Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Similarweb Ltd (SMWB, Financial) achieved a revenue growth of 13% year-over-year in Q2 2024.
- The company signed its first 8-figure ARR customer and increased its customer count to over 5,000.
- Similarweb Ltd (SMWB) launched an improved version of its digital data estimation, enhancing accuracy and coverage.
- The company generated $6 million of free cash flow in Q2 and $16 million in the first half of 2024.
- Similarweb Ltd (SMWB) raised its guidance for both revenue and non-GAAP operating profit for the full year 2024.
Negative Points
- The company faces risks and uncertainties that may cause actual results to differ from expectations.
- Increased operating expenses are anticipated due to higher headcount to support revenue growth.
- The pricing and packaging of new offerings for large tech companies remain uncertain and custom.
- The company’s strategy to make it easier for customers to get started may result in lower ARR per customer initially.
- Similarweb Ltd (SMWB) needs to continue improving its go-to-market motion and retention rates to sustain growth.
Q & A Highlights
Similarweb Ltd (SMWB) Q2 2024 Earnings Call Highlights
Q: Congrats on a great Q2. Can you elaborate on the interest from large tech companies in using your data to train their LLMs and how you price such use cases?
A: We see increasing demand from big tech companies for our digital data to train their LLMs. Pricing and packaging are still evolving, but we are building trust and working closely with these companies to create valuable solutions.
Q: Your revenue from $100,000+ customers is growing faster than overall revenue. What is driving this, and how does demand differ between smaller and larger customers?
A: We are seeing more success with strategic accounts and have improved our service to them. Our first 8-figure customer is a testament to this. Smaller customers often start with lower spending but expand over time as they see the value in our data.
Q: Do you expect Similarweb 3.0 to drive lower ARR per customer due to lower entry points?
A: Yes, we made it easier for customers to start with us, which has accelerated logo growth. Self-serve customers can start with a credit card and scale up as they see value, leading to strong margins and increased overall AOV over time.
Q: Can you provide more details on the planned headcount increase?
A: The increase is mostly sales-related to support our growing revenue and customer base. We need more customer success staff to manage the expanding book of business.
Q: How is the 42matters acquisition impacting customer interest in mobile app analytics, and what is its contribution to your financials?
A: Customers want a holistic view of digital assets, including web and app data. The acquisition allows us to provide this and offers significant cross-sell and upsell opportunities. Financially, 42matters is a small business, so its impact is incremental but positive.
Q: How is the macro environment affecting your business, given your improving metrics?
A: Our improved go-to-market and self-serve motions are driving growth. In challenging markets, companies double down on market data to understand their positioning, which benefits us as a provider of digital market insights.
Q: Where are you seeing the most demand across your product portfolio, and how is shopper intelligence performing?
A: Data-as-a-Service (DaaS) and our solutions for public investors are seeing strong demand. Our ability to productize and introduce these offerings to the market has led to significant success.
Q: Can you quantify the impact of the new data version on accuracy?
A: The new data version significantly improves accuracy and coverage across various metrics, including country, website size, and vertical. We added over 30 million new websites to our estimation, enhancing our digital data insights.
Q: How did the 8-figure deal evolve from its initial value?
A: The customer started with a few tens of thousands of dollars in ARR nine years ago and has grown to well over 8 digits, using multiple products across various departments and geographies.
Q: How much of the full-year guidance is driven by organic demand versus acquisitions?
A: The core organic business is driving most of the growth, as seen in our customer numbers, RPO, and NRR. Acquisitions contribute incrementally but are not the primary driver of our improved guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
