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Q1 Earnings Outperformers: SEMrush (NYSE:SEMR) And The Rest Of The Sales And Marketing Software Stocks


Jabin Bastian /
2024/07/08 3:50 am EDT

As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the sales and marketing software industry, including SEMrush (NYSE:SEMR) and its peers.

The Internet and the exploding amount of data have transformed how businesses interact with, market to, and transact with their customers. Personalization of offerings, e-commerce, targeted advertising and data-empowered sales teams are now table stakes for modern businesses, and sales and marketing software providers are becoming the tools of evolving customer interaction.

The 23 sales and marketing software stocks we track reported an ok Q1; on average, revenues beat analyst consensus estimates by 2.3%. while next quarter's revenue guidance was in line with consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and sales and marketing software stocks have held roughly steady amidst all this, with share prices up 0.1% on average since the previous earnings results.

SEMrush (NYSE:SEMR)

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.

SEMrush reported revenues of $85.81 million, up 21.1% year on year, in line with analysts' expectations. It was a solid quarter for the company, with accelerating customer growth and a decent beat of analysts' ARR (annual recurring revenue) estimates.

“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.

SEMrush Total Revenue

The stock is up 2.8% since the results and currently trades at $13.54.

We think SEMrush is a good business, but is it a buy today? Read our full report here, it's free.

Best Q1: AppLovin (NASDAQ:APP)

Co-founded by Adam Foroughi, who was frustrated with not being able to find a good solution to market his own dating app, AppLovin (NASDAQ:APP) is both a mobile game studio and provider of marketing and monetization tools for mobile app developers.

AppLovin reported revenues of $1.06 billion, up 47.9% year on year, outperforming analysts' expectations by 8.6%. It was an exceptional quarter for the company.

AppLovin Total Revenue

AppLovin pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 17.3% since the results and currently trades at $86.88.

Is now the time to buy AppLovin? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Sprout Social (NASDAQ:SPT)

Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ:SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.

Sprout Social reported revenues of $96.78 million, up 28.7% year on year, falling short of analysts' expectations by 0.5%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' billings estimates.

Sprout Social had the weakest performance against analyst estimates and weakest full-year guidance update in the group. The company added 134 enterprise customers paying more than $10,000 annually to reach a total of 8,823. The stock is down 24.8% since the results and currently trades at $36.23.

Read our full analysis of Sprout Social's results here.

Squarespace (NYSE:SQSP)

Founded in New York City in 2003, Squarespace (NYSE:SQSP) is a platform for small businesses and creators to build their digital presences online.

Squarespace reported revenues of $281.1 million, up 18.6% year on year, surpassing analysts' expectations by 1.7%. It was a decent quarter for the company, with an impressive beat of analysts' billings estimates but a decline in its gross margin.

The stock is up 23.5% since the results and currently trades at $43.78.

Read our full, actionable report on Squarespace here, it's free.

VeriSign (NASDAQ:VRSN)

While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.

VeriSign reported revenues of $384.3 million, up 5.5% year on year, in line with analysts' expectations. It was an ok quarter for the company.

The stock is down 3.6% since the results and currently trades at $176.06.

Read our full, actionable report on VeriSign here, it's free.

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