SEMrush (NYSE:SEMR) Exceeds Q2 Expectations

Kayode Omotosho /
2022/08/10 4:44 pm EDT

Marketing analytics software Semrush (NYSE:SEMR) reported results ahead of analyst expectations in the Q2 FY2022 quarter, with revenue up 39.1% year on year to $62.6 million. The company expects that next quarter's revenue would be around $64 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. SEMrush made a GAAP loss of $8.28 million, down on its loss of $279 thousand, in the same quarter last year.

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SEMrush (SEMR) Q2 FY2022 Highlights:

  • Revenue: $62.6 million vs analyst estimates of $60 million (4.32% beat)
  • EPS (GAAP): -$0.06
  • Revenue guidance for Q3 2022 is $64 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed revenue guidance for the full year, at $252 million at the midpoint
  • Free cash flow was negative $10.3 million, down from positive free cash flow of $7.37 million in previous quarter
  • Net Revenue Retention Rate: 125%, in line with previous quarter
  • Customers: 91,000, up from 87,000 in previous quarter
  • Gross Margin (GAAP): 79.8%, up from 77.2% same quarter last year

“We saw sequential growth accelerate in the second quarter as we added a record $5.5 million of revenue. Our growth was once again underpinned by higher average revenue per customer, driven by an increased proportion of customers from higher priced plans and growth of add-ons. We also made remarkable progress with relocations and are well on target to wind down our operations in Russia ahead of plan,” said Oleg Shchegolev, CEO and Co-Founder of Semrush.

Started by Oleg Shchegolev while still in university, Semrush (NYSE:SEMR) is a software as a service platform that helps companies optimize their search engine and content marketing efforts.

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Sales Growth

As you can see below, SEMrush's revenue growth has been impressive over the last year, growing from quarterly revenue of $45 million, to $62.6 million.

SEMrush Total Revenue

And unsurprisingly, this was another great quarter for SEMrush with revenue up 39.1% year on year. On top of that, revenue increased $5.48 million quarter on quarter, a very strong improvement on the $3.38 million increase in Q1 2022, and a sign of acceleration of growth.

Guidance for the next quarter indicates SEMrush is expecting revenue to grow 29.9% year on year to $64 million, slowing down from the 52.9% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 25.9% over the next twelve months.

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Customer Growth

You can see below that SEMrush reported 91,000 customers at the end of the quarter, an increase of 4,000 on last quarter. That is a little slower customer growth than last quarter but still in line with what we are used to seeing lately, suggesting that the company still has decent sales momentum.

SEMrush Customers

Key Takeaways from SEMrush's Q2 Results

With a market capitalization of $1.94 billion SEMrush is among smaller companies, but its more than $248.9 million in cash and positive free cash flow over the last twelve months give us confidence that SEMrush has the resources it needs to pursue a high growth business strategy.

We enjoyed seeing SEMrush’s impressive revenue growth this quarter. On the other hand, there was a slight slowdown in customer growth. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The company is up 2.39% on the results and currently trades at $14.13 per share.

Should you invest in SEMrush right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.