Similarweb(US:SMWB)2023-08-09 16:21Financial Data and Key Metrics Changes - In Q2 2023, the company reported revenue of $53.7 million, representing a 13% increase year-over-year [6] - The global customer base grew by 12% year-over-year, reaching over 4,300 customers, with an average customer spend of nearly $51,000 annually, consistent with Q2 last year [6] - The non-GAAP gross margin was nearly 80%, and the non-GAAP operating margin improved by 35 percentage points compared to the previous year [6][40] - The GAAP operating loss for Q2 was $9.8 million, while the non-GAAP operating loss was $3.5 million, better than the lower end of the guidance range [40] Business Line Data and Key Metrics Changes - The dollar-based net retention rate (NRR) was 101%, down from 115% in Q2 2022, indicating challenges in expansion within the existing customer base [16] - For customers with annual recurring revenue (ARR) of $100,000, the NRR was 109%, down from 127% in the same quarter last year [39] Market Data and Key Metrics Changes - The company noted that enterprise customers are optimizing budgets, leading to longer sales cycles and some customers reducing spending to fit corporate budgets [12][62] - There is a noticeable change in behavior among small accounts and very large corporates, with increased pressure on budget optimization [26] Company Strategy and Development Direction - The company is focused on achieving sustained positive free cash flow by Q4 2023 and is investing efficiently in marketing, R&D, and product divisions [35][41] - The launch of SimilarAsk, an AI-driven feature, aims to enhance customer experience and drive growth potential [13][14] - The company is optimistic about the integration of AI capabilities to unlock growth and improve product development cycles [37][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustained positive free cash flow and emphasized the importance of balancing growth with profitability [41] - The pipeline remains strong, with new customer additions and market penetration expected to continue [35] - Management acknowledged the challenges posed by macroeconomic conditions but remains committed to efficient growth [60] Other Important Information - The company expects total revenue for Q3 2023 to be in the range of $54.1 million to $54.5 million, and for the full year, revenue is expected to be between $216 million and $218 million, reflecting approximately 12% growth year-over-year [18] - The company is seeing strong performance in Europe, while China is experiencing some slowdown [30] Q&A Session Summary Question: How are customers reducing spend? - Management noted that budget reductions are often due to layoffs and corporate budget adjustments, leading to decreased spending on fee-based products [43][44] Question: What changes have been made to shorten sales cycles? - Management acknowledged that sales cycles remain longer due to macroeconomic pressures but emphasized strong visibility into deals [62] Question: How is the AI feature SimilarAsk progressing? - SimilarAsk is already live and being used by early adopters, with plans for broader rollout to paying customers [64][75] Question: Are there differences in behavior between large enterprise customers and smaller ones? - Management indicated that larger enterprises are under more pressure to optimize budgets, while smaller accounts are also feeling the strain [64] Question: What is the outlook for normalized top-line growth? - Management plans to provide guidance for next year in Q4, emphasizing the unique value of their digital data in driving growth [60]