Similarweb vs. SEMrush: Which SEO Stock Is a Better Buy?
In a world where most businesses are looking to establish an
online presence, it makes sense to look at companies that provide
digital marketing solutions to enterprises. Two such companies are
SEMR) and Similarweb (NYSE: SMWB).
Both these stocks recently went public and let’s see which company
is a better buy right now.
Similarweb stock is valued at a market cap of $1.64
Similarweb is an Israel-based company that provides website
traffic solutions through AI-driven analytics. It offers digital
research solutions allowing enterprises to analyze and benchmark
performance against competitors while exploring trends in the
market. Its suite of solutions enables users to conduct in-depth
research and study audience behavior.
Similarweb also provides shopper intelligence solutions where
product managers can view the customer journey as well as monitor
consumer demand and improve brand visibility in the process.
Additionally, the company offers investor intelligence solutions
to investment professionals and provides them with a comprehensive
view of the market, sector, or even a particular company.
Similarweb stock went public last month after it sold 8 million
ordinary shares in its IPO. In 2019, the company reported sales of
$70.59 million and it rose to $93.48 million in 2020. However, its
gross profit rose from $50 million to $72 million in this period
which meant its gross margin was up from 70.8% in 2019 to 77% in
However, its operating expenses rose from $66 million to $91.47
million. It also suggests Similarweb’s operating loss widened from
$16 million in 2019 to over $19.6 million in 2020. Similarweb stock
is trading at a trailing price to sales multiple of 17.6x which is
steep especially for a company that still unprofitable. However,
the company is debt-free and is rapidly expanding into other
business verticals which will allow it to grow revenue at a stellar
pace in 2021 and beyond.
SEMrush has a market cap of $2.43 billion
SEMrush develops online visibility management SaaS
(software-as-a-service) platform. It helps businesses to run SEO
(search engine optimizations), pay-per-click, content, social
media, and competitive research campaigns. The company also offers
insights and solutions to build, manage and measure campaigns
across multiple marketing campaigns.
In the first quarter of 2021, SEMrush sales were $40 million,
indicating a growth of 44% year over year. Its annual recurring
revenue was up 53% at $168 million. The company’s stellar top-line
growth allowed it to end Q1 with an adjusted net income of $2.1
million, compared to a loss of $1.7 million in the prior-year
SEMrush also ended the March quarter with 72,000 customers, an
increase of 29% year over year. We can see that existing customers
increased their spending on the SEMrush platform that allowed the
company to grow its sales by 44%. Its dollar-based net retention
rate stood at 116%. The net retention rate represents the revenue
growth of a company from its existing base of customers.
SEMrush forecasts revenue between $42.2 million and $42.7
million in Q2 of 2021, which is a growth of 49% year over year. Its
net loss is forecast between $4.4 million and $4.1 million. In
2021, SEMrush expects sales between $175 million and $177 million,
a rise of 41% at the midpoint range. Adjusted net loss is expected
to be in the range of $7.9 million and $6.3 million.
SEMrush stock IPO’d on the NYSE on March 26, 2021, and closed
trading at $11.8 that day. It has since risen 51.36% to currently
trade at $17.86, valuing it
at a market cap of $2.42 billion.
It suggests the stock is trading at a forward price to sales
multiple of 13.8x.
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