SMWB - Earnings call transcript Q3 2024

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Operator

Greetings, and welcome to the Similarweb Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Rami Myerson, Vice President, Investor Relations for Similarweb. Thank you.

You may begin.

Rami Myerson

operator. you, Thank our to XXXX conference earnings Welcome, third call. everyone, quarter

ir.similarweb.com. released Relations are Joining strategic Yesterday, business Co-Founder, we our the results our shareholders, discussion Or a letter well published today website quarter after results our and third on Offer; close, in Schwartz. and with of Jason as the CEO me an overview a presentation for at of CFO, and market Investor to a our as our investor

Form statements call based which the statements Certain the to that refer reflect the earnings expectations. to XX-F cause our management's that most currently These could release differ more our recent statements, information on constitute forward-looking results statements. uncertainties results our made today information. cause risk forward-looking and our best on from involve actual on to from filed may differ factors judgment Please and for risks actual on annual report available

financial and discussed GAAP financial will non-GAAP comparable available the in Additionally, be are earnings directly call report presentation. earnings on today. to most measures certain measures the Reconciliations the the

the We analysts. to Or will highlights up Jason's the questions and begin then open will from and quarter, sell-side we in with call

With go Or. turn call Or, that, I'll ahead. over to the please

Or Offer

driven Thank proud accelerated growth again you, call of increase the results Rami, extremely annual report and growth in improving yesterday. Revenue retention. to QX, welcome, today. the in financial I'm by everyone, customer joining year-over-year we third and quarter XX%

quarter row we growth second growth. net percentage accelerating This increased quarter X revenue customer count points. a and retention, and grew that fourth or the of total XX% NRR, accelerating the customer the Our year-over-year, reported is by in

This sales that trend year, number over our our only results of is up acceleration organization brand a We meeting a growth X NRR from the one our have around and driving and of year. last small last awareness. is XXX% companies customer improved implemented the the capabilities, marketing team we initiatives built group Similarweb NRR and improvement a past over more back for accelerating our again. the growth turn have reported in success helped over now quarters strong software increasing of public the that we

new our see series motion, initiatives the and our Dunn, these CRO, great to is Susan improvements the is progress in success to a deliver. happy of making. driving I'm It are go-to-market she's starting with

in providing Similarweb mission most is accurate, successful to with by data. them companies help the world comprehensive the be to digital actionable digital and

market. their win can business every So

properties, and a a to we solution and continued data invested For and data. us the to The we growth confidence digital place from in provide. our more than the data customers and series our invest quality empower the continue to of have in are trends ability our generate indication customer of retention decade, of value capabilities our create improved that unique the

for us investment AI we have benefit and unique X now, AI opportunity. distinct years digital generative to revolution. means to significant the to capitalize we Right I build options The that in from position the are data a great the made see over monetize Similarweb

are tech LLM first and digital of tech our models data and LLM access one component us The digital and critical to and that train data is and largest is accurate why fundamental of every ensure stack, the that relevant. is their global to with AI their are many engaging companies

and engage its and many with LLM, is now several also X-digit data is also customer. customer. we secured API continue companies This our use today, through announced our XX digital also using pleased October, Shopper Last share Intelligence, tech I'm quarter, divisions and first Intelligence us the customer train during similar Sales our who to nearly big been opportunities. second a And Similarweb It has Intelligence, that to platform other with geographics. we to across integration and X-digit years on Web we

that motion the believe journey customer evolution us already we changes we second having and search are see from more The opportunity significant much for for the LLM online chatbots AI more is behavior opportunity in and [indiscernible] on are material of the present that a Similarweb. the the to that

understand impact to are engaging brands are from that find the to consumer chatbots information several traditional will search transition We that with for their to keen business. how to engine leads the transaction,

the can customer output assist of version great LLM data that the and positioned risk the opportunity growing range from brands AI evolves. every insights omission is uniquely a journey of can world. that around of of new consumers that in evolution believe is way provide the information. to understanding the digital the this a are the The Similarweb for brand a of evolution as this capitalize impact gather we concern in I navigating

products The solution, and users assistant AI case our their of this year, insights all our across of and intelligence per and solution, solutions evolution speed to agents third the our adoption them earlier help and we of sales use sales our customer solutions. way deploying enjoying agent accelerating course, more introduced into to customers. use our is, Last Sam, to introduced engagement, drive we while in own implementing high more year, AI we integrating our And increase to SimilarAsk. the

or is, efficiency organization and time is and there's engineering across in with our improve improvement drive responses, around more to AI. process and area many and internal into our customers' development implementation, the cost AI to come with reducing those costs. support our efficiency tools of more already integrating savings reducing own fourth and the seeing our driving cycle And tools, We're and course, more

us. bullish ahead very the on I'm of opportunity

of opportunity number our meetings high go-to-market more our our website to our a a million we testing We record to the high marketing seeing top that QX, teams generated this continue X.X go-to-market up of our capture big created team are and of registration grow. In than are to year on and funnel teams. record on

reference pleased as appreciate observation side, corporate the the this many that become On to confidence they, and by the Similarweb leaders Bezos expressing when leading of the Altman, of business with big in week, brand been Musk Elon the adopted CEO, Jeff are when world. outlets data. And media show Sam how world. We as making has digital referred want Similarweb critical super Similarweb along Even appreciate importance digital and high-quality executives on website, OpenAI ChatGPT data. measure preferred tweets. leaders, their the awareness his data I'm those our

partner to #X Our goal for is digital be the success.

geopolitical as that only we macroeconomic excellent another our we I and data realize starting say, want the the are getting We of quarter results potential to a the uncertainty execution great are challenges. to like to believe still serve. and whole started. I for during we team and market just period And thank of addressable of

you, turn Thank will the to everyone, that, the I over on call continued support. call Jason. for With

Jason Schwartz

on the everyone and we'll call discuss Or, our third to call our provide us joining performance, I'll and Thanks, the open to then results. quarter of questions. up today financial highlights

$XX.X million of revenue in generated We QX.

retention. quarter As mentioned, QX, Or new by revenue for XX% and consecutive accelerate growth to customer driven the improving to growth in year-over-year continued fourth

year-over-year. million Our remaining end at the XX% RPO, or performance up QX, $XXX totaled obligations, of

to next months. recognize revenue expect over XX the RPO the approximately We total XX% as of

of achieved both our relative segment, over to retention for quarter an overall and $XXX,XXX net for we In improvement QX, XXX% revenue XXX% ARR second the XXXX an rate of customer of metrics. an NRR

will demonstrates encouraged XX% the importance are expect last contribute data, the expect and trajectory the of to to by in in ahead. the ARR we We change and the retention X ahead. The our further over approximately increase of quarters improved nature improvement our rates contracts critical of quarters multiyear and

Our flow the positive a generated of flow in phasing a the we and impacted in operating fifth quarter non-GAAP of quarter. consecutive the quarter quarter flow. million we fourth quarter, in the continued non-GAAP of $X customer cash by collect cash profit. demonstrates was operational of that free margin positively free had a of operating cash the execution, performance our commitment fourth We expected quarter disciplined consecutive in to to X%, delivered seats Free

generate to and over cash free coming quarters quarter positive flow future as We to the expect well. continue in

results for in the the XX% we narrowing year million, expect midpoint for for representing and full we the Following that at we are raising to of $XX.X that approximately range profit the growth QX expectations, and range total revenue range. the yesterday, operating exceeded In revenue reported non-GAAP $XX.X XXXX. guidance year-over-year guidance the our million of

XXXX, million at full For increase million of total year the midpoint we previous to of range the the our to $X.X range relative in million, the $XXX $XXX expectations. of expect an revenue

the profit expected for quarter range $X.X million. fourth the $X.X to Non-GAAP in of to be is million operating

profit operating the $XX For million. the between range full $XX our we and year, million narrowing are be and to expect

primarily increased expenses operating related increased guidance Our reflects headcount. to

presented As capture by accelerate Or our have for earlier, we hiring opportunities the demand to growing data our to mentioned decided and solutions. the

accelerating growth, making as well our progress flow quarters revenue non-GAAP growth X positive time, profit on as profit achieving towards and After free of over and delivering operating remain free we profitable the cash cash flow, further Rule delivering XX focused of and long-term targets.

Or are and that, to I with questions. And ready your answer

Operator

MacWilliams, first with Our of line Instructions] question from [Operator the Barclays. Ryan comes

Ryan MacWilliams

-- the more accelerate. some a see is Or, the How has maybe environment? customer for changes improvements? I'm a it it's better made attribute growth? it stronger customer is what macro new market to growth and do but new great Similarweb you to mix, drove sure of Or due

Or Offer

Yes. we very and what from improvement awareness, of course, an the a Thanks, job and in the a team. fund. [indiscernible] doing more Ryan. driving And go said big more in is I've excellent lately the seen customer earnings call, our registration, -- brand team doing of marketing of of I lot as a our a of great have increase strong amount top internally, in growth And from conversion

Ryan MacWilliams

for but in Appreciate I certainly should you're Jason, into any we think growth? how should growth drivers about then, year insight next key think our that. we next how year starting here, think revenue models the of early And for about XXXX?

Jason Schwartz

the exit to that I the the momentum see the you Yes. full to on year, going think forward. rates good the are We'll see of we momentum that XXXX indications give but at intend that guidance beginning and

as continuing, well. basis flow operating on and going to So forward quarterly profit be a as we're that continue going we focused on cash growth to have to said, profitable both

Operator

Jason Co. Our & next question Helfstein Oppenheimer of from comes with line the

Jason Helfstein

how most perspective, whether product AI, business from Two to highlighted I still a the interest? from the where are a of seems kind versus like, super other you seeing the has Obviously, ago? like momentum within year And questions. most a maybe mix know, but what it's have But products, it's don't of standpoint? Or, you kind early. shifted, the

way in bit the question, it little volatility the the second Jason, year-over-year? XQ guide it have the just then in flows maybe on seeing a of can between spike through Does the slowdown an accounting billings quarter catalyst year-over-year basis? a with then the to we're kind was of do that? kind the And the what why And for and in Just accounting? you unpack revenue XQ, revenue fourth the unpack XQ

Or Offer

we're Jason, perspective, you. think -- the well question. good hear are seeing for the Thank X product X From products doing good to in past a you maybe quarter. I

We're a We Intelligence, the on Web company to core X. years that X lot part. [indiscernible] or demand seeing more SCO ago. our year past the We product, have in there acquired in well. did a of progress the continues called doing We very

more we capabilities. SCO implementing So start deep

seeing the drive So growth organization we're there. channel, sell and marketing great more around success

doing lot insight about high a Sales one our lot there this demand. help had agent good activity. we on tools is the capabilities, well. coming AI Also, assistant, quarter get Intelligence We a there. sophisticated AI of of very seeing Sales so services had with the and leveraging of tool. insights progress has customers a will a demand, organization big that strong Advisory to needs brands with We're lot digital better a

So those very had good now. X momentum I right think

Jason Schwartz

between business, RPO there's to the that's of we And a through works. that we flows we're and guys then and accounting, guide, the visibility -- ARR give lot to I just deferred meet. that -- by revenue the and on an are the you -- revenue know And so the guidance now you how think have like we

Jason Helfstein

Okay.

as trend So about this really not -- into is like kind of next year? representative thinking it's of we're any

Jason Schwartz

No, so. I don't think

Operator

Our next William from with the question Arjun of Bhatia comes Blair. line

Arjun Bhatia

to training? can that to tech LLM very be about then should this these expect the see. touch with second become acceleration company you, with the for you've this companies Or, And big data on that these years we little I it nice what's LLMs. LLM data you us on recurring these quarter, contracts, about train these specific can big if refreshed use use to training data how that Can attracting our start be is just bit does to deal announced you so Similarweb the license guys is just continually as the And help whether special something that models to maybe into needed unique to and a understand fit maybe more and case? coming over a be mature. Congrats to

Or Offer

I more. We be working X ]. you So explain deals to do -- X-figure XX announced more it second to you, customers. to closed just we tell And [ around thanX the but with companies, customer

I good question think LLM is the really seeing sets. growing from order an regarding using ISO X initiative you this So visibility explain to digital AI worked build I And In give nicely with to we're need the chatbot, our data, evolution. that your perspective. it's our that data about a how with to you more feed

data all can first the read smart data, web content The all that probably the and and learn the Internet be is his data, knowledge. we

element need in to be date, to like The speak data what's what giving the the or to is data. is to the order need all up like will Trump in digital This up date to human is the data third to probably world. happening happening. you needs data, that's different of be In probably would won set to data. anything and -- second know He Reddit you you conversation call when And I kinds feed that in to conversation the the data. election, that need LLM

is what's right they're very data in right the what searching now world, where people gets That's are happening the this digital they important. are about. what what reading, now, And talking

when And about be he something have chatbot talking need feed and you the with this daily what and you up that the to context talk that to track, will will know morning they happened. election, those

data And it where our So is question. set answered trend. feeding the this is the I hope

Arjun Bhatia

on Yes, that's And then, back just to Jason, fourth revenue helpful. come quarter the question prior very I if can guidance. the

I sequential should when think of like it a live some sounds you to the new we're QX. coming quarters. more go comparing QX it's past And contracts to guides, in perspective from to compared like start when conservative these LLM

be rev anything starting off some So in extra that that we is aware be beyond? there and QX of Or conservatism else there quarter might the next in just should of rec number? timing

Jason Schwartz

when for these rev data, go once a flows subscription of the just we come deals or term. it's recognize think using revenue and that, start live or depending I Again, us, get in how rec the through. the on general, activated In just people

QX within going through. So quarter. come much reality The those there's the that in of well as timing on we bookings depends and quarter the that be in the come recognized as hope will the of is that when just of how to

So can meet. we consistently, guidance we use like we give same the to and methodology know we'd

Operator

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

Scott Berg

today? your on remarks, of are customers already team customer the impacts that more in you my capitalize to eye, LLM in better you the versus understand companies trend that from second in today. going data you've change Or, could guess X. consumer Or think data? business believing that how seen GenAI seeing capture business you're really what online trying have is and option to behavior, that that I your today forward trying that the a caught I and much pre-scripted

Or Offer

for the you questions. Thank

the information. things, seeing more change way the more they start realize brands this consumer we So is early and consume to that start in

whatever, the Hawaii today chatbots will chatbot changes start and treatment restaurants used search. be hotel, most example, show Miami them than top start and a my top of that the me the the in other want to vacation I if with information For have or consuming I to or plan to from

So being time consumer the understand they how that to something to much behavior get really will are one It's this the action to and drive the and consumer, it's to start consumer about of changed. behavior transaction. now, as how options brands visibility more drive presented want

seek brands start they they the being market they've if more And we data, by see right how been now are more it. realizing data digital perceived, to now So see and for recommended what the kind the best company data of chatbot and action. and et we give help world is the and are cetera. -- them the right market, drive how And this to in for

Scott Berg

in it. revenue Got helpful. then, the talked recovery And Jason, Very the a nice here. about increase you net had retention in quarter

to you're expected the tell higher to in us made early be going it's also you the predicting what term. here, you're that I comment to necessarily that QX short you believe, Not year. and going You go we that think in or today? next maybe XXXX, levels trajectory? Can somewhere it you that how ultimately between you'll and in settle Or 'XX saw 'XX? where do levels about But the think think return are do those to you in you in

Jason Schwartz

seeing Scott. and much, that customers. upsells having with like so well Thanks cross-sells momentum we're We both the that the as the retention as and in we're

put think you're X of things is bit already that by account the is and management our customer is thousands gives on locked we there to I is multiyear place confidence revenue very that a the land, you're the us that thousands thousands One of book multimillion customers, deal to in then we this are example is thing team to commitment and indication or accounts. now there. about over and hearing of again have. And that little that millions, from we confidence fact dollars what those XX% side. twofold, taking That we of and the of of tens seeing another talked how commitments. dollars retain and of the we are and another of the And of large encouraged retention a on that hundreds second to give that in are expand that motion earlier, of business is of them success lot and us over the

Operator

Our Thind of next with question comes from Surinder line Jefferies. the

Surinder Thind

the In near but that think where us how you over through away a deals have are something terms term? of point, little past necessarily million a of $XX X-figure X jump in at the ARR? got just should the that like $X more this years, Not an the you maybe with we walk this how upsells? Or the able from XX Is there? million they ARR to latest to a about of bit large journey

Or Offer

So the Super think advanced with we to about a those digital show start stand of long-term visibility. story those Those companies that offering engagement X-figure they relationships market at nice have our figures each I the years, of more amazing companies. and more over almost started the XX data X with solution. around ago, low And them digital and started X data Intelligence, engaging If more Web Intelligence. trusted market Intelligence into capabilities it deals, with us we it's go don't you engagements basically for X data. very the little, And years have us giving and them, one our buy now with to Sales of become and adviser trust our more when

of business, to digital to the deals. depend the more want again I many come now think companies data we've that for years and engagement the the more And we provider. success this as build And we world on their to digital big will more and down and you more built driving And the revenue see -- market like relationship road. those give over drive those those confidence

road. and down that, with happy the more come hope I to very we're So

Surinder Thind

the if this on accelerating within focused Or, to bigger that you've mentioned talk where in and your can at clients. just and out little opportunity kind of more see near improvement there's And think a clients clients but of Is this ability demand those incremental then a hiring you're just opportunity on bit start in you to seeing the upsell are I terms force, -- about existing we the maybe that think point? to where a sales higher about the there see just term? -- new you can you enough finally in with the NRR, buying coming meaningful we

Or Offer

we Yes, thank our see expansion. accelerate X go-to-market place great you question. for that the can We

the demand first funnel. hire take seeing in end we're inbound, the see. one accelerators The increase meetings to is demand the the in all the and over inbound Basically, to of top we more the of

area the clients. The doing around enterprise basically second repeat is rental

really We on which have success today, the those we more need than customers drive enterprise market. actively offering customers approach be about customers we know and solution educating and exactly side. and X,XXX our to more want in And our industry

a market to hoping that digital and massive, time. be TAM, of every that company Because and is world big our share online solution we more talked and a our in growth. to very we're need about we believe drive market lot want successful, But operates the

Just that of any insight to and on to capabilities, get front right them the them people, the board. in them present bring can and bring we

So opacity good there. we see

a also we shopper we the a app come for we company Intelligence the Amazon and and App for Web a website activity, strategy. can customer especially So -- marketplace and to multi-solution now for that Intelligence are the have and

I So lot and of offering. great present a with come can

so our good also And seen on momentum we've enterprise.

Operator

comes Patrick JMP. from question the Walravens of with Citizens next Our line

Patrick Walravens

each one What as for sales, Susan one, made my most is you. changes what how But Or, first Dunn on? and of have Great. new she focused I is she of head doing? your

Or Offer

A Wow, leader. industry amazing. amazing comes that cannot tell us. Susan an joined We lucky feel true is from much she how we She you background.

more It's $X raising She Discover business. there with well been leading she Nielsen XX years with She since and thousands a grew So learning. people. of was than IQ. ARR billion

approaching, deep knowledge she moves. very we're and [indiscernible] ecosystem. the great of about to really success she up we go-to-market data, excited how sun So around up a the it. All executive the Ramped have a the doing to And and background, capture selling now. right really and very we're lot has industry CPG raising insights, set job

Patrick Walravens

Page XX at we get deck of size I what how you margin, then, XX% a remind long-term on to us look model, or long-term And or that your think you, Jason, that model? when Awesome. what to get operating at about for where level slide if we

Jason Schwartz

Sure. level, to It's cash $XXX free free to of we'll cash And talking $XXX flow. And gross about margin XX% margin, between be that flow. million. at million Meaning, looking operating forward model,is and XX% million to XX% million long-term $XXX $XXX that. that

Patrick Walravens

to Congratulations guys. you

Jason Schwartz

Thanks so Pat. much. Thanks so much,

Operator

[Operator question line the Radke comes Citi. Instructions] Our next of from with Tyler

Tyler Radke

around of Just sort terms they're the us going you cases API then just the back much bigger you the that and consumption remind the to And terms seeing how Can deal than of exactly data Similarweb are of questions what or of those deals. an for involve sizes? they just access, some AI How use AI AI are deals deals? or in traditional in nature of of those kind structured? average

Or Offer

Okay.

if So is we're products talking -- you're AI we basically, about deal, about talking the there different sell. X

you up first in with about different different going world. it's And smarter train to data to help chatbots that things. be one date what's basically, be training each when is to the can LLM to LLM and The their data the digital sell, then one sets,

what and platform. stream read, And by happening those X right data it's different different figures growing. and you and basically deals So people, about sales, start from then now, usually, what's regions do

model see adding improving and with one data it the then more starts start models. set, small you It

around also people perceive line what And demand number provide by platform. understand ask of increased the the to The product region, by there, business they those consumer who the to chatbot. of using how understand answers. by want it's And second brands it's to

and but -- go also it's it So it starts with can X up. there, figures

Jason Schwartz

freshness contracts Tyler, as the data, do value up because LLMs to the keep the to in renewed need to And that the of saying with just of think we these Or the that be order before, was of need date data.

Operator

back and our Offer turn Ladies question-and-answer for gentlemen, comments. final the concludes floor that session. any to Mr. I'll you. Thank

Or Offer

Thank you. Thank you, everyone.

Operator

today's conference call. This Thank you. concludes

your may at time. you participation. disconnect Thank your You for lines this

Similarweb (SMWB) 13 Nov 242024 Q3 Earnings call transcript