Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at 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 a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was in line.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, sales and marketing software stocks have been resilient with share prices up 8.1% on average since the latest 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 $90.95 million, up 21.8% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ ARR (annual recurring revenue) estimates.
“We delivered a strong second quarter, exceeding our guidance and positioning us to raise our full year 2024 revenue guidance. Revenue increased 22% year-over-year and ARR grew 25% year-over-year as we focused on continuing to grow our core business, upselling and cross selling our offerings, and expanding our platform. We are also confident in our ability to continue growing and scaling our business as demonstrated by increasing average ARR per customer year-over-year. Notably, our Enterprise SEO product is gaining traction in the market with new deals such as Digital Ocean, HSBC, and the Royal Bank of Canada. We look forward to hosting our first Analyst Day on October 1st to provide more details on our growth initiatives and long-term strategy,” said Oleg Shchegolev, CEO and Co-Founder of Semrush.
Interestingly, the stock is up 19.1% since reporting and currently trades at $15.38.
Best Q2: Zeta (NYSE:ZETA)
Co-founded by former Apple CEO John Scully, Zeta Global (NYSE:ZETA) provides software and data analytics tools that help companies market their products to billions of customers.
Zeta reported revenues of $227.8 million, up 32.6% year on year, outperforming analysts’ expectations by 7.2%. The business had an exceptional quarter with an impressive beat of analysts’ billings estimates and optimistic revenue guidance for the next quarter.
Zeta scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 36.8% since reporting. It currently trades at $29.37.
Is now the time to buy Zeta? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: PubMatic (NASDAQ:PUBM)
Founded in 2006 as an online ad platform helping ad sellers, Pubmatic (NASDAQ: PUBM) is a fully integrated cloud-based programmatic advertising platform.
PubMatic reported revenues of $67.27 million, up 6.2% year on year, falling short of analysts’ expectations by 4.1%. It was a disappointing quarter as it posted underwhelming revenue guidance for the next quarter.
As expected, the stock is down 23.3% since the results and currently trades at $15.03.
Read our full analysis of PubMatic’s results here.
Yext (NYSE:YEXT)
Founded in 2006 by Howard Lerman, Yext (NYSE:YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.
Yext reported revenues of $97.89 million, down 4.6% year on year. This print met analysts’ expectations. Overall, it was a strong quarter as it also recorded full-year revenue guidance exceeding analysts’ expectations and a decent beat of analysts’ billings estimates.
Yext pulled off the highest full-year guidance raise among its peers. The stock is up 38.9% since reporting and currently trades at $6.82.
Read our full, actionable report on Yext here, it’s free.
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 $296.8 million, up 19.9% year on year. This print surpassed analysts’ expectations by 1.2%. It was a strong quarter as it also logged an impressive beat of analysts’ billings estimates and a decent beat of analysts’ ARR (annual recurring revenue) estimates.
The stock is up 5.2% since reporting and currently trades at $46.38.
Read our full, actionable report on Squarespace here, it’s free.
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