Semrush Announces Fourth Quarter and Full Year 2023 Financial Results

Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility management SaaS platform, today reported financial results for the fourth quarter and full year ended December 31, 2023.

“In 2023, we accelerated revenue growth throughout the year, delivering ARR growth of 23%, and strong profitability. In Q4, we reported revenue growth of 21% year-over-year, increased paying customers to nearly 108,000, and our number of free, active customers surpassed one million for the first time. Looking ahead, we remain focused on our three main growth pillars: increasing new user growth, driving expansion by delivering higher value to our customers, and adding new products and monetization to our portfolio to address client needs and market trends. I want to express my sincere gratitude to our growing number of customers, talented employees, and shareholders who showed incredible support and loyalty across our business,” said Oleg Shchegolev, CEO and Co-Founder of Semrush.

See “Non-GAAP Financial Measures & Definitions of Key Metrics” below for how Semrush defines ARR, dollar-based net revenue retention, non-GAAP net income (loss), and free cash flow, and the financial tables that accompany this release for reconciliations of each non-GAAP financial measure to its closest comparable GAAP financial measure.

We are committed to empowering our customers with the best-in-class platform needed to boost their online presence and gain an edge in the market. In the fourth quarter, we advanced and expanded many of our offerings:

“During 2023, we were able to re-accelerate revenue growth, improve our profitability and generate strong free cash flow,” said Brian Mulroy, CFO of Semrush. “Looking ahead to 2024, we are confident in our ability to grow and to continue to scale our business to capitalize on the market opportunity. We remain committed to a disciplined and balanced approach to spending to improve efficiency and profitability, even while we invest in future growth opportunities that we expect will continue to create long-term, durable growth and value for our shareholders.”

Based on information as of today, March 4, 2024, we are issuing the following financial guidance:

Starting with our guidance for the first quarter 2024 and full year 2024, we are no longer providing guidance for non-GAAP net income, and instead will guide both non-GAAP Operating Margin and Free Cash Flow Margin. We are also updating our definitions of non-GAAP Income (Loss) from Operations to exclude Amortization of Acquired Intangible Assets, Acquisition Related Costs, Restructuring Costs and other one-time expenses outside the ordinary course of business (for example, our Exit Costs incurred primarily in 2022) in addition to the current exclusion of Stock Based Compensation. Our guidance for the first quarter 2024 and full year 2024 reflect this change. Additionally, with this release, we are also providing a reconciliation of historical non-GAAP Income (Loss) from Operations and non-GAAP operating margin under both the prior definition and the new definition for the prior periods presented. We believe these changes will allow investors to better understand our financial performance, better align with the measures used internally by management in operating our business, and permit a better evaluation of the efficacy of the methodology and information used by management to evaluate and measure our performance.

Reconciliations of non-GAAP operating margin and free cash flow margin guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

Semrush will host a conference call and webcast to discuss its financial results, business highlights, outlook and other matters, the details for which are provided below.Date: Tuesday, March 5, 2024

Time: 8:30 a.m. ET

Hosts: Oleg Shchegolev, CEO, Eugene Levin, President, and Brian Mulroy, CFO

Conference ID: 726760

Participant Toll Free Dial-In Number: 1 (833) 470-1428

Participant International Dial-In Number: 1 (929) 526-1599

The live webcast of the conference call as well as the replay can be accessed for a limited time from the Semrush investor relations website at http://investors.semrush.com/.