SEMrush (NYSE:SEMR) Posts Better-Than-Expected Sales In Q1, Next Quarter's Growth Looks Optimistic

Max Juang /
2024/05/06 4:38 pm EDT

Marketing analytics software Semrush (NYSE:SEMR) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 21.1% year on year to $85.81 million. The company expects next quarter's revenue to be around $89.6 million, in line with analysts' estimates. It made a GAAP profit of $0.01 per share, improving from its loss of $0.07 per share in the same quarter last year.

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SEMrush (SEMR) Q1 CY2024 Highlights:

  • Revenue: $85.81 million vs analyst estimates of $85.05 million (small beat)
  • EPS: $0.01 vs analyst estimates of $0.02 (-$0.01 miss)
  • Revenue Guidance for Q2 CY2024 is $89.6 million at the midpoint, roughly in line with what analysts were expecting
  • The company slightly raised its revenue guidance for the full year of $367.5 million at the midpoint (also slightly raised operating margin guidance for the same period)
  • Gross Margin (GAAP): 82.9%, in line with the same quarter last year
  • Free Cash Flow of $12.01 million, up 35.2% from the previous quarter
  • Net Revenue Retention Rate: 107%, in line with the previous quarter
  • Customers: 112,000, up from 108,000 in the previous quarter
  • Market Capitalization: $1.82 billion

“We had a strong start to 2024, achieving first quarter revenue and ARR growth of 21% year-over-year. Importantly, we reported strong profitability exceeding our guidance, with income from operations of $1.5 million and non-GAAP income from operations of $9.7 million. In the first quarter, we reported nearly 112,000 paying customers and added several new products and features to our platform. Looking ahead, we are very optimistic about our potential. We continue to succeed in executing on our core growth pillars by onboarding more customers, cross-selling and up-selling to existing customers and leveraging AI in our platform to ensure businesses of any size have the most valuable digital marketing software suite. And now with our Enterprise SEO product generally available, we expect to drive momentum by moving up-market to larger accounts,” 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.

Listing Management Software

As the number of places that keep business listings (such as addresses, opening hours and contact details) increases, the task of keeping all listings up-to-date becomes more difficult and that drives demand for centralized solutions that update all touchpoints.

Sales Growth

As you can see below, SEMrush's revenue growth has been very strong over the last three years, growing from $40 million in Q1 2021 to $85.81 million this quarter.

SEMrush Total Revenue

This quarter, SEMrush's quarterly revenue was once again up a very solid 21.1% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $2.42 million in Q1 compared to $4.68 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that SEMrush is expecting revenue to grow 20% year on year to $89.6 million, in line with the 19.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 18.9% over the next 12 months before the earnings results announcement.

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Customer Growth

SEMrush reported 112,000 customers at the end of the quarter, an increase of 4,000 from the previous quarter. That's a little better customer growth than last quarter and quite a bit above the typical growth we've seen in past quarters, demonstrating that the business has strong sales momentum. We've no doubt shareholders will take this as an indication that SEMrush's go-to-market strategy is working very well.

SEMrush Customers

Key Takeaways from SEMrush's Q1 Results

We were impressed by SEMrush's strong growth in customers this quarter. We were also glad next quarter's revenue guidance came in higher than Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $13.14 per share.

So should you invest in SEMrush right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.