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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SEMrush Holdings Inc | NYSE:SEMR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.20 | -1.35% | 14.64 | 14.97 | 14.57 | 14.91 | 56,103 | 17:13:48 |
Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility management SaaS platform, today reported financial results for the third quarter ended September 30, 2023.
"In the third quarter, we achieved strong results, with revenue growth accelerating to 20%, ARR growth of 21%, and customers increasing roughly 14% year-over-year," said Oleg Shchegolev, CEO and Co-Founder of Semrush. "We have built a business focused on driving strong, sustainable growth with improving profitability. We remain focused on three main growth pillars to set us up for long-term, durable success: increasing new user growth, maximizing the value we generate from our users, and adding new products to our portfolio to address client needs and market trends. Looking ahead, we are excited about what the future holds and are committed to making Semrush the platform of choice for businesses of all sizes, across all industries, all around the world, to improve their online visibility,” added Mr. Shchegolev.
Third Quarter Financial Highlights
See “Non-GAAP Financial Measures & Definitions of Key Metrics” below for how Semrush defines ARR, dollar-based net revenue retention, non-GAAP net income (loss), 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 2023 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:
As of September 30, 2023, we had approximately 106,800 paying customers, accounting for $322.8 million in ARR, an increase from 94,000 paying customers accounting for $267.3 million in ARR as of September 30, 2022.
Business Outlook
“Looking at the fourth quarter, I am confident in the underlying trends in the business and capabilities of our team as we continue on the path to delivering strong growth and profitability. As a result, we are meaningfully raising our non-GAAP net income guidance to account for our improved efficiency and tightening our previously issued top line guidance,” said Brian Mulroy, CFO of Semrush. “We believe we will continue to make progress on our revenue growth pillars and maintain a disciplined and balanced approach to improving efficiency and profitability while also investing in future growth opportunities that we expect will drive long-term value.”
Based on information as of today, November 1, 2023, we are issuing the following financial guidance:
Fourth Quarter 2023 Financial Outlook
Full-Year 2023 Financial Outlook
Reconciliation of non-GAAP net income guidance to the most directly comparable GAAP measure is 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 this non-GAAP measure, 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: Thursday, November 2, 2023
Time: 8:30 a.m. ET
Hosts: Oleg Shchegolev, CEO, Eugene Levin, President, and Brian Mulroy, CFO
Conference ID: 3520221
Participant Toll Free Dial-In Number: 1 (888) 350-3436
Participant International Dial-In Number: 1 (646) 960-0185
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, pay-per-click, 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, with approximately 106,800 paying customers, is headquartered in Boston and has offices in Philadelphia, Trevose, Austin, Dallas, Amsterdam, Barcelona, Belgrade, Berlin, Limassol, Prague, Warsaw, and Yerevan.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements include, but are not limited to, guidance on financial results for the fourth quarter and full year of 2023, including revenue and non-GAAP net income; statements about future operating results, growth opportunities, our ability to add new products and address user needs, business trends, capability to deliver profits, cost reduction and structures, product development and consumer growth.
The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission (“SEC”), including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations'' in our filings with the Securities and Exchange Commission ("SEC"), including our most recent annual report on form 10-K, and our subsequently filed quarterly reports and other SEC filings. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. The forward-looking statements in this release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Additional information regarding these and other factors that could affect our results is included in our SEC filings, which may be obtained by visiting our Investor Relations page on its website at investors.semrush.com or the SEC's website at www.sec.gov.
Non-GAAP Financial Measures & Definitions of Key Metrics
Semrush has provided in this release the non-GAAP financial measures of non-GAAP income (loss) from operations and non-GAAP net income (loss). Semrush uses these non-GAAP financial measures internally in analyzing its financial results and believes it is useful to investors, as a supplement to GAAP measures, in evaluating Semrush’s ongoing operational performance. Semrush believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Semrush’s industry, many of which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
ARR is defined as of a given date as the monthly recurring revenue that we expect to contractually receive from all paid subscription agreements that are actively generating revenue as of that date multiplied by 12. We include both monthly recurring paid subscriptions, which renew automatically unless canceled, as well as the annual recurring paid subscriptions so long as we do not have any indication that a customer has canceled or intends to cancel its subscription and we continue to generate revenue from them.
Dollar-based net revenue retention is defined as (a) the revenue from our customers during the twelve-month period ending one year prior to such period as the denominator and (b) the revenue from those same customers during the twelve months ending as of the end of such period as the numerator. This calculation excludes revenue from new customers and any non-recurring revenue.
Non-GAAP income (loss) from operations. We define non-GAAP income (loss) from operations as GAAP income (loss) from operations, excluding stock-based compensation expense. We believe non-GAAP income (loss) from operations provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.
Non-GAAP net income (loss). We define non-GAAP net income (loss) as GAAP net income (loss), excluding stock-based compensation expense. We believe non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.
Semrush Holdings, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended September 30,
Nine months ended September 30,
2023
2022
2023
2022
Revenue
$
78,718
$
65,793
$
224,281
$
185,531
Cost of revenue ¹
13,032
12,405
38,643
36,590
Gross profit
65,686
53,388
185,638
148,941
Operating expenses
Sales and marketing ¹
30,094
30,569
95,827
87,293
Research and development ¹
14,075
10,134
42,071
27,943
General and administrative ¹
18,769
17,007
56,797
45,388
Exit costs
—
5,932
1,292
9,417
Total operating expenses
62,938
63,642
195,987
170,041
Income (loss) from operations
2,748
(10,254
)
(10,349
)
(21,100
)
Other income, net
2,104
1,483
6,728
2,353
Income (loss) before income taxes
4,852
(8,771
)
(3,621
)
(18,747
)
Provision for income taxes
637
321
2,303
1,200
Net income (loss)
$
4,215
$
(9,092
)
$
(5,924
)
$
(19,947
)
Net income (loss) per share attributable to common stockholders:
Basic
$
0.03
$
(0.06
)
$
(0.04
)
$
(0.14
)
Diluted
$
0.03
$
(0.06
)
$
(0.04
)
$
(0.14
)
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders:
Basic
142,837
141,256
142,247
141,034
Diluted
146,271
141,256
142,247
141,034
¹ includes stock-based compensation expense as follows:
Three months ended September 30,
Nine months ended September 30,
2023
2022
2023
2022
Cost of revenue
$
33
$
20
$
82
$
52
Sales and marketing
822
189
2,190
599
Research and development
579
329
1,464
836
General and administrative
2,769
1,442
7,028
3,629
Total stock-based compensation
$
4,203
$
1,980
$
10,764
$
5,116
Three months ended September 30,
Nine months ended September 30,
2023
2022
2023
2022
Reconciliation of Non-GAAP income (loss) from operations
Income (loss) from operations
$
2,748
$
(10,254
)
$
(10,349
)
$
(21,100
)
Stock-based compensation expense
4,203
1,980
10,764
5,116
Non-GAAP income (loss) from operations
$
6,951
$
(8,274
)
$
415
$
(15,984
)
Three months ended September 30,
Nine months ended September 30,
2023
2022
2023
2022
Reconciliation of Non-GAAP net income (loss)
Net income (loss)
$
4,215
$
(9,092
)
$
(5,924
)
$
(19,947
)
Stock-based compensation expense
4,203
1,980
10,764
5,116
Non-GAAP net income (loss)
$
8,418
$
(7,112
)
$
4,840
$
(14,831
)
Semrush Holdings, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
As of
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
41,189
$
79,765
Short-term investments
188,882
157,774
Accounts receivable
5,820
3,559
Deferred contract costs, current portion
8,192
6,974
Prepaid expenses and other current assets
16,403
9,307
Total current assets
260,486
257,379
Property and equipment, net
5,661
8,076
Operating lease right-of-use assets
10,942
12,009
Intangible assets, net
12,901
10,286
Goodwill
7,738
6,529
Deferred contract costs, net of current portion
3,189
2,082
Other long-term assets
1,045
2,329
Total assets
$
301,962
$
298,690
Liabilities and stockholders' equity
Current liabilities
Accounts payable
$
9,904
$
15,495
Accrued expenses
17,923
17,847
Deferred revenue
55,240
49,354
Current portion of operating lease liabilities
3,713
3,694
Other current liabilities
1,878
2,311
Total current liabilities
88,658
88,701
Deferred revenue, net of current portion
405
122
Deferred tax liability
24
11
Operating lease liabilities, net of current portion
7,880
8,929
Other long-term liabilities
226
1,023
Total liabilities
97,193
98,786
Stockholders' equity
Class A common stock
1
—
Class B common stock
—
1
Additional paid-in capital
285,831
274,057
Accumulated other comprehensive deficit
(2,191
)
(1,206
)
Accumulated deficit
(78,872
)
(72,948
)
Total stockholders’ equity
204,769
199,904
Total liabilities and stockholders' equity
$
301,962
$
298,690
Semrush Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2023
2022
Operating Activities
Net loss
$
(5,924
)
$
(19,947
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization expense
4,807
6,626
Amortization of deferred contract costs
7,510
7,145
Amortization (accretion) of premiums and discounts on investments
(4,667
)
—
Non-cash lease expense
2,828
—
Stock-based compensation expense
10,764
5,116
Non-cash interest expense
158
149
Change in fair value of convertible debt securities
(335
)
(889
)
Deferred taxes
12
290
Loss on disposal of subsidiaries
—
1,738
Other non-cash items
771
—
Changes in operating assets and liabilities
Accounts receivable
(2,261
)
(344
)
Deferred contract costs
(9,835
)
(8,358
)
Prepaid expenses and other current assets
(5,411
)
(1,395
)
Accounts payable
(5,570
)
4,824
Accrued expenses
174
(2,772
)
Other current liabilities
—
1,562
Deferred revenue
6,198
6,299
Other long-term liabilities
—
(38
)
Change in operating lease liability
(2,786
)
—
Net cash (used in) provided by operating activities
(3,567
)
6
Investing Activities
Purchases of property and equipment
(1,065
)
(4,016
)
Purchases of short-term investments
(182,381
)
—
Proceeds from sales and maturities of short-term investments
154,741
—
Purchases of convertible debt securities
(319
)
(2,000
)
Capitalization of internal-use software development costs
(3,913
)
(1,273
)
Cash paid for acquisition of businesses, net of cash acquired
(1,232
)
(13,993
)
Purchases of other investments
(150
)
—
Net cash used in investing activities
(34,319
)
(21,282
)
Financing Activities
Proceeds from exercise of stock options
746
1,539
Proceeds from issuance of shares in connection with Employee Stock Purchase Plan
264
257
Payment of finance leases
(1,938
)
(1,967
)
Net cash used in financing activities
(928
)
(171
)
Effect of exchange rate changes on cash and cash equivalents
238
(1,664
)
Decrease in cash, cash equivalents and restricted cash
(38,576
)
(23,111
)
Cash, cash equivalents and restricted cash, beginning of period
79,765
269,665
Cash, cash equivalents and restricted cash, end of period
$
41,189
$
246,554
View source version on businesswire.com: https://www.businesswire.com/news/home/20231101780295/en/
INVESTOR Brinlea C. Johnson Managing Director The Blueshirt Group brinlea@blueshirtgroup.com
MEDIA Jesse Platz VP of Analyst and Public Relations Semrush Holdings, Inc. jesse.platz@semrush.com
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