Semrush Announces First Quarter 2024 Financial Results

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Publish: 09/10/2024
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SEMrush announced its first quarter financial results. Investors assessed that SEMrush would grow even stronger in the following quarters and accurately predicted the rapid growth rate since SEMrush was listed on the Nasdaq. Please also ToolsClick Follow the impressive results that SEMrush achieved in the first quarter of 2024.

First-quarter revenue reached $85.8 million, up 21% year-over-year
ARR was $354.2 million, up 21% year-over-year
First-quarter net cash provided by operating activities was $14.8 million
First-quarter free cash flow was $12.0 million, free cash flow margin was 14.0%
New enterprise SEO platform now generally available (GA)

SEMrush appears in Time Square

Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility management SaaS platform, today reported financial results for the first quarter ended March 31, 2024.

“We got off to a strong start in 2024, delivering first-quarter revenue and ARR growth of 21% year-over-year. Importantly, we reported strong profits that exceeded our target, with operating income of $1.5 million and non-GAAP operating income of $9.7 million. In the first quarter, we reported nearly 112,000 paying and complementary customers. adding several new products and features to our platform. Looking ahead, we’re optimistic about our potential to continue successfully executing on our core growth pillars by onboarding more customers, cross-selling and upselling to existing customers, and leveraging AI within our platform to ensure businesses of all sizes have the most valuable digital marketing suite we are widely available, we hope to accelerate the growth by moving into larger accounts in the premium market,” said Oleg Shchegolev, CEO and Co-Founder, Semrush.

Financial highlights first quarter year 2024

· First-quarter revenue was $85.8 million, up 21% year-over-year.

· Operating income was $1.5 million in the first quarter, compared with an operating loss of $10.8 million in the year-ago period.

· Operating margin was 1.7% in the first quarter, compared to an operating margin of (15.2)% in the year-ago period.

· Non-GAAP operating income was $9.7 million in the first quarter, compared with a non-GAAP operating loss of $6.5 million in the year-ago period.

· Non-GAAP operating margin was 11.3% in the first quarter, compared to a non-GAAP operating margin of (9.1)% in the year-ago period.

· Q1 free cash flow was $12.0 million and free cash flow margin was 14.0%.

· ARR of $354.2 million as of March 31, 2024, up 21% year-over-year.

· Nearly 112,000 paying customers as of March 31, 2024, up 10% from a year ago.

· Net revenue retention in dollar terms was 107% as of March 31, 2024, comparable to the prior-year quarter.

See “Non-GAAP Financial Measures and Definitions of Key Metrics” below for how Semrush defines ARR, dollar net revenue retention, non-GAAP operating income (loss), non-GAAP operating margin, free cash flow, and free cash flow margin, as well as the financial tables accompanying this release that reconcile each non-GAAP financial measure to the nearest equivalent GAAP financial measure.

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First quarter 2024 business highlights

We are committed to empowering our customers with the best-in-class platform needed to boost their online presence and gain an edge in the market. During the first quarter, we enhanced and expanded many of our services:

· Continued investment in generative AI to deliver enhanced and more efficient content creation through Semrush’s platform and App Center:

· Introducing Semrush Copilot, a feature that provides AI-powered SEO alerts and recommendations based on machine learning algorithms that reference data from multiple Semrush engines at once.

· Launched AdCreative.ai, an AI-powered app that generates creative, product photography and text for any display or social media platform.

· We’re excited to announce that our new Enterprise SEO Platform is now generally available following a soft launch in October 2023. We’ve seen huge demand for this product and are currently being used by large multinational corporations.

· We upgraded .Trends, one of our Competitive Intelligence (CI) products, with daily and weekly competitor website traffic data. Previously, data was tracked monthly. We believe the added level of detail will help businesses gain deeper insights into competitor content performance, shifts in strategy, individual site and page traffic, special events, and seasonal fluctuations.

· Semrush customers paying more than $10,000 per year grew 32% year-over-year.

· Ended the quarter with more than 1,125,000 registered free active customers, up 27% year-over-year.

SEMrush Business Outlook

“We had a strong first quarter across the board, beating our Non-GAAP revenue and operating margins,” said Brian Mulroy, Semrush Chief Financial Officer. “Growth this quarter was driven by new customer additions and average revenue per customer expansion as we continued to execute on our cross-selling and upselling strategy. We continued to drive cost efficiencies, invest in the business and expand margins. Looking ahead, we are raising our full-year 2024 guidance and are confident in our ability to grow and scale our business. We expect to make incremental investments.” increases to strengthen our position while driving further operating leverage within the business and delivering long-term value for our shareholders.”

Based on information as of today, May 6, 2024, we are providing the following financial guidance:

Financial outlook for the second quarter of 2024

· For the second quarter, we expect revenue to be between $89.1 and $90.1 million, which at the midpoint would represent approximately 20% year-over-year growth.

· We expect second-quarter non-GAAP operating margin to be approximately 11.0%.

Financial outlook for the whole year 2024

· For the full year, we expect revenue to be approximately $366 to $369 million, growing 19% to 20% year over year.

· We expect full-year non-GAAP operating margin to be 10.5% to 11.5%.

· We expect full-year free cash flow margin to reach approximately 8.0%.

As stated in our fourth quarter 2023 and full year 2023 Financial Results, we are no longer providing guidance for non-GAAP net income but instead are providing guidance for both non-GAAP operating margin and free cash flow margin. We also updated our definition of non-GAAP income (loss) from operations to exclude Amortization of Acquired Intangible Assets, Acquisition-Related Expenses, Restructuring Expenses and other one-time expenses that are outside the ordinary course of business (e.g., our Exit Costs incurred primarily in 2022) in addition to the previous exclusion of Stock-Based Compensation. Our guidance for the second quarter of 2024 and full year 2024, as well as the actual results presented here, reflect this change.

Reconciling non-GAAP operating margin and free cash flow margin guidance to the most directly comparable GAAP measures would not be feasible without unreasonable efforts on a forward-looking basis due to the high volatility, complexity, and low visibility of the charges excluded from these non-GAAP measures, especially the measures and impacts of stock-based compensation expense, employer taxes, and specific tax deductions. The potential for stock compensation is directly affected by future recruitment, turnover and retention needs. We expect the volatility of the above fees to have a significant and potentially unpredictable impact on our future GAAP financial results.

Conference call details

Semrush will host a conference call and webcast to discuss financial results, business highlights, outlook and other matters, details of which are provided below.

Date: Tuesday, May 7, 2024

Time: 8:30 a.m. ET

Hosts: Oleg Shchegolev, Chief Executive Officer, Eugene Levin, President and Brian Mulroy, Chief Financial Officer

Conference code: 283299

Participant toll-free number: +1 833 470 1428

Participant’s international phone number: +1 929 526 1599