- First quarter revenue of $70.9 million, up
24% year over year
- Surpasses milestone of 100,000 paying
customers
Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility
management SaaS platform, today reported financial results for the
first quarter ended March 31, 2023.
“I am pleased with our first quarter results - we achieved
revenue growth of 24% year-over-year and ARR growth of 23%
year-over-year based on strong new customer demand. During the
quarter, we surpassed 100,000 paying customers, set record net-new
customer additions, and had a record number of new trials. We are
committed to making online marketing easier for businesses of any
size and continue to provide professional marketers and growing
businesses with exceptional value,” said Oleg Shchegolev, CEO and
Co-Founder of Semrush.
“Looking ahead to the remainder of 2023, we are focused on
further balancing our paid and organic marketing activities,
expanding our App Center, automating more sales actions, and
upgrading our product offerings to strengthen our leadership
position in the industry. We continue to carefully manage expenses
and drive towards sustained profitability. I believe that we have a
long runway for growth fueled by product expansion, customer
additions, and a strong demand environment for our technology,"
added Mr. Shchegolev.
First Quarter Financial Highlights
- First quarter revenue of $70.9 million, up 24% year over
year.
- ARR of $293 million as of March 31, 2023, up 23% year over
year.
- Dollar based net revenue retention of 116% as of March 31,
2023, compared to 118% in the previous quarter.
- Over 100,000 paying customers as of March 31, 2023, up
approximately 15% from a year ago.
- Net loss of $9.9 million for the first quarter, compared with a
net loss of $2.6 million from a year ago.
- Non-GAAP net loss of $7.1 million for the first quarter, which
includes $1.0 million in expenses associated with our substantially
completed relocation efforts, compared with non-GAAP net loss of
$1.6 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 loss, and the financial tables that
accompany this release for reconciliations of each non-GAAP
financial measure to its closest comparable GAAP financial
measure.
First Quarter 2023 Business Highlights
Semrush is committed to empowering its customers with the
best-in-class tools and services needed to boost their online
presence and gain an edge in the market. In the first quarter,
Semrush advanced and expanded many of our offerings in addition to
significant talent investments:
- Leveraging Generative AI to provide enhanced, more efficient
content creation capabilities through Semrush’s platform and App
Center:
- Recently launched ContentShake, an all-in-one content writing
tool that uses AI and Semrush’s powerful competitive intelligence
data to help customers build unique, engaging content faster.
- Released AI Writing Assistant by Copymatic, an intelligent tool
that uses AI to generate engaging and relevant copy in
minutes.
- Launched the AI Social Content Generator by Predis.AI, an AI
content creation tool for social media that automatically generates
content such as images, carousels, and videos with descriptive
captions.
- Acquired Traffic Think Tank (TTT), a leading marketing
education company and community that features premium content by
and for world-class marketers to further enhance Semrush
Academy.
- App Center finished the quarter with a total of 51 apps, 25 of
which are from third-party partners.
- Semrush customers who pay more than $10K annually grew by more
than 45% year over year.
- Ended the quarter with more than 885,000 registered free active
customers, up more than 36% year over year.
- Ended the quarter with more than 20% of Semrush customers
buying two or more products / Apps.
- Appointed Brian Mulroy (former SVP of Finance at Microsoft) as
Chief Financial Officer and Channing Ferrer (former Chief Revenue
Officer at Built In) as Chief Sales Officer.
- Appointed Anna Baird (former Chief Revenue Officer, Outreach
Corporation) and Steven Aldrich (former Chief Product Officer at
GoDaddy) to our board as independent, non-executive directors.
Business Outlook
Based on information as of today, May 8, 2023, we are issuing
the following financial guidance:
Second Quarter 2023 Financial Outlook
- For the second quarter, we expect revenue in a range of $73.6
to $75.0 million dollars, which at the mid-point would represent
growth of approximately 19% year over year.
- We expect a second quarter non-GAAP net loss of $3.0 to $1.5
million dollars.
Full-Year 2023 Financial Outlook
- For the full-year, we are reiterating our prior revenue
guidance of $306.0 to $309.0 million dollars, which would represent
growth at the midpoint of approximately 21% year over year.
- We continue to expect non-GAAP net income of breakeven to $3
million dollars for the full year 2023.
Reconciliation of non-GAAP net loss 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.
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, May 9, 2023 Time: 8:30 a.m. ET Hosts: Oleg
Shchegolev, CEO, Brian Mulroy, CFO, Eugene Levin, President, and
Andrew Warden, CMO 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 100,000 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 second quarter and full
year of 2023, including revenue and non-GAAP net loss; statements
about future operating results, including margin improvements,
expense reductions, and sales and marketing productivity;
statements regarding the expectations of demand for our products;
statements about sales and marketing activities, App Center
expansion, automations, product upgrades and leadership
position.
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 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 loss. We define non-GAAP net loss as GAAP
net loss, excluding stock-based compensation expense. We believe
non-GAAP net 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.
Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except per
share data)
Three months ended March
31,
2023
2022
Revenue
$
70,870
$
57,128
Cost of revenue ¹
12,639
11,587
Gross profit
58,231
45,541
Operating expenses
Sales and marketing ¹
35,496
25,830
Research and development ¹
13,880
8,138
General and administrative ¹
18,640
14,163
Exit costs
983
—
Total operating expenses
68,999
48,131
Loss from operations
(10,768
)
(2,590
)
Other income, net
1,705
159
Loss before income taxes
(9,063
)
(2,431
)
Provision for income taxes
797
140
Net loss
$
(9,860
)
$
(2,571
)
Net loss per share attributable to common
stockholders:
Basic and diluted
$
(0.07
)
$
(0.02
)
Weighted-average number of shares of
common stock used in computing net loss per share attributable to
common stockholders:
Basic and Diluted
141,650
140,790
¹ includes stock-based compensation
expense as follows:
Three months ended March
31,
2023
2022
Cost of revenue
$
17
$
11
Sales and marketing
528
133
Research and development
343
149
General and administrative
1,908
639
Total stock-based compensation
$
2,796
$
932
Three months ended March
31,
2023
2022
Reconciliation of Non-GAAP net
loss
Net loss
$
(9,860
)
$
(2,571
)
Stock-based compensation expense
2,796
932
Non-GAAP net loss
$
(7,064
)
$
(1,639
)
Semrush Holdings, Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except per
share data)
As of
March 31, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
56,889
$
79,765
Short-term investments
175,416
157,774
Accounts receivable
3,858
3,559
Deferred contract costs, current
portion
7,059
6,974
Prepaid expenses and other current
assets
11,909
9,307
Total current assets
255,131
257,379
Property and equipment, net
7,061
8,076
Operating lease right-of-use assets
11,193
12,009
Intangible assets, net
11,301
10,286
Goodwill
7,766
6,529
Deferred contract costs, net of current
portion
2,187
2,082
Other long-term assets
861
2,329
Total assets
$
295,500
$
298,690
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
11,373
$
15,495
Accrued expenses
19,229
17,847
Deferred revenue
56,255
49,354
Current portion of operating lease
liabilities
3,660
3,694
Other current liabilities
2,479
2,311
Total current liabilities
92,996
88,701
Deferred revenue, net of current
portion
238
122
Deferred tax liability
15
11
Operating lease liabilities, net of
current portion
8,042
8,929
Other long-term liabilities
756
1,023
Total liabilities
102,047
98,786
Stockholders' equity
Undesignated preferred stock, $0.00001 par
value - 100,000 shares authorized, and no shares issued or
outstanding as of March 31, 2023 or December 31, 2022
—
—
Class A common stock, $0.00001 par value -
1,000,000 shares authorized, and 118,182 shares issued and
outstanding as of March 31, 2023; 43,743 shares issued and
outstanding as of December 31, 2022
1
—
Class B common stock, $0.00001 par value -
160,000 shares authorized, and 23,657 shares issued and 23,604
outstanding as of March 31, 2023; 97,897 shares issued and 97,844
outstanding as of December 31, 2022
—
1
Additional paid-in capital
277,184
274,057
Accumulated other comprehensive
deficit
(924
)
(1,206
)
Accumulated deficit
(82,808
)
(72,948
)
Total stockholders’ equity
193,453
199,904
Total liabilities and stockholders'
equity
$
295,500
$
298,690
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005676/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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