Revenue Growth - Total revenue for the three months ended September 30, 2024, was $53.5 million, up from $45.2 million for the same period in 2023, representing an increase of approximately 18.2%[145] - Annual Recurring Revenue (ARR) as of September 30, 2024, reached $400.7 million, an increase from $322.8 million as of September 30, 2023, reflecting a growth of approximately 24.1%[148] - In Q3 2024, the company reported revenue of $97,410,000, a 23.7% increase from $78,718,000 in Q3 2023[180] - Revenue for the three months ended September 30, 2024, was $97,410,000, representing a 24% increase from $78,718,000 in the same period of 2023[184] Customer Metrics - The number of paying customers increased to over 117,000 as of September 30, 2024, compared to more than 106,000 as of September 30, 2023, indicating a growth of approximately 10.4%[148] - The company served over 117,000 paying customers as of September 30, 2024, with no single customer accounting for more than 10% of total revenue[166] - The number of paying customers increased from over 106,000 as of September 30, 2023, to over 117,000 as of September 30, 2024[184] Financial Performance - Free cash flow for the nine months ended September 30, 2024, was $25.8 million, compared to a negative free cash flow of $(8.5) million for the same period in 2023[159] - Net cash provided by operating activities as a percentage of revenue was 12.8% for the nine months ended September 30, 2024, compared to (1.6)% for the same period in 2023[160] - Non-GAAP income from operations for the nine months ended September 30, 2024, was $33.98 million, significantly up from $3.34 million for the same period in 2023[161] - The net cash provided by operating activities was $35,063,000 in 2024, compared to a net cash used of $(3,567,000) in 2023[163] - Net income for the three months ended September 30, 2024, was 1% of revenue, down from 5% in the same period of 2023[183] - The net income attributable to Semrush Holdings, Inc. for Q3 2024 was $1,094,000, compared to $4,215,000 in Q3 2023[180] Operating Expenses - The cost of revenue for Q3 2024 was $17,063,000, up from $13,032,000 in Q3 2023, representing a 31% increase[180] - Total operating expenses for the three months ended September 30, 2024, were 81% of revenue, compared to 80% in the same period of 2023[183] - Research and development expenses increased to $22,183,000 in Q3 2024 from $14,075,000 in Q3 2023, reflecting a 57.7% rise[180] - Research and development expenses for the three months ended September 30, 2024, increased by $8,108,000, a 58% increase compared to the same period in 2023[192] - Sales and marketing expenses for the three months ended September 30, 2024, were $35,689,000, a 19% increase from $30,094,000 in the same period of 2023[189] - General and administrative expenses for the three months ended September 30, 2024, were $20,770,000, an 11% increase from $18,769,000 in the same period of 2023[194] Cash and Investments - As of September 30, 2024, the company had cash and cash equivalents of $45.1 million and short-term investments of $187.8 million[203] - Net cash used in investing activities for the nine months ended September 30, 2024, was $51.1 million, primarily due to $136.8 million in purchases of short-term investments[211] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $2.0 million, consisting of $3.7 million from the exercise of stock options[213] - The company believes existing cash and short-term investments will be sufficient to meet operating and capital needs for at least the next 12 months[204] Strategic Plans - The company plans to continue investing in product development to enhance its technology and expand its product offerings[153] - The company expects to continue investing in research and development to enhance its platform and customer experience[171] - The company anticipates fluctuations in its cost of revenue as it continues to expand its customer base and invest in infrastructure[168] Other Financial Metrics - The dollar-based net revenue retention rate was approximately 107% as of September 30, 2024, consistent with the rate at the end of 2023[150] - ARR per paying customer increased to $3,414 as of September 30, 2024, up from $3,022 as of September 30, 2023, representing an increase of approximately 13%[152] - Non-GAAP income from operations margin improved to 12.4% in 2024 from 1.5% in 2023[162] - Total stock-based compensation expense for Q3 2024 was $7,575,000, up from $4,203,000 in Q3 2023, indicating an increase of 80.5%[181] - The provision for income taxes for the three months ended September 30, 2024, was $3,899,000, representing a 512% increase from $637,000 in the prior year[200] - The increase in other income for the nine months ended September 30, 2024, was primarily due to an increase in foreign currency exchange gains and interest income[199] Market Presence - The company operates subsidiaries in multiple countries, including the U.S., Spain, and Germany, indicating a broad market presence[144] - The company is exposed to foreign currency exchange risk, with a potential $7.7 million gain or loss from a 10% change in the euro relative to the U.S. dollar[222]

Semrush Investor Presentation November 2024 Safe Harbor This presentation will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and existing and future demand for our existing and any new products and features, our expected gro ...

Financial Data and Key Metrics Changes - The company reported revenue of $97.4 million, representing a 24% year-over-year increase [6][26] - Non-GAAP operating income was $12.1 million, with a non-GAAP operating margin of 12.4%, up from 9.5% in the prior year [7][33] - Annual recurring revenue (ARR) grew 24% year-over-year to $401 million [30] - The average ARR per paying customer exceeded $3,400, up 13% year-over-year [31] Business Line Data and Key Metrics Changes - The company has 8,000 enterprise accounts, over 17,000 mid-market accounts, and over 21,000 marketing agencies [27] - The enterprise product has secured major deals with clients such as Salesforce, HSBC, and Samsung, indicating strong demand [12][24] - The company has seen a significant increase in customers paying over $10,000 and $50,000 annually, with over 4,000 customers now in the former category [28] Market Data and Key Metrics Changes - The total addressable market (TAM) has increased from $13 billion at the time of the IPO to approximately $40 billion [9] - The company is experiencing strong demand for its enterprise SEO products, which are expected to drive future growth [12][24] Company Strategy and Development Direction - The company aims to leverage profitability to invest in new products and enhance cross-sell and upsell capabilities [15] - The acquisition of Third Door Media is part of the strategy to expand reach and provide industry-related content [18] - The company is focused on maintaining a 20% compound annual revenue growth rate over the near term [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth opportunities for 2025 and beyond, citing a strong foundation built in 2024 [7][15] - The company anticipates continued strong demand for its enterprise products, which are expected to enhance net revenue retention rates [48] Other Important Information - Cash and cash equivalents at the end of the quarter were $233 million, reflecting a slight increase from the previous quarter [34] - The company raised its full-year 2024 revenue guidance to a range of $375 million to $376 million, up from the previous range [36] Q&A Session Summary Question: Insights on AI capabilities and pricing strategy - Management discussed the positive reception of AI capabilities and various monetization strategies for core and enterprise plans [39][44] Question: Net Revenue Retention (NRR) expectations - Management confirmed NRR at 107% and highlighted the importance of segment analysis in understanding this metric [45][48] Question: Interest in SEO following Google's AI updates - Management noted increased interest from marketers in optimizing content for new search features introduced by Google [50][51] Question: Enterprise product penetration and migration - Management reported that over 90 enterprise accounts have migrated to the new SEO solution, with expectations for continued growth [63] Question: Consolidation of SEO tools for enterprises - Management explained the goal of providing an integrated solution to replace disparate tools used by enterprises [70][72]

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]