Similarweb Ltd. (NYSE: SMWB) (“Similarweb” or the “Company”), a leading digital data and analytics company powering critical business decisions, today announced financial results for its second quarter ended June 30, 2023. The Company published a letter to shareholders from management discussing these results, which can be accessed at the link: https://ir.similarweb.com/financials/quarterly-results, located on the Company’s investor relations website.
“We delivered another quarter of revenue growth and expanded our operating margin significantly compared to last year at this time,” said Or Offer, Co-Founder and CEO of Similarweb. “We now help over 4,300 businesses win their market. Our customers tell us that our unique data and actionable insights are critical to their success.” Offer added, “We recently announced a new milestone for the Company with the launch of SimilarAskTM in beta release. SimilarAsk is the first digital intelligence generative AI assistant of its kind that answers questions by accessing Similarweb Digital Data, which we believe unlocks tremendous value potential for us.”
Second Quarter 2023 Financial Highlights
- Total revenue was $53.7 million, an increase of 13% compared to $47.6 million for the second quarter of 2022.
- GAAP operating loss was $(9.8) million or (18)% of revenue, compared to $(26.5) million or (55.6)% of revenue for the second quarter of 2022.
- GAAP net loss per share was $(0.12), compared to $(0.29) for the second quarter of 2022.
- Non-GAAP operating loss was $(3.5) million or (6)% of revenue, compared to $(19.8) million or (42)% of revenue for the second quarter of 2022.
- Non-GAAP operating loss per share was $(0.04), compared to $(0.26) for the second quarter of 2022.
- Cash and cash equivalents totalled $73.0 million as of June 30, 2023, compared to $77.8 million as of December 31, 2022.
- Net cash used in operating activities was $(2.3) million, compared to $(13.1) million for the second quarter of 2022.
- Free cash flow was $(2.8) million, compared to $(28.9) million for the second quarter of 2022.
- Normalized free cash flow was $(2.7) million, compared to $(18.9) million for the second quarter of 2022.
Recent Business Highlights
- Grew number of customers to 4,301 as of June 30, 2023, an increase of 12% compared to June 30, 2022.
- Annual revenue per customer was approximately $50,600 in the second quarter of 2023, as compared to $50,700 in the second quarter of 2022.
- Grew number of customers with ARR of $100,000 or more to 356, an increase of 15% compared to June 30, 2022.
- Customers with ARR of $100,000 or more contributed 55% of the total ARR as of June 30, 2023, compared to 53% as of June 30, 2022.
- Dollar-based net retention rate for customers with ARR of $100,000 or more was 109% in the second quarter of 2023 as compared to 127% in the second quarter of 2022.
- Overall dollar-based net retention rate was 101% in the second quarter of 2023 as compared to 115% in the second quarter of 2022.
- Multi-year subscriptions now comprise 42% of our overall ARR as of June 30, 2023, as compared to 36% as of June 30, 2022.
- Remaining performance obligations increased 9% year-over-year, to $174.8 million as of June 30, 2023, as compared to $160.5 million as of June 30, 2022.
Financial Outlook
“We made progress towards our goal of generating sustained positive free cash flow quarterly by the fourth quarter of 2023,” said Jason Schwartz, Chief Financial Officer of Similarweb. “We continue to focus relentlessly on improving our operating efficiency in this challenging demand environment.”
- Q3 2023 Guidance
- Total revenue estimated between $54.1 million and $54.5 million, representing approximately 9% growth year over year at the mid-point of the range.
- Non-GAAP operating loss estimated between $(2.8) million and $(3.2) million.
- FY 2023 Guidance
- Total revenue estimated between $216.0 million and $218.0 million, representing approximately 12% growth year over year at the mid-point of the range.
- Non-GAAP operating loss estimated between $(16.0) million and $(17.0) million.
- We expect to reach sustained positive free cash flow in the fourth quarter of 2023.
The Company’s third quarter and full year 2023 financial outlook is based upon a number of assumptions that are subject to change and many of which are outside the Company’s control. Actual results may vary from these assumptions, and the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
The Company does not provide guidance for operating loss and gross margin, the most directly comparable GAAP measures to non-GAAP operating loss and non-GAAP gross margin, respectively, and similarly cannot provide a reconciliation of these measures to their closest GAAP equivalents without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.
Conference Call Information
The financial results and business highlights will be discussed on a conference call and webcast scheduled at 8:30 a.m. Eastern Time on Wednesday, August 9, 2023. A live webcast of the call can be accessed from Similarweb’s Investor Relations website at https://ir.similarweb.com. An archived webcast of the conference call will also be made available on the Similarweb website following the call. The live call may also be accessed via telephone at (888) 428-7458 toll-free and at (862) 298-0702 internationally.
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