Similarweb(US:SMWB)2025-11-12 14:32Financial Data and Key Metrics Changes - Revenue increased by 11% year over year to $72 million, aligning with expectations [5][11] - Customer base grew 15% year over year to over 6,000 ARR customers [5] - Reported eighth consecutive quarter of positive free cash flow, generating $43 million over the past eight quarters [9][12] - Normalized free cash flow for the quarter was $3 million, with a 4% free cash flow margin [12] - Remaining performance obligations (RPO) totaled $268 million at the end of Q3, up 26% year over year [12] Business Line Data and Key Metrics Changes - ARR from GenAI Intelligence products grew rapidly to over $1 million since the launch in April [6] - App Intelligence ARR increased to above $10 million, with over 580 customers using the product [8] - 58% of ARR is contracted under multi-year contracts, up from 45% last year, indicating revenue durability [11] Market Data and Key Metrics Changes - Overall net revenue retention (NRR) was 98% across all customers and 105% for customers with over $100,000 of ARR [12] - Gross revenue retention (GRR) showed improving trends, reaching the highest level in two years [12] Company Strategy and Development Direction - Focus on three high-impact opportunities: GenAI intelligence, data selling for LLM, and AI agents [5][6] - Launched Web Intelligence 4.0, integrating GenAI capabilities into the web intelligence solution [6][8] - Investment in go-to-market strategies is ramping, with 30% more sellers than the previous year [9] Management's Comments on Operating Environment and Future Outlook - Management reiterated guidance for 2025 revenues, expecting total revenue in the range of $285 million to $288 million, representing 15% year-over-year growth at the midpoint [13] - Raised non-GAAP operating profit guidance to between $8.5 million and $9.5 million, reflecting disciplined execution [13] - Confidence in converting large data contracts for LLMs into ARR deals in the future [19][20] Other Important Information - New CFO Ron Verrett will join in December, bringing over 20 years of finance experience [10] - The company is focused on delivering profitable growth and achieving long-term profit and free cash flow targets [9] Q&A Session Summary Question: Can you talk about your gross revenue retention? - Management noted that NRR reflects expansion primarily from large contracts booked in previous quarters, which may not yet show in NRR [16][17] Question: How is the LLM data selling evolving? - Management confirmed that the process of converting one-time data sales into ARR deals is lengthy but expressed confidence in future conversions [18][19] Question: Where are App Intelligence customers coming from? - Majority of App Intelligence customers are cross-sell from existing clients, leveraging their existing digital data needs [23][25] Question: Why did RPU decline slightly? - RPU was impacted by the addition of new customers, particularly larger ones, which may not yet reflect in revenue [32][33] Question: Any impact on demand for web intelligence due to SEO traffic decline? - Management observed increased demand for solutions as companies seek to fill gaps from declining SEO traffic [35][36] Question: Can you highlight any customer conversations around GenAI products? - There is significant interest in GenAI optimization products, with customers keen to understand brand perceptions and sentiment [50][52] Question: Any changes in the mix between enterprise and mid-market customers? - No significant changes in the customer mix between SMB and enterprise were observed [56] Question: How should we think about next year? - Guidance for next year will be provided in the next quarter, with a focus on ongoing engagement with large data contracts [72][73]