Core Insights - Adobe has announced its acquisition of Semrush for $12.00 per share, totaling approximately $1.9 billion, to enhance its brand visibility solutions [1] - The acquisition aims to strengthen Adobe's capabilities in generative engine optimization (GEO) and search engine optimization (SEO), addressing the growing need for marketers to maintain brand visibility in an AI-driven landscape [4][6] Company Overview - Adobe is recognized for its leadership in customer experience orchestration, providing comprehensive solutions that include content supply chain management, customer engagement, and brand visibility [2][7] - Semrush is a leading SaaS platform focused on online visibility management, offering tools for SEO, advertising, content, and competitive research [17] Market Context - The demand for brand visibility is increasing as consumers increasingly rely on large language models (LLMs) for information and purchasing decisions, making it essential for brands to invest in both GEO and SEO [3][4] - Recent data indicates a significant shift in consumer behavior, with traffic from generative AI sources to U.S. retail sites increasing by 1,200% year-over-year in October [8] Transaction Details - The acquisition has been approved by the boards of both companies and is expected to close in the first half of 2026, pending regulatory approvals and stockholder consent [9] - Semrush's founders and stockholders representing over 75% of the voting power have committed to vote in favor of the transaction [9] Strategic Implications - The combination of Adobe and Semrush is expected to provide marketers with enhanced insights and capabilities to improve brand discoverability across various digital channels [6][7] - Adobe's existing products, such as Adobe Experience Manager and Adobe Analytics, will integrate with Semrush's solutions to address the challenges brands face in the evolving digital landscape [5][7]

Adobe Inc. is nearing a deal to buy the marketing software company Semrush Holdings Inc. for $1.9 billion, the Wall Street Journal reported, a takeover that would mark its first since the failed $20 billion acquisition of Figma Inc. in 2022. https://t.co/GKAT98PeeT ...

Group 1 - Adobe will acquire Semrush for $1.9 billion, paying $12 per share, which is a 77.5% premium over Semrush's closing price [1] - Semrush specializes in software for search engine optimization, social media, and digital advertising, which aligns with Adobe's marketing tools [2] - Semrush shares surged 55% in premarket trading following the acquisition announcement [1] Group 2 - Adobe's stock has declined over 27% this year due to pressure to enhance monetization of its AI products amid rising competition in the digital design sector [3] - Adobe is integrating AI capabilities into its tools, allowing users to interact with applications through chat interfaces, in collaboration with OpenAI [3]

Revenue and Customer Metrics - As of September 30, 2025, the company reported an Annual Recurring Revenue (ARR) of $455.4 million from approximately 114,000 paying customers, an increase from $400.7 million in ARR from about 117,000 paying customers as of September 30, 2024[126]. - The company generated combined revenues of $56.1 million and $167.8 million from customers in the United States and United Kingdom for the three and nine months ended September 30, 2025, respectively, compared to $53.5 million and $153.8 million for the same periods in 2024[122]. - The company experienced a decrease of approximately 2,000 paying customers during the three months ended September 30, 2025, primarily due to macro-economic pressures and increased costs in the market[126]. - Revenue for the three months ended September 30, 2025, increased by $14.7 million (15%) to $112.1 million compared to $97.4 million in 2024, while revenue for the nine months increased by $51.8 million (19%) to $326.0 million compared to $274.2 million in 2024[159]. - The company’s ARR per paying customer increased to $4,000 as of September 30, 2025, up from $3,414 as of September 30, 2024[159]. Financial Performance - Non-GAAP income from operations for the nine months ended September 30, 2025, was $38.3 million, compared to $34.0 million for the same period in 2024[140]. - The non-GAAP income from operations margin was 11.8% for the nine months ended September 30, 2025, compared to 12.4% for the same period in 2024[141]. - The net loss attributable to Semrush Holdings, Inc. for the nine months ended September 30, 2025, was $7,859,000, compared to a net income of $4,891,000 in 2024[157]. - Free cash flow for the nine months ended September 30, 2025, was $31,974,000, up from $25,810,000 in 2024, representing a growth of 24.5%[143]. - Revenue for the nine months ended September 30, 2025, reached $325,985,000, a 19.0% increase from $274,173,000 in 2024[157]. Operating Expenses - Total operating expenses for the nine months ended September 30, 2025, were $271,693,000, compared to $220,941,000 in 2024, reflecting a 23.0% increase[157]. - Research and development expenses for the nine months ended September 30, 2025, were $71,421,000, up from $58,775,000 in 2024, indicating a 21.5% increase[157]. - Sales and marketing expenses for the nine months ended September 30, 2025, totaled $130,659,000, compared to $104,610,000 in 2024, marking a 24.9% increase[157]. - Cost of revenue for the three months ended September 30, 2025, increased by $5.2 million (30%) to $22.2 million compared to $17.1 million in 2024, and for the nine months, it increased by $16.5 million (35%) to $63.2 million compared to $46.7 million in 2024[161][162]. - General and administrative expenses for the three months ended September 30, 2025, increased by $3.5 million (17%) to $24.3 million compared to $20.8 million in 2024, and for the nine months, it rose by $12.1 million (21%) to $69.6 million compared to $57.6 million in 2024[167][169]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2025, was $44,687,000, an increase of 27.5% compared to $35,063,000 in 2024[143]. - As of September 30, 2025, the company had cash and cash equivalents of $80.8 million and short-term investments of $194.9 million[173]. - The company believes its existing cash, cash equivalents, and short-term investments will be sufficient to meet its operating and capital needs for at least the next 12 months[174]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $12.2 million, significantly lower than $51.1 million for the same period in 2024, indicating a decrease of 76.1%[179][180]. - Net cash used in financing activities for the nine months ended September 30, 2025, was $1.6 million, compared to a net cash provided of $2.0 million for the same period in 2024[182]. Strategic Initiatives - The company plans to continue investing in product development and generative AI to enhance its technological capabilities and expand its offerings, including the new Enterprise AIO and AI Toolkits[133]. - The company plans to continue investing in research and development to enhance AI-specific products and improve customer experience[150]. - The company authorized a share repurchase program on July 31, 2025, allowing for the repurchase of up to $150.0 million of Class A common stock, although no shares were repurchased by September 30, 2025[183]. Market and Economic Conditions - The dollar-based net revenue retention rate was approximately 105% as of September 30, 2025, down from 106% as of December 31, 2024, indicating temporary pressures due to market softness[130]. - The company incurred significant expenses outside the United States, primarily in euros, exposing it to foreign currency exchange risk[190]. - The company has not engaged in hedging foreign currency transactions to date but may evaluate this as international operations expand[192][193]. - An immediate 10% decrease in the relative value of the U.S. dollar to the euro could result in a $10.0 million gain or loss on the company's financial statements[190].

Financial Data and Key Metrics Changes - Semrush reported revenue of $112.1 million for Q3 2025, with a non-GAAP operating margin of 12.6% and cash flow from operations of $21.9 million [5][17][19] - Annual recurring revenue (ARR) increased by 14% year over year, reaching $455.4 million, with a sequential growth of $20 million [17][18] - Average ARR per paying customer rose to $4,000, marking a 17% increase compared to the same quarter last year, the highest growth in 13 quarters [18] Business Line Data and Key Metrics Changes - The enterprise customer segment experienced a 33% year-over-year growth in ARR, driven by strong adoption of new enterprise products [5][18] - AI products contributed $10 million in ARR during the quarter, more than doubling from Q2 to Q3 [5][12] - The number of customers spending over $50,000 annually increased by 72% year over year [18] Market Data and Key Metrics Changes - The digital landscape has become more competitive, with search engines driving traffic and transactions, creating opportunities for Semrush [6][8] - Google remains the dominant search engine, with over 5 trillion searches annually, representing more than 90% of daily searches [8] Company Strategy and Development Direction - Semrush is focusing on expanding its AI product portfolio and targeting enterprise customers to drive long-term growth [17][23] - The company aims to combine traditional SEO with AI optimization to enhance discoverability and brand visibility [10][12] - The launch of Semrush One integrates AI and SEO capabilities into a single platform, aiming to set a new industry benchmark [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to drive durable growth and profitability, particularly through AI and enterprise initiatives [23][24] - The company anticipates continued momentum in AI adoption and expects to approach $30 million in ARR from AI products by year-end [12][23] Other Important Information - Cash, cash equivalents, and short-term investments totaled $275.7 million, reflecting strong free cash flow generation [20][23] - The company reiterated its full-year guidance for revenue growth of approximately 18% and a non-GAAP operating margin of around 12% [21][22] Q&A Session Summary Question: What is different about Semrush One compared to traditional SEO products? - Semrush One integrates workflows across SEO and AI capabilities, providing a holistic view of how both work together [25][26] Question: What drove the strong net new ARR in Q3 compared to Q2? - The strong net new ARR was driven by the adoption of enterprise and AI products, with a significant increase in ARR from AI solutions [27][28] Question: What are the key drivers for growth heading into fiscal 2026? - Key drivers include organic growth, new product launches, and improvements in the go-to-market strategy [29][30] Question: How is pricing structured for new AI and enterprise products? - The pricing model is hybrid, including per-seat pricing, usage pricing, and pricing for add-on capabilities [31][32] Question: What is the company's approach to capital allocation? - The company prioritizes organic investment in AI and enterprise, while also considering M&A opportunities and share repurchase programs [33][35] Question: Is there a seasonal trend in ARR build for the fourth quarter? - The enterprise segment is expected to build momentum in the back half of the year, aligning with typical enterprise SaaS dynamics [36][37] Question: How are AI and traditional SEO growth linked? - The growth of AI and traditional SEO is increasingly interconnected, as marketers need both to succeed [38][39] Question: What is the competitive landscape for AI optimization? - Semrush maintains a competitive edge due to its established foundation in SEO, comprehensive data set, and brand recognition [40][41] Question: Is there new interest from non-traditional SEO customers for AI products? - There is growing interest from both new and existing customers, particularly as AI becomes a focal point in boardrooms [42][43]

Core Insights - SEMrush Holdings, Inc. reported quarterly earnings of $0.08 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.06 per share a year ago [1] - The company achieved revenues of $112.08 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 0.49% and up from $97.41 million year-over-year [2] - SEMrush shares have declined approximately 40.4% year-to-date, contrasting with the S&P 500's gain of 15.1% [3] Earnings Performance - The earnings surprise for the previous quarter was -37.5%, as the company reported earnings of $0.05 per share against an expectation of $0.08 [1] - Over the last four quarters, SEMrush has not surpassed consensus EPS estimates [1] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $118.46 million, and for the current fiscal year, it is $0.33 on revenues of $443.3 million [7] - The estimate revisions trend for SEMrush was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Internet - Software industry, to which SEMrush belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Third quarter revenue reached $112.1 million, representing a 15% year-over-year increase[7] - Annual Recurring Revenue (ARR) increased by $20 million, totaling $455.4 million as of September 30, 2025, up 14% year-over-year[6][7] - Non-GAAP income from operations for the third quarter was $14.1 million, resulting in a non-GAAP operating margin of 12.6%[7] - Revenue for Q3 2025 reached $112,075,000, a 15% increase from $97,410,000 in Q3 2024[28] - Gross profit for Q3 2025 was $89,855,000, compared to $80,347,000 in Q3 2024, reflecting an increase of 11%[28] - Net loss attributable to Semrush Holdings, Inc. for Q3 2025 was $2,141,000, compared to a net income of $1,094,000 in Q3 2024[28] - Non-GAAP income from operations for Q3 2025 was $14,141,000, representing a 12.6% operating margin, compared to 12.4% in Q3 2024[29] - Free cash flow for Q3 2025 was $17,042,000, which is 15.2% of revenue, up from 6.3% in Q3 2024[29] - Semrush Holdings, Inc. reported a net loss of $8,517,000 for the nine months ended September 30, 2025, compared to a net income of $4,082,000 in the same period of 2024[32] Cash Flow and Assets - Cash flow from operations was $21.9 million, with a margin of 19.5%[6][7] - Operating cash flow increased to $44,687,000 in 2025 from $35,063,000 in 2024, representing a growth of approximately 27%[32] - Cash, cash equivalents, and restricted cash at the end of the period totaled $80,965,000, up from $45,268,000 in 2024, indicating a year-over-year increase of approximately 79%[32] - Cash and cash equivalents rose to $80,780,000 as of September 30, 2025, compared to $48,875,000 at the end of 2024[31] - Total current assets increased to $323,874,000 as of September 30, 2025, from $276,184,000 at the end of 2024[31] Liabilities and Equity - Total liabilities increased to $151,864,000 as of September 30, 2025, from $124,591,000 at the end of 2024[31] - The accumulated deficit as of September 30, 2025, was $71,621,000, compared to $63,762,000 at the end of 2024[31] - Total stockholders' equity attributable to Semrush Holdings, Inc. increased to $289,683,000 as of September 30, 2025, from $256,604,000 at the end of 2024[31] Customer Growth and Retention - Dollar-based net revenue retention stood at 105% as of September 30, 2025[7] - Customers paying more than $10,000 annually grew by 30% year-over-year, while those paying over $50,000 grew by over 72%[8] Future Guidance - For Q4 2025, the company expects revenue between $117.5 million and $119.5 million, indicating approximately 15.5% year-over-year growth at the midpoint[11] - Full-year 2025 revenue guidance is set between $443.5 million and $445.5 million, reflecting an expected growth of approximately 18% year-over-year[11] Strategic Initiatives - The company launched the Semrush Enterprise Partner Program to expand its enterprise footprint and create new growth opportunities[10] - Investments in Generative AI were advanced, including the release of Semrush One and the Semrush Enterprise AI Visibility Index[10] Investment Activities - Net cash used in investing activities decreased to $12,158,000 in 2025 from $51,076,000 in 2024, reflecting a reduction of about 76%[32] - The company reported a decrease in purchases of short-term investments to $71,331,000 in 2025 from $136,768,000 in 2024, a decline of approximately 48%[32] - Proceeds from sales and maturities of short-term investments were $66,000,000 in 2025, compared to $132,500,000 in 2024, a decrease of about 50%[32] Expenses - The company experienced a significant increase in stock-based compensation expense, rising to $35,522,000 in 2025 from $19,856,000 in 2024, an increase of about 79%[32] - The company reported a significant increase in accounts payable, which rose to $10,252,000 in 2025 from $1,939,000 in 2024, an increase of about 429%[32]

Core Insights - Semrush has launched Semrush One, a unified solution that integrates traditional SEO and AI search capabilities to enhance digital brand visibility across various platforms, including Google and AI discovery engines like ChatGPT and Gemini [2][10]. Product Overview - Semrush One combines extensive SEO data with AI visibility tools, providing marketers with access to 142 keyword databases, 808 million domains, and the largest keyword and backlink databases, totaling 27.5 billion and 43 trillion respectively [3]. - The solution includes visibility tracking across leading large language models (LLMs), brand presence measurement, sentiment analysis, and competitive insights [5]. Market Context - The increasing adoption of LLMs has made online brand visibility a critical topic for businesses, necessitating new tools for marketers to navigate the evolving landscape of AI visibility [4]. - Semrush aims to empower marketers to take control of their visibility in this new era, building on nearly two decades of industry leadership in search [4]. Pricing and Tiers - Semrush One is available in three tiers: Starter, Pro+, and Advanced, catering to different business needs and team sizes. The Starter tier begins with essential SEO capabilities and AI visibility tracking, while Pro+ and Advanced tiers offer more advanced features and data access [6]. Performance Validation - Prior to the launch, Semrush tested its AI visibility capabilities on its own brand, achieving a nearly threefold increase in AI share of voice from 13% in July 2025 to 32% in August, and improving non-branded queries from 40% to 50% [8]. - The results demonstrate the rapid response of LLMs compared to traditional SEO cycles, with visibility improvements occurring in days rather than months [9].

Core Insights - Semrush has launched its Enterprise Partner Program, aimed at expanding its enterprise presence and creating new growth opportunities for marketing agencies and their clients [1] Group 1 - The Enterprise Partner Program is a global strategic initiative that will create a new revenue channel for both Semrush and its partners [1] - Certified partners will be empowered to sell, service, and scale with Semrush, utilizing the full suite of Semrush's offerings [1]

Core Insights - Semrush has launched Semrush Enterprise Site Intelligence, a site health and monitoring solution aimed at enhancing website visibility and resilience in the AI and search landscape [1] Company Overview - Semrush is recognized as a leading online visibility management SaaS platform [1] - The new solution is designed to ensure that websites remain technically prepared and visible [1] Importance of Website Health - A brand's website is identified as its most valuable digital asset, serving as the foundation for discoverability and growth [1] - Semrush data indicates the significance of maintaining a healthy website in the current digital environment [1]