SEMR - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Semrush Holdings' Third Quarter 2021 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like President, the Investor now Bob over Gujavarty, Vice Relations. to would call turn to, I Please go ahead.

Bob Gujavarty

XXXX We'll Good the morning. on on to quarter Tuesday. welcome Investor our Relations, conference I’m Bob after Gujavarty, Semrush VP press release Holdings' market results discussing the be of issued and results announced call. closed third With CFO, summary our on and Levin. A SEMrush Evgeny of also this prepared official CSO, is are CEO, our @semrush. call on account, Fetisov, me Oleg our comments our Shchegolev, Twitter Eugene available

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

We and Today's which statements made will Midwest of Virtual the Securities contain pursuant call November are Safe Harbor to Act Reform RBC Private will XXXX. Technology Conference the the XX, XX. Provisions on Global Stifel Litigation November of One-on-One forward-looking Growth attend the TIMT Conference on

statements not these date, financial market full expected words any our duty any statements. relied year XXXX statements and at their seek should do the concerning competitive and anticipate, for or today upon business features, update and reflect of views such will. as we benefits, our investments future our growth, subsequent Forward-looking our be XXXX, be opportunities, market identified intend not can and to by the only, position, of These for our products expect, fourth guidance demand representing and as plan, believe, and views undertake industry expected and statements and anticipated condition, quarter include our expected and trends, and performance and financial adoption as

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

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

Oleg Shchegolev

call. X% Thank you, up with our the and quarter. in XX% and on of morning the up performance I'm good $XX.X sequentially. million everyone to Revenue was third pleased year-over-year

by I grew as the customers our our paid to XX% grew wanted the XX% than while key customer once approximately Our again to year-over-year. is believe revenue this product more year-over-year, strategy. highlight I per offerings, average growth of breadth

we with part licenses, have relationship been look successful. incremental of our we prices for pricing entry in That raised appears as repackaging As [indiscernible] user but customers. our for efforts plans, our deepen to strategy level January, to

September of more growth XX, XXXX, As year-to-date, licenses user than was XX%. year-over-year

I annually. than would XX% in was is We this Semrush were .Trends, user fortunate competitive weightage growth ago. look forward quarter our than revenue strong up traffic capability not further weekly. Semrush year to space. XX% and is Semrush quarter. the third the in of which customer industry or this any a in period up a .Trends in While as believe strength compared the updates feature quarter, competitive same position concentration. product. contributed growth year-over-year customers more XXk the Semrush to have could us to introduced estimates a intelligence unique leader .Trends .Trends, also ahead in paid license customers $XX,XXX I excess more of in who third intelligence These highlight continued the to industry-leading

agency introduced customers kits an pleased marketing represent are agency business. Agency our XX% growth Kit our report estimate Growth their rates We to customers help grow and of I'm for we these us. kit nearly digital are XX%, attach in to of have for our to add-on agencies, channel only after only approaching grow, growth product important attach agencies with digital the our However, single will every marketing customers X% XX% registering XX-months continue our optimistic agency customers, as at agency expressed for clients' rates portal. launch. interest by I'm

industry, CMO. Warden executive team in Semrush, variety marketing joining Andrew a with fill platform to very continued remarketing familiar in is Chief We as Semrush out previously Marketing of and roles joined as our as to including a Officer. experience Andrew technology our our short product

seasoned And of growth. brand Semrush I'm strategy our marketing. conditions public a incorporates in face we meeting Andrew return ensure impact and gradually investment investors the we growth XXXX. forward have face onboard to guide those positive our have pleased a like where implementing efforts health office more to increased to professional to and look allow, Our in a help to to

Boston he I product out our robust more and please suggest growth essential what in customers. with Bob, and If performance are reach quarter. coordinate. our third pleased arrange our extended to in meeting as We user growth our the In strong check can you team, every to with would the our like to leadership conclusion, products becoming am a in

a margin. year hand financial on recap strong must the the for stay we our to call Looking focused to on Evgeny that, execution With performance. of will a ahead, I end

Evgeny Fetisov

and quarter ago XX% The and of additional steady user and year increase driven was of again in customers revenue by QX We in of the accounts Oleg. once growth growth in period. mix was $XX.X licenses, paying expectations. the average million our you, increase a richer the core was strong and driven as business revenue average by Growth customer customer. revenue up an to Thank came above in the third than of add-ons. per to a per XX% experienced year-over-year, compared growth more

comparisons due revenue as retention believe see comparisons as those to easy moderation Our reflect retention of COVID September I of will XX, some abate. June from in continues trailing as easy increase XXXX. up The revenue XXX% to XX-month XX. was we XXX%

However, previous The Strong by growth income driven XXXX. are marketing increased quarter additional this into majority in by were was a XX% and medium down margin into and as of enterprise year a were from loss service drove in quarter margin achieving up Non-GAAP XXXX. I year lower We expected for make to up ago, slightly decline, quarter, a of by XX.X% ago. net million Gross quarter, XX% from operating and from the with the will approximately spend. the year and investments revenue offset growth year third $XX,XXX as in and well was a revenue of And additional expenses additional was a the continue marketing of the growth fourth up and $XX.X software gross investments ago, driven the retention and non-GAAP spend. a previous the The headcount marketing well slightly was in the XX% operating $XX.X XX% of from operating quarter. back-half Non-GAAP produce expenses quarter. to up the market. in believe in net from XX% higher extend to of small contributed ago. headcount, approximately Semrush modest industry-leading from from as previous million $XXX,XXX to quarter sequential up up as firms investment expenses the increase. plan brand of increased Those

flow we quarter cash up $X.X cash end $XXX.X at approximately second of cash due cash Turning from from to to increase in quarter. million the with of of the $XXX.X million balance and sheet, the equivalents ended the primarily The million, was operations.

to moderate third The was due integration, another quarter expect to the cash in sales. fourth quarter quarter increased into of and investment cash strong and marketing flow I

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

weigh support therefore to loss million of and million revenue profitability another I driven revenue appropriate to a position For our expect the range in puts flow us to performance strongly the consecutive $X of We expect quarter $XXX net $XXX.X financial represent questions. likely for With for income. million, Increased million, to higher the by marketing, a investments and are Eugene of of year-over-year Oleg, that, in I would to fourth any are our $X.X of full in spending million the Cash growth non-GAAP $X.X and achieved open million year, primarily the growth to our take non-GAAP happy I quarter make beyond. $X.X third line $XX in to please XXXX and non-GAAP in your of strong loss investments growth. which a XXXX. questions. and rebound Operator, quarter in

Operator

the with Brent Your of Instructions] line question first comes Jefferies. [Operator from Thill

open. line Your is

Unidentified Analyst

on are any to should for intact? go Great. strategic your bringing Hey the to on And on sales we just his My know you versus talk objectives of How question. what Are expect check? this about year? Could everything Brent. for stays Thank Should be is, is guidance any second and questions. market my about drivers can to providing talk you should the first Or Warden specific That's just we Thanks be guys, that we one you structure? ‘XX marketing? growth mix run Andrew about next James much. not side? assume, but changes for you're so we relatively should takes there average yet, revenue the subscriber I puts the thinking big considering?

Oleg Shchegolev

kind ourselves with to name But And Andrew is We to and more give with changes significant with to way. our we shows strategy. advertising more Oleg. Thank experiments video in should first even go sales and market of to years question marketing. want more. video started very for we what We expect brand branding our future. marketing the five Warden. quarter you. are Look, same want prepare to related attention I’ll strategy. this we advertising, don't time, same many want take we three, the should any at continue the We We us continue campaigns. to start CMO, good My our new

would think great addition Warden I to be a our team. Andrew

Eugene Levin

I'll take Eugene, the is question James. This second

year about numbers. So on revenue believe full it's the talk guidance, too slightly year's next early to I

more call February. our will We clarity you next on in provide

be However, we with plus We'll to our this expanding more continue average we can adding year. customers focus continue in to say plan how that working line to check, grower. we on basically high were

I'll Evgeny? provide. the I be So level And guess then, detail to able of that's

Evgeny Fetisov

a comes going easier of the going users. little a be and check for is in we be average think then of little half terms is comes of bit year, when bit so of second comps, half to to easier Yeah, when it it year that growth to growth to first the next

So that’s directionally details information your how you can more models. provide later. in But we'll use this

Unidentified Analyst

you. Thank Great.

Operator

Your comes next KeyBanc. Michael Turits with question of the from line

open. Your line is

Michael Turits

Hey, quarter. on guys. Congrats the

things through of progressed couple on Just the a questions how quarter. third

back from to that hand, third played out NRR may was quarter, as future, you’re On that But wondering there the COVID point the in combined on that come if the did you comps with you the into how I one tougher starting what then bounce and evolve was seasonality summer of will. some fall say have the levels there smart you see the if as off of back we hit growth general accelerated just that at that we to from and activity levels, we to looked just deceleration. been, companies, that the say, any slight I would saw bigger tech office project. from and out

Evgeny Fetisov

to Michael, is try I’ll pick up this this question. Evgeny,

normal is in more actually at continue them year. much what seeing The So say, second-half typical the typical, were the in which the we the return What see of of be numbers in saw would didn't and the patterns. accelerated year with to expected clearly, which what to see first particular, line half the the or in saw in be the to year and the will fairly we we we beginning I seasonality. not we're of quarter are third growth,

that's to you're across So probably corresponds the seeing board. what

normal of first elevated maybe So more and the second year, half year. the of half

Michael Turits

little also And talked was if different and I guys a pricing and about incremental the increase, price seats. little but a factors Thanks. you wondering bit the you Evgeny, price – of could those you two talked just bit, reduction

the talk of impact bit quantify you of you if each So those? little can a can

Evgeny Fetisov

of adoption quantify it's quarter, the seats accelerated see to early or So user we by licenses additional our customers. in quite an

supportive, customers prices, part tax higher part higher a a in average And I So, seeing mean, check this from growth like is come then by of – I feature. we're migrating there Plus is and the is driven in existing lower the see just new upgrade. points higher higher, the they new revenue overall, particular, would the at new customers of with which price price. a say net-net when increase, driven rate fraction not to we our by

go is a ahead. I'm So there positive. sorry,

Michael Turits

Yes.

the of driving like you will, seems elasticity, you're where revenue, it getting even just a if is incremental in price. at incremental reduction it lower out price So demand seat more

Evgeny Fetisov

That's Absolutely. correct.

Michael Turits

you. Thank

Operator

the from comes question JPMorgan. Murphy Mark with next of line Your

open. is line Your

Unidentified Analyst

given a [ph] they're uncertainties filling what lean terms is Great. them evolving level, which seeing around you I Hey, tailwind the as organic how to for content their quarter. are marketing want hearing the IDFA marketing, Ben Are Mark. customers Congrats could this your in from maybe Jilin all budgets, act in solutions? more cookies? and a at your marketing high of ask on towards you for

Eugene Levin

the marketplace, the Yeah, thank asked This forward. reallocate how and conversation in have that customers done question. to what we about general, our planning a part figure how planning It's we In you for what they're seeing big far, people address right trying survey path scale to Eugene. the are is the budget. small is community, out in and the they're to the so and changes we're marketing of did

our within Facebook on of was that organic paid gainers investments most they in top will sort Surprisingly, and of their have in ads. seen number we've four down of search marketing. search, customer three double Those been saying budget. that Now, people base, their sort content

Facebook have advertising programmatic in people like ads things faith or retargeting. still more So in than

So conclusions those so are our far.

total it's our Now, we in I really study, user base, fraction customer which they address small how a market. comment only that market. base. our are have changes to of the and within it's what seeing is that's That's But scale a

Unidentified Analyst

follow-up Understood. on, And just maybe. to Evgeny,

uncertainties, mainly other seems bit a Is seeing uncertainties of half? the potential macro side second a first half a on little you're it muted. marketing ARR when supply was budgets from forward pull that customers? Or chain any new towards net or function on the business are the talking On you any impact to like the

Evgeny Fetisov

is Evgeny. Right. This

of more say, pull first I the you're would half would like the or I I right. say base This of think is year. a, of forward higher

seasonality back I to So wouldn't it's that high mentioned, bit coming abnormal be but where the again expect a little it was now tougher Again, as comparison. to ago, as year we’re normal. we

I think that So it's like former. the the

Unidentified Analyst

you. Thank it. Got

Operator

Your next Piper question with [indiscernible] Sandler. the from line comes of

Your line is open.

Unidentified Analyst

morning. good Hi,

most driving stands plus hopping that of upsells And hoping Thanks questions. revenue Certainly, color one on Brent thing for out our for XX% and is were in just to here. taking Just per growth here some we effective you're add-on Bracelin those customer, number? that are proving using, follow have upsells that per this strategies to on what be then revenue I'll customer terms that license one in driving and in up. get

Oleg Shchegolev

This is you. Thank Oleg.

in related it our time. First marketing customer, we do of it and future. to goals experiments such to what And gave in sides. experiments was feel focus on created all, very and some all sell And sale products experiments products additional focus such growers. optimistic our we and successful. on ourselves, about on even expansion. for was sides also, should in We about we quarter, very such I started to marketing, talked side We about And about third every the additional on initiatives

Unidentified Analyst

– Thank oh it. then Got And sorry. you.

Evgeny Fetisov

I one personalization highlight front effort we we are Yeah, that doing our more will good particular technology, and understand sales what for wanted we lot are is, particular can to investing add thing that products team. of so a for be soft the into fit a customer, just

to customer they interested teach customer be know this increases know sort out this they interested. already customer that could could that particular of When reach be to efficiency. why they So product, and

per boost are doing couple of to extra we those So highlights our what revenue a user. just are

Unidentified Analyst

marketing of get adoption, And user social it. there seen on Thank to then color update and active some trend media users call you've it that an you how on terms out be Anything to tools? Got in can maybe the helpful. would really That's you. possible solution?

Eugene Levin

number Eugene. So products. of we users quarter, this in primarily active In very that by had two was is this free driven high growth

large One of portion we made of limitations for for backlinks is them analytics some customers. free with that

driving number customers And active that of increase lot more we an tools, free had also continued offering a general, the users, some of XXX,XXX the but free attracted of than was have free limitations active of quarter-over-quarter. And top with largely been up. we media In that XX% this users So also social at free. then which funnel.

of of So generating the lot into invest a funnel we future top in for effort definitely the growth.

Unidentified Analyst

Thank you. Got it.

Operator

the comes [Operator next of from Stifel. question Instructions] Lane line Your Parker with

open. Your line is

Unidentified Analyst

that Is of instead alluded Hi, it's there, [indiscernible] for driving acquisition there feature it the that's right just search outside free new know Parker Lane. there, of you Staying kind paid on specific of that but users. thinking maybe engine topic and paid free? optimization? to I about customer maybe any

Eugene Levin

I having new with new pointed free as features are functionality continue tools traction and social of expanding so customers. our Yeah, there. sort And media we great adding

become So those even products more attractive.

you across as engine verticals products, adding free we not portfolio So many optimization, search products. search to our just different engine new continue And happens traction see, can marketing. this of and will new

experienced I very generation to think, they and paid ready environment. kind we company marketers product. something but to that to premium newer not next make in them happy company those their today's very of early be that then a them important provides the on when of products. future this need their buy focus journey, guide step, be to we And become maybe they're them ready free are first are products, paid to want in to And and it's to sell they more the

Unidentified Analyst

in roll that countries we next coverage are that to and should any market population should expect addressable availability now of six know have And from tool are different How it. the a the of listing to it in over Got you local I additional there countries. out ways tools think about its Canada year? expanding, we is And then just guys thinking and standpoint?

Evgeny Fetisov

for question. the Yeah, thank you

just customers a of was milestone, because United Canada. in they States a adding big our lot in So Canada have the also North branches

most pretty So with markets this general, product. essential. that In English was we cover our speaking today, critical

keep in mature. definitely those into products. say the expanding Right maybe new developing need in will We much not there is get world, those more geographies now, I geographies as would that

that's be mature, So will listings as the highest why local we markets But products they're to priority. adding well. them not as those

Bob Gujavarty

the response Bob. good is very that It's we've Canada. just early but days, from I’d response from a add seen this strong expansion. And product, incremental

Unidentified Analyst

Got it. guys. Thanks,

Operator

you concludes this There This for are thank participation. conference no questions gentlemen, and call. time. your at further Ladies today's

You may now disconnect.

Semrush (SEMR) 10 Nov 212021 Q3 Earnings call transcript