First quarter 2023 revenue grew 19%
year-over-year to $52.8 million
Non-GAAP operating margin improved by 31
percentage points
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 first
quarter ended March 31, 2023. 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.
“We continued to improve our operating efficiency and navigate
through a challenging demand environment in the first quarter,”
said Or Offer, Founder and CEO of Similarweb. “We expanded our
operating margin significantly compared to last year at this time
due to our focus on aligning our resources with our growth
trajectory. Despite longer sales cycles, we were able to win new
customers, and retain many existing customers who assess our data
as critical to their success.” Offer continued, “Our customers tell
us that our data and actionable insights are essential to make the
right decisions.”
First Quarter 2023 Financial
Highlights
- Total revenue was $52.8 million, an increase of 19% compared to
$44.3 million for the first quarter of 2022.
- GAAP operating loss was $(13.1) million or (25)% of revenue,
compared to $(26.2) million or (59)% of revenue for the first
quarter of 2022.
- GAAP net loss per share was $(0.15), compared to $(0.34) for
the first quarter of 2022.
- Non-GAAP operating loss was $(7.2) million or (14)% of revenue,
compared to $(19.8) million or (45)% of revenue for the first
quarter of 2022.
- Non-GAAP operating loss per share was $(0.09), compared to
$(0.26) for the first quarter of 2022.
- Cash and cash equivalents totaled $75.3 million as of March 31,
2023, compared to $77.8 million as of December 31, 2022.
- Net cash provided by operating activities was $0.3 million,
compared to $0.9 million for the first quarter of 2022.
- Free cash flow was $(1.2) million, compared to $(4.3) million
for the first quarter of 2022.
- Normalized free cash flow was $(0.6) million, compared to
$(4.0) million for the first quarter of 2022.
Recent Business
Highlights
- Grew number of customers to 4,179 as of March 31, 2023, an
increase of 14% compared to March 31, 2022.
- Grew average annual revenue per customer to approximately
$51,300 in the first quarter of 2023, an increase of 4% compared to
the first quarter of 2022.
- Grew number of customers with ARR of $100,000 or more to 344,
an increase of 16% compared to March 31, 2022.
- Customers with ARR of $100,000 or more contributed 55% of the
total ARR as of March 31, 2023, compared to 53% as of March 31,
2022.
- Dollar-based net retention rate for customers with ARR of
$100,000 or more was 114% in the first quarter of 2023 as compared
to 127% in the first quarter of 2022.
- Overall dollar-based net retention rate was 105% in the first
quarter of 2023 as compared to 115% in the first quarter of
2022.
- Multi-year subscriptions now comprise 40% of our overall ARR as
of March 31, 2023, as compared to 35% as of March 31, 2022.
- Remaining performance obligations increased 9% year-over-year,
to $174.0 million as of March 31, 2023, as compared to $159.1
million as of March 31, 2022.
Financial Outlook
“Our first quarter results, especially in our improved operating
margin, show progress towards our objective of achieving sustained
positive free cash flow quarterly by the fourth quarter of 2023,”
said Jason Schwartz, Chief Financial Officer of Similarweb. “We
continue to focus on disciplined execution and cost effectiveness
in this challenging environment that we believe will be critical to
accomplishing our objectives in 2023.”
- Q2 2023 Guidance
- Total revenue estimated between $53.3 million and $53.8
million, representing approximately 13% growth year over year at
the mid-point of the range.
- Non-GAAP operating loss estimated between $(6.5) million and
$(7.0) million.
- FY 2023 Guidance
- Total revenue estimated between $221.0 million and $222.0
million, representing approximately 15% growth year over year at
the mid-point of the range.
- Non-GAAP operating loss estimated between $(21.0) million and
$(22.0) million.
- We expect to reach sustained positive free cash flow in the
fourth quarter of 2023. Our free cash flow may fluctuate seasonally
as we progress through this year.
The Company’s second quarter and full year 2023 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 and
gross margin, the most directly comparable GAAP measures to
non-GAAP operating loss and non-GAAP gross margin, respectively,
and similarly cannot provide a reconciliation to these measures to
their closest GAAP equivalents 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, May 10, 2023. 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 (201) 689-7806
internationally.
About Similarweb: As a trusted platform for understanding
online behavior, millions of people rely on Similarweb Digital Data
and insights to strengthen their knowledge of the digital world. We
empower anyone — from the curious individual to the enterprise
business leader — to make smarter decisions by understanding why
things happen across the digital ecosystem.
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 second quarter and full year of 2023 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, and challenges in our business and in the markets in
which we operate; (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 March 23, 2023, 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 above 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,
March 31,
2022
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
77,810
$
75,349
Restricted deposits
9,814
9,858
Accounts receivable, net
38,141
37,497
Deferred contract costs
9,789
9,365
Prepaid expenses and other current
assets
6,628
5,023
Total current assets
142,182
137,092
Property and equipment, net
31,823
31,904
Deferred contract costs, non-current
8,348
7,323
Operating lease right-of-use assets
40,823
39,126
Intangible assets, net
9,561
8,359
Goodwill
12,867
12,868
Other non-current assets
441
10
Total assets
$
246,045
$
236,682
Liabilities and Shareholders'
equity
Current liabilities:
Borrowings under Credit Facility
$
25,000
$
25,000
Accounts payable
7,144
6,089
Payroll and benefit related
liabilities
18,512
16,355
Deferred revenue
93,195
100,933
Other payables and accrued expenses
27,990
23,906
Operating lease liabilities
9,091
8,408
Total current liabilities
180,932
180,691
Deferred revenue, non-current
974
479
Operating lease liabilities,
non-current
40,075
37,836
Other long-term liabilities
2,113
2,019
Total liabilities
224,094
221,025
Shareholders' equity
Ordinary Shares, NIS 0.01 par value
500,000,000 shares authorized as of December 31, 2022 and March 31,
2023 (unaudited), 76,435,940 and 77,234,752 shares issued as of
December 31, 2022 and March 31, 2023 (unaudited), 76,433,772 and
77,232,584 outstanding as of December 31, 2022 and March 31, 2023
(unaudited), respectively;
210
212
Additional paid-in capital
345,834
351,649
Accumulated other comprehensive income
(loss)
(367
)
(644
)
Accumulated deficit
(323,726
)
(335,560
)
Total shareholders' equity
21,951
15,657
Total liabilities and shareholders'
equity
$
246,045
236,682
Similarweb Ltd.
Consolidated Statements of Comprehensive Income
(Loss)
U.S. dollars in thousands (except
share and per share data)
Three Months Ended March
31,
2022
2023
(Unaudited)
Revenue
$
44,280
$
52,750
Cost of revenue
13,095
12,076
Gross profit
31,185
40,674
Operating expenses:
Research and development
14,713
14,351
Sales and marketing
30,342
28,666
General and administrative
12,311
10,737
Total operating expenses
57,366
53,754
Loss from operations
(26,181
)
(13,080
)
Finance income, net
822
1,355
Loss before income taxes
(25,359
)
(11,725
)
Provision for income taxes
250
109
Net loss
$
(25,609
)
$
(11,834
)
Net loss per share attributable to
ordinary shareholders, basic and diluted
$
(0.34
)
$
(0.15
)
Weighted-average shares used in computing
net loss per share attributable to ordinary shareholders, basic and
diluted
75,035,966
76,862,020
Net loss
(25,609
)
(11,834
)
Other comprehensive income (loss), net
of tax
Change in unrealized gain (loss) on
cashflow hedges
86
(277
)
Total other comprehensive income (loss),
net of tax
86
(277
)
Total comprehensive loss
$
(25,523
)
$
(12,111
)
Share-based compensation costs included above:
U.S. dollars in thousands
Three Months Ended March
31,
2022
2023
(Unaudited)
Cost of revenue
$
146
$
155
Research and development
1,209
1,390
Sales and marketing
1,373
1,374
General and administrative
1,075
1,490
Total
$
3,803
$
4,409
Similarweb Ltd.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
Three Months Ended March
31,
2022
2023
(Unaudited)
Cash flows from operating
activities:
Net loss
$
(25,609
)
$
(11,834
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,049
2,540
Finance expense
231
207
Unrealized loss (gain) from hedging future
transactions
4
(27
)
Share-based compensation
3,803
4,409
Loss from sale of equipment
—
2
Changes in operating assets and
liabilities:
Change in operating lease right-of-use
assets and liabilities, net
3,177
(1,225
)
Decrease in accounts receivable, net
486
644
(Increase) decrease in deferred contract
costs
(1,767
)
1,449
Decrease in other current assets
1,104
250
Decrease in other non-current assets
—
431
Increase (decrease) in accounts
payable
1,494
(1,059
)
Increase in deferred revenue
12,518
7,243
Decrease in other non-current
liabilities
(62
)
(94
)
Increase (decrease) in other liabilities
and accrued expenses
2,486
(2,610
)
Net cash provided by operating
activities
914
326
Cash flows from investing
activities:
Purchase of property and equipment,
net
(4,784
)
(1,132
)
Capitalized internal-use software
costs
(380
)
(433
)
Decrease (increase) in restricted
deposits
12
(44
)
Net cash used in investing activities
(5,152
)
(1,609
)
Cash flows from financing
activities:
Proceeds from exercise of stock
options
609
1,392
Payments of contingent consideration,
net
—
(2,363
)
Net cash provided by (used in) financing
activities
609
(971
)
Effect of exchange rates on cash and cash
equivalents
(231
)
(207
)
Net decrease in cash and cash
equivalents
(3,860
)
(2,461
)
Cash and cash equivalents, beginning of
period
128,879
77,810
Cash and cash equivalents, end of
period
$
125,019
$
75,349
Supplemental disclosure of cash flow
information:
Interest (received) paid, net
$
(17
)
$
6
Taxes paid
$
60
$
55
Supplemental disclosure of non-cash
financing activities:
Additions to operating lease right-of-use
assets and liabilities
$
4,279
$
170
Deferred proceeds from exercise of share
options included in other current assets
$
479
$
16
Deferred costs of property and equipment
incurred during the period included in accounts payable
$
10,542
$
121
Deferred payments in relation to business
combinations held in escrow
$
—
$
1,269
Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measures
Reconciliation of GAAP gross profit to
non-GAAP gross profit
Three Months Ended March
31,
2022
2023
(In thousands)
GAAP gross profit
$
31,185
$
40,674
Add:
Share-based compensation expenses
146
155
Retention payments related to business
combinations
690
88
Amortization of intangible assets related
to business combinations
1,041
1,168
Non-recurring expenses related to
termination of lease agreement and others
9
—
Non-GAAP gross profit
$
33,071
$
42,085
Non-GAAP gross margin
75
%
80
%
Reconciliation of Loss from operations
(GAAP) to Non-GAAP operating loss
Three Months Ended March
31,
2022
2023
(In thousands)
Loss from operations
$
(26,181
)
$
(13,080
)
Add:
Share-based compensation expenses
3,803
4,409
Retention payments related to business
combinations
712
282
Amortization of intangible assets related
to business combinations
1,041
1,202
Adjustment of fair value of contingent
consideration related to business combinations
552
—
Non-recurring expenses related to
termination of lease agreement and others
318
13
Non-GAAP operating loss
$
(19,755
)
$
(7,174
)
Non-GAAP operating margin
(45
)%
(14
)%
Reconciliation of GAAP operating
expenses to non-GAAP operating expenses
Three Months Ended March
31,
2022
2023
(In thousands)
GAAP research and development
$
14,713
$
14,351
Less:
Share-based compensation expenses
1,209
1,390
Non-recurring expenses related to
termination of lease agreement and others
23
—
Non-GAAP research and
development
$
13,481
$
12,961
Non-GAAP research and development
margin
30
%
25
%
GAAP sales and marketing
$
30,342
$
28,666
Less:
Share-based compensation expenses
1,373
1,374
Retention payments related to business
combinations
22
194
Amortization of intangible assets related
to business combinations
—
34
Non-recurring expenses related to
termination of lease agreement and others
271
13
Non-GAAP sales and marketing
$
28,676
$
27,051
Non-GAAP sales and marketing
margin
65
%
51
%
GAAP general and administrative
$
12,311
$
10,737
Less:
Share-based compensation expenses
1,075
1,490
Adjustment of fair value of contingent
consideration related to business combinations
552
—
Non-recurring expenses related to
termination of lease agreement and others
15
—
Non-GAAP general and
administrative
$
10,669
$
9,247
Non-GAAP general and administrative
margin
24
%
18
%
Reconciliation of Net cash provided by
operating activities (GAAP) to Free cash flow and normalized free
cash flow
Three Months Ended March
31,
2022
2023
(In thousands)
Net cash provided by operating
activities
$
914
$
326
Purchases of property and equipment,
net
(4,784
)
(1,132
)
Capitalized internal use software
costs
(380
)
(433
)
Free cash flow
$
(4,250
)
$
(1,239
)
Purchases of property and equipment
related to the new headquarters
4,456
1,048
Payments received in connection with
purchases of property and equipment
(4,169
)
—
Payments received from escrow in relation
to contingent consideration
—
(380
)
Normalized free cash flow
$
(3,963
)
$
(571
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509006096/en/
Press Contact: David Carr
Similarweb press@similarweb.com Investor
Contact: Raymond "RJ" Jones Similarweb
raymond.jones@similarweb.com
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