Press Releases

Similarweb Announces Third Quarter 2023 Results

Achieved company record gross profit and gross margin

Achieved Non-GAAP operating profit for the first time

TEL AVIV, Israel--(BUSINESS WIRE)-- Similarweb Ltd. (NYSE: SMWB) ("Similarweb" or the "Company"), a leading digital data and analytics company powering critical business decisions, today announced financial results for its third quarter ended September 30, 2023. The Company published a letter to shareholders from management discussing these results, which can be accessed at the link: https://ir.similarweb.com/financials/quarterly-results, located on the Company's investor relations website.

“We delivered another quarter of revenue growth in a challenging demand environment, and we achieved non-GAAP profitability for the first time, which is a tremendous accomplishment for us as a team,” said Or Offer, Co-Founder and CEO of Similarweb. “During the quarter, we launched the latest generation of our platform, Similarweb 3.0, which brings more actionable insights to more customers than ever before, especially in our Research and Marketing solutions, and we are excited about the traction we are seeing.”

Third Quarter 2023 Financial Highlights

• Total revenue was $54.8 million, an increase of 10% compared to $50.0 million for the third quarter of 2022.

• GAAP operating loss was $(4.9) million or (9)% of revenue, compared to $(20.6) million or (41)% of revenue for the third quarter of 2022.

• GAAP net loss per share was $(0.06), compared to $(0.28) for the third quarter of 2022.

• Non-GAAP operating profit (loss) was $1.1 million or 2% of revenue, compared to $(13.3) million or (27)% of revenue for the third quarter of 2022.

• Non-GAAP operating earnings (loss) per share was $0.01, compared to $(0.18) for the third quarter of 2022.

• Cash and cash equivalents totalled $67.4 million as of September 30, 2023, compared to $77.8 million as of December 31, 2022.

• Net cash used in operating activities was $(4.8) million, compared to $(21.7) million for the third quarter of 2022.

• Free cash flow was $(4.9) million, compared to $(29.5) million for the third quarter of 2022.

• Normalized free cash flow was $(4.6) million, compared to $(25.1) million for the third quarter of 2022.

Recent Business Highlights

• Grew number of customers to 4,371 as of September 30, 2023, an increase of 12% compared to September 30, 2022.

• Annual revenue per customer was approximately $50,580 in the third quarter of 2023, as compared to $51,570 in the third quarter of 2022.

• Grew number of customers with ARR of $100,000 or more to 355, an increase of 10% compared to September 30, 2022.

• Customers with ARR of $100,000 or more contributed 55% of the total ARR as of September 30, 2023, compared to 53% as of September 30, 2022.

• Dollar-based net retention rate for customers with ARR of $100,000 or more was 108% in the third quarter of 2023 as compared to 123% in the third quarter of 2022.

• Overall dollar-based net retention rate was 99% in the third quarter of 2023 as compared to 112% in the third quarter of 2022.

• Multi-year subscriptions now comprise 43% of our overall ARR as of September 30, 2023, as compared to 37% as of September 30, 2022.

• Remaining performance obligations increased 6% year-over-year, to $167.7 million as of September 30, 2023, as compared to $158.0 million as of September 30, 2022.

Financial Outlook

“We achieved record gross margin and our first ever profitable quarter on a Non-GAAP operating basis,” said Jason Schwartz, Chief Financial Officer of Similarweb. “This reflects our ongoing efforts to improve our operating efficiency, which enables the conditions for profitable growth and sustainable positive free cash flow.”

• Q4 2023 Guidance

• Total revenue estimated between $55.5 million and $56.0 million, representing approximately 9% growth year over year at the mid-point of the range.

• Non-GAAP operating profit estimated between $0.5 million and $1.0 million.

• FY 2023 Guidance

• Total revenue estimated between $216.8 million and $217.3 million, representing approximately 12% growth year over year at the mid-point of the range.

• Non-GAAP operating loss estimated between $(8.6) million and $(9.1) million.

• We expect to reach sustained positive free cash flow in the fourth quarter of 2023.

The Company’s fourth quarter and full year 2023 financial outlook is based upon a number of assumptions that are subject to change and many of which are outside the Company’s control. Actual results may vary from these assumptions, and the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

The Company does not provide guidance for operating loss and gross margin, the most directly comparable GAAP measures to non-GAAP operating loss and non-GAAP gross margin, respectively, and similarly cannot provide a reconciliation of these measures to their closest GAAP equivalents without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.

Conference Call Information

The financial results and business highlights will be discussed on a conference call and webcast scheduled at 8:30 a.m. Eastern Time on Wednesday, November 8, 2023. A live webcast of the call can be accessed from Similarweb’s Investor Relations website at https://ir.similarweb.com. An archived webcast of the conference call will also be made available on the Similarweb website following the call. The live call may also be accessed via telephone at (877) 407-0726 toll-free and at (201) 689-7806 internationally.

About Similarweb

Similarweb powers businesses to win their market with the best Digital Data. Similarweb reveals what is happening online and provides businesses with the essential digital data & analytics needed to build strategy, optimize customer acquisition and increase monetization. We empower our users to be the first to discover and capture the best business opportunities and stay alert to react instantly to emerging threats to their business. Similarweb products are easy to use and integrated into users’ workflow, powered by the most advanced technology, and based on the most comprehensive and accurate digital data on the planet.

Learn more: Similarweb | Similarweb Digital Data

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Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our guidance for the fourth quarter and full year of 2023 described under "Financial Outlook". Forward-looking statements include all statements that are not historical facts. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. These forward-looking statements reflect our current views regarding our intentions, products, services, plans, expectations, strategies and prospects, which are based on information currently available to us and assumptions we have made. Actual results may differ materially from those described in such forward-looking statements and are subject to a number of known and unknown risks, uncertainties, other factors and assumptions that are beyond our control. Such risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) our expectations regarding our revenue, expenses and other operating results; (ii) our ability to acquire new customers and successfully retain existing customers; (iii) our ability to increase usage of our solutions and upsell and cross-sell additional solutions; (iv) our ability to achieve or sustain profitability; (v) anticipated trends, growth rates, rising interest rates, rising global inflation and current macroeconomic conditions, challenges in our business and in the markets in which we operate, and the impact of Israel's war with Hamas and other terrorist organizations on geopolitical and macroeconomic conditions or on our company and business; (vi) future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; (vii) the costs and success of our sales and marketing efforts and our ability to promote our brand; (viii) our reliance on key personnel and our ability to identify, recruit and retain skilled personnel; (ix) our ability to effectively manage our growth, including continued international expansion; (x) our reliance on certain third party platforms and sources for the collection of data necessary for our solutions; (xi) our ability to protect our intellectual property rights and any costs associated therewith; (xii) our ability to identify and complete acquisitions that complement and expand our reach and platform; (xiii) our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business, including in Israel, the United States, the European Union, the United Kingdom and other jurisdictions where we elect to do business; (xiv) our ability to compete effectively with existing competitors and new market entrants; and (xv) the growth rates of the markets in which we compete.

These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Form 20-F filed with the Securities and Exchange Commission on March 23, 2023, and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.

Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. Except as required by law, we undertake no duty to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

Non-GAAP Financial Measures

This press release contains certain financial measures that are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures and capitalized internal-use software costs. Normalized free cash flow represents free cash flow less capital investments related to the Company's new headquarters, payments received in connection with these capital investments and deferred payments related to business combinations. Non-GAAP operating income (loss), non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses and non-GAAP general and administrative expenses represent the comparable GAAP financial figure operating income (loss) or expense, less share-based compensation, adjustments and payments related to business combinations, amortization of intangible assets and certain other non-recurring items, as applicable and indicated in the above tables.

Other Metrics

Customer acquisition costs (CAC) represent the portion of sales and marketing expenses allocated to acquire new customers. Customer retention costs (CRC) represent the portion of sales and marketing expenses allocated to retain existing customers and to increase existing customers’ subscriptions. Annual recurring revenue (ARR) represents the annualized subscription revenue we would contractually expect to receive from customers assuming no increases or reductions in their subscriptions. CAC payback period is the estimated time in months to recover CAC in terms of incremental gross profit that newly acquired customers generate. Net retention rate (NRR) represents the comparison of our ARR from the same set of customers as of a certain point in time, relative to the same point in time in the previous year ago period, expressed as a percentage.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231107435065/en/

Press Contact:
David Carr
Similarweb
press@similarweb.com

Investor Contact:
Raymond "RJ" Jones
Similarweb
raymond.jones@similarweb.com

Source: Similarweb Ltd.

Released November 7, 2023