SEMrush (US:SEMR)2025-11-10 21:31Revenue 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].