Core Insights - SEMrush Holdings, Inc. reported quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.07 per share, representing an earnings surprise of -14.29% [1] - The company posted revenues of $97.41 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.95%, compared to year-ago revenues of $78.72 million [2] - SEMrush shares have increased about 1% since the beginning of the year, underperforming the S&P 500's gain of 24.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $100.93 million, and for the current fiscal year, it is $0.25 on revenues of $374.19 million [7] - The estimate revisions trend for SEMrush is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which SEMrush belongs, is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Revenue Growth - Q3 2024 revenue reached $97.4 million, up 24% year-over-year[1][3] - Revenue for Q3 2024 increased to $97.41 million, up 23.8% from $78.72 million in Q3 2023[27] - Total revenue for the first nine months of 2024 reached $274.17 million, a 22.2% increase from $224.28 million in the same period of 2023[27] - Q4 2024 revenue guidance is $100.8 to $101.8 million, representing approximately 21% year-over-year growth at the midpoint[8] - Full-year 2024 revenue guidance raised to $375 to $376 million, representing 22% year-over-year growth[9] Annual Recurring Revenue (ARR) and Customer Growth - ARR as of September 30, 2024, was $401 million, up 24% year-over-year[1][4] - Paying customers grew to over 117,000, up 10% year-over-year[4] - Dollar-based net revenue retention was 107% as of September 30, 2024[4] - Customers paying more than $10,000 annually grew by 44% year-over-year[6] Profitability and Operating Income - Q3 2024 non-GAAP operating income was $12.1 million, with a non-GAAP operating margin of 12.4%, up nearly 300 basis points year-over-year[4][8] - Non-GAAP income from operations for Q3 2024 was $12.06 million, representing 12.4% of revenue, up from $7.51 million (9.5% of revenue) in Q3 2023[29] - Net income for Q3 2024 was $1.09 million, compared to $4.22 million in Q3 2023[27] - Net income for the nine months ended September 30, 2024, was $4,082 thousand, compared to a net loss of $(5,924) thousand in the same period in 2023[32] Cash Flow and Financial Position - Q3 2024 free cash flow was $6.2 million, with a free cash flow margin of 6.3%[4] - Free cash flow for Q3 2024 was $6.16 million, compared to $4.97 million in Q3 2023[30] - Net cash provided by operating activities was $35,063 thousand for the nine months ended September 30, 2024, compared to $(3,567) thousand used in the same period in 2023[32] - Total assets as of September 30, 2024, increased to $383.80 million from $331.49 million as of December 31, 2023[31] - Deferred revenue as of September 30, 2024, was $68.99 million, up from $58.31 million as of December 31, 2023[31] - Total stockholders' equity attributable to Semrush Holdings, Inc. increased to $248.52 million as of September 30, 2024, from $219.15 million as of December 31, 2023[31] Expenses and Investments - Research and development expenses for Q3 2024 were $22.18 million, a 57.6% increase from $14.08 million in Q3 2023[27] - Stock-based compensation expense for Q3 2024 was $7.58 million, up from $4.20 million in Q3 2023[28] - Stock-based compensation expense increased to $19,856 thousand in 2024 from $10,764 thousand in 2023[32] - Purchases of short-term investments totaled $(136,768) thousand in 2024, compared to $(182,381) thousand in 2023[32] - Proceeds from sales and maturities of short-term investments were $132,500 thousand in 2024, down from $154,741 thousand in 2023[32] - Cash paid for acquisition of businesses, net of cash acquired, was $(21,082) thousand in 2024, significantly higher than $(1,232) thousand in 2023[32] - Cash, cash equivalents, and restricted cash decreased by $(13,580) thousand in 2024, compared to a decrease of $(38,576) thousand in 2023[32] - Depreciation and amortization expense increased to $7,094 thousand in 2024 from $4,807 thousand in 2023[32] - Amortization of deferred contract costs rose to $9,163 thousand in 2024 from $7,510 thousand in 2023[32] - Net cash used in investing activities was $(51,076) thousand in 2024, compared to $(34,319) thousand in 2023[32] Enterprise Customer Growth - Semrush Enterprise SEO Platform signed new deals with large multinational corporations including Salesforce, HSBC, LG, Samsung, Alibaba, Sony, DoorDash, TikTok, and Square[6]

Investment Overview - Semrush Holdings (NYSE: SEMR) reported strong 2Q24 results, with total revenue of $91 million, slightly above consensus estimates of $89.7 million, and a year-over-year growth of 21.8% [3][4] - The company maintains a hold rating due to the near-term upside being largely priced in, despite positive growth indicators [2][44] Financial Performance - Adjusted gross margin expanded by 60 basis points year-over-year, contributing to adjusted EBIT growth from 3.1% in 2Q23 to 13.4% in 2Q24 [3] - Annual recurring revenue (ARR) grew by 23% in 2Q24, with a notable organic growth acceleration of 200 basis points from 1Q24 [3][4] Customer Growth and Strategy - The number of net new paying customers increased by 12% year-over-year, indicating a strong up-sell and cross-sell potential, with average revenue per paying customer (ARPC) growing by approximately 12% [4][37] - The company is optimistic about future growth from its Enterprise GO product, with a 37% increase in customers with over $10k ARR, marking the third consecutive quarter of acceleration [39] Acquisition Impact - The acquisitions of Brand24 and Ryte are expected to enhance SEMR's capabilities, particularly in social media, brand marketing, and technical SEO, potentially driving significant ARPC uplift in the long term [37][38] - However, the benefits from these acquisitions are not expected to materialize in the near term as cross-selling efforts are still in the early stages [41][43] Valuation Metrics - The forward revenue multiple is currently at 4.0, with a target share price of $13.90, indicating limited near-term upside based on current growth expectations [40][41] - The market is likely to reassess SEMR's valuation as growth accelerates in the medium term, potentially allowing for a higher multiple [42][44]

Core Insights - The article discusses stocks priced below $50 that have potential for long-term investors due to rising revenue and earnings, along with growth catalysts and low valuations [1][2][3] Company Summaries Semrush (SEMR) - Semrush is a search engine marketing tool with a strong annual recurring revenue model, achieving 21% year-over-year revenue growth in Q1, totaling $85.8 million, with net income of $2.1 million and a net profit margin of 2.5% [5][6] - The company has nearly 112,000 paying customers and is expected to expand profit margins, with a single-year stock gain of 31% and an average price target suggesting a 19% upside [6] Upwork (UPWK) - Upwork is an online freelance marketplace benefiting from the remote work trend, despite a 25% year-to-date stock loss [7][8] - The company reported 19% year-over-year revenue growth in Q1, reaching $190.9 million, with net income up 7% to $18.4 million and a net profit margin of 9.7% [8] - Upwork has seen significant growth in ad revenue (93% YOY) and Freelancer Plus revenue (76% YOY), with over 100,000 active subscriptions for the latter [9] SoFi (SOFI) - SoFi is a digital bank offering various financial products, currently facing a 31% year-to-date stock loss [10][11] - The company reported 20% year-over-year revenue growth in Q2, with net income of $17.4 million compared to a $47.5 million net loss in the same quarter last year, and membership growth from 6.24 million to 8.77 million [11] - The digital banking industry is projected to grow at a compounded annual growth rate of 11.7% until 2033, positioning SoFi to gain market share and potentially rally by 23% from current levels [12]

Financial Data and Key Metrics Changes - The company reported revenue of $91 million for Q2 2024, representing a 22% year-over-year increase [5] - Annual Recurring Revenue (ARR) grew by 25% year-over-year to $377.7 million [16] - Non-GAAP operating income was $12.2 million, with a non-GAAP operating margin of 13.4%, up from 3.1% in the prior year [5][17] - Cash flow from operations was $12.1 million [17] - The company ended the quarter with cash and cash equivalents of $231.5 million [18] Business Line Data and Key Metrics Changes - The acquisition of Brand24 contributed approximately 2% to the reported ARR [16] - The average ARR per paying customer grew by 12% year-over-year and is up over 50% since the beginning of 2021 [16] - Approximately 4,100 net new paying customers were added in Q2, with three-quarters coming from the Brand24 acquisition [17] Market Data and Key Metrics Changes - The company has over 116,000 paying customers and approximately 1.1 million free active users across more than 150 countries [8] - The enterprise product launched in May has already attracted 8,000 enterprise accounts, indicating strong market demand [9] Company Strategy and Development Direction - The company is focused on expanding its leadership position in online visibility and enhancing profitability and free cash flow generation [6] - Recent acquisitions, including Brand24 and Ryte, are aimed at extending capabilities in social media, brand marketing, and technical SEO [10][12] - The company plans to leverage profitability to invest in new products and solidify its position as the marketing platform of choice across various industries [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong start to 2024 and the foundation built for future growth [10] - The company raised its full-year 2024 revenue guidance, expecting revenue in the range of $373 million to $375 million [19] - Management noted that the combination of Brand24 and Ryte is expected to contribute approximately 200 basis points of growth [19] Other Important Information - The company is maintaining its non-GAAP operating margin guidance for the full year at 10.5% to 11.5% [20] - The company anticipates higher general and administrative expenses due to changes in its affiliate ownership structure [21] Q&A Session Summary Question: Demand environment and enterprise solution pricing - Management confirmed that they have increased prices for the enterprise product after initial feedback indicated they were underpriced, maintaining a pricing range of 10x to 15x the core product [24] Question: Impact of pricing increase on growth rates - Management noted that a price increase in Q3 2023 contributed approximately $4 million of ARR in the second half of last year, with continued impacts expected [26] Question: Features of the new enterprise product - Key features include deep customization, automated AI workflows, and connections to leading experts for services [30] Question: Opportunities with Brand24 and Ryte - Management highlighted strong bundling opportunities with Brand24 and Ryte, particularly for larger customers [34][35] Question: Generative AI and its impact on SEO - Management discussed how new search elements, including AI overviews, are expected to increase total traffic and outgoing clicks over time [43]

Datos' integration significantly enhances Semrush's portfolio of competitive intelligence products and the new Enterprise SEO platform. The Enterprise SEO platform harnesses an extensive database of more than 25.7 billion keywords and 43 trillion backlinks, providing users with unparalleled insights and competitive advantages. The enhanced data analytics capabilities empower users to better understand the consumer journey and the path to purchase. This comprehensive understanding allows businesses to refine ...

Stock Splits and Market Reactions - Nvidia and Broadcom announced 10-for-1 stock splits, leading to significant increases in their stock prices [1] - Chipotle experienced a surge to all-time highs following a 50-for-1 stock split, indicating strong investor interest in owning whole shares [1] - Stock splits are appealing to investors who prefer to own entire shares rather than fractional ones, despite the availability of fractional stock buying [1][8] SoFi Financial Performance - SoFi's stock is down 33% year-to-date, presenting a potential buying opportunity for long-term investors [3] - The company reported a 37% year-over-year revenue increase in Q1 2024, with GAAP net income of $88 million compared to a net loss of $34.4 million in the same period last year [12] - SoFi's Technology Platform Segment revenue grew by 21% year-over-year to $94.4 million, while Financial Services revenue surged by 86% year-over-year to $150.6 million [4] Upwork's Market Position - Upwork's stock is down 28% year-to-date, which may provide a buying opportunity [5] - The company reported a 19% year-over-year revenue growth in Q1 2024, with ad revenue increasing by 93% and Freelancer Plus sales up by 76% [7] - Upwork's net income rose to $18.4 million, a 7% year-over-year increase, indicating solid financial growth [19] Semrush's Growth Metrics - Semrush reported a 21% year-over-year revenue growth in Q1 2024, with GAAP profits of $2.14 million compared to a net loss of $9.86 million in the same period last year [15] - The company has a strong annual recurring revenue model with over 100,000 paying customers, contributing to its growth potential [10][15] - Despite a modest 2% increase year-to-date, Semrush has demonstrated a 50% gain over the past year, indicating potential for further growth [10]

Core Insights - Semrush Holdings, Inc. has launched the Semrush Enterprise SEO platform, which integrates AI workflows to enhance SEO operations for large businesses, aiming to streamline complex tasks and improve productivity [1][2] Group 1: Platform Features - The Semrush Enterprise SEO platform automates labor-intensive tasks, conducts technical audits, and creates customized workflows, significantly reducing analysis and issue resolution time [2] - It utilizes a database of over 25.7 billion keywords and 43 trillion backlinks, providing users with valuable insights and competitive advantages [3] - The platform includes AI-powered tools for real-time content optimization across multiple languages, sophisticated A/B testing, and forecasting features to support data-driven decision-making [3] Group 2: Professional Services and Collaboration - A notable feature is access to a professional services network that connects businesses with industry experts for strategic support in areas like mobile SEO and competitive intelligence [4] - The integrated collaboration suite facilitates project management and messaging, enabling seamless execution and measurement of marketing campaigns, thus enhancing the ROI of SEO investments [5] Group 3: Market Impact and Performance - Early adopters like AutoScout24 and BlueGlass have reported significant benefits, with the platform enhancing strategic SEO views and workflow management [6] - The launch is expected to drive substantial growth for Semrush, positioning it as a key player in the digital marketing industry and setting a new standard for enterprise-level SEO solutions [6] - Semrush's stock has increased by 96.7% over the past year, outperforming the industry's growth of 28% [7]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40276 Semrush Holdings, Inc. (Exact ...

Semrush Holdings, Inc. (NYSE:SEMR) Q1 2024 Earnings Conference Call May 7, 2024 8:30 AM ET Company Participants Brinlea Johnson - Investor Relations Oleg Shchegolev - Chief Executive Officer Eugene Levin - President Brian Mulroy - Chief Financial Officer Conference Call Participants Scott Berg - Needham Surinder Thind - Jefferies Jackson Ader - KeyBanc Capital Markets Adam Hotchkiss - Goldman Sachs Elizabeth Porter - Morgan Stanley Arti Vula - JPMorgan Operator Hello everyone, and welcome to the Semrush Hol ...