SEMR - Earnings call transcript Q4 2023

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Operator

Hello, and welcome to the Semrush Fourth Quarter and Full Year 2023 Earnings Call. My name is Alex, and I'll be operating the call today. [Operator Instructions]. I'll now hand over to your host, Brinlea Johnson of Investor Relations. Please go ahead.

Brinlea Johnson

to Conference Holdings Call. welcome Full Quarter and XXXX Year morning, the Fourth Semrush and Good March We'll our after Monday, press discussing release be the issued market results close announced in X. on is our me Eugene and CFO, our the With Mulroy. CEO, Levin; on Brian Shchegolev; our Oleg President, call

to Securities Today's Act Litigation contain pursuant of which provision harbor XXXX. are statements, will safe of Reform call made forward-looking the the Private

limited financial Forward-looking and to, expected but the statements not sales statements pricing business demand growth staffing and marketing for are and expected our quarter including guidance operating App and full NNA position, the sufficiency and financial and our adoption market results, Center performance revenue first existing and statements about expansion, products conditions, competitive features, concerning year growth, future our levels, market and margin XXXX industry include, future our for our profitability. of our improvement, trends, the opportunities, XXXX activities, and of

than will. Forward-looking or by anticipate, seek statements believe, are statements intend, plan, expect, statements of such as words it can, identify can fact, other

These upon statements undertake views update representing statements. views reflect any only do at as we date, subsequent and our any not be duty of and not today should our to relied these as

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

as please risks refer of well Commission Form with discussion our report the the filed on important Securities actual and and most SEC. to Form filings other our and XX-K factors cause recent results, report a the annual For XX-Q could as on that our Exchange with quarterly

currently first definition. guidance found are at and to non-GAAP non-GAAP year non-GAAP we and There call, today's schedule a guidance with in starting our issued be market highlight for press measures measures. close, of we financial release updating want also results our showing our that after quarter is GAAP yesterday investors.semrush.com. I course the full can refer to reconciliation the certain versus available which XXXX, During

for income non-GAAP operating presented margin the to are will for earnings longer We release. non-GAAP guidance our these a several guide in margin. and provide net cash Definitions and flow free no both

of We course margin operating non-GAAP acquired acquisition-related calculated of costs, intangible GAAP from our how much definition amortization operations, to updating are income business. is outside restructuring expenses other and of ordinary the also exclude assets, onetime costs

our compensation. example, incurred stock-based costs in addition the exit in to For primarily current exclusion XXXX, of

we historical evaluate our the definitions be this from definition, To updated clear, reported year-ended currently first providing anticipation also compensation. quarter the earnings and XXXX With this We methodology me and guidance the it the with using align internally management allow will better measure business update a performance, of understand our used Oleg. investors by this that, to definition. which presented. financials. The period now we the by performance. efficacy are previously change, used information reflected for with and and updated providing report when operating to financial management prior actuals evaluation the and let to reconciliation of reflects new In we better definition excludes a our over stock-based of believe better And all only definition permit are release, old to our our our measures turn

Oleg Shchegolev

$XX.X delivered to revenue XX% towards of our to profitability. million, fourth for platform year, full ARR sustained of pipeline in pleased in million. grew everyone the as quarter, we our accelerating with growth, Thank am our increasing XX% continue new XXXX. the you, customers expanding year-over-year. and we the I succeeded to ability and good And We drive up revenue In morning call. execute $XXX.X team's on to

year with quarter, Importantly, net reporting income in fourth the in $XX.X net of million the while non-GAAP guidance, our $XX.X million full exceeding non-GAAP generated we also closing strong income. profitability, out

by cash strong driving generating sustainable demonstrated expanding growth, guidance, our profitability free our and on As flow. focused is business XXXX

firmly it handing scale over upon the online our Brian to would and to discussed to few competitors. strategy assets about the our highlights call, choice to a positive differentiation success factors unique more Eugene ability and to the our I and and grow continue of strong dynamics. about data positioning is to believe visibility. significant Before about our in our opportunity. talk about business the control in for platform that within less competitive capture to businesses like our market touch the industry last improve also our our due more I detail, talked their as of On We quarter to and market our I are

opportunity market on continue greenfield significant assets a have the to of our ahead we unique portfolio us, of about educating data diverse value and our We customers of and products. focus

be businesses To online to and where put need it seen simple, consumers places are. in

and highly organize rank higher higher how to solutions platform potential Clients have to search to about their to in the websites that help To capabilities. consider consumers our listings. them also would a with channels. to marketing customer customer visibility intelligence in engagement those in presence them journey Semrush more and several in conversations rankings We in site engines, in ratings. customers' order a search them customers provides and the keyword higher look, seeking need their competitors be to order gather with with innovate across our them might find illustrate local and social levels digital help about to on ways. of come the media. businesses of number engines so We for a moved they up show optimize we achieve Also, their their assist We strategies location-specific elements

by assistant ROI researching out those a figure potential. our ones and the would ads ad keywords to which start have competitors' keywords. use better to will using selected campaigns We then They round launch

Their automate directories listing and on of the in to to pain limitations our online easily in they subscription Maps. take the over on the we keywords. Local more relying then platform XX media, Google use would make when As platform begin store updates only for would understand would the Semrush rankings to physical discoverable maps the

tool to to Of course, leverage they AI respond same would at generating and our social while to content time, included. also features quickly our keywords the reviews use high-value is want

As we valuable predictability result with engagement the tools, then our could algorithms. use to share of could and which with us, our increase data accuracy to they of choose a further the

To complete our with can which and visibility the demonstrate of brand influencers, to platform, breadth use want collaborate with better niche to would enhance also hypothetical we to example likely find to they tools the credibility. and our

enhancing a on These highlights hypothetical TikTok, content reels online is marketing all execute benefit to and investing with have sizes trend create generator, a which of where activities in will With this. customer promotion provides then their will the businesses results. videos for more We where you the to Semrush in do they for organic to growing greatly platform And believe from. social opportunities. journey plan can resources capitalize all and trend best place visibility, of our and seconds can they help as one digital businesses exceptional effort continue Instagram AI of are time, analyze, into potential tools able see, and

our network more enabling predictive a happier customers We more stronger are, the data growth. ARR dynamic insights our This stronger share effect. algorithms as and actionable effect algorithms makes our have fills created we flywheel The with proprietary a predictive, with our the return and us. share and new are, also we customers in highly even which

conclusion, ability opportunities. XXXX, focused and In our expanding Looking position exploring continuing to about outlook now upselling Levin in And and on grow growth acquisition platform Eugene business, of more market to we ahead turn call capacity I cross-selling opportunities. about new core the optimistic our to future I to detail. XXXX. over and I'm our strong and excited are results on our our capitalize am offerings, the the to quarter discuss very will

Eugene Levin

and two, increasing by upselling cross-selling main three, pillars To Thank base; user existing continue another durable that focus up delivering products our growth. growth front. set our our and higher making We one, to each within customers adding on: we're to you, expansion delivered we new portfolio. our progress revenue focused by value our on Oleg. with in long-term to review, offerings; X growth new driving are quarter for us And solid and

updates this quarter. for me provide Let

continued growth. we new First, increasing user

of platform efficient and seen our nearly there but tens customers, We additions paying quarters. from business achieved are marketing prior in QX, a than offerings. small registrations more we've millions and engine owners benefit In XXX,XXX marketers of product we and have believe sales and new will with we customer net that solid

various organic fine Looking at the their tools allows enhance online initiatives. customers channels, is data measure further, our tune, It benefits, this one and companies many multiple provide that leverage to of of and presence. impact to the analyze has technology organic and marketing marketing

marketing the our spend own considerable very past our Semrush be Much improvements have towards attributed year, online success we and our own of in and boost tools where successful our to pivoted some we results. following organic deliver can our optimizing Over presence. leveraging seen to efforts to recommendations sales

its has more long effective marketing place marketing effective the in and in channel cost trustworthy. marketing organic every is importantly, be run While strategy, the can it

a any result live You and Organic to quality when marketing where search on you're you based you're an paying, a whereas that for but anyone organic building are is relevance paid search equity, your trust don't place house paid like than can own media owning more likely done be estate. real needs. house where can you a like to renting get ad there,

strategy. have focused organic and with key generated presence that companies Facebook a the and differentiators path to organic Semrush's This The of something the results quarter Oleg on of like one boosting competitive Semrush's this on our are tools clear is Google power us provides paid the efficiency in we advertising. As focus ecosystem. demonstrate company's contrast believe highlighted, that we which with in

customer, upsell as second a average we our to an Turning in our growth expand to strategy today cross-sell is ARR $X,XXX. customers over per and the pillar, reported which, to effort have

marketing on is continued where focus the intelligence. media, PR differentiates search our we in are Semrush local marketplace, cross-sell competitive competencies advertising, optimization, digital and social core search and in saw These clearly itself believe QX. success and content Our engine markets we engine

Before a segment engine portfolio, that of moments take new higher have each into a per to are revenue our that third our which customer ARPU segment represents and to fall is they the base growth products we marketing this talk about average for adding generally tend discuss few have broad or believe that Semrush our us. pillar, multiple like that users, growth significant we are user team than Companies members average I'd our to customer. to businesses significantly

a customers. and business is the are from different trying small reasonably is I'm solo-preneur this they point broad to that demonstrate description, While our

customer. sophisticated more is average this subscriptions at that healthier add their they about to than exciting clip products What's accounts additional a our

We they achieve as higher rapidly grows a the leverage more strong ARPU double-digit average. revenue is sustainable to adoption retention as net their goals. net points on. covering bright And expect for significantly this growth Semrush time ARPU Semrush segment and overall. growth business already of of two, comprises grow believe of a our sophisticated this our This this So revenue cohort their that percentage this our goes we and to more tools ARR, will high-level accounts their and meaningfully demonstrate meaningful accounts customer future within that will than that support retention for metrics products help

our set also supporting be goal the and met confidence that new top this customer line. driving of strength durable with strong relative We our will increased growth us product of bottom a believe adoption, strong enterprise line on that both further gives

me third our expanding portfolio. our product growth pillar, to This leads

signs launched are we into We App contributor a product Center. take launched the to to added During and apps an time officially SEO be although AI to this seeing are material The apps overall multiple very early revenue. and tools we numerous in encouraging. stages, early XXXX, the our market, and enterprise will we're

migrating early level, To client Our building opportunity last and that has We months meaningful customizable making helping corporate to significant carries our anticipated inflection are Features are savings. and our we go-to-market requisite enterprise adjustments. motion of the to product XXx to cost create as access the dashboards sales enterprise this tend returns spent controls, customers on adopter automated workflows, believe infrastructure delivering our after offering improvements support time in average. efficiency our like product, investments platform. professional ARPUs our the while this their experiencing in to ARPU a the and XX our analyzing customers drive services several growth also meaningful significant be and

growth, optimized roles. of As the We our teams sales exercise, as LTV a this market, result our Go enterprise result to area. In provide head strategy product financial enterprise-facing over very guidance. expand success we and we our detailed market. will we driving several our pleased while of focus will ability detailed and the and our ahead, believe with who success summary, led our the to call of investment move down count will upselling to ship turn new customer Brian. very CAC performance I more I'm more reallocated in portfolio discussion leverage more a this SMB-focused into up cross-selling high-value our of product low-touch and sales now ratio to Brian,

Brian Mulroy

Thanks, Eugene.

to our finance in my last remind Before results like plans I you highlighted what organization. detail, quarter discuss I on the more I'd for

our our see further my do to results growth X I confidence our this drive significant also opportunity improvements quarter the markets. recent our us making several durable Evidenced as profitability. here penetrate by while next we for sit only an ability I guidance, later, over As in has stronger served and to gone years to

To for buying to understand finance data bring in their customer user the products a dynamics among this many retention other team to focuses data we patterns, throughout base organization. have decision-making things. Semrush new ability fruition, to has interest the and our valuable segment Because on set, our metrics such

growth, a and You rigorously product heard moment that allocate accounts characteristics corporate has sales, marketing And in robust about how this retention our our analyze Eugene and talk for accordingly. example data of we this extremely ARPU, investments and taking ago.

us disciplined on regular this biggest our to that result driving operating basis expect while opportunities outcome We doing simultaneously capitalize the a a enables approach efficiencies. of in on to

will structure. whether that external capital apply projects, We our expect for framework is the or to allocation ROI of this capital decisions, internal M&A our optimization

to quarter I'd fourth very We results our the like detail. strong turn board. across With in had that, quarter to more a

$XX.X million, fourth was XX% year-over-year. revenue Our in quarter the growing

Growth per customer our additions increased on upsell was year, to strategy. new as and cross-sell full by of we to continue the driven revenue million. XX% expansion For $XXX.X and customer average revenue our execute

Our dollar-based XXX%. quarter was net fourth revenue retention the for

trough We and of the to our Annual a our of quarter improvement factors. within increase installed or of next expect adoption our year grew which reported to XX% $XXX.X to number for margin, X,XXX products, recurring improvements of year-over-year. dollar-based This portfolio up the is net quarter tools retention million add-ons revenue ago. base. is a points We operating as our compared we approximately revenue within result full a in significant basis two

our benefited XXX efficiently Gross First, margin year-over-year gross ability our points and from leverage basis engineered and improved continued gain XX.X%. to margin from higher our platform. scale revenue to

key continue strong differentiator. is the and near We as in XX% way a expect the our to view gross stack term above in competitive engineered which margins

advantage gives us Our to profit flexibility healthy gross structural the the margins invest which market. line, provides below gross us a in also the

programs implemented while opportunities through continue spending our additional durable drive I further initiatives, there to we been our policies and profit I manage Second, our I've execute the short and time to and believe here, drive expand to have are expenses objectively growth also to and expanding commitment focus margins profitability. discipline. on efficiencies, carefully examine In

our carefully During and XXXX, expenses managed we across headcount. the company, maintained

Moving down statement. the income

was the we a guidance in strong for and During $XX.X performance both flow-through with made the end income XXXX net non-GAAP the our relative and non-GAAP fourth treatment result XXXX. of positive our accounting income gains guidance on high million $XX.X The million the our investments full operating had quarter, net and year, of of we range. of surpassing the for

the and with cash ended We balance the previous cash of up sheet. million, million equivalents short-term quarter. from investments the in and $XXX.X to Turning $XXX.X quarter

operations from in was $XX.X flow fourth quarter million. cash the Our

the capabilities and very underlying in growth deliver the confident We're the of business continue team Turning the profitability. our in trends that path to to on guidance. strong and

we've very we see are we the what is what we not strong, of are business and so in but optimistic us. encouraged Our by only as about opportunities far, accomplished front

strong paused start the seasonal platform to in a were we as quarter that years to off similar fourth the trend to customer in respect first their previous the net the holidays. subscriptions were pattern we seeing to QX, to returned we're quarter, attribute at a Looking additions with a customers

margin are to in margin. flow guiding cash the revenue, free forward-looking statements, and As mentioned operating we now non-GAAP

For of million, we of the million $XX.X of in a revenue the the a remainder provide first this expect we what range of approximately quarter, expect first during $XX.X normally XX%. the already quarter growth to than are which bit year. into we to the XXXX, narrower translates is Because into months X range

X%. We expect to first a operating margin quarter approximately be non-GAAP

expect XX%. in million, For revenue growth $XXX to the of which we $XXX into full to the translates million range of year XXXX, XX%

We taxes. margins with free the capital our and margins to our year of cash in margin XX% operating between you be free difference and To to interest result cash to cash is X%. the non-GAAP expect offset by help a operating XX% between income full expenditures modeling, margin full and your of year XXXX X% be flow flow range non-GAAP and

our exchange guidance euro assumes of Finally, a rate X.XX.

of approximately spending ability euros. confident balanced In reminder, in and to grow XX% disciplined closing, to denominated approach are and are a to and committed a we remain XXXX. As in scale in our our our expenses business

efficiency improved expect we driving value to future on will opportunities deliver and focused in growth are long-term we even shareholders. our that invest profitability while We

of that, With your for we happy any line are questions. open Operator, the to take please questions.

Operator

Instructions]. [Operator

of today for question Surinder Jefferies. from first Thind comes Our

Surinder Thind

where you profitability. So balancing everybody of with us was. trajectory well process margin of the the ahead to like margin the you're just I of how the It walk looks the expectations for be thought starting of maybe think, part us here, can Brian, of, story through growth the

Just there. any color or commentary

Brian Mulroy

extremely question. to need get we think every about we right. growth question. It's profitability is and something really that the and the Thanks between trade-off it's day, a something important Yes. for Look,

So achieve call is our we goal an Semrush efficient at what frontier. to

opportunities the growth. and Eugene that last have positioned want 'XX, capitalize So to future, and for deliver the the we incremental over drives we're on and to to prepared don't been we continue see really where invest return that growth. an that long essentially, to in spend good incremental foreseeable going But able and the 'XX market extensive And where invest so that durable in investment. remarks, to investment drive business we've uniquely business the We're in mentioned growth opportunity, quarters. the we opportunity. this durable few results doesn't as for justify Oleg past do to and

XXX,XXX We X million users. have paying over free customers,

our and cross-sell expanding portfolio, vector for upsell us. We're a it's and good compelling creating really growth

So as really encouraged we're we in by store business is we've said, very We're optimistic the and us what our about going what business seen, forward. strong. has for

in to growth. say I be and going say, we This We're us. to a outlined to this and in profitability investing to business framework 'XX. in efficiency we're after framework priority. is and really So 'XX, our look, important We're with operate continuing is the growth efficient

So million, profitability the $X to year and million net which last at of guided in increase income. originally net we committed $XX.X We X landing up was to in sustained $XX-plus year. non-GAAP ended income million the a

an in between we results. sure with investing business, really the and the doing see that growth, that So driving trade-off framework continue being efficient We're and disciplined that to mind, balanced we're appropriate the also way. in but pleased in have to going making

Surinder Thind

this of sale something just the to how the given maybe enterprise getting platform, any an initial you set period insights users? the costs in it and like point thinking then helpful. availability, enterprise acquisition for of it's And And at then payback that? customer from terms about are new That's general

Eugene Levin

question. right. All for Thank the you

is good. traction So early very

first we all our working great recommender day delight of link they're every and ability them. ROI, some into lot of happy. scale the customers use who onboard customers workflows. But batch A We that brought them very product, are especially our customers of to early really the hard see to

in seen terms of traffic improvements. will see So they results already good

a expect we first of the lot So traction. hard, availability working in general very this year, half really yes, of positive

upmarket. couple to, a of But reps. have we entirely motion really, new let's per We when say, don't team. made you several terms need year go $XX,XXX trained hires. sales of you In People sales new also range, experience just sales selling

We've reallocated But other from of our for good SMB to of and actually our very much have really lot in with CPQ seeing of our a sales components built enterprise a enterprise If use we're [ it's players, better normal we're workflows of we reps. effectively and in teams seen and the adding So lot we CRM money components what just SMB enterprise our then team. much selling reps we course even and seeing straightforward, resources selling several selling. when really sales you've anything, systems Everything And standard team efficiencies just a relatively new like sales ROI versus within tons historically through ]. ROI is SMB better. even segment making we're enterprise business.

Brian Mulroy

financial that just a Let me just for opportunity excited But few the add really the financial side. us. about the on on things We're enterprise side. add to provides

for see us and Oleg presents ARPU ARR to inflection average mentioned customer. Eugene of price course, point is it And per XX what about customer is our As paying the the an where XXx that our ratio going expense on X sales. for acquisition costs preparing to not change that. to I'd going say to And to is, revenue significant things. One higher, a are but we're we're be

main and enterprise our Eugene investments back building reinvest making in efficiencies things. into in enterprise. already As we're to the focused selling SMB able that on driving And we've X foundation started mentioned, motion for a

negotiation that's the and we with out within selling of system an come on and executives facilitates people building started a partnership to the course, dynamics process have deal. deal. deal procurement close to and demand from with able process be bringing CRM the the motion with transaction from enterprise already that negotiation desk an our of navigate level that that the enterprise are the is through First a And through and able customers relationships we're move generation a serve. building more to to talent deal senior out into We're organization a build and and of

is in future enterprise have to The able scale is we So we're and additional cost foundation up structure appreciate be different, different. it place I the the now starting growth. color. but to to yes, prepare for

Operator

next Our comes Needham Company. from Berg question & Scott of

Robert Morelli

is for Scott. Rob This Morelli on

versus this signing but ARR to a quarter? in of customer expected, customers distance you to the that new were quite cross-sell that net added? count added existing larger result customer So net lighter ARR was drive Or this Is than seeing high. better activity customers quarter new are

Brian Mulroy

thanks the good question. for Rob, question. Really

and growth with think So just should I fourth and step the vectors, we talk about back our quarter. then again I'll sit

So owners on in strategy the continue who net gain new executing to vectors. We're paying path we've and paying our we're net in of is will that extending we customers. XXX,XXX believe and adds. been of out very new out In and expand focused to adoption. from on new marketers did value X platform, net of early that nearly number There's XX,XXX there innings continue One business millions to main growth add our at going we're the adds. and customers, we XXXX,

that pleased really progress. we're So with

then and ARPU. drive The We're vector to have around point inflection up. continue in products, is to gross is point, growth and have And second portfolio yes, strong that. in your upselling. do very profitability. that and extensive a creating an able and And cross-sell ARR increase invest to of very then We we our cross-selling finally, platform expansion we and

to back develop that able to basis XXX structural business reinvest on continue Our gross margin it for a and and trajectory. that products us the into advantage to strong creates XX.X% the points enable is up partnerships at be that's and quarter, in fourth

It For the not fourth quarter quarter one seasonally is a for thing. specifically, us. low

we smaller actually customers So is very customers, to and quarter. of in the XXX, tend subscriptions their the and then there that up first and the trend all play from paying because good during seeing out. way cohort we XXX,XXX seeing in traction nearly returned many that February have solo-preneurs January We're so pause extend and they a to holidays Fortune

it's quarter seasonality just So attribute to dynamic. we something X a and

Robert Morelli

execute acquisitions more How about here, Oleg, tuck-ins? looking in XXXX. then, opportunity are helpful. strategic? small Got should mentioned And something think it. to It's Or we you you that on

Oleg Shchegolev

a related to the these be give of of front more strategic opportunities to shares digital us. we we time, say and I reasons. all would All [indiscernible] of attention will course, more will that to lot And content on attention marketing. we have And in focused

Brian Mulroy

financially, And positioned well in M&A. we're to engage

X% have balance nearly and private on valuations X% margin more line. free we starting $XXX in We're to So get million 'XX to cash projecting flow the sheet. see much in

So our appetite for we'll for but something we'll M&A everybody something updated, that sure, at XXXX. keep in look is

Operator

next Our Adam Sachs. Goldman comes question Hotchkiss of from

Adam Hotchkiss

going your How those online that inform the the today does And in for you would then are what you're after? they some category, like competitive environment typically looks using you characterize multi-user for businesses what the enterprise in aren't on how rest view in that enterprise visibility? doing that the sales measurement

Oleg Shchegolev

Thank you.

greenfield we any we And a same our positive customers. about time, our And can We [indiscernible]. here. of again, to about once talk solution very players, from a just we it integrated business, see it our we competitive talk to competitors feedback opportunity, We view see productivity like other is significant at activity little compare our we it from positive of from talk optimistic good we different about if and very built any environment, see see point very look, our a it don't and now we enterprise are our hard significant bit what very activities the about in you don't feedback, competitors. from many If core And see see customers. customers. the lines and you very, projection and

Eugene Levin

We you're don't most to competing usually, those some clients products. really deals targets Oleg for general, even And like who competitive, perfect are points. good are really large with are have where deals customers said, add else, already in not us when And couple do, X,XXX of see we use of them there they a any anyone. deals, rates. but very even greenfield corporations, our Just win are to of upmarket and sell those

like Semrush, enterprise brands that so where think us strong. players, other, when much in but have let's than existing greenfield a that's for is we very better there very leading with So market of our say, opportunity lot very, for head-to-head I product is is go user portfolio dynamics even product SEO base, is favorable also our

of products, for to big we other in terms a that product going bring market. factor definitely portfolio In rates there's up adoption be

products. enterprise-level we our for candidates first be would products for a or the where PR our So have traction, local example, which products categories for strong competitive is, digital intelligence those already marketing

and again, products there's add the lot those the portfolio for to So good quite be will a enterprise us already board, of across to of traction products.

Adam Hotchkiss

free Great. what That's your either way the giving paid helpful. product approaching thoughts bit you updated the little And platform more opportunity on conversion. there what in you're free you're are the into that's customers visibility in looks really a Any changes making that to additions then are marketing like? Okay. through

Brian Mulroy

it we The take Adam, free pleased that. can I and users, about think XX%. see grew we're to way really

So think free We we're ways. now over $X in million. of X users about

training of First the is generation next we're marketers.

of the that every to and as XX doing in investing to be work facilitate generation in and comes growth we the that that ensure and Semrush can to next into we're durable generation workforce a value they're add core over the and to curriculum universities when part looks So day. next sustain able

we also traction marketplace, and we it and quarter. launched then as and free that it. fine-tune adoption. that the then we monetize a user to get use technology, we we And the put over lot while of that into and did platform with media products social often get get a we We the test ago third we it time, in feedback products we And free monetize that

free expansion a user out then users customers convert see of journey early and training to customer future. are the can base their and pushed who are products paid. of And finally, in small there being in very a who converting the our them them in version to and often leverage start free coming you'll back when paying then we capabilities So marketing their cohort into and ultimately are

building source our to look business a It's developing we metric as in near-term convert of directly customer. and long So the into at free run. a don't longer-term a more foundation of a users

Operator

next Our Sandler. of from question Jeffries comes Clarke Piper

Wayne Trinh

to Trinh Clarke. of factored new I back existing? it back this And customers. Wayne much to QX. I X% into you guidance? is announced for how Have want is tested believe you pricing in to go on of the This

Brian Mulroy

Eugene I do the pricing then price in But guidance, yes, third did general. and can some on we X% can quarter. color with add an in the start increase about

about of million million that year to a $X the did about half ARR. So mention at $X it of time got revenue. We was incremental the we

pleased on that we results with of Eugene, the 'XX should other coming our really in through in saw and pricing. half you the through We're 'XX. talk more And half there. So

we've, we We pricing and have in the that changes course, the guidance, now, for a very all from baked XXXX. But our made time. strong pricing of in that looking the at something asset we're in impact

Eugene Levin

Yes.

there So existing question about increasing was part prices for of the customers.

scenarios different changes very, do you and So kind small But existing for of we cohort did we pricing better that customers. much expected. than a do when like was of well. as And you reality those very

a good of course, prices. we buy it's higher think proof think future. at provides people value the we to so that I are And use this much our that as information willing product So really about

think even real changes. is But we our monetization are I exactly several more when already question in add-on of products. right do we now, the

our those more, nothing prices optimistic is about we'll also We're pay. monetization. to now, when and For but again, pricing makes to recently. time example, keep right And very, it social right, there finalize we're price will but do plants sense. media unfortunately changes very doing willingness the changed about ability doing improve elasticity to to core And is report for when product research big our have thoughts we

Wayne Trinh

down terms Is more so main I the pricing bit And of far? dip the looking for retention that? in you a sign you quarter. this trough net And guess I into a Great. are of X are QX, factor what guess, and seeing a what And saw I months in recovery?

Brian Mulroy

That's a great question.

more see to we're the of very making a net bit net of portfolio. and traction really and indicator. course, Our a is retaining adopt and customers, retention The on retention expanding rate they NRR, strong, metric of pleased our expanding is renewing them rate lagging as them actually more we're

for it's ARR just QX to then reaccelerate. because did ARR XX% have growth XX% revenue and and quarters on we XX% revenue QX XX-month NRR We in deliver and lags measuring So growth, and over about period. respectively, X behind X seen a growth. are

So or our start to we'll through we see on on average growth then continue execute next and XXx and see enterprise, flow that important upsell, XX to as cross-sell upmarket to start quarter we'll successful the advantage sector in see then that that ARPU to a for trough And to metric. and move and so. our us of strategy which is very the

Operator

of question comes Elizabeth Our Morgan next Stanley. from Porter

Elizabeth Elliott

seeing initial if any to hit macro differences wanted quickly. XXXX? we it you there's to any And Do I see also, you're or customer up QX? And call QX between head any relates in as differences observations those that larger as market on into changes But between that any cohorts, there helpful. out just I very opportunity. you're would smaller moving X was be know with if to customers?

Oleg Shchegolev

year our mentioned this marketing little all year probably good the we that say, first features and good very for for products local is things Thank and demand so launched it's like and a our year you AI environment, for and even for the strong. question. core stable. very not content quarter our was and bit things last you on, very about if for for We environment new I would leasing demand. time, a products It's stronger. every [indiscernible] And looks stable. same already and it's think At

Brian Mulroy

And welcome Elizabeth. back,

Eugene expanding they we our higher. adopt the faster are and mentioned are do earlier Just expansion portfolio that of growing rate at do sophisticated segmentation, accounts the rates on retention the that enterprise clip, a have faster, question a on more cohort

to going bit business are ability next to to and enterprise the quarters. about stability of provides that more a upsell it in talk and couple the We the more that We'll about the share with platform. our

Elizabeth Elliott

to then your and And follow-up, drive of customers are just sales marketing and lot as spend. their tools able a for Great. efficiency a

of internally. using your tools some mentioned obviously You

hoping just are where of seeing and could was integrating And I own improvement So that you. to sales what double-click AI tools, the go? Thank your particularly you're to hear initiatives and marketing you business? within how types into some about of your

Eugene Levin

products. us, a almost for benchmark. Using own really, our a It's lot of

we're teams Our they would But are time, teams terms producing anything. products we content our our that they buy very, operation. very, people up just both the a more scale in creation, it, improved And it. and quickly of to with AI content this picky terms everything can it click of how our but question, decided we they higher do. And like on production own to content how in of and most almost be once making now, in particular very need very of trends not to double choose so good also terms of use engage and are content read and it Semrush quality, for

of topics of production lot right just our pricing really that to relevant not and our efficiently. use, course, but volumes different of as really content organic very research our use production, So tools the to through content. great we example, for different then, content that in tools steroids we system, our content a content maybe yet on ship content audience, just keyword shake use, And such And our of we course, and quality. for put the are understand covered

products We to our digital intelligence the identify acquisition. our good competitive to marketing same also, partnerships. tools and to audience of find course, overlaps improve use especially affiliate use We asset

our buy instead we content self. sometimes just So we're building

and tons tons applications. of So

social Of poster. our media teams course, our media use social

marketing marketing influencer team influencer our our course, tools. uses Of

us it. PR in I all that's much products one PR given. we like tools. quality is of is measure terms our our of in for criteria how own that the team said, said, pretty Because Our But like using products use I of success teams

Operator

Murphy today JPMorgan. Mark comes of from Final question for

Arti Vula

Murphy. Arti for is on This Mark

about I think resources this You SMB of makes that upmarket. And shift the lot from guys a talked of sense.

you SMB any guys get fires from the headwinds the aftermarket. guys shifting resources those you expect those do you one as as are away So and in

Eugene Levin

for you the Thank question.

SMB we and more couldn't have on they that of When a that. you of certain of and point to launched increases, being basis a actually build sides mean is we AI "I'm number are thousands lot we It just volume on ignore there. adding seeing see this As those especially we're money, of a more we have our market focus monetization with that of on no, big how a tools willing to great. that of already We're great where customers doesn't a capabilities. regular and doing traction social products, have reached you the large who On lot we realize So both we're enterprises is unhappy of conversations those in this products. front. with all just front, started to It's recently of say, you come this me." opportunity We've for see what the recent pay customers to our media SMB but great.

We have marketing much local regular a it on pretty daily. products of a basis, very using good protection SMBs lot our with with

end don't help. there So with about and At market. of of big in to the need companies We're headwind. sides traffic any there I we're very more think the yes, is excited traction companies the both day, need small

Brian Mulroy

our we're was Elizabeth's Elizabeth I'd contributor That's And big one the a to the in seeing add, thing on use question, just asking about business. efficiencies building AI. of

the continued and XX% investment. SMB why of despite automating side us customer that giving the And to of EDR that a for saying able our more overall and expansion the over which us capability into to we're the efficiency lot So now use giving enterprise, is the sales we're interactions. won't [ be ] reinvest expand is on

Operator

this At questions. time, chase further we no

back for further any hand I'll remarks. to So Oleg

Oleg Shchegolev

very Thank you support.

Once very and results pleased our you again, all with look keep about and for our updated in optimistic progress. to support your execution you we forward I very on future. our are XXXX, now thank and our are We

Operator

you today's call. Thank joining for

lines. may disconnect now your You

Semrush (SEMR) 5 Mar 242023 Q4 Earnings call transcript