operations of $2.3 million in the prior
year period.
- Operating margin of 3.7% for the second quarter, compared to
operating margin of (3.1)% in the prior year period.
- Non-GAAP income from operations of $12.2 million for the second
quarter, compared to a non-GAAP income from operations of $2.3
million in the prior year period.
- Non-GAAP operating margin of 13.4% for the second quarter,
compared to non-GAAP operating margin of 3.1% in the prior year
period.
- Q2 free cash flow of $7.6 million and free cash flow margin of
8.4%.
- ARR of $377.7 million as of June 30, 2024, up 25%
year-over-year.
- Over 116,000 paying customers as of June 30, 2024, up 11.5%
from a year ago.
- Dollar-based net revenue retention of 107% as of June 30, 2024,
consistent with the previous quarter.
See “Non-GAAP Financial Measures & Definitions of Key
Metrics” below for how Semrush defines ARR, dollar-based net
revenue retention, non-GAAP income (loss) from operations, non-GAAP
operating margin, free cash flow, and free cash flow margin, 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 2024 Business Highlights
We are committed to empowering our customers with the
best-in-class platform 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:
- Semrush Enterprise SEO Platform is receiving strong demand; new
deals were signed with large multinational corporations including
Digital Ocean, HSBC, and the Royal Bank of Canada.
- Launched AI Keyword Inspector for App Store Optimization. The
product recommends high performing keywords for developers and
marketers to use when listing and advertising their apps for
increased visibility and downloads.
- Upgraded ContentShake AI with an AI Images feature. The feature
allows users to generate visually compelling content to complement
blog and social media posts using simple text prompts.
- Added daily and weekly metrics to .Trends, allowing businesses
to uncover traffic insights on their competitors in real time.
- Acquired a majority stake in Brand24.
- Semrush customers who pay more than $10,000 annually grew by
37% year-over-year.
- Ended the quarter with approximately 1.1 million registered
free active customers.
Business Outlook
“Growth was driven primarily by an expansion of our average
revenue per customer as we continue to execute on our cross-sell
and up-sell strategy,” said Brian Mulroy, CFO of Semrush. “We
posted another quarter of strong profitability, with non-GAAP
income from operations of $12.2 million and non-GAAP operating
margin of 13.4%. We are executing well through the first half,
gaining traction and strong returns on our strategic investments
and remain confident in our ability to deliver long-term efficient
growth.”
Based on information as of today, August 5, 2024, we are issuing
the following financial guidance:
Third Quarter 2024 Financial Outlook
- For the third quarter, we expect revenue in a range of $96.0 to
$97.0 million, which at the mid-point would represent growth of
approximately 23% year-over-year.
- We expect third quarter non-GAAP operating margin to be
approximately 11.0%.
Full-Year 2024 Financial Outlook
- For the full year, we expect revenue in a range of $373.0 to
$375.0 million, which represents growth of 21% to 22%
year-over-year.
- We expect a full year non-GAAP operating margin of 10.5% to
11.5%.
- We expect the full year free cash flow margin to be
approximately 8.0%.
As previously disclosed, we are no longer providing guidance for
non-GAAP net income, and instead are guiding both non-GAAP
operating margin and free cash flow margin. Also as previously
disclosed, we have also updated our definitions of non-GAAP income
(loss) from operations to exclude Amortization of Acquired
Intangible Assets, Acquisition Related Costs, Restructuring Costs
and other one-time expenses outside the ordinary course of business
in addition to the prior exclusion of Stock Based Compensation. Our
guidance for the third quarter 2024 and full year 2024, as well as
actual results presented herein, reflect this change.
Reconciliations of non-GAAP operating margin and free cash flow
margin guidance to the most directly comparable GAAP measures are
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 these non-GAAP measures,
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.
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: Tuesday, August 6, 2024 Time: 8:30 a.m. ET Hosts: Oleg
Shchegolev, CEO, Eugene Levin, President, and Brian Mulroy, CFO
Conference ID: 618536 Participant Toll Free Dial-In Number: +1
833 470 1428 Participant International Dial-In Number: +1 929 526
1599
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 is
headquartered in Boston and has offices in Trevose, Austin, Dallas,
Florida, 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 2024 (including revenue, non-GAAP operating margin, and
free cash flow margin); statements regarding the expectations of
demand for our products, our upcoming Analyst Day, adoption of and
demand for new products and features and results of recent
acquisitions; statements about expansion of our platform, and
launching new products; statements about future operating results,
including revenue, growth opportunities, variability of expenses,
future spending and incremental investments, business trends, our
ability to deliver profits, and growth and value for
shareholders.
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 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 Measures & Definitions of Key
Metrics
We believe that providing non-GAAP information to investors, in
addition to the GAAP presentation, allows investors to view the
financial results in the way management views the operating
results. We further believe that providing this information allows
investors to not only better understand our financial performance,
but also to evaluate the efficacy of the methodology and
information used by management to evaluate and measure such
performance. We also believe that the use of non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing
our financial results with other companies in our industry, many of
which present similar non-GAAP financial measures to investors. We
also believe free cash flow margin is useful to investors as we
monitor it as a measure of our overall business performance, which
enables us to analyze our future performance without the effects of
non-cash items and allows us to better understand the cash needs of
our business. The non-GAAP information included in this press
release should not be considered superior to, or a substitute for,
financial statements prepared in accordance with GAAP and may be
different from non-GAAP financial measures presented by other
companies. Investors are encouraged to review the reconciliation of
non-GAAP measures to their most directly comparable GAAP financial
measures provided in the financial statement tables included below
in this press release.
Annual Recurring Revenue (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.
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.
Free cash flow and free cash flow margin. We define free
cash flow, a non-GAAP financial measure, as net cash provided by
(used in) operating activities less purchases of property and
equipment and capitalized software development costs. We define
free cash flow margin as free cash flow divided by GAAP
revenue.
Non-GAAP income (loss) from operations, and non-GAAP
operating margin. As described above, we have updated our
definitions for non-GAAP income (loss) from operations and have
introduced non-GAAP operating margin; the updated definitions,
which apply to our guidance for the third quarter and full year
2024, are as follows. We define non-GAAP income (loss) from
operations as GAAP income (loss) from operations, excluding
Stock Based Compensation, Amortization of Acquired Intangible
Assets, Acquisition Related Costs, Restructuring Costs and other
one-time expenses outside the ordinary course of business (for
example, our Exit Costs incurred primarily in 2022). We define
non-GAAP operating margin as non-GAAP income (loss) from
operations divided by GAAP revenue. We believe investors may want
to consider our results with and without the effects of these items
in order to compare our financial performance with that of other
companies that exclude such items and to compare our results to
prior periods.
Stock-based compensation. Stock-based compensation is a
non-cash expense accounted for in accordance with FASB ASC Topic
718. We believe that the exclusion of stock-based compensation
expense allows for financial results that are more indicative of
our operational performance and provide for a useful comparison of
our operating results to prior periods and to our peer companies
because stock-based compensation expense varies from period to
period and company to company due to such things as differing
valuation methodologies, timing of awards and changes in stock
price.
Amortization of acquired intangible assets. Excluding
amortization of acquired intangible assets from non-GAAP expense
and income measures allows management and investors to evaluate
results “as-if” the acquired intangible assets had been developed
internally rather than acquired and, therefore, provides a
supplemental measure of performance in which our acquired
intellectual property is treated in a comparable manner to our
internally developed intellectual property. These amounts are
inconsistent in amount and frequency and are significantly impacted
by the timing and size of acquisitions. Although we exclude
amortization of acquired intangible assets from our non-GAAP
expenses, we believe that it is important for investors to
understand that such intangible assets contribute to revenue
generation.
Restructuring and other costs. Restructuring and other
costs include restructuring expenses as well as other charges that
are unusual in nature, are the result of unplanned events, and
arise outside the ordinary course of our business. Restructuring
expenses consist of employee severance costs, charges for the
closure of excess facilities and other contract termination costs.
Other costs include litigation contingency reserves, asset
impairment charges, relocation expenses associated with the
migration of employees in 2022 that occurred throughout 2022 and
early 2023, and gains or losses on the sale or disposition of
certain non-strategic assets or product lines.
Acquisition-related costs, net. In recent years, we have
completed a number of acquisitions, which result in transition,
integration and other acquisition-related expense which would not
otherwise have been incurred, are unpredictable and dependent on a
significant number of factors that are deal-specific or outside of
our control, are not indicative of our operational performance (or
that of the acquired businesses or assets) and are likely to
fluctuate as our acquisition activity increases or decreases in
future periods. By excluding acquisition-related costs and
adjustments from our non-GAAP measures, management is better able
to evaluate our ability to utilize our existing assets and estimate
the long-term value that acquired assets will generate for us.
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,
2024
2023
2024
2023
Revenue
$
90,951
$
74,693
$
176,763
$
145,563
Cost of revenue (1)
14,957
12,972
29,602
25,611
Gross profit
75,994
61,721
147,161
119,952
Operating expenses
Sales and marketing (1)
35,000
30,237
68,921
65,733
Research and development (1)
19,288
14,116
36,592
27,996
General and administrative (1)
18,312
19,388
36,786
38,028
Exit costs
—
309
—
1,292
Total operating expenses
72,600
64,050
142,299
133,049
Income (loss) from operations
3,394
(2,329
)
4,862
(13,097
)
Other income, net
2,616
2,919
6,255
4,624
Income (loss) before income taxes
6,010
590
11,117
(8,473
)
Provision for income taxes
4,649
869
7,753
1,666
Net income (loss)
1,361
(279
)
3,364
(10,139
)
Net loss attributable to noncontrolling
interest in consolidated subsidiaries
(298
)
—
(433
)
—
Net income (loss) attributable to Semrush
Holdings, Inc.
$
1,659
$
(279
)
$
3,797
$
(10,139
)
Net income (loss) attributable to Semrush
Holdings, Inc. per share attributable to common
stockholders—basic:
$
0.01
$
0.00
$
0.03
$
(0.07
)
Net income (loss) attributable to Semrush
Holdings, Inc. per share attributable to common
stockholders—diluted:
$
0.01
$
0.00
$
0.03
$
(0.07
)
Weighted-average number of shares of
common stock used in computing net income (loss) per share
attributable to common stockholders—basic:
145,678
142,239
145,122
141,946
Weighted-average number of shares of
common stock used in computing net income (loss) per share
attributable to common stockholders—diluted:
148,825
142,239
148,261
141,946
¹ includes stock-based compensation
expense as follows:
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Cost of revenue
$
59
$
32
$
98
$
49
Sales and marketing
1,209
840
1,979
1,368
Research and development
1,371
542
2,007
885
General and administrative
4,527
2,351
8,197
4,259
Total stock-based compensation
$
7,166
$
3,765
$
12,281
$
6,561
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Reconciliation of Non-GAAP income
(loss) from operations
($)
(%)
($)
(%)
($)
(%)
($)
(%)
Income (loss) from operations
$
3,394
4
%
$
(2,329
)
(3
)%
$
4,862
3
%
$
(13,097
)
(9
)%
Stock-based compensation expense
7,166
8
%
3,765
5
%
12,281
7
%
6,561
5
%
Non-GAAP income (loss) from operations
(prior definition)
$
10,560
12
%
$
1,436
2
%
$
17,143
10
%
$
(6,536
)
(4
)%
Amortization of acquired intangibles
890
1
%
548
1
%
1,582
1
%
1,070
1
%
Restructuring and other costs
—
—
%
309
—
%
2,124
1
%
1,292
1
%
Acquisition-related costs, net
737
1
%
—
—
%
1,075
1
%
—
—
%
Non-GAAP income (loss) from operations
(new definition)
$
12,187
14
%
$
2,293
3
%
$
21,924
13
%
$
(4,174
)
(2
)%
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Reconciliation of Free cash
flow
($)
(%)
($)
(%)
($)
(%)
($)
(%)
Net cash provided by (used in) operating
activities
$
12,143
13
%
$
(6,314
)
(8
)%
$
26,922
15
%
$
(9,923
)
(7
)%
Purchases of property and equipment
(2,147
)
(2
)%
(689
)
(1
)%
(2,906
)
(2
)%
(957
)
(1
)%
Capitalization of internal-use software
costs
(2,354
)
(3
)%
(1,574
)
(2
)%
(4,369
)
(3
)%
(2,630
)
(2
)%
Free cash flow
$
7,642
8
%
$
(8,577
)
(11
)%
$
19,647
10
%
$
(13,510
)
(10
)%
Semrush Holdings, Inc.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands)
As of
June 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
69,626
$
58,848
Short-term investments
161,906
179,721
Accounts receivable
9,060
7,897
Deferred contract costs, current
portion
9,738
9,074
Prepaid expenses and other current
assets
30,268
10,014
Total current assets
280,598
265,554
Property and equipment, net
7,395
6,686
Operating lease right-of-use assets
11,812
14,069
Intangible assets, net
26,948
16,083
Goodwill
40,630
24,879
Deferred contract costs, net of current
portion
2,997
3,586
Other long-term assets
2,568
633
Total assets
$
372,948
$
331,490
Liabilities, redeemable noncontrolling
interest, and stockholders' equity
Current liabilities
Accounts payable
$
11,199
$
9,187
Accrued expenses
21,788
19,891
Deferred revenue
66,589
58,310
Current portion of operating lease
liabilities
4,829
4,274
Other current liabilities
7,601
2,817
Total current liabilities
112,006
94,479
Deferred revenue, net of current
portion
237
331
Deferred tax liability
1,932
839
Operating lease liabilities, net of
current portion
8,084
10,331
Other long-term liabilities
1,534
1,195
Total liabilities
123,793
107,175
Commitments and contingencies
Redeemable noncontrolling interest
8,733
—
Stockholders' equity
Class A common stock
1
1
Class B common stock
—
—
Additional paid-in capital
306,103
291,898
Accumulated other comprehensive loss
(2,284
)
(752
)
Accumulated deficit
(68,201
)
(71,998
)
Total stockholders' equity attributable to
Semrush Holdings, Inc.
235,619
219,149
Noncontrolling interest in consolidated
subsidiaries
4,803
5,166
Total stockholders’ equity
240,422
224,315
Total liabilities, redeemable
noncontrolling interest and stockholders' equity
$
372,948
$
331,490
Semrush Holdings, Inc.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June
30,
2024
2023
Operating Activities
Net income (loss)
$
3,364
$
(10,139
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation and amortization expense
4,269
3,135
Amortization of deferred contract
costs
6,054
4,855
Amortization (accretion) of premiums and
discounts on investments
(2,023
)
(3,201
)
Non-cash lease expense
2,233
1,886
Stock-based compensation expense
12,281
6,561
Non-cash interest expense
—
105
Change in fair value of convertible debt
securities
—
(380
)
Deferred taxes
(217
)
81
Other non-cash items
1,400
649
Changes in operating assets and
liabilities
Accounts receivable
(774
)
(422
)
Deferred contract costs
(6,129
)
(5,768
)
Prepaid expenses and other current
assets
(4,017
)
(5,869
)
Accounts payable
1,906
(5,184
)
Accrued expenses
2,917
(1,390
)
Other current liabilities
360
—
Deferred revenue
7,353
6,958
Other long-term liabilities
92
—
Change in operating lease liability
(2,147
)
(1,800
)
Net cash provided by (used in) operating
activities
26,922
(9,923
)
Investing Activities
Purchases of property and equipment
(2,906
)
(957
)
Capitalization of internal-use software
costs
(4,369
)
(2,630
)
Purchases of short-term investments
(83,605
)
(172,687
)
Proceeds from sales and maturities of
short-term investments
102,500
132,741
Purchases of convertible debt
securities
(650
)
(323
)
Funding of investment loan receivable
(7,000
)
—
Cash paid for acquisition of businesses,
net of cash acquired
(10,026
)
(1,082
)
Purchases of other investments
(131
)
(150
)
Net cash used in investing activities
(6,187
)
(45,088
)
Financing Activities
Proceeds from exercise of stock
options
3,053
302
Proceeds from issuance of shares in
connection with employee stock purchase plan
—
264
Payment of finance leases
(493
)
(1,209
)
Net cash provided by (used in) financing
activities
2,560
(643
)
Effect of exchange rate changes on cash
and cash equivalents
(614
)
(39
)
Increase (decrease) in cash, cash
equivalents and restricted cash
22,681
(55,693
)
Cash, cash equivalents and restricted
cash, beginning of period
58,848
79,765
Cash, cash equivalents and restricted
cash, end of period
$
81,529
$
24,072
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805462691/en/
Investor Brinlea C. Johnson The Blueshirt Group Semrush
Holdings, Inc. ir@semrush.com Media Jesse Platz VP of
Analyst and Public Relations Semrush Holdings, Inc.
jesse.platz@semrush.com
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