Semrush Announces Third Quarter 2024 Financial Results
-- Third quarter revenue of $97.4 million, up 24% year-over-year
-- ARR of $401 million, up 24% year-over-year
-- Third quarter net cash provided by operating activities of $8.1 million
-- Company raises full year 2024 revenue and non-GAAP operating margin
guidance
BOSTON--(BUSINESS WIRE)--November 07, 2024--
Semrush Holdings, Inc. $(SEMR)$, a leading online visibility management SaaS platform, today reported financial results for the third quarter ended September 30, 2024.
"We reported a strong quarter, exceeding our guidance and positioning us to raise our full year 2024 guidance. Revenue growth accelerated, rising 24% year-over-year to $97.4 million, and ARR also grew 24% year-over-year, as we focused on growing our core business, while upselling and cross selling our additional offerings. Our portfolio of products is expanding, and we are seeing continued strong initial uptake in the market for our Enterprise SEO solution. We are expanding our leadership position in online visibility and we are succeeding in combining strong durable growth with profitability and free cash flow generation," said Oleg Shchegolev, CEO and Co-Founder of Semrush.
Third Quarter 2024 Financial Highlights
-- Third quarter revenue of $97.4 million, up 24% year-over-year.
-- Income from operations of $1.7 million for the third quarter, compared to
income from operations of $2.7 million in the prior year period.
-- Operating margin of 1.8% for the third quarter, compared to operating
margin of 3.5% in the prior year period.
-- Non-GAAP income from operations of $12.1 million for the third quarter,
compared to a non-GAAP income from operations of $7.5 million in the
prior year period.
-- Non-GAAP operating margin of 12.4% for the third quarter, compared to
non-GAAP operating margin of 9.5% in the prior year period.
-- Q3 free cash flow of $6.2 million and free cash flow margin of 6.3%.
-- ARR of $401 million as of September 30, 2024, up 24% year-over-year.
-- Over 117,000 paying customers as of September 30, 2024, up 10% from a
year ago.
-- Dollar-based net revenue retention of 107% as of September 30, 2024,
consistent with the previous quarter.
See "Non-GAAP Financial Measures & Definitions of Key Metrics" below for how Semrush defines ARR, dollar-based net revenue retention, non-GAAP income (loss) from operations, non-GAAP operating margin, free cash flow, and free cash flow margin, and the financial tables that accompany this release for reconciliations of each non-GAAP financial measure to its closest comparable GAAP financial measure.
Third 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. In the third quarter, we advanced and expanded many of our offerings:
-- Semrush Enterprise SEO Platform is receiving strong demand; new deals
were signed with large multinational corporations including Salesforce,
HSBC, LG, Samsung, Alibaba, Sony, DoorDash, TikTok, and Square.
-- Expanded AI Overview tracking to Semrush's Organic Research, Domain
Overview, Keyword Overview, and Keyword Magic Tool, helping customers
better understand AI Overviews as a key SERP feature and enhancing their
chances of being featured.
-- Improved Semrush Social, including Content AI, and added TikTok
integration, allowing users to schedule and post videos, track engagement
metrics, and analyze content performance.
-- Continued investments in Generative AI to provide enhanced, more
efficient content creation and marketing capabilities through Semrush's
platform and App Center:
-- Introduced AdCreative.ai's AdLLM Spark, a smart AI tool that
empowers businesses to create optimized ad texts to improve
engagement and enhance conversion rates.
-- Daily insights allow for faster reactions and more precise
decision-making. Now, .Trends users can spot trends early, understand
ongoing market dynamics fast, strategize immediately, and execute with
lower risk.
-- Integrated Klaviyo with My Reports, enabling marketers to pull email
performance data and create dashboards alongside Semrush and other
external marketing tools to easily showcase campaign performance.
-- Released AlgoPix's Product Research Pulse in the App Center, providing
e-commerce sellers with insightful product research data from various
marketplaces to inform product development and enhance marketing
strategies.
-- Strengthened customer focus with appointment of Veronique Montreuil as
Chief Customer and Data Officer.
-- Semrush customers who pay more than $10,000 annually grew by 44%
year-over-year.
-- Ended the quarter with approximately 1.0 million registered free active
customers.
Business Outlook
"We are pleased with our performance this quarter and have executed well to overachieve on our top line growth and profitability guidance," said Brian Mulroy, CFO of Semrush. "We posted another quarter of strong growth and profitability, with positive non-GAAP operating income of $12.1 million, non-GAAP operating margin of 12.4%, which was up nearly 300 basis points year-over-year, and cash flow from operations of $8.1 million. Looking ahead, we have a disciplined capital allocation strategy and expect to continue gaining efficiencies across the organization while also investing in our future growth."
Based on information as of today, November 7, 2024, we are issuing the following financial guidance:
Fourth Quarter 2024 Financial Outlook
-- For the fourth quarter, we expect revenue in a range of $100.8 to $101.8
million, which at the mid-point would represent growth of approximately
21% year-over-year.
-- We expect fourth quarter non-GAAP operating margin to be approximately
11%.
Raised Full-Year 2024 Financial Outlook
-- For the full year, we expect revenue in a range of $375 to $376 million,
which represents growth of 22% year-over-year.
-- We expect a full year non-GAAP operating margin of approximately 12%.
-- We expect the full year free cash flow margin to be approximately 8%.
As previously disclosed, we are no longer providing guidance for non-GAAP net income, and instead are guiding both non-GAAP operating margin and free cash flow margin. Also as previously disclosed, we have also updated our definitions of non-GAAP income (loss) from operations to exclude Amortization of Acquired Intangible Assets, Acquisition Related Costs, Restructuring Costs and other one-time expenses outside the ordinary course of business in addition to the prior exclusion of Stock Based Compensation. Our guidance for the fourth quarter 2024 and full year 2024, as well as actual results presented herein, reflect this change.
Reconciliations of non-GAAP operating margin and free cash flow margin guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs. We expect the variability of the above charges 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 its financial results, business highlights, outlook and other matters, the details for which are provided below.
Date: Friday, November 8th, 2024
Time: 8:30 a.m. ET
Hosts: Oleg Shchegolev, CEO, Eugene Levin, President, and Brian Mulroy, CFO
Conference ID: 866040
Participant Toll Free Dial-In Number: +1 833 470 1428
Participant International Dial-In Number: +1 929 526 1599
Registration:
The live webcast of the conference call as well as the replay can be accessed for a limited time from the Semrush investor relations website at http://investors.semrush.com/.
About Semrush
Semrush is a leading online visibility management SaaS platform that enables businesses globally to run search engine optimization, advertising, content, social media and competitive research campaigns and get measurable results from online marketing. Semrush offers insights and solutions for companies to build, manage, and measure campaigns across various marketing channels. Semrush is headquartered in Boston and has offices in Trevose, Austin, Dallas, Miami, Amsterdam, Barcelona, Belgrade, Berlin, Limassol, Prague, Warsaw, and Yerevan.
Forward-looking Statements
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