Similarweb (SMWB) 10 Aug 222022 Q2 Earnings call transcript

Greetings, and welcome to SimilarWeb Q2 Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. R. J. Relations. Investor President, Vice Jones, Please go sir. ahead,

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

cause projected during results an Risk During this performance statements. be of XXXX, call, These our we differ differ or of economic materially results, will from implied uncertainties to the make subject our Again, those forward-looking potential may known the statements therein. as and SEC future impact include results our review timing Further, Please business with projected unknown the risks, entitled not strategy, associated XX, on or business. implied COVID-XX XX-F statements pandemic forward-looking or actual the anticipated results March growth performance. section such may the are our Factors expected of the and our from financial These events reported related and timing global call. its Form to certain and statements the long-term assumptions of predicted actual should the that future could filed and our in materially uncertainty, overall particular, the results future indication prospects. by and to considered

undertake could cause as of from today's For a by of that obligation based law. available as make required information actual made update are no on today, We the to statements factors we forward-looking on results date, to statements discussion XX, differ statements. forward-looking our that any the the except note Also this forward-looking XXXX. call August

forecasting of planning purposes. to basis. provide share-based and are because or GAAP financial financial We be assets non-GAAP loss, and and and other operations they of financial expressed use We items. our and used operating may referenced business that non-GAAP represents amortization this on measures results today operating analysis intangible consistency for certain non-GAAP call our business collectively payments of In loss certain presentation believe may we we other when investors and results As reminder, less past combinations, and to adjustments measures particular, of a comparability on nonrecurring related trends compensation, financial a non-GAAP to measures which certain business, of financial our taking indicative these excluding outlook. and facilitate internally internal helpful items not be by performance with in

up included ir.similarweb.com. reconciliation financial CFO, non-GAAP GAAP a release, with Jason to an we measures in between to analytical substitute call SimilarWeb. can strategic Relations of Offer, non-GAAP Or to note call attendance. discussion brief sell-side of detailed tool second with our are results Offer Schwartz then and limitations However, considered not financial prepared we to from shareholders that will a we investors questions the a in open XXXX for letter our published quarter Please analysts our of website. over are I on reference which overview of available that, an presentation the Relations turn as business, well With investor will CEO only. purposes should accordance the as Or updated in CEO, found both Investor remarks financial from is isolation a Today, begin and these website GAAP. prepared or in have as Investor supplemental A for information presented our at They and as with which from in be measures informational be will for our on earnings

second consisting our efficient customer growth our call strategic thank quarter. in in of joining XX% for and strong. $XX.X to you We R.J. result of the as grew last we an expansion focused remaining Revenue today. enterprise accounts on everyone you, over And million to excellent base more global second also company. QX quarter Thank our posted the SMB, The year

with $XX,XXX since customers right year-over-year more over behaves change comes XXXX, that from even solution X,XXX to spend to into ecosystem -- how revenue the through times and expand help a us. to more of customers. of year important have about Similarweb our uncertain, has those navigate global and customer XX% offering recurring relationships has just as economic year since the annual strategic become digital grew our Today, $XXX,XXX metric with customers multiyear stormy in information in decision environment year-over-year critical is make Our spend and contracts, macroeconomic XX% and Furthermore, the up our XX% that consistent visibility successful. our IPO. our our more XX% of account over us who to be base become it annually, weather and a continued than to average per The

analytics data, sales, innovate improve we wide and we are a a the their teams. actionable to data. then marketing, them including designed solution online of data revenue-driven our and it solution we of reminder, from make to enable help collect of the impact on of users into packaging suite range our better customers, built add to and insights solution and which in quarter, refined competitive The underlying C the for extensive customers, e-commerce to our markets. top decisions our seek teams we and upon operational our Every to As

feature regular our to forward look additions. customers Our

took value us we major our more enable to provide to quarter, a This customer. that step-forward

complementary as a Rank immediately represents acquired acquisition with capabilities enhance which of continue. data. example strategy, SCO to a aspire the great and we This our which Ranger, technology First, our we M&A

world. time. customer up plan more to incorporate from give feature formally customers The activity which add over we product of App intelligent AI our are Second, data data an initial we the expanded responses and view that our our any positive, partnership, launched across digital

the We the insights the macroeconomic deliver, in innovate we to half Intelligence grow. adopting environment in appreciate deliver Investor greatly for especially our customers as to the in which build to value and middle new new we exciting investor our for our our solution, year. are will of back uncertainty, the to timely of customers anticipate with we in Again, bring are cycle will Lastly, experience the a we market times of experience continue we customers.

us becoming profitable. efficiency to also more will are that We focusing on lead operational

to unlock are our market I call only will you. just Jason, turn We within a the opportunity. multibillion-dollar over potential to beginning

and will you, results. you Or, our second address to the quarter our financial open on briefly call I discuss call joining and everyone we to the us up to thank today questions. Thank will performance, then

exceeded the $XX.X million of second results reached to of to in on outlook quarter commitment $XX.X the our disciplined our Revenue high Our quarter for show our continued million and the end execution. range.

for customer to segment of XXX% NRR, QX our year. last compared XXX% Importantly, to retention NRR $XXX,XXX to increased as XXX% the XXXX XXX% to our as dollar-based ARR increased and overall or in rate, compared second net in quarter

will of XX% months. performance Our remaining obligations XX% RPOs next XX year-over-year be to the $XXX over realized increased or million, which

As we in we plans exceeded also our on revenue, line. exceeded bottom our

the the sales loss which Our loss was less our than end was the across above factors operating $XX on million efficiency expectations two $XX.X million, guidance of result low The this and were business. range. non-GAAP operating driving

reminder, prior this result includes non-comparable impacts year. a to as As expense the acquisitions from our compared

expect million. million Turning range total in now $XX.X XXXX, the revenue to to of $XX.X QX we

$XX.X the to total range the million $XXX We of to $XX non-GAAP the and range. of For XXXX to result million. $XXX XX% in full gross last acquisition is Compared relating expected at cost Non-GAAP data the midpoint outlook and XX% expect of million loss to AI a in XXXX XX% anticipate the QX our growth of and impacts. impacts year, XX% to million and year-over-year the be includes between Mobile. to revenue year, MB we in million, of full to year, the third for to operating will goods million our the for approximately $XX.X full margin representing XX% these to for be continue $XX year quarter between sold range of as partnership to

running are XXXX profitable questions. balance are pursuing increasing time second and making results during With decisions reflects and globally. on happy very flexibility focus Or efficiently to the Our resilience maintaining challenges of quarter strategic I growth. are your sheet take our business and indicate that, we The our we

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

I on on the focused seeing to that as prepared things Guys well. as and from X that and more difficult little more to EU softness appreciate enter calling more in just ground the starting a are SMB the you macro remarks maybe that Can impact those you're environment. the maybe the of your just in you XX maybe some we see you're customers the how next highlight a months? out over strategy

speaking. Or It's

So I the see that think a market. in softness we do

cycle longer. it you the little I feel just closing as do more think to of bit business harder it's life deal takes a a --

budget people etcetera. haptics when there's think all lot I of the the the switch as jobs like allocating customer a

regions. So I a but in we've also seen the in slowness, lot think Europe, other

across the sense. for takes the for this basically that much quarter. And puts software So And with what free path Can rest out? in just of are flow -- think on the the there? here cash and flow going the universe Any cash seeing some and then can from how that line? free you forward for provide changes we just year, about we're on Jason, makes

Ryan. sure, Yes,

year. you the exceed that for flow cost some should that that not execution. normalized So free -- on cash that of I cash free see million think kind given flow We've in think the we the you disciplined $XX

been at managing from And happen significant Well, we're of the so point, renewals that. our a just a QX we've amount as flow and I QX. from reminder, think cash here perspective, a a halfway in

a QX the of April lot the comes flow beginning the so to of of and in And QX, that in cash end year.

a our cycle. into getting the part we're So weaker the of standpoint billing flow seasonal trough of cash from

one so in call XX-month here on in to our other did release you a saw we is new the that look basis. The always headquarters Israel. it is do we And rolling thing at move out that into what

quarters headquarters related flow We capital out the free build-out cash about cash the few ago, here talked break coming both flow through we that had and the quarter. total loan free and we that that cash in So, a had and release. the you normalized lung a expenditures the on this new to see that you cash and show that,

you. Thank

line question Oppenheimer. comes the from of next Our Helfstein with go Please Jason ahead.

how to you're thinking into Just just gross year. next one, ask about margins about want

flow year kind this I feel should we will So the be with next there's the obviously to in gross Do margin the gross year. what don't of meaningful have that margins? you like it pipeline, to you of see more like slower, that product investments to extent mean, the the more first about I the back but able in if we more growth -- 'XX. been know something, saw depressed something half sales have bit get little you're XX, And investment is how like line? world then XXs, in to if XXXX, bottom high thinking separately, 'XX call marketing XX, it, you and and let a

So thank you, Justin, good to you. from hear

about let's the gross So talk margin.

the get definitely we the that to saying long-term Not short going numbers. the model, most XX calls yes, improve is So to hoping answer are we're but like the to the of chunk operation biggest going is cost looking not about to future, And the increase. the acquisition. data it's the think around is from that into coming definitely like think are This I our I prove there.

a place in very are we So currently. and good

is answer will yes, nicely. probably the and So increase it

efficient. SMA, Regarding in decisions to more lot this make It's time. we of very again, important a be

and and add forward. you in have spend sales on do hopefully improvement also that? So optimizing to we Jason, around good anything going have marketing are

one you flow that Yes, that. think is start efficiency with things quarter. that I the this or I agree of you already through on seeing And

We on it's to line the through that actively in you're this of in be fell improvement in numbers QX. sales XXX already and and growth marketing starting making basis see quarter efficient, to I lot part come the to and line with decisions point the revenue of strategy, the a bottom more a have that think

you. Thank

Brent comes Please question of with Jeffries. next Our go ahead. line Thill from the

is for Thill. John This on Brent

like looking it of the through QX QX. rest similar year, So for implies to the guidance the looks growth

I August, July, rest broader about to change efficiency, how operational ask going how question, is and so how wonder of in into And the cost is And the quarter change of part from, structure, wanted just far much wondering macro embedded? year you're second So in trends also headcount then next plans thinking are how to on? you are year? what terms thinking of the the how June? notable the let's in Any about say, so in about

for the thanks John, question.

the about about talk then So on and the think first, about -- efficiency. talk we'll we growth operating trend how

requiring done, guidance. So additional are as we levels more getting see not And account talk Or to they're take that we trends macroeconomic that cycles as where within we're mentioned, into immune about prepare the deal the our taking we stuff of just or organization. we happening that that's reviews

like me to You've that we'd we guidance that meet. say we before can heard give know

have we sustained as get shareholder letter of focus unit from the economics in And to those so that with flow we said, are that released drive on we that I that And night, do, an and proactively coming -- see baked we to through our to And to is into flow. that to we to already. last we standpoint, efficiencies we work efficient. diligently and on is as mentioned on that the decisions more cash something efficiency and growth be those kind making have are assumptions like lines guidance. balance the are this disciplined And you execution that cash focused operational

and into we as our XXXX. baked guiding assumptions planning for is that start about thinking So,

that, efficient, the headcount have hiring the will looking time hiring the because people to be XXXX. made for next I for and that started did decision of now on more of probably to it hiring and we future would top account into add of impact XXXX And QX the into we're of the now course, that planning plan plan. QX we that is we year taking for

Thank you.

Our Radke ahead. go Tyler from question with Please comes line Citi. of next the

rest if mostly if other could some geographies they're companies just in the for you we've I in about was kind issues wondering perspective -- year? the of and saw to in the spread baking you're geo your wondering plan assuming the that geographies talk to that Europe in you But from performance seeing what Europe. you're of of a that conditions those rest relative from heard

question. well Japan So doing it's sorry, that. think our very U.S., almost like U.S. good have and did was was was that the was that up It think, and it around of up represents a it's also some We we revenue. I I internal it Interesting interesting regions an look quarter doing operation our well. -- our now also, XX% And enough, XX%. XX%

performing. So interesting dynamic. good U.S. was was Europe

to and For or operation example, we I'm information scaling very Germany. good have but any And you trying think we more on struggling. thoughts anything in France, were have a if on. U.K. No. maybe more

think this global a the good I So is overview about impact.

Yes.

geographic things assuming kind you're what the bit on from the perspective, assuming worse if a stayed just maybe you're Jason, guidance investor a of sorry, And get and same?

assumptions Even there we that's some Europe, in over on based and we've some solid the good of a there. So, taken in got regions things see that the pipeline already. still pipeline we've

of And put so at guidance. we we look together our as all those factors

who things and we some will make. be to giving that will will that there's want make guidance be some sure we similar, that we're can that So, assume knows, assume things always we

of primarily Just or related? where the marketing perspective, sense is hiring us it pulling us down direct a you're give a side? you what areas sense headcount from back give And it on kind you're -- less perspective? sales a spending the maybe from it on the slowing Is of is most? Great. could just are a on that Or

on how me I let side, so lately. did lot try marketing -- So to of the about a think we think changes

think and are was bigger optimize to were we than planning. bit as marketing I little we our it organization a what

when are to of around bit only a in areas have higher the a R&D each probably in amount also doing be planned those we amount recruiter car now adoption to did the your so, think recruit x come in of income. and major about on little in recruiting, client organization, you people maybe marketing bit little maybe and set down And services I

that. can So workforce less need to executing you

you. Thank

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

the you Perfect. question. Thank for guys taking

bit uncertain you uncertain you you're your I expect versus within deeper you coming how that customers? new in little sense a mentioned certain environment there little shareholder more curious going are rely that more. others just remarks in into demand a times, how be in products think, could Do times actually couple through? a Is more thinking out? think of that might existing dig certainly portfolio? customers drive data letter prepared in bit a the makes customers Could that I as maybe to your in will to business and on just their more that's concentrated play than -- it's think benefit you I'm increase

Yes, of course.

the stress we and world and So in a strategy. our in travel past, was to They and back or back phenomenon bought struggling adapt to hit, the a see order COVID lose all we're on, on sectors when the similar we all came the going thought great then, going was of example. When more them. when any

we a there the that now to start do time market of better, and as a get public get now in about going is they into that more to do the more see to gets right to lot little and hectic. bounce think again. realize the seeing in So vertical. they now when So bit rents signals things planning a that a bit we is market and back? when increase we're investor investors little similar we're And try area start One can motion demand start to can the investing when

both data world Similarweb the give So performance. indications, those best will you is on -- and digital

situation. to think vertical those get So, we And more let's are start seeing about us. them start thinking having the services first data, the from that more interest more I use

and market see market start probably getting more digital time. we're -- those verticals going demand So, for that more to of for

maybe very for then -- That's And it. Jason. helpful. Got one

more expect us give of a the for expanding the net environment. you seems any bit might doing can sense wondering of retention you I'm well in as obviously for at very rate gets if backdrop it year Just is customers little out remainder all. retention you granularity you that macro how how play just are Can if with that your be might changing, the this us share more and the in terms gross metric And that challenging. have which a in

for are have. great really the we at expansion you. a hear it's that gross numbers customers that lot to and pretty The actually, the rate from power of the stable. look of Arjun, retention is think So I part, buying The thing most

on of One already of multiple numbers in our ARR the is the ARR the that is some us years. durability XX% of signed confidence things our up gives and that for --

even so business, will, of report already recurring for during business our time. having annual means though are and that as renewal, you revenue if And of those multiyear of we up that's an XX% think not deals that things, period up that is revenue that but on signed

different And gives getting We're so of detail, that get intelligence that the to us seeing in number as that more a need mentioned, there. that they customers confidence things able large regions. in or that over the being Or

people pick where expanding more starting the and regions. of products And I strategy more are something So are this their customers to on their and up information some integrating like we're Intelligence as products. within deeper are into stuff, into integrating additional movement quarter, we Similarweb seeing our solutions need customers some they so more also -- actually that think OEM And product Shopper to see. our where that's great we're and more Shopper

to to the to kinds macroeconomic that and trends they those we continue of things, going extent these for. watch are of be to during think number So we upsides kind continue the that things

Thank you.

comes question go the Noah from line of next Please Herman with Our JPMorgan. ahead.

maybe you Thanks for are quarter. question the usage going color us What any Can customer on forward? your on platform? Hey for provide solid a on my taking pricing and congrats expectations guys.

Sizing the question? platform. on you Can the repeat

Yes.

pricing? Or itself. Just power if maybe maybe any any pricing you the on touch change maybe have you for could platform in

And the pricing packaging. and

area on be. better well an able are think as that be introducing I strong to increase a platform, the have customers to the think more we And still customer it's a then and is can more putting price. to and I the ROI a about deep the one packaging to that belief our our that get as better the pricing win is to more not solution win-win we that optimized scenario holistic more has able more have will we our

So, the where business. area of we one into of are lines each an thriving

of have We them. five

in good, top and have neater best top and better, and of a will We on have very approach add them each strong to a of that. also that of one on add-on plug

not we're just in place, we but optimizing and So perfect always I'm of hired pricing and a packaging. a director

to answer hope So I it to that efficient really leverage I there's get question. of a lot the hope more

Got it. quarter past of few any on you've over months what maybe the terms as maybe in color from recent customers the And seeing seeing and usage been what well? you're into most heading just

easy use efforts always. up And a on going in to and of the platform. is we putting discoverability lot to product are Usage of work our the and

ongoing improve more So, teams to feature. to day-to-day only help always is not we more usage and also discover working and that customers usage have to

a have We many very functionalities. good platform with

So, something success. we working toning, that having and great it's we're are

Thank you.

from ahead. question Cantor Knoblauch the Please of next Our Fitzgerald. comes line Brett with go

thinking prioritizing ACBs. was with is are product just taking some the provide for then research color demand core of incremental update could intelligence exceeding you're about Thanks I sales has And selling marketing adoption as on still seeing app and products? question. your product. expectations? Intelligence Jason. Are How as an digital your they they force either to? much that on digital your that Shopper your Is them similarly, or those my wondering maybe well if the for higher landing of you

Yes.

of the first thank question. So you for all,

So regarding model. intelligence the app

the were great. So initiatives first

of hundreds have to deals. many them customers more offering. seeing this closed very it also, or we a And was more And already good we So, and many, indication. getting from information numbers of to requests

but becoming is momentum seeing dynamic close longer us taking good the that also to as tough, a pipeline. it's market it's So this

saying market great. of offering we're forward. it going are the about the excited So this also first And part initiative dynamically

we ACBs ways best high better, so lot the didn't Intelligence, Shopper to too Regarding it have put we of good, with indeed, mostly was offering. launched market and a because product the very to

good as to different price. in you can the it was big because was continue one charge momentum out on it sector But of down said the we having for It tougher or was beginning. them industry as part platform, price. it road, the and full much So to every

a offering a we dice the the quarter ago, better, core and the introduce the offering. well I Shopper for to this compared acquisition before few and that always. as to last So very months Shopper scale think logo good, was for And slice regarding ability that. best quarter, changed us And this and good to also the product, they're doing

full time And when between call environment. guide, or Perfect. XQ, kind then implies maybe on obviously sequential in at it in XX.X% and you last just it, macro revenue look difficult so year is more much your of a this that XQ growth frame XX.X% year, backdrop you grew,

understand see environment? help uncertain that relatively the gives kind macro just us more last the you what what given going confidence in XQ year, to saw can faster of you So acceleration maybe you're than you

Yes.

well that all just together. deals the So, and to we've and helps the at discussions pipeline have we looking having. the that as and form put and put at as guidance that We confidence and that we backlog got us that look together, our the that place in we're we're

times that Our know to we to goal and well. aim do give as that always is to continue we through these meet, guidance we can

the of JMP with Securities. Our next comes Please question Patrick go from Walravens ahead. line

All talk Jason, cash. growth. right, And let's Great. on the about add me let congratulations continued my

have the $XX balance on sheet. you So million

in basis. even get back will the year. operating the better collections the on $XX so, XX be guiding in the I half normalized of are per you're But losses burned still to a You million the quarter.

quarters case, but know yet have haven't the next think you I it, address that let's And the address should So just which bear not you I year. cash, we of guided right? is five that's case, it. for

When bottom? where make So positive? expect us you that what decisions? to free having -- you can balance you do you cash be these When you'll cash do comfortable think are tell flow

Great.

But remind the have the So million on million $XX with you're sheet. facility. just balance under you, of undrawn I right, also cash we credit ended we $XX a quarter

of in of to the our per course, And is in that revenue was before in QX terms driving generating have and we to $XXX and we on customer, as then the continuing to deliver kind numbers balance that growth. resources And do order feel the of like IPO than comfortable an we and we're so, that that disciplined going things burning company liquidity execution did doing execute we more cash public, retention terms in where What very efficient. as and $XX million of done million million results over we -- ourselves burn then cash our we've turned right were being we and $X view the following cash said, being XXXX to unit a having the more that with same decisions be very to customer drive for order outstanding of of favorable accelerate that customer revenue to XX% ARPU making in to us becoming part That from the we to proactively this we're flow per Pre-IPO, the company. those pre-IPO. is execution of one growth net proceeds liquidity into on growth continue to company and a and plan. the history. our cash positive less of throughout use year on that focus what economics now took than half year, to back over by cash XXXX go million in more flow. cutting growth in by net $XX.X I'd to growth free adds XX% minus that always -- than following And for available

hopefully, through when we've for that already P&L. cash about think to sustainable in that to quarter our started we improvement this that of already investment is to to I'm guided, as something all focused the as guiding And talking indications on show that are get year this that flow. be to following You're efficiently those starting the And across been see that the come we focused will margin we that And -- community see continue the plan terms and we we've through. that operating be on this beyond. numbers. free XXXX -- to that our earlier come XXXX

and Thank this conference. of Similarweb, behalf concludes question-and-answer Ladies session. this the gentlemen, you. concludes On that

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