SEMR - Earnings call transcript Q1 2021

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Operator

Good day. Thank you for standing by and welcome to the Semrush Holdings First Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Please note that today's call is being recorded. the to hand now will conference Mr. over I Investor Gujavarty, Vice of President Bob Relations.

Bob Gujavarty

Bob Levin. Investor me our Conference and VP to afternoon. market Oleg in Gujavarty, Good I'm Shchegolev; issued release of call discussing results Holdings CSO, after our is Quarter our CEO, press be today. the First Fetisov; Relations the XXXX CFO, We'll Results With Evgeny Call. closed the Eugene announced on Semrush welcome and our

our highlight quarter. participation several we begin, to Before held second like conferences investor the be in will I'd virtual during

and these Private on the We Morgan our Act will attend Litigation call were conferences Details Media investors.semrush.com. on Baird the Conference Telecom Today's statements found Services the Media Technology May contain Needham May to JP of XX. Virtual made Conference The pursuant Consumer can of and website, June Securities be the Technology will provisions our Global forward-looking which on Reform XX. XXXX. Conference XX, Harbor on Technology attendance Safe and with on

seek not do these upon representing we our as duty reflect believe, our financial include future expected and guidance the any and full identified be relied quarter be date views any statements our and or financial and by statements. market XXXX and and can statements future year plan, will. These to concerning expect, for only second views expected business, such intent, words our not as the statements opportunities condition, as Forward-looking of growth, should performance today undertake anticipate, subsequent update at

materially these actual risks and results forward-looking subject statements. address statements to that uncertainties to Forward-looking could that are cause from differ matters

and today's could certain press actual the to non-GAAP our versus can to and reconciliation as Commission course let over filings And refer to the of Shchegolev. of Exchange during well XX-Q, our showing closed SEC. important please will For the There's Securities as results our Oleg our call, filed perspective factors risks, found issued refer a be with a investors.semrush.com. reports quarterly Also, today. Form which affect the the the on our release website that our final schedule market financial other results, discussion call turn we in me measures. with that, non-GAAP after available at GAAP currently with And

Oleg Shchegolev

I Thank good of us call. you. call everyone us maybe the joining story. on believe And on to new to afternoon today Semrush the many

full quarter offer believe few product we to I on comments would and first take online visibility a some story our So like and cover platform be is I Later, nearly is a outlook minutes our I with for which new to of will our grown management, a And offerings. the we leading to for billion Semrush software and have market are greater. chair. addressable well $XX we positioned over category a compound XXXX, XX%. total since at revenue category. rate a The growth is believe potentially annual year.

of spent to of all hours to customers beta this potential than online and Businesses overwhelmed by a customers. XX%. count connect an is day our sizes more average wall growing consumer average While with six noise information. To-date over factor breakthrough

is work in data than first Our countries. potential a solutions Russia, categories, to we visible myself a in Petersburg, distances believe founded my I marketing. marketplace offer quickly, more noise we the broad including across solutions breakthrough environment. from has [indiscernible]. We different according range this report today. our differentiator by various offers the of in us and XXXX SEO, workforce XX States helped our businesses Boston, platform help I customers. as zones pandemic Massachusetts. the key and intelligence the competitors we supports the of opened was and a are media social Working point part ranked we Semrush and many to on of become St. acclimate our home office in leader believe large friend Semrush to GX; offices competitive solutions from and of and across United our beginning. very And from been In time headquartered Today, have XXXX. All DNA global in in five employees in Melnikov in Dmitry XXXX. breadth

XXXX, was countries XXX in As of generated of the revenue from United we over the end customers our approximately XX% States. of customers and outside have

friction to low them customer. products of model, pricing very can a our paid premium have platform capabilities a charge, of users free try with the become to full sales a our We but requires stage, access

industry have customer built of specific all customers across business We a or have no concentration, we as types.

drive used Our about the well opportunity an can figures, $XXX I on well large ACV our as month. level very program excited is six am the by of small at which as entry enterprises, very per businesses us. into platform ahead

margins. robust scratched We have opportunity. we is large growth barely very rapid diverse what base, of surface And have a large a market and the underpinned believe we by customer

Looking was and revenue want The grew a strong at customers growth year-over-year, year-over-year, while first delivering the last employees, were over whom paid our XX% thanks partners, express pattern growth first every our consistent best a XXXX. the traded years, quarter quarter of by with the year-over-year my our to check I XX%, of our grew our company. in our $XX about pattern few as XX% to million up all publicly was results key year-over-year. to users since of the quarter

the partners. element key at assets to the underway. to have we third-party App offer Looking to access of And data of our today. a two customers of Center unlock and App want our more quarter, Center from highlights initially potential with We web strategy. is some some launched creative product We apps

our will developers innovate unique more However, App of Center data easily third-party assets. to on top allow

data of value more help drive space. customers, many a over of ago. assets, topic for in than the can and a rest backlinks sets larger our offering links our we year from more data change you believe is can trillion database the in our as XX% our our contains our On further database milestone passed XX quarter, our of Larger this We competitors now competitors. from than up

Finally, marketing efforts journey. our the but the I will ranking our I to believe ranking were not and global and beginning Microsoft, strength to digital number speaks alongside This Slack, limited We with brand a our rather so of ranked brands remarkable our sellers best was relationship our what Google, product far, end, very Where and want XX Zoom, and IPO was GXs our believe given like size successful of others. customers. I in XXXX. for a leading highlight our achievement be software the

resonate would and sizes poised of Evgeny, Semrush. category to visibility to to the continues call with customers detailed and financials. of that, platform I for online growth all of for is more pass With like Our rapid our so the is management discussion

Evgeny Fetisov

lastly, of additional of to add-on share more our subscription continuous price in sales business, and above user the of XX% customer was came parties. of and internet year-over-year Oleg. licenses in recurring moving Guru competitive the limits change the too revenue average I interaction expectations. uptick in $XX our revenue to the Price by in million Thank intelligence you, driven growth growing or higher-than-expected higher project can increase that average users monthly check. paying company's steady mix, number and attribute plans, was up QX Growth users and with in generate with revenue. the check

plan new the small apply XX,XXX reminder, and portion users. a to new impact As of therefore total only only users pricing paid our a paid

net company. business, the improvement of our also this slower expenses year-over-year goods I of the growth XXX% growth. support public as combined our associated gross within initial to So as December in would in we accelerate spending net as COVID-XX basis the in improved line of in the functional of invest strong up below the operating be XXXX, $XX.X first costs played goods growth quarter margins. balance the well were I of XX.X% and metric like year so a to potential a with represent all year trends iterating well but in income contributed pace company. XX to our our year retention expenses support base expense sold, an Operating railing XXXX The of the of and our savings as public margin. lockdowns fees translated the largest leverage ago, trailing The quarter, growth only fees areas, support from from decline prove from to I the across up the in the the at the XXXX of model pricing revenue at from previous could for of well increase months additional of half Hosting as the believe incur XXXX, XXX% any to ago. transition the tailwind pieces up million better a to demonstrates hosting growth, quarter. XXXX. growth so of to in of as as to we worth from XX% of continue was was that points due as Margin $X.X a expect first believe remainder of came the the to XXX to cost so million of a those and $X.X end a in as note up for of was from significant year of the I growth sold, operating headcount XXXX, top first business Gross end into result primarily quarter we cost offering, March. in with year. the million ago this a in public far to slightly primarily increase revenue

the exercise a $XXX.X and the million and The IPO million, the of of balance $XXX of flow from IPO from April from operations ended Turning up million approximately equivalents received approximately company $XX.X We ago. cash cash in the to quarter received from million option granted expenses. cash underwriters. with the the we $X partial we year to also of generated million Over-Allotment of sheet, net $XX proceeds

quarter cash margin as exceptionally strong was operating The XX%. flow first exceeded

neutral year year. of operating pace For to I XXXX, as spending of the flow be grow the the positive, full the will remainder marginally the expect or for cash

$XX.X Looking XX% growth. $XX.X million ahead range revenue to guidance, I expect year-over-year quarter million, in second to representing the of

would full XX% growth. year, to of revenue in million which $XXX expect the $XXX year-over-year For XX% range million, represent I

the non-GAAP expansion. expect acceleration marketing investment allows sales to income growth revenue operating strong the to us growth. am And degree company's loss million performance pleased a previously, as the to near million, the we full expect quarter revenue with quarter mentioned weigh second to in support margin make investments of $X.X revenue in to incremental and and margin to for $X.X $X.X we million and I in I million first year. As on $X.X term. I delivered lesser this

believe continue questions. I ahead, to to are to take revenue while making long-term in of any happy With your objectives. questions. growth Looking are we Operator, well necessary deliver I Eugene XXXX, our positioned the open that, strong line please the for investments to and support Oleg,

Operator

And [Operator our comes Instructions] Turits from first Michael with question KeyBanc.

Michael Turits

could promote there completely can out? questions. quantify congratulations sure and where fantastic talk over or I views on great doing really something I to branding, first have we And But on to brand next a that the then was other uplift appreciated you year? have of that of the pricing your even brand. On terms the that gate. at guys to and name quarter go I'm you stands your pricing. Hey, and more this heard customers so might on that the is not that that guys, differentiation be branding Is widespread. and wondering revenue two that's in investors quarter your One you always if that

Oleg Shchegolev

you're Yes, you. right. Thank

think have spend us great in opportunity when of We a of have received eventually a us brands. about opportunities such see point educate front spending marketing, to and market we our more on we branding. futures to on We opportunity great more around

Eugene Levin

another jump And this Eugene; is I'll on front. in

So we'll spending be more investors. and time meeting conferences visiting

the be I amongst investor the in our promoting that contribution company So will community. think

going as in coming we're quarters active to be well. So very the

Michael Turits

all. at year? seen How or for then spin the so uplift on you've a contribution And much qualification any pricing, far

Eugene Levin

this - clearly we again. So is Eugene

So repackaging. clearly a from we positive see effect the

pricing average to blends the notional comes would the basically I close XX% chips higher, to say, like we've So what for XX%. like change

So reception. terms actually than in overall the customer the we anticipated results of better

Operator

And comes Bracelin Piper from our question next Brent Sandler. with

Hannah Rudolph

Hannah Rudolph is for today. Brent my taking Hi, question. actually this Thanks on guys, for

about talk customer First just those really you one the feel ads me, for wondering drilled in could if quarter. what you strong

Oleg Shchegolev

Thank you.

from say quarter, First want will when the would quarters we such higher of it's all, that our third be same mention to to be And the I if ago. some such it it digital demand hard I topic tailwind in same the our years But started started about time, I demand growth moderation careful high feel how us to and customers. feel time, think expectations at what previous in of ago, it its we such to say I continue. a at quarters. global should long, expect But we next could few couple brings transformation.

continue to quarters, I see… expected next We few next years.

Hannah Rudolph

yes, want say And Do you go ahead. great. Okay, to something?

Oleg Shchegolev

go sorry. ahead. No, Please

Hannah Rudolph

And okay. how Oh, churn third quarter? second And that. the then kind of question was in question then is logo on a to

what were customers your paid quarter? in the free to of and premium terms you in the about conversion talked seeing You motion of

Eugene Levin

Thank question. again. you is Eugene for your Hannah, this

XX can And churn; revenue that XXX%. trailing this was logo it than saw which to our retention, we up nudged you So quarters. had better slightly months in on we previous in see the

have we in mentioned remarks. our As

how far, the customers. question conversion our second improvement then retain And So was we rates. some in on we see

Eugene Levin

Yes, this I one. can take

model, conversion, very So see We in terms of QX. any from with this are model happy didn't in how we premium changes performs.

our year. significantly efforts. would I in acquisition to changes still, contributes demand QX say product to generation So no comparing and overall demand previous material premium user

Operator

question next Chris from comes Merwin Goldman Sachs. with our And

Chris Merwin

I Thanks so my wanted increase the ask much drivers question. for of some check in about of size. those taking to

of mentioned some price you of change, a them, higher migrating number was customers to like the there think of course, tiers. there I kind was there pricing were

magnitude thinking you the for And we break sustainability as those the of about much us? we here? of you progress As year the can, as you. through should drivers Thank how drivers, those can out

Evgeny Fetisov

Chris. Eugene is the This you Thank question. for again.

So there number of mentioned. were you drivers a as

be new pronounced to clearly and in I introduced a in just, is, only. probably one bit it So little mean, the because less was we was price QX will the it increase customers just applicable

the price points higher as a the of of and successful price see the usage limits, projects, sales overall, migration additional or points price portfolio, or we such is points shift check in what repackaging, drives from average price So apart lower add-ons. from the plus higher to subscription like sales share of keywords

company's So growing total from faster than faster. is the our I revenue. revenue growing add-ons are add-ons mean,

more So Eugene, that all important check. say, or that of average may add the something. less equally contributes, And to I the of you would growth to want

Eugene Levin

Yes.

core expensive looking customers hear of we is that are beyond think we subscriptions three thing I go plans. could that one So also number that also at on more our

in XX So than $XX,XXX more for we example, And number at this of who customers for XX% look paid us than grew more in example, months. year-over-year. the number, QX last

average that's of per the hope take. you So of provides quantitative it the one that color also And the behind can of things revenue growth more user. kind

Chris Merwin

just Okay, one quick follow-up. Maybe great. you. Thank

those bit XX% the growing as growth your think the grow they are I we to I in number positive your customers metric you. a I impacting about, like your called all are? and why more around in add excess you can in customers, talk how to way think first a you like a it's Thank the fast if could? to how ability of about just with that you some in even you're if the announcement, sounds of quarter growing guess, acquire number, customer out that trillions it's contexts well almost backlinks mean, able can and of you year-on-year, as more

Eugene Levin

one. so this I'll Eugene, Yes, this I is take

is think acquisition why how So part of sharing very think metric, about our and back of goes overall when backlinks our we customer product, number it strategy. and to relevant I of are this we the importance product

checkers checkers really small a business, they database, insights, anything in able find will backlinks, have they build ideas Semrush sometimes to that even more links, not something. be about with find in they how means general, will what end especially will their less a about more they it for in have links, you have will they're with customer So if lot and But big business. when of to like

what products of opens analytics broader then it have improves So And the will picture, the people backlinks at which time, like the quality to us set quality improve sort and of of acquire complete have primary goal a means just customers. helps that, for is product. more same more more yet overall But it of complete overall hopefully businesses, just of product internet. the and map to again, small have is

Operator

our And from question comes next Tom with Roderick Stifel.

Tom Roderick

reacting for kind and to you side How search either emphasis shifting there portfolio other? potential are for long-term more everybody paid the economy vision thanks short-term the Are strategies, which you the of about advertising digital Congratulations the or in taking And impacting is and or you improving are short-term IPO. end Hey, end newer of of seeing Semrush for sort my the on solutions think whether short-term and there if one demand they about curve strategies. that, the of demand would payback on out questions. an question, how Is just clients the marketing? side. marketing holistic I long-term have wanted love optimization engine economy on your to as understand strategies, of clients and existing to thinking just how product demand the the it's I Thanks. of ask long-term recovers? digital more

Eugene Levin

seen spend good we is whole the necessarily see think they're of And Thank paid going in problem the people you the to channels But want indicated only do more with think the that; general, we I is much. Really saturated. that paid is for But so Not question. to I what market. have market. channels? the segment on to what be

a marketing again, ad long-term that increase we words, bigger don't definitely towards growth since they all market, demand board. demand of towards So probably we to in more people across will they for search they the short-term activities but ads, Yet see we see see general, say transition side But and other because demand you search talk the from see huge seeing sell see even sides, if activities increasing we long-term growth marketing ads. in who accuses keep in the for marketing. organic

Tom Roderick

feedback. view longer Yes, that's towards term. the excellent And I appreciate

that side, side. been As you Semrush of even or upsells, conversion is traction? some has couple to on deal the just some to add-on Anything in the front of real last front? Thank out to engine whether customers the you. size the solutions, the some in impact to the search you've other on point solutions, the are perhaps optimization newer love starting newer loyalty of starting have you it's and the newer look the offering that Can core at years that rolled Would or hear about more that. market, on

Eugene Levin

absolutely. Yes,

trans we local did was years think I And especially [ph] for building couple mentioned, add-on them the is previous traction, United job some you've portfolio. building So great our in during the right add-on Dot listings, in good product those really example, this has having States. really also analytics traction of that good called traffic previously now,

selling started early also product constantly example, split beta. those that have things, in is differently rent. of companies for really a impact are acquired at and designed signal, and higher September, one for priced this revenue. will also early it for bigger to websites, be we material our that And product product is building large We new new with probably too on in we cross new But them, things. But is

more have if we we I hard what But leveraging products. our new adding at previously. past. the in that you now constantly right be work And teams drives all done things are done the are product will a look of today, that we those already revenue think So

Operator

Thill question with And Jefferies. Brent next our comes from

Brent Thill

you're strength? had quarter of I all, it in in the growth those terms don't in you what if the of know solder to the that And rates geos? as relates happened any First trends

Evgeny Fetisov

unfortunately, this what's please of your first repeat Brent can part question, you one?

Brent Thill

see differences of each the material world? of Just in changes any or U.S. versus did in overall you growth those What the regions? rest

Evgeny Fetisov

differences. This we seen is any haven't Evgeny; actually

that have been most say would fairly of globe steadily I in So we top the markets we across - had. growing the

same the quarters. market fairly for was our top share last consistent and quarter the for for the countries So several actually the remains

So like it's a broad, globally. consistent growth broad,

Brent Thill

to market reps highlighted to in any or with you changes any changes on Is And it that that outside model? adding this continuing this market? success relates touch inside had the low market reps as there terms go-to with you model? further Are your Are to of sales penetrate contemplating you've sales sales you model. go

Oleg Shchegolev

we change flow. have all changes We market It flow very go-to our signup conversions, consistent. our face to things And the I and didn't markets didn't signup in our quarter. think all And here. same related any first

Operator

our Murphy with And next comes question from Morgan. Mark JP

Matthew Cost

is quarter of afternoon. Hi, This of the first public on Murphy, Mark Matt behalf gate. congrats company Cost, a on good out as the

it's see good prior to uptick. that in Just to range think a the effects XXX% you we're you year saw completely back question of lapped at once gets the it like that But of retention, the we've levels point to do once COVID? close some

Evgeny Fetisov

very Matt, be do to unfortunately. precise number, the of cannot I thank question. be We'd terms you able is this for the in love Evgeny. This to

we So denominator is into see and for this for past So three out go two retention being to to rate, maybe all move what next expect quarters, do the think to or continue done. I it leveling things of that numerator up quarter from or going then as calculation? moving the continue equal the marginally the up we'll the to happen

that's the hope I expectation. So helpful. this is

Matthew Cost

question, Oleg, signup think that's you Brent's I to you Yes, of that just the so saw to haven't And you're that free then any change the helpful. sure users seen And said make number bringing to correct? the want flow. you is platform onto I same

Oleg Shchegolev

repackaging, to customers all change this customers even metrics, paid some quarter, our packaging. expected conversion free of we in consistent. already we expect that mentioned our our our all, And didn't we from more, the of it, such in Amount paying and new right, face of customers signup yes, growth, you're users all we because decline and we but beginning didn't

Operator

at conference does Thank call. time. And participation. today's And there this questions your you are for conclude further that no

disconnect. may You now

Semrush (SEMR) 12 May 212021 Q1 Earnings call transcript