Semrush Holdings, Inc. (NYSE:SEMR) Q4 2022 Results Conference Call March 14, 2023 8:30 AM ET Company Participants Bob Gujavarty - Vice President, Investor Relations Oleg Shchegolev - Chairman and Chief Executive Officer Eugene Levin - President Evgeny Fetisov - Chief Financial Officer Andrew Warden - Chief Marketing Officer Conference Call Participants Elizabeth Porter - Morgan Stanley Parker Lane - Stifel Scott Berg - Needham & Company Michael Turits - KeyBanc Capital Markets Operator Good morning. My name ...

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $65.8 million, representing a 34% year-over-year increase and a 5% increase from the previous quarter [9][21] - The company had approximately 94,000 paying customers at the end of September, with customer growth of over 17% consistent with the previous quarter [9][21] - Non-GAAP gross margin was 81.2%, up over 400 basis points year-over-year and up 160 basis points from the previous quarter [21][22] - Non-GAAP net loss was $7.1 million, compared to a non-GAAP net income of $12,000 a year ago [24] Business Line Data and Key Metrics Changes - The product mix remained largely unchanged, with growth slightly favoring the entry-level pro plan [21] - The dollar-based net revenue retention for Q3 was down to 122%, impacted by lower expansion from existing customers [21] Market Data and Key Metrics Changes - The company noted a more uncertain demand environment compared to the previous year, particularly affecting larger accounts [12][31] - The small business segment showed resilience, with strong performance despite macroeconomic pressures [31] Company Strategy and Development Direction - The company is focused on user growth and plans to introduce new features in late 2023, including enhancements to the App Center [10][11] - The App Center strategy aims to address market fragmentation by offering third-party applications to meet diverse customer needs [16][19] - The company is optimistic about long-term growth, emphasizing efficiency and solid unit economics [12][27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q4, acknowledging potential challenges in the economic environment but highlighting positive demand signals [26][37] - The company expects Q4 revenue in the range of $67.25 million to $67.75 million, representing approximately 26% year-over-year growth at the midpoint [26] Other Important Information - Total non-GAAP operating expenses were $55.8 million, up 48% year-over-year, primarily due to increased investment in sales and marketing [22][24] - The company entered the quarter with $247 million in cash, with cash flow from operations being negative $500,000 [25] Q&A Session Summary Question: Changes in macroeconomic conditions and their impact - Management noted that larger accounts are experiencing scrutiny in spending, but the small business segment remains stable [31] Question: Sales leadership changes and their effects - Management indicated that while changes in sales leadership can cause concerns, they did not see a significant impact on current results [33] Question: Q4 guidance assumptions - Management expressed cautious optimism for Q4, noting that while demand signals are positive, they are being careful due to potential seasonality effects [37] Question: Demand environment comparison between Q3 and Q4 - Management observed that demand was strong in August but showed variability in September and October, leading to a cautious outlook [42] Question: Monetization of free users through the App Center - The company aims to convert free users into paying customers by offering lower-priced apps through the App Center, which could increase overall revenue [53][54] Question: Cost structure and future modeling - Management indicated that Q4 will serve as a proper baseline for modeling next year's costs, as most relocated employees will be settled by then [57]

[Part I. Financial Information](index=7&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The company's H1 2022 results show revenue growth but a net loss due to increased expenses and Russia exit costs [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $302.2 million while stockholders' equity declined due to the period's net loss Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$302,246** | **$300,074** | | Cash and cash equivalents | $248,917 | $269,665 | | Goodwill | $6,740 | $1,991 | | **Total Liabilities** | **$84,350** | **$74,532** | | Deferred revenue | $48,488 | $40,469 | | **Total Stockholders' Equity** | **$217,896** | **$225,542** | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) Revenue grew 41% in H1 2022, but a net loss of $10.9 million was recorded due to higher operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$62,610** | **$45,005** | **$119,738** | **$85,003** | | Gross Profit | $50,012 | $34,767 | $95,553 | $65,992 | | Total Operating Expenses | $58,268 | $34,782 | $106,399 | $64,501 | | *Exit Costs* | *$3,485* | *$0* | *$3,485* | *$0* | | (Loss) Income from Operations | $(8,256) | $(15) | $(10,846) | $1,491 | | **Net (Loss) Income** | **$(8,284)** | **$(279)** | **$(10,855)** | **$1,192** | | Diluted EPS | $(0.06) | $0.00 | $(0.08) | $0.01 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations fell sharply to $0.6 million in H1 2022, down from $10.1 million in the prior year Statement of Cash Flows Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$589** | **$10,059** | | Net cash used in investing activities | $(19,573) | $(1,871) | | Net cash (used in) provided by financing activities | $(251) | $137,040 | | **(Decrease) increase in cash** | **$(20,748)** | **$145,228** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the financial impact of exiting Russian operations, recent acquisitions, and accounting changes - In response to the Russia-Ukraine conflict, the company began exiting its Russian operations in March 2022, which involved relocating its Russia-based workforce[46](index=46&type=chunk)[115](index=115&type=chunk) - On August 3, 2022, the company completed the sale of its two Russian subsidiaries for an insignificant amount of consideration[169](index=169&type=chunk) - The company incurred **$3.5 million in exit costs** during Q2 2022, with an additional **$8.5 million in other costs** expected by year-end 2022[118](index=118&type=chunk)[119](index=119&type=chunk) - In H1 2022, the company completed two acquisitions, Backlinko and Kompyte, for a total of **$14.0 million**[104](index=104&type=chunk)[106](index=106&type=chunk) - Beginning January 1, 2022, the functional currency for most foreign subsidiaries was changed from the U.S. dollar to their local currencies[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth was driven by more paying customers, while profitability was hit by higher costs and Russia exit charges Key Performance Indicators | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Paying Customers | >91,000 | 79,000 | | Annual Recurring Revenue (ARR) | $254.7 million | $188.0 million | | Dollar-Based Net Revenue Retention | ~125% | N/A (126% at Dec 31, 2021) | | ARR per Paying Customer | $2,792 | $2,351 | - The company is winding down operations in Russia and expects to incur total costs of approximately **$17.5 million to $21.5 million** during fiscal year 2022[173](index=173&type=chunk) Revenue by Geography (in thousands) | Region | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | | United States | $54,652 | $38,840 | | United Kingdom | $12,233 | $8,870 | | Other | $52,853 | $37,293 | | **Total** | **$119,738** | **$85,003** | - The increase in sales and marketing expense for H1 2022 was primarily due to a **35% increase in headcount** and higher advertising expenses[210](index=210&type=chunk) - The company believes its existing cash of **$248.9 million** will be sufficient to meet operating and capital needs for at least the next 12 months[224](index=224&type=chunk)[226](index=226&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are foreign currency exchange rates, with minimal exposure to interest rate risk - The company does not believe it has material exposure to interest rate risk as its cash and cash equivalents are held in cash deposits and money market funds[241](index=241&type=chunk) - The company has foreign currency risk from expenses denominated in various currencies; a **10% adverse change in the USD/ruble exchange rate** would result in a **$2.3 million loss**[245](index=245&type=chunk) - The company has not engaged in hedging foreign currency transactions to date but may evaluate doing so in the future[246](index=246&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to a previously identified material weakness in financial reporting - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were **not effective**[247](index=247&type=chunk) - A **material weakness** in internal control over financial reporting, first identified in 2019, persists due to deficiencies in the financial statement close process[248](index=248&type=chunk)[388](index=388&type=chunk) - The company is implementing a remediation plan which includes formalizing processes, hiring additional finance personnel, and upgrading accounting systems[250](index=250&type=chunk)[389](index=389&type=chunk) [Part II. Other Information](index=54&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any material legal proceedings - As of the report date, **Semrush is not involved in any material legal proceedings**[256](index=256&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) Key risks include subscription dependency, intense competition, geopolitical instability, and a persistent material weakness - The business is highly dependent on customers renewing their premium subscriptions, which constitutes **substantially all of its revenue**[259](index=259&type=chunk) - Instability in geographies with significant operations, particularly Russia, presents a material risk, with estimated exit costs of **$17.5M - $21.5M in FY2022**[268](index=268&type=chunk)[270](index=270&type=chunk) - The company's products rely on access to data from third-party sources like Google, and any loss of access could harm the business[272](index=272&type=chunk)[273](index=273&type=chunk) - A **material weakness** in internal control over financial reporting related to the financial statement close process, identified in 2019, still exists[388](index=388&type=chunk) - The dual-class stock structure concentrates **81% of voting power** with pre-IPO stockholders, limiting the influence of Class A stockholders[27](index=27&type=chunk)[420](index=420&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=96&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred, and the use of IPO proceeds remains unchanged - There were no unregistered sales of equity securities in the period[432](index=432&type=chunk) - The use of proceeds from the IPO remains consistent with what was previously disclosed[433](index=433&type=chunk) [Defaults Upon Senior Securities](index=96&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities - None[435](index=435&type=chunk) [Mine Safety Disclosures](index=96&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[436](index=436&type=chunk) [Other Information](index=96&type=section&id=Item%205.%20Other%20Information) The company reports no other material information for this period - None[437](index=437&type=chunk) [Exhibits](index=96&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and corporate documents

Semrush Holdings, Inc. (NYSE:SEMR) Q2 2022 Earnings Conference Call August 11, 2022 8:30 AM ET Company Participants Bob Gujavarty – Vice President-Investor Relations Oleg Shchegolev – Co-Founder and Chief Executive Officer Eugene Levin – President Evgeny Fetisov – Chief Financial Officer Conference Call Participants Parker Lane – Stifel Elizabeth Porter – Morgan Stanley Mark Murphy – JP Morgan Clarke Jeffries – Piper Sandler Michael Vidovic – Keybanc Capital Markets Scott Berg – Needham Operator Good morni ...

Investor Presentation May 2022 Safe harbor This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business, operations, and financial conditions, including but not limited to current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our product development plans, and other future conditions. Words such as, but not limited to, "look forward to," "believe," "exp ...

Part I. Financial Information [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2022 revenue grew 43% year-over-year to $57.1 million, but a net loss of $2.6 million was recorded due to acquisitions and subsequent operational changes Condensed Consolidated Statements of Operations (Q1 2022 vs Q1 2021) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Revenue** | **$57,128 thousand** | **$39,998 thousand** | | Gross Profit | $45,541 thousand | $31,225 thousand | | (Loss) Income from Operations | ($2,590) thousand | $1,506 thousand | | **Net (Loss) Income** | **($2,571) thousand** | **$1,471 thousand** | | Diluted EPS | ($0.02) | $0.01 | Condensed Consolidated Balance Sheets (As of March 31, 2022 vs Dec 31, 2021) | Metric | As of March 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $259,824 thousand | $269,665 thousand | | Total Assets | $307,447 thousand | $300,074 thousand | | Deferred Revenue | $47,868 thousand | $40,469 thousand | | Total Liabilities | $82,884 thousand | $74,532 thousand | | Total Stockholders' Equity | $224,563 thousand | $225,542 thousand | Condensed Consolidated Statements of Cash Flows (Q1 2022 vs Q1 2021) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,026 thousand | $9,007 thousand | | Net cash used in investing activities | ($16,656) thousand | ($1,139) thousand | | Net cash (used in) provided by financing activities | ($13) thousand | $128,468 thousand | - In Q1 2022, the company completed two acquisitions: the asset acquisition of Backlinko for **$4.0 million** and the acquisition of Kompyte for **$10.0 million**, adding **$8.4 million** to intangible assets and **$6.1 million** to goodwill[106](index=106&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) - As a subsequent event, the company is winding down operations in Russia and relocating its workforce, expecting to incur costs of approximately **$24.5 million to $28.5 million** over the remainder of fiscal year 2022[168](index=168&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth was driven by customer base expansion, though increased operating expenses in sales, marketing, and administration led to an operating loss Key Performance Metrics (As of March 31, 2022 vs 2021) | Metric | As of March 31, 2022 | As of March 31, 2021 | | :--- | :--- | :--- | | Paying Customers | > 87,000 | > 72,000 | | Annual Recurring Revenue (ARR) | $235.7 million | $167.6 million | | Dollar-Based Net Revenue Retention | 127% | N/A (126% as of Dec 31, 2021) | | ARR per Paying Customer | $2,687 | N/A ($2,584 as of Dec 31, 2021) | Revenue by Geography (Q1 2022 vs Q1 2021) | Region | Q1 2022 Revenue (in thousands) | Q1 2021 Revenue (in thousands) | | :--- | :--- | :--- | | United States | $25,822 | $18,130 | | United Kingdom | $5,877 | $4,190 | | Other | $25,429 | $17,670 | | **Total** | **$57,128** | **$39,998** | - Sales and marketing expenses increased by **$9.4 million (57%)** YoY, driven by a 36% increase in headcount and a $4.3 million increase in marketing and advertising expenses to acquire new customers[210](index=210&type=chunk)[211](index=211&type=chunk) - General and administrative expenses rose by **$6.3 million (79%)** YoY, primarily due to a 16% increase in headcount, higher stock-based compensation, and increased costs for professional services and insurance associated with being a public company[213](index=213&type=chunk) - The company is actively winding down operations in Russia and relocating employees, expecting to incur costs of approximately **$24.5 million to $28.5 million** in fiscal 2022 for relocation and higher labor costs[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces minimal interest rate risk but has exposure to foreign currency fluctuations, particularly from expenses denominated in the Russian ruble - The company does not believe it has material exposure to interest rate risk as its **$259.8 million** in cash and cash equivalents are held in cash deposits and short-term money market funds[234](index=234&type=chunk) - The company is exposed to foreign currency risk, particularly from expenses denominated in the Russian ruble, where a **10% change** in the U.S. dollar to ruble exchange rate would result in a **$1.1 million** gain or loss[237](index=237&type=chunk) - The company has not engaged in hedging foreign currency transactions to date but may consider it in the future as international operations grow[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to a previously identified material weakness in financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **not effective** as of March 31, 2022[239](index=239&type=chunk) - The ineffectiveness is due to a **material weakness** identified in the 2019 audit related to controls over the financial statement close process, specifically the review of complex accounting issues involving significant judgment[240](index=240&type=chunk) - A remediation plan is underway, which includes implementing new accounting systems, hiring additional qualified staff, and strengthening supervisory reviews to address the material weakness[242](index=242&type=chunk)[243](index=243&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any legal proceedings that would materially impact its business, financial condition, or cash flows[249](index=249&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) Key risks include reliance on customer renewals, intense competition, geopolitical instability in Russia, and dependence on third-party data sources - A most material risk is the instability in Russia, where more than half of the company's full-time employees have historically been located, with expected relocation costs of **$24.5 million to $28.5 million** in fiscal 2022[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - The business is highly dependent on retaining paying customers and encouraging them to upgrade subscriptions or purchase add-ons, with the majority on monthly plans which increases churn risk[252](index=252&type=chunk)[253](index=253&type=chunk) - The company operates in a highly competitive market against both all-in-one platforms and specialized point solutions, which may have greater resources or brand recognition[256](index=256&type=chunk)[257](index=257&type=chunk) - The platform's functionality relies on access to data from third-party sources via APIs and data providers, and loss of access could harm the business[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - The dual-class stock structure concentrates **81% of voting power** with pre-IPO stockholders, limiting the influence of Class A common stockholders on corporate matters[410](index=410&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=92&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred, and the use of IPO proceeds remains unchanged from previous disclosures - There were no unregistered sales of equity securities in the reported period[421](index=421&type=chunk) - The use of proceeds from the IPO remains consistent with what was previously disclosed in the company's Form 10-K filed on March 18, 2022[423](index=423&type=chunk) [Item 3. Default Upon Senior Securities](index=93&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[425](index=425&type=chunk) [Item 4. Mine Safety Disclosure](index=93&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company's operations - Not applicable[426](index=426&type=chunk) [Item 5. Other Information](index=93&type=section&id=Item%205.%20Other%20Information) The company reports no other material information for this period - None[427](index=427&type=chunk) [Item 6. Exhibits](index=93&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and required officer certifications - The exhibits filed include corporate governance documents, an amendment to the revolving credit agreement, and required certifications by the Principal Executive Officer and Principal Financial Officer[428](index=428&type=chunk)[429](index=429&type=chunk)

Semrush Holdings, Inc. (NYSE:SEMR) Q1 2022 Earnings Conference Call May 11, 2022 8:30 AM ET Company Participants Bob Gujavarty - VP of IR Oleg Shchegolev - CEO Evgeny Fetisov - CFO Eugene Levin - Chief Strategy Officer Conference Call Participants Michael Turits - KeyBanc Parker Lane - Stifel Scott Berg - Needham Mark Murphy - JPMorgan Clarke Jeffries - Piper Sandler David North - Due North Capital Operator Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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 name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or ...

SEMrush Holdings, Inc. (NYSE:SEMR) Q4 2021 Earnings Conference Call March 1, 2022 8:30 AM ET Company Participants Bob Gujavarty - Vice President, Investor Relations Oleg Shchegolev - Chief Executive Officer Evgeny Fetisov - Chief Financial Officer Eugene Levin - Chief Strategy Officer Conference Call Participants Michael Turits - KeyBanc Parker Lane - Stifel Scott Berg - Needham Clarke Jeffries - Piper Sandler Operator Good morning. My name is Chris, and I will be your conference operator today. At this tim ...

SEMrush Holdings, Inc. (NYSE:SEMR) Q3 2021 Earnings Conference Call November 10, 2021 8:30 AM ET Company Participants Bob Gujavarty - VP, IR Oleg Shchegolev - CEO Evgeny Fetisov - CFO Eugene Levin - Chief Strategy Officer Conference Call Participants Michael Turits - KeyBanc Operator Ladies and gentlemen, thank you for standing by. My name is Brent, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Semrush Holdings' Third Quarter 2021 Results Conference Call. ...