Semrush Announces First Quarter 2025 Financial Results
-
First quarter revenue of
$105.0 million , up 22% year-over-year -
Achieved ARR of
$424.7 million , up 20% year-over-year -
Net cash provided by operating activities of
$22.1 million in Q1 - Company reiterates full year guidance
“I am thrilled to be part of the
First Quarter 2025 Financial Highlights
-
First quarter revenue of
$105.0 million , up 22% year-over-year. -
Loss from operations of
$0.1 million for the first quarter, compared to income from operations of$1.5 million the prior year’s quarter. - First quarter operating margin of (0.1)%, compared to 1.7% in the prior year period.
-
Non-GAAP income from operations of
$12.2 million for the first quarter for a non-GAAP operating margin of 11.6%, compared to non-GAAP income from operations of$9.7 million in the prior year period for a non-GAAP operating margin of 11.3%. -
Q1 free cash flow of
$18.5 million and free cash flow margin of 17.6%. -
ARR of
$424.7 million as ofMarch 31, 2025 , up 20% year-over-year. -
Approximately 118,000 paying customers as of
March 31, 2025 , up approximately 5.1% from a year ago. -
Dollar-based net revenue retention of 106%, as of
March 31, 2025 .
See “Non-GAAP Financial Measures & Definitions of Key Metrics” below for how
First Quarter 2025 Business Highlights
We remain committed to empowering our customers with a best-in-class platform designed to boost their online presence and gain an edge in the market.
-
We advanced and expanded many of our offerings and continued investments in Generative AI to provide enhanced, more efficient content creation and marketing capabilities through Semrush’s platform and App Center:
- Launched AI Optimization (AIO), now in open beta, a Semrush Enterprise Solution that provides businesses with the tools to track, control, and optimize brand presence across AI-powered search platforms.
- Released AI Toolkit, a solution that simplifies how businesses assess their visibility in AI-driven search results and guides strategic decisions to improve performance and positioning.
-
Semrush customers who pay more than$10,000 annually grew by 39% year-over-year. -
Semrush customers who pay over$50,000 increased 86% year-over-year to 388. - Ended the quarter with over 1.0 million registered free active customers.
“We reported a strong first quarter - overachieving on our top line growth and profitability, as we executed on our cross-sell and up-sell strategy and continued to expand our average revenue per customer,” said
Based on information as of today,
Second Quarter 2025 Financial Outlook
-
For the second quarter, we expect revenue in a range of
$108.2 million to$109.2 million , which at the mid-point would represent growth of approximately 20% year-over-year. - We expect second quarter non-GAAP operating margin to be approximately 11%.
Full-Year 2025 Financial Outlook
-
For the full year, we expect revenue in a range of
$448.0 to$453.0 million , which at the mid-point would represent growth of approximately 20% year-over-year. - We expect full year non-GAAP operating margin to be approximately 12%.
- We expect the full year free cash flow margin to be approximately 12%.
To note, our full year 2025 guidance now absorbs an incremental
Reconciliations of non-GAAP operating margin and free cash flow margin guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
Conference Call and Webcast Details
Date:
Time:
Hosts:
Conference ID: 923956
Participant Toll Free Dial-In Number: +1 833 470 1428
Participant International Dial-In Number: +1 929 526 1599
The live webcast of the conference call as well as the replay can be accessed for a limited time from the
About
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “positioning,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements include, but are not limited to, guidance on financial results for the second quarter and full fiscal year of 2025 (including revenue, non-GAAP operating margin, and free cash flow margin); statements about transition and the impact of recent changes to our executive management team; statements regarding the expectations of demand for our products and cash flow generation; statements about improvements to and expansion of our products and platform, and launching new products; statements about future operating results, including revenue, growth opportunities, variability of expenses, ability to realize efficiencies, future spending and incremental investments, business trends, our ability to deliver profits, and growth and value for shareholders; and assumptions regarding foreign exchange rates.
The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the
Additional information regarding these and other factors that could affect our results is included in our
Non-GAAP Financial Measures & Definitions of Key Metrics
We believe that providing non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but also to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. We also believe that the use of non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. We also believe free cash flow margin is useful to investors as we monitor it as a measure of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allows us to better understand the cash needs of our business. The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release.
Annual Recurring Revenue (ARR) is defined as the total subscription revenue as of a given date that we expect to contractually receive over the subsequent 12 months from customers on an annualized basis, assuming no increases, reductions or cancellations.
This ARR definition was updated in our Annual Report on Form 10-K for the period ended
Dollar-based net revenue retention is defined as (a) the revenue from our customers during the twelve-month period ending one year prior to such period as the denominator and (b) the revenue from those same customers during the twelve months ending as of the end of such period as the numerator. This calculation excludes revenue from new customers and any non-recurring revenue.
Free cash flow and free cash flow margin. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software development costs. We define free cash flow margin as free cash flow divided by GAAP revenue.
Non-GAAP income (loss) from operations, and non-GAAP operating margin. We define non-GAAP income (loss) from operations as GAAP income (loss) from operations, excluding Stock Based Compensation, Amortization of Acquired Intangible Assets, Acquisition Related Costs, Restructuring Costs and other one-time expenses outside the ordinary course of business (for example, our Exit Costs incurred primarily in 2022). We define non-GAAP operating margin as non-GAAP income (loss) from operations divided by GAAP revenue. We believe investors may want to consider our results with and without the effects of these items in order to compare our financial performance with that of other companies that exclude such items and to compare our results to prior periods.
Stock-based compensation. Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense allows for financial results that are more indicative of our operational performance and provide for a useful comparison of our operating results to prior periods and to our peer companies because stock-based compensation expense varies from period to period and company to company due to such things as differing valuation methodologies, timing of awards and changes in stock price.
Amortization of acquired intangible assets. Excluding amortization of acquired intangible assets from non-GAAP expense and income measures allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation.
Restructuring and other costs. Restructuring and other costs include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business. Restructuring expenses consist of employee severance costs, charges for the closure of excess facilities and other contract termination costs. Other costs include litigation contingency reserves, asset impairment charges, relocation expenses associated with the migration of employees in 2022 that occurred throughout 2022 and early 2023, and gains or losses on the sale or disposition of certain non-strategic assets or product lines.
Acquisition-related costs. In recent years, we have completed a number of acquisitions, which result in transition, integration and other acquisition-related expense which would not otherwise have been incurred, are unpredictable and dependent on a significant number of factors that are deal-specific or outside of our control, are not indicative of our operational performance (or that of the acquired businesses or assets) and are likely to fluctuate as our acquisition activity increases or decreases in future periods. By excluding acquisition-related costs and adjustments from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us.
|
|
|||||||
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
|
(in thousands, except per share data) |
|||||||
|
|
Three Months Ended |
||||||
|
|
|
2025 |
|
|
|
2024 |
|
|
Revenue |
$ |
105,018 |
|
|
$ |
85,812 |
|
|
Cost of revenue (1) |
|
19,871 |
|
|
|
14,645 |
|
|
Gross profit |
|
85,147 |
|
|
|
71,167 |
|
|
Operating expenses |
|
|
|
||||
|
Sales and marketing (1) |
|
41,307 |
|
|
|
33,921 |
|
|
Research and development (1) |
|
21,912 |
|
|
|
17,304 |
|
|
General and administrative (1) |
|
22,002 |
|
|
|
18,474 |
|
|
Total operating expenses |
|
85,221 |
|
|
|
69,699 |
|
|
(Loss) income from operations |
|
(74 |
) |
|
|
1,468 |
|
|
Other income, net |
|
4,172 |
|
|
|
3,639 |
|
|
Income before income taxes |
|
4,098 |
|
|
|
5,107 |
|
|
Provision for income taxes |
|
3,443 |
|
|
|
3,104 |
|
|
Net income |
|
655 |
|
|
|
2,003 |
|
|
Net loss attributable to noncontrolling interest in consolidated subsidiaries |
|
(194 |
) |
|
|
(135 |
) |
|
Net income attributable to |
$ |
849 |
|
|
$ |
2,138 |
|
|
|
|
|
|
||||
|
Net income attributable to |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
Net income attributable to |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
|
|
|
|
||||
|
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders—basic: |
|
147,214 |
|
|
|
144,566 |
|
|
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders—diluted: |
|
151,078 |
|
|
|
147,698 |
|
|
¹ includes stock-based compensation expense as follows: |
|
|
|
||
|
|
Three Months Ended |
||||
|
|
|
2025 |
|
|
2024 |
|
Cost of revenue |
$ |
44 |
|
$ |
39 |
|
Sales and marketing |
|
1,627 |
|
|
770 |
|
Research and development |
|
2,466 |
|
|
636 |
|
General and administrative |
|
4,975 |
|
|
3,670 |
|
Total stock-based compensation |
$ |
9,112 |
|
$ |
5,115 |
The following table sets forth a reconciliation of our (loss) income from operations and operating margin to non-GAAP income from operations and non-GAAP operating margin, respectively (percentage amounts may not sum due to rounding):
|
|
|
Three Months Ended |
|||||||||||
|
|
|
2025 |
|
2024 |
|||||||||
|
Reconciliation of Non-GAAP income from operations |
|
($) |
|
(%) |
|
($) |
|
(%) |
|||||
|
(Loss) income from operations |
|
$ |
(74 |
) |
|
(0.1 |
)% |
|
$ |
1,468 |
|
1.7 |
% |
|
Stock-based compensation expense |
|
|
9,112 |
|
|
8.7 |
% |
|
|
5,115 |
|
6.0 |
% |
|
Amortization of acquired intangibles |
|
|
1,379 |
|
|
1.3 |
% |
|
|
692 |
|
0.8 |
% |
|
Restructuring and other costs |
|
|
1,312 |
|
|
1.2 |
% |
|
|
2,124 |
|
2.4 |
% |
|
Acquisition-related costs, net |
|
|
484 |
|
|
0.5 |
% |
|
|
338 |
|
0.4 |
% |
|
Non-GAAP income from operations |
|
$ |
12,213 |
|
|
11.6 |
% |
|
$ |
9,737 |
|
11.3 |
% |
The following table sets forth a reconciliation of our net cash provided by operating activities and net cash provided by operating activities (as a percentage of revenue) to free cash flow and free cash flow margin, respectively (percentage amounts may not sum due to rounding):
|
|
|
Three Months Ended |
||||||||||||
|
|
|
2025 |
|
2024 |
||||||||||
|
Reconciliation of Free cash flow |
|
($) |
|
(%) |
|
($) |
|
(%) |
||||||
|
Net cash provided by operating activities |
|
$ |
22,109 |
|
|
21.1 |
% |
|
$ |
14,779 |
|
|
17.2 |
% |
|
Purchases of property and equipment |
|
|
(725 |
) |
|
(0.7 |
)% |
|
|
(759 |
) |
|
(0.9 |
)% |
|
Capitalization of internal-use software costs |
|
|
(2,879 |
) |
|
(2.7 |
)% |
|
|
(2,015 |
) |
|
(2.3 |
)% |
|
Free cash flow |
|
$ |
18,505 |
|
|
17.6 |
% |
|
$ |
12,005 |
|
|
14.0 |
% |
|
|
|||||||
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(in thousands) |
|||||||
|
|
As of |
||||||
|
|
|
|
|
||||
|
Assets |
|
|
|
||||
|
Current assets |
|
|
|
||||
|
Cash and cash equivalents |
$ |
64,665 |
|
|
$ |
48,875 |
|
|
Short-term investments |
|
197,125 |
|
|
|
186,693 |
|
|
Accounts receivable |
|
11,034 |
|
|
|
8,955 |
|
|
Deferred contract costs, current portion |
|
10,161 |
|
|
|
10,044 |
|
|
Prepaid expenses and other current assets |
|
14,461 |
|
|
|
21,617 |
|
|
Total current assets |
|
297,446 |
|
|
|
276,184 |
|
|
Property and equipment, net |
|
6,401 |
|
|
|
6,534 |
|
|
Operating lease right-of-use assets |
|
12,133 |
|
|
|
11,126 |
|
|
Intangible assets, net |
|
33,007 |
|
|
|
32,055 |
|
|
|
|
57,682 |
|
|
|
56,139 |
|
|
Deferred contract costs, net of current portion |
|
3,379 |
|
|
|
3,080 |
|
|
Other long-term assets |
|
6,453 |
|
|
|
5,825 |
|
|
Total assets |
$ |
416,501 |
|
|
$ |
390,943 |
|
|
Liabilities, noncontrolling interest, and stockholders' equity |
|
|
|
||||
|
Current liabilities |
|
|
|
||||
|
Accounts payable |
$ |
14,218 |
|
|
$ |
10,463 |
|
|
Accrued expenses |
|
21,606 |
|
|
|
20,216 |
|
|
Deferred revenue |
|
79,926 |
|
|
|
71,827 |
|
|
Current portion of operating lease liabilities |
|
5,202 |
|
|
|
4,669 |
|
|
Other current liabilities |
|
5,750 |
|
|
|
6,913 |
|
|
Total current liabilities |
|
126,702 |
|
|
|
114,088 |
|
|
Deferred revenue, net of current portion |
|
235 |
|
|
|
235 |
|
|
Deferred tax liability |
|
1,634 |
|
|
|
1,621 |
|
|
Operating lease liabilities, net of current portion |
|
8,569 |
|
|
|
7,602 |
|
|
Other long-term liabilities |
|
1,203 |
|
|
|
1,045 |
|
|
Total liabilities |
|
138,343 |
|
|
|
124,591 |
|
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders' equity |
|
|
|
||||
|
Class A common stock |
|
1 |
|
|
|
1 |
|
|
Class B common stock |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
331,917 |
|
|
|
322,586 |
|
|
Accumulated other comprehensive loss |
|
(311 |
) |
|
|
(2,221 |
) |
|
Accumulated deficit |
|
(62,913 |
) |
|
|
(63,762 |
) |
|
Total stockholders' equity attributable to |
|
268,694 |
|
|
|
256,604 |
|
|
Noncontrolling interest in consolidated subsidiaries |
|
9,464 |
|
|
|
9,748 |
|
|
Total stockholders’ equity |
|
278,158 |
|
|
|
266,352 |
|
|
Total liabilities, noncontrolling interest and stockholders' equity |
$ |
416,501 |
|
|
$ |
390,943 |
|
|
|
|||||||
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
(in thousands) |
|||||||
|
|
Three Months Ended |
||||||
|
|
|
2025 |
|
|
|
2024 |
|
|
Operating Activities |
|
|
|
||||
|
Net income |
$ |
655 |
|
|
$ |
2,003 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
||||
|
Depreciation and amortization expense |
|
3,424 |
|
|
|
2,183 |
|
|
Amortization of deferred contract costs |
|
3,474 |
|
|
|
3,016 |
|
|
Amortization (accretion) of premiums and discounts on investments |
|
(659 |
) |
|
|
(1,071 |
) |
|
Non-cash lease expense |
|
1,257 |
|
|
|
1,164 |
|
|
Stock-based compensation expense |
|
9,112 |
|
|
|
5,115 |
|
|
Change in fair value included in other income, net |
|
(1,164 |
) |
|
|
— |
|
|
Deferred taxes |
|
(55 |
) |
|
|
(100 |
) |
|
Other non-cash items |
|
880 |
|
|
|
844 |
|
|
Changes in operating assets and liabilities |
|
|
|
||||
|
Accounts receivable |
|
(2,167 |
) |
|
|
782 |
|
|
Deferred contract costs |
|
(3,891 |
) |
|
|
(3,455 |
) |
|
Prepaid expenses and other current assets |
|
(379 |
) |
|
|
(2,275 |
) |
|
Accounts payable |
|
3,559 |
|
|
|
1,012 |
|
|
Accrued expenses |
|
1,632 |
|
|
|
1,414 |
|
|
Other current liabilities |
|
(299 |
) |
|
|
(390 |
) |
|
Deferred revenue |
|
7,873 |
|
|
|
5,658 |
|
|
Other long-term liabilities |
|
158 |
|
|
|
— |
|
|
Change in operating lease liability |
|
(1,301 |
) |
|
|
(1,121 |
) |
|
Net cash provided by operating activities |
|
22,109 |
|
|
|
14,779 |
|
|
Investing Activities |
|
|
|
||||
|
Purchases of property and equipment |
|
(725 |
) |
|
|
(759 |
) |
|
Capitalization of internal-use software costs |
|
(2,879 |
) |
|
|
(2,015 |
) |
|
Purchases of short-term investments |
|
(27,156 |
) |
|
|
(46,706 |
) |
|
Proceeds from sales and maturities of short-term investments |
|
18,000 |
|
|
|
25,000 |
|
|
Funding of investment loan receivables |
|
— |
|
|
|
(7,000 |
) |
|
Proceeds from repayment of investment loan receivables |
|
7,676 |
|
|
|
— |
|
|
Cash paid for acquisition of assets and businesses, net of cash acquired |
|
(512 |
) |
|
|
(501 |
) |
|
Purchase of noncontrolling interest |
|
(90 |
) |
|
|
— |
|
|
Net cash used in investing activities |
|
(5,686 |
) |
|
|
(31,981 |
) |
|
Financing Activities |
|
|
|
||||
|
Proceeds from exercise of stock options |
|
365 |
|
|
|
844 |
|
|
Repayment of acquired debt |
|
(611 |
) |
|
|
— |
|
|
Payment of finance leases |
|
(99 |
) |
|
|
(410 |
) |
|
Net cash (used in) provided by financing activities |
|
(345 |
) |
|
|
434 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(288 |
) |
|
|
(507 |
) |
|
Increase (decrease) in cash, cash equivalents and restricted cash |
|
15,790 |
|
|
|
(17,275 |
) |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
49,060 |
|
|
|
58,848 |
|
|
Cash, cash equivalents and restricted cash, end of period |
$ |
64,850 |
|
|
$ |
41,573 |
|
|
|
|
|
|
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20250507166809/en/
Investor
Brinlea C. Johnson
ir@semrush.com
Media
Senior Public Relations Manager
jena.sullivan@semrush.com
Source:
