Similarweb Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2025
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Operator

Greetings and welcome to the SimilarWeb Q1 Fiscal twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rami Myerson, Vice President, Investor Relations.

Operator

Thank you. You may begin.

Rami Myerson
Rami Myerson
VP - Investor Relations at Similarweb

Thank you, operator. Welcome everyone to our first quarter twenty twenty five earnings conference call. Joining me today are our CEO and Co Founder, Paul Offer and our CFO, Jason Schwartz. Yesterday, after market close, we released our results for the first quarter and published a discussion of our results in a letter to shareholders as well as an investor presentation with a strategic overview of the business on our Investor Relations website at ir.sunarweb.com. Certain statements made on the call today constitute forward looking statements, which reflect management's best judgment based on the currently available information.

Rami Myerson
Rami Myerson
VP - Investor Relations at Similarweb

These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release and our most recent annual report filed on Form 20 F for more information on the risk factors that could cause actual results to differ from our forward looking statements. Additionally, certain non GAAP financial measures will be discussed on the call today. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation. We will begin with Orr and Jason's highlights of the quarter and then we will open up the call to questions from sell side analysts.

Rami Myerson
Rami Myerson
VP - Investor Relations at Similarweb

With that, I'll turn the call over to Ur. Ur, please go ahead.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Thank you, Rami, and welcome everyone joining the call today. I'm extremely proud of the first quarter financial result that we reported yesterday. Revenue increased by 14% to $67,000,000 ahead of our expectation. Our customer base grew 19% year over year to more than 5,700 ARR customer at quarter end. We reported six quarter of positive free cash flow while we continue our investment to realize the long term potential of our business.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

The investments we begin in the fourth quarter in sales and R and D are starting to generate positive returns. We doubled the number of insight sale reps selling in this quarter as compared to Q1 last year and our progress on releasing new features like GenAI traffic intelligence and free AI agents are tough to be proud of. We completed an accelerated recruitment of new sales people at the end of the first quarter and we are encouraged by the indication of improved productivity as they ramped. More than 80% of the new hires should be fully ramped by Q3 and we expect this team to deliver in the second half of the year as planned. I'm excited by our customer reaction to the launch of the new product since the beginning of the year.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Those products provide tools that empower our customer to maximize ROI they get from our data and reduce them to value. We launched App Intelligence expanding our app data and incorporating the acquisition of forty two Matters last year. I'm super happy that SimilarWeb can now provide digital data on more than 4,000,000 iOS and Android mobile apps in 58 countries. App Intelligence give our customer visibility on app data including download, usage, patterns, engagement, retention and audience demographic. We are seeing strong demand and four eighty four of our customers have already signed up for the App Intelligence.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

We're excited to be the leading company providing full digital visibility to brands combining web, mobile web and app data and providing our customer with holistic real time view of the entire digital world on one platform. This comprehensive coverage is literally turning SimilarWeb into a mission critical resource for anyone that needs to understand digital behavior and market dynamics around the world. We continue to develop products and capabilities to capitalize on the AI revolution. In Merit, we launched our AI Chatbots traffic intelligence into our platform and I'm really excited that our customer can now see data on the prompts and Chatbots products that are sending traffic to website as part of our web intelligent offering. As more customers move from traditional search to chatbots, this information is becoming critical to companies to drive impact in this new digital channel.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

I believe that we are the leading company in the world providing this critical information to our customer that want to succeed in the digital ecosystem. And I'm very proud of that. The response from our customers is truly amazing and the commercial pipeline for this data is growing fast. On top of that, we are also rolling out a series of AI agents to help our customer maximize the commercial opportunities provided by our data. Our first three agents are now already live in our platform.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

The first one is the SEO strategy AI agent which show digital marketing professionals what they should do to promote the content strategy and how best to do it in order to win. The second agent is our traffic trend analyzer AI agent, which automatically detect unusual spikes in sales demand and identified their cause thereby helping companies act before the competition until now analyzing and formulating an understanding of the reason. The why for those changes was very hard and time consuming. And this now can help them save time and get to the insight faster. The third agent we released is our meeting prep AI agent for sales team that this agent build a strategic one pager meeting brief using our digital signals and our market data to reduce time of the salesperson spending time on research to prospect and help him improve his win rate.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

The new product launches in the quarter are the first encouraging indication that the investments that we begin will grow faster and we will produce higher margin going forward as part of this journey as an AI first company. And as I like to say, we are just getting started. Thank you everyone on the call for continued support. With that, I will turn the call over to Jason.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Thanks, Orr and everyone joining on the call today to discuss our first quarter results. I'll provide highlights of our financial performance and then we'll open up the call to questions. We generated $67,100,000 of revenue in Q1, a 14% increase relative to Q1 twenty twenty four. Revenue growth was driven by the 19% growth in customers mainly in the below $100,000 ARR cohort as well as expansions and upsells from our over $100,000 ARR customers. NRR for our over $100,000 customers increased by 400 basis points year over year to one hundred and eleven percent and three hundred basis points year over year to 101% for the overall customer base.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

We are proud that 52% of our ARR is contracted under multiyear contracts, up from 42 last year. We believe this demonstrates the importance and critical nature of our data to our customers and we expect these multi year contracts will contribute to improve retention rates ahead. Our remaining performance obligations or RPO totaled $253,000,000 at the end of Q1, up 18% year over year. We expect to recognize approximately 69% of total RPO as revenue over the next twelve months. Our operational performance in the quarter was in line with expectations and we reported a non GAAP operating loss of 2% in Q1 due to the increased investment in sales and R and D discussed in the past.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

We're committed to profitable growth over time and if returns on these investments do not materialize as planned, we're prepared to rapidly respond and improve profitability as we have in the past. We think it's worthy to note that over the last three years, we've improved operating margins by more than 4,000 basis points from minus 45% in the first quarter of twenty twenty two. This performance and our unit economics provide us with confidence in our ability to achieve our profit and cash flow targets. We generated $5,000,000 of normalized free cash flow in the quarter, a 7% free cash flow margin and the sixth consecutive quarter of positive free cash flow. We expect to continue to generate positive free cash flow on a quarterly basis in 2025.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Turning to our outlook, we continue to monitor the global macroeconomic and market developments leveraging the insights provided by SimilarWeb digital data to assess the potential impact of tariffs on our different end markets. So far, we have not experienced a material impact on our business. For the full year 2025, we are maintaining our previous guidance and expect total revenue in the range of $285,000,000 to $288,000,000 representing 15% year over year growth at the midpoint of the range and expect our non GAAP operating profit to be between $5,000,000 For Q2 twenty twenty five, we expect total revenue in the range of $68,600,000 to $69,000,000 Non GAAP operating loss for the second quarter of twenty twenty five is expected to be in the range of $500,000 to $1,000,000 We remain focused on delivering profitable growth over time as well as achieving our long term profit and free cash flow targets. And with that, Laura and I are ready to answer your questions.

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Arjun Bhatia with William Blair and Company. Please proceed with your question.

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

Thank you so much. I'm curious, obviously, investments are a big part of the in Q4 and into Q1, a big part of the story here.

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

And it seems like you've completed the accelerated hiring process. I'm curious or how you feel just about the hires you've made, the quality of the team that's been

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

brought

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

on. And as you're tracking kind of the ramp to productivity for some of the go to market investments and the sales reps. What exactly are you looking at just to make sure that there is ROI on those investments and the ramp to productivity is happening in line with expectations to get your team kind of up and productive by, I believe it was Q3 that you mentioned here.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Hi, Arjun. And of course, thank you everyone for joining the call today. We look forward to speaking with everyone and thank you Arjun for the first question. So regarding the quality of the hiring, we're happy from the quality. We learned a lot over the past few years about how we can bring the right persona to sell our specific offering that are about insight data and analytics.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

And we build a very good process about measuring the activities and what we expect from those new hires to deliver in every part of the onboarding process. How many meetings, how many win rates we expect to see and so right now looking good.

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

Okay. Great. And then on the product side, you've kind of integrated AI chatbot traffic data into your platform now. What sort of early indications of usage or interest are you seeing from your customer base? Obviously, pertinent and timely, given some of the comments we've heard recently from the ecosystem of maybe traffic starting to shift from search to the AI chatbots.

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

But would love to hear what you're seeing in your customer base in terms of interest of your innovation on that front?

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes. So it's super, super nice. The customer are really excited about it and it's they see that and it's like that there is like a wow effect when they when we showed them the data. It's very unique. So it's very nice to see that it's feel like in the early days when we launched similar web and and felt like magic that people didn't realize that this data is out there and then the insights we can get out of it.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

So the reaction is super nice and it's surface up a lot of interesting insight and visibility of something that right now is a very black box. I think most of the website owners right now out there don't have idea about the impact of how much traffic those chatbot are still generating in the channel. And also they have no visibility about what people are asking as prompt and we bring those two data now. And it's very nice to see. Given them and the impact is super nice.

Arjun Bhatia
Co-Group Head - Technology, Media & Communications at William Blair

All right, perfect. Thank you, Uar.

Operator

Thank you. Our next question comes from the line of Raimo Lenschow with Barclays. Please proceed with your question.

Analyst

Hey guys, this is Damon Colligan on for Raimo Lenschow. Thanks for taking the question. Great to hear that the new talent you recently recruited has been driving improved yield and strong pipeline. Can you help us understand the level of visibility that you have for some of the deals that are supporting the revenue reacceleration in the second half of the year? Just trying to gain clarity on mechanics of the growth implied by the guide in the second half.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

So we hire many people all across the go to market organization and there's many different position there. You have AM that need to drive upsells and renewal. And you have in the sales, in the new sales, you have few tiers of sellers. You have inside sales that need to let to land like 20 ks deals. You have enterprise people that need to land higher deals.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

You have start people that need to do high expansions. Also have like lot of entry level that needs to work on our self serve customers there and move them to yearly. So each one behaves differently and have different trend time. And the more senior the rep and the more enterprise and above it's taking longer, much longer sales cycles. And so in the inside sales organization, you can see much faster the ramp and you can recognize faster the yield.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

The other was taking more time by nature.

Analyst

Got it. Thanks, Orr. And then maybe just one for Jason. Is there anything factored into the top and bottom line guide from the SearchMonitor acquisition?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Yes, nothing material on that. There was a small business. We're excited to have them on board, not material contribution for the quarter of the year.

Analyst

Got it. And then just one quick one if I may. Is there any change to your guidance philosophy for the rest of the year? I understand that it's an uncertain environment. So just kind of understand some of the mechanics for the rest of the year.

Analyst

Thanks guys.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

We haven't changed a lot of the assumptions, FX and the like, but we'd like to give guidance that we note that we can meet. So, the same philosophy. Thanks guys.

Operator

Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed with your question.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

You.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

Or can you maybe talk a little bit about your larger clients, the 100,000 clients, the behavior that you're seeing there and some of the ongoing conversations perhaps? It looked like the NRR number dipped a little bit quarter over quarter by about a percentage point.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes, of course. So I think the decline of this 1% was kind of mechanism because last year in Q3 we had big upsell in Q1 sorry. And I think it's increased the base a lot. So this year the upsell was not big as Q1 so this is why you have that. Overall this bucket of 100,000 customers I think we have above 400.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

You see that it's also have a few different types though. Have a lot of very big big companies and you know Fortune 100 that are engaged and looking at us as the trusted digital market data provider and they continue to buy more and more different data sets and they're growing significantly. And then you have a big part of companies that are digital first and digital is very important and they are engaging above $100,000 with us.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

Got it. And then just kind of the reverse with maybe some of the smaller clients in the SMB space?

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Do you want to know what type of customer are in that bucket?

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

No, no. Just in terms of just the trends and the demand. It sounds like you onboarded a lot of new customers this quarter in terms of just the number of accounts that grew. And just kind of what you're seeing there, it sounds like still a healthy appetite, actually improving appetite, if I was to potentially characterize it.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes. We still see a big demand on top of the funnel and we have many, many registration hundreds of thousands per month and we're seeing great success converting them to customers yearly customers. And also as we said in the earning call, we see a big increase in the multi year engagement that is something very good that is good for us is good indication of companies that want to engage for the long term with us that they see value in our offering.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

That's helpful. And then just one final one for me. As you think about your strategy around building insights for the different chatbots, Can you is there any color that you can provide on all of the different partnerships that you can get to or what what coverage you can get versus what you currently have?

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

So I think that regarding coverage, we feel confident that we can cover all of the big chatbots out there and provide a full visibility. We hope to launch this quarter like a full module around AI intelligence that will have the mix of the first product we launched that give you that traffic intelligence. And the second part will help you track your market share and how much you're visible on the chatbot. Because a lot of the time the chatbot are quoting your brands talking about your product, but don't give you link and send you outside to go to other website. So there's two sides of the data brands want to see.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

One how much traffic they're getting from chatbots and the prompts generate those topics. And then they want to see overall how much market, how much time my brand has been mentioned versus competition. And if the mentioned was, if the sentiment was positive or negative. So this second part would launch this quarter and we will have a very strong offering for companies who want to get better visibility and success on this new digital channel, I will call it.

Surinder Thind
Surinder Thind
Equity Research Analyst at Jefferies Financial Group

Thank you.

Operator

Thank you. Our next question comes from the line of Jason Helfstein with Oppenheimer and Company. Please proceed with your question.

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

Thanks everybody. I guess I'll ask a few. So one is as you look to sell the AI related products, is it a different like you're selling to a different audience at the client? I mean a lot of what you started with typically is with the right, the marketing department, but then does it have to kind of go to a bigger level? So just how is how do you envision selling the AI products differently than some of the legacy products?

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

Two, how I guess besides upgrading the overall quality of salespeople, like how is the strategy different now under the new Chief Revenue Officer? And then I guess lastly, the billings did slow in this quarter. I don't know if there's like and again, last year, first quarter was your slowest growth in billings. So I don't know if there's like an emerging pattern around first quarter, is this the slowing billing quarter, but just any color Jason just on around that like, don't if there's like there were some comments about upsells last year and then made tougher comps, but just any other color there? Thank you.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Okay. So thank you, Jason, for the questions. I heard three questions. The first one was the ICT, ideal customer that can buy the AI Intelligent Model. The second one is around CRO and the third one is billing.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

I will start entering the first two and I will give Jason to answer the billing. So regarding the ideal customer to buy the AI intelligent data. So as we all know, it's a very new motion. Right now we presenting it to most of our users and there is a big excitement around all personas because I think this is something very new and inside there appealing to many different roles from marketing, branding, SEO, PPC, product, executive. And so right now the excitement is around all different customers we have in the platform.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

It's early to say who will be the buyer. I think it will end probably somewhere around marketing and I guess somewhere around search dimension acquisition or maybe brand. And regarding the second question on the CRO, so like every executive, our CRO just finished first year. And usually when you hire executive C level, they need one year to set up the organization the way they need and then they start to execute. So, dear Cheryl just finished her first year in the company and we excited to see how she's gonna execute going forward with all the changes she rolled up.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

And I'll let Jason answer the billing question.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Hey, On the billing side, it's just a function of the invoicing schedules. Sometimes and that's really a seasonal thing. Sometimes there are customers that are asking for to move from one month to another month and you get some of that shifting. But overall, what you see is free cash flow is still very strong. We did a 7% free cash flow generation this quarter and I think we've guided that we'll continue to be positive free cash flow all throughout the year.

Jason Helfstein
Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.

Thank you.

Operator

Thank you. Our next question comes from the line of Tyler Radke with Citi. Please proceed with your question.

Tyler Radke
Tyler Radke
Director / Senior Equity Research Analyst - Software at Citigroup

Hey, gentlemen. Good morning. Thanks for taking the question. I wanted to follow-up on the questions around billings, but actually ask about bookings. It looks like current RPO bookings, if we just take a look at the sequential change current RPO, that growth has slowed quite a bit over the last couple of quarters.

Tyler Radke
Tyler Radke
Director / Senior Equity Research Analyst - Software at Citigroup

And I know there's been some pretty large compares in that number over the past year and a half with some of the large deals that you've signed. But help us understand what's driving that and any changes that you're expecting in terms of seasonality to the business? In other words, should we expect that current RPO to reaccelerate or rebound in the back half of the year?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Hey, Tyler. Thanks for that. Yes, current RPO was up 9% year over year, But we do think of that as somewhat seasonal. You see some of those big deals that we bigger deals that we signed last year were in Q2, Q3. So those burned down and then well, when the renewals come up, get invoiced again.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

So the bookings and the current RPO will match that we believe going in the back end of the year. And I think that's just a function of some of that change that you had a year over year.

Tyler Radke
Tyler Radke
Director / Senior Equity Research Analyst - Software at Citigroup

Got it. Okay. So we're lapping some pretty big deals in Q2, Q3. So we should see some replenishment of those numbers.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

And I think

Jason Schwartz
Jason Schwartz
CFO at Similarweb

exactly. And the same thing on the NRR comment that Orman made before, remember all those big upsells and big deals, we announced last year two customers that crossed over to eight digit customers. At this point when we're at a twelve month look back, those are already in the baseline. So the NRR has to grow even bigger numbers. So we're feeling good on the pipeline, but understand that there are in the near term over the next couple of quarters, we've got some big numbers to match.

Tyler Radke
Tyler Radke
Director / Senior Equity Research Analyst - Software at Citigroup

Yes, great. And on the new customer additions, it looked like total new customers was quite strong. The quarter over quarter growth in new logos was well ahead of what you did in Q1 of last year. Can you just talk about like the size of those deals? Like are the is the average deal size for new lands?

Tyler Radke
Tyler Radke
Director / Senior Equity Research Analyst - Software at Citigroup

Is it consistent with last year? Is it maybe lower because you're just prioritizing new logos? You know, and any any changes in in the profile of of customers now that you have kind of a a new sales motion and and a bigger sales force that, that's going after those?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

I'm sorry about that. Yeah. Very consistent with our strategy that we laid out over the last, you know, eighteen months. We talked about the the barbell strategy. And part of the strategy that we said is that on one hand, we've got 60%, sixty one % of our business that are from the revenue that's generated from customers who spend more than $100,000 a year and those customers are spending 300,000 on average nearly $370,000 each.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

But at the same time, we've got this momentum motion and velocity motion that is bringing in new customers every single day, every single quarter. I think we were up two thirty some odd customers just quarter over quarter just under 1,000 net new customers over the past year. That's the function of that. And yes, the land of those customers are is lower than the average revenue per customer and so you see that happening. But I think one of the interesting things, when you look at the over $100,000 customers, we have those 400 plus customers that today are $100,000 or more, more than 80% of those customers started well below $100,000 And so we have a history of knowing how to land, retain and expand and that's what you see going on over the last couple of quarters and continued in Q1.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Luke Horton with Northland Capital Markets. Please proceed with your question.

Luke Horton
VP - Senior Equity Research Analyst at Northland Capital Markets

Yes. Hey guys, thanks for taking the questions and congrats on the quarter. Jason, in your prepared remarks, you mentioned about the investments in the new sales hires that they don't end up performing as expected. You mentioned being prepared to kind of rapidly respond and improve profitability. So just wondering how long of a kind of timeline the new sales hires are given here to start to show some results?

Luke Horton
VP - Senior Equity Research Analyst at Northland Capital Markets

And then if it doesn't pan out the way it was thought, what are kind of those nearest levers that you could pull to improve that profitability?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Yes. The we've done this before. One of the nice things that we mentioned in the quarter that we're already seeing more sellers selling and closing business in Q1 than we last year. Looking at just the inside sales and as Ors mentioned, the inside sales team, you actually see relatively quickly over the first couple of months whether these guys are ramped and able to sell or not. And we're very encouraged by that.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

And then looking at pipeline that we have, we think and we've said I think now both in the letter and in Or's comments is that we expect 80% of all of the new heads that we people that we added to the team to be ramped up during by Q3. And that gives us a lot of confidence that if for some reason this is not going to be in place, we'll be able to reduce unproductive capacity and continue to execute. It's very similar to the change that we did taking sales and marketing. If you look back historically, sales and marketing was about 65%, sixty six % of revenue going back to Q1 twenty twenty two. And over the course of five, six quarters, it got down to below 50%.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

And that was just taking out unproductive resources and still driving revenue growth. And so we believe that the hires that we did should be accelerators on the back end of the year going into 2026 and that's what we're continuing to do.

Luke Horton
VP - Senior Equity Research Analyst at Northland Capital Markets

Okay, great. Yes, appreciate the color there. And then just one last one here, just on the 2025 outlook. Is this still accounting for that 1% to 2% foreign exchange headwind or revenues? Or has that assumption changed at all here as we kind of got through the quarter?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

We haven't changed any of our assumptions. We as I think we're all seeing that things keep on has volatility day by day and we're going to stay with that guidance that we the, assumptions that we used in building our guidance at the beginning of the year.

Luke Horton
VP - Senior Equity Research Analyst at Northland Capital Markets

Okay. Got it. Awesome. Thanks for taking the questions, guys.

Operator

Thank you. Our next question comes from the line of Adam Hodges with Goldman Sachs. Please proceed with your question.

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Great. Thanks for taking the questions. Oren, just a high level question for you. What in your mind is the most important execution item for you this year, whether that's ramping salespeople, accelerating growth, selling new products, innovating the platform or is it something else? And then what do you need to see to validate the vision that you've laid out through doubling down on investment that you did earlier this year?

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Thanks so much.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Thank you for the question. I think if I had to choose one that I think can generate the most impact is to drive the up enterprise motion. We've been lucky to have more than a thousand plus an amazing enterprise that engage in our customers that buying one or two solution. And today we have placed seven, eight different solution to offer them that can really help and drive ROI for them. So I see huge opportunity to drive more expansion on the book of business.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

And this is something that I'm excited about and I feel that if I will crack that to get top notch, it will drive a lot of impact. Also if you think AM enterprise, it's the function that has the most in this commercial organization. So we're able to take this organization and make them over perform, it's going to drive a lot of impact.

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Okay, great. That's helpful. And then I know you've mentioned it a lot in the past. I didn't hear it as much on this call. Just your updated view of the data as a service and broader, large language model or small language model opportunity, maybe how that progressed in Q1 relative to your expectations?

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Thanks.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes. So those motions are very successful internally. I think in the data as a service, we have an OEM team that sells our data to other software vendors that use our data to improve the offering. This is team is rocking and highly successful and we're seeing a lot of demand from a new vertical of software companies that want to give insight on chatbots and GenAI. So this is a nice opportunity.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

And also around everything about chat AI data. So it's a hot topic drive nice revenue. So it did perform very well this quarter.

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Patrick Walravens with Citizens. Please proceed with your question.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

Great. Thank you. This is Austin Cole on for Pat Walravens. Or I just wanted to go back to the AI chatbot traffic product. This kind of idea of visibility into Gen AI output is something you guys have talked about as an opportunity for a while now.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

So now that you have this kind of product offering, maybe you could comment just specifically on kind of what you're seeing in terms of engagement from customers and specifically on the pipeline as it relates to that product? And then how does that kind of inform your idea of the total opportunity there?

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes, I think it's a great question. So the opportunity I think that is the complete opportunity is once we're going to develop the second part of the offering is to help you measure your market share and visibility on the chatbot. Because this is seeing that out of I will say, let's say million people choosing chatbot to ask questions about running shoes and the chatbots you know give them answers about five, ten brands. Very small part are clicking and getting out of the chatbots. And the majority are staying there doing something else.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

So I think the second part that we're going to introduce this quarter of bringing you more visibility about how much time you appear and the sentiment when we can develop that and combine that with the traffic then we will have a very strong proposition and we will start monetizing it as a standalone model. Right now we opened traffic GenAI as a beta to our paying yearly customers and to see the reaction and drive engagement and our lives didn't start monetizing it. But it did help to convert a lot of no touch customer paying with credit card, they didn't have access to that model. So we're using this model, it really helped convert a lot of leads or credit card customer to yearly. So this is when we saw dollar impact, but I assume that this quarter after we launched the second part and start charging for this model it will have a bigger impact.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

Okay. That's super helpful. And then maybe one for Jason. I had the same kind of question regarding what you said in your prepared remarks around the investments. Maybe just to put a point on it.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

It doesn't sound like it, but I just want to clarify that there isn't anything in the pipeline today that makes you think that you would need to make that change regarding investments?

Jason Schwartz
Jason Schwartz
CFO at Similarweb

No. There's nothing that we see today. And this was just a comment that sentiment that we had felt from a number of investors over the last couple of months, and we wanted to make sure that we clarify that.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

Okay. Appreciate it. Very clear. Thank you.

Operator

Thank you. Our next question comes from the line of Scott Berg with Needham and Company. Please proceed with your question.

Scott Berg
Senior Analyst at Needham & Company

Hi, everyone. Thanks for taking my questions. I appreciate the comments on pipeline activity with the ramp in sales reps, but how is expansion activity going? If I look at your customer additions over the last year, looks like you're coming in at a slightly lower, maybe rate than some of your historical customers, but you've already had a at least historically had a good opportunity to expand with customers over time. But how is that kind of process going in this macro?

Scott Berg
Senior Analyst at Needham & Company

Are you seeing any changes to what that cadence looks like? Any commentary there would be helpful. Thanks.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

Hey Scott, it's Jason. A couple of things on that. We mentioned that we are seeing actually good healthy pipeline build over here. We see bigger the NRR numbers are actually reflecting as we mentioned earlier some of the hurdles from that we said last year with some big sales and upsells that we had. But we had some good experience this quarter and one thing that I think stands out to me was a large U.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

S. Retailer who became a customer in 2023. It's a Fortune 500 U. S. Retailer who purchased Web Intelligence for their SEO and performance team going back in 2023, really to understand standard voice and content strategies, the classic, what I would call the classic keyword use case, they were $100,000 customer back in 2023.

Jason Schwartz
Jason Schwartz
CFO at Similarweb

In Q1, they expanded to the category management team and e commerce merchandising team. So they went from the marketing team to the category management team and the e commerce merchandising team to really understand, you know, to build out the custom segments and understand the category performance versus their competitors and then also bought shopper intelligence to understand to look at the product level performance on Amazon versus their competitors. That customer now that upsell that they did, that customer has grown 4x in just two years. And again, as an example of the kinds of value that a large retailer could see and grow, it's something that's very encouraging to us. And we're looking forward as Or said to see more and more of these upsells with the portfolio of customer portfolio of products that we have over the remainder of the year.

Scott Berg
Senior Analyst at Needham & Company

Helpful. Thanks, Jason. And then, I heard there's no real impact on guidance with your acquisition of the Search Monitor. But how do we think about that impacting your product platform kind of going forward?

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Yes. Thank you. So we're very excited about this opportunity and this acquisition because Search Monitor has, I would say two main use case that we are not strong. One is to help PPC team paid acquisition at Search to save money on their brand protection budget. Many brands right now spending millions if not tens of millions of dollars on protecting their brand in Google.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

We have some of our customers in the insurance vertical, banks, CPG that literally spend tens of millions of dollars monthly to protect their brand and they need to do it sometimes worldwide in many different countries. So, they need a tool to monitor where they should spend more or where they can spend less. So this tool is very sticky and very ROI driven. We can think that we will take this offering now with our current book of business. We can really show great ROI for those PPC paid search teams.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

The second part they have is for affiliate team and to help monitor the affiliate program to see that the affiliates they're bringing on board to promote their products are not our compliance with the guidelines they put for those affiliate and not start putting ads on their branding. So, those are two strong use cases with very clear ROI, very sticky, very operational offering that can fit perfectly with our assets and our market data. So, combining our market data there and stickiness workflow tools can be very powerful. And so hopefully we integrate them and maybe Q4, Q1 and we're going to rolled out those new offering into our existing book of business.

Operator

Thank you. We have reached the end of the question and answer session. I'd like to turn the floor back to CEO, Orfer, for closing remarks.

Or Offer
Or Offer
Co-Founder & CEO at Similarweb

Well, thank you, everyone. We're super excited for this quarter and this year. And I want to thank you everyone for joining the call, especially our shareholder for their confidence. And we look forward to speaking with all of you in the next few weeks. Thank you so much.

Operator

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your line at this time. Thank you for your participation and have a great day.

Executives
    • Rami Myerson
      Rami Myerson
      VP - Investor Relations
    • Or Offer
      Or Offer
      Co-Founder & CEO
    • Jason Schwartz
      Jason Schwartz
      CFO
Analysts
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Key Takeaways

  • SimilarWeb reported 14% year-over-year revenue growth to $67.1 million in Q1 and expanded its customer base by 19% to over 5,700 ARR customers.
  • It generated positive free cash flow for the sixth consecutive quarter, delivering $5 million (7% margin) while continuing to invest in sales and R&D.
  • New investments are starting to pay off, as the company doubled its Insight sales reps versus last year and expects >80% of new hires to be ramped by Q3.
  • SimilarWeb launched App Intelligence, offering data on 4 million+ iOS and Android apps across 58 countries, with 84% of customers already signed up.
  • Retention remains strong with net revenue retention >100% for >$100k customers, 52% of ARR under multi-year contracts, and RPO up 18% to $253 million, supporting maintained FY25 guidance of $285–288 million.
AI Generated. May Contain Errors.
Earnings Conference Call
Similarweb Q1 2025
00:00 / 00:00

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