Semrush Holdings, Inc. ((SEMR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Semrush Holdings, Inc. recently held its earnings call, revealing a mixed sentiment characterized by robust growth in its enterprise and AI segments, juxtaposed with challenges in the lower market segment and rising costs in paid search acquisition. Despite these hurdles, the company remains optimistic about its long-term growth, as evidenced by the introduction of a new share repurchase program.
Strong Revenue Growth
Semrush reported impressive revenue figures for Q2 2025, reaching $108.9 million, which marks a 20% increase compared to the same period last year. This growth underscores the company’s ability to expand its market presence and capitalize on emerging opportunities.
Enterprise Segment Performance
The enterprise segment emerged as a significant driver of revenue growth for Semrush. The company saw a substantial increase in enterprise accounts, with the number of customers paying over $50,000 annually surging by 83%. This highlights the growing demand for Semrush’s enterprise SEO solutions.
AI Product Success
Semrush’s AI toolkit has quickly gained traction, achieving an annual recurring revenue (ARR) of $3 million within a few months. Additionally, the enterprise AI search product, AI optimization, has attracted 30 customers, contributing nearly $1 million in ARR.
Positive Operating Margin
The company reported a non-GAAP operating margin of 11% for the quarter, reflecting efficient cost management and operational effectiveness.
Share Repurchase Program
In a move that signals confidence in its future growth, Semrush announced a $150 million share repurchase program. This initiative is expected to enhance shareholder value and demonstrate the company’s commitment to long-term success.
Softness in Lower Market Segment
Semrush continues to face challenges in the lower-end market segment, which includes freelancers and less sophisticated users. This segment is characterized by higher churn rates, impacting overall growth.
Increased Paid Search Costs
The company experienced a significant rise in paid search costs per click, leading to increased expenses in acquiring lower-value customers. This has been a contributing factor to the downward adjustment in revenue guidance.
Adjusted Revenue Guidance
Semrush revised its full-year 2025 revenue guidance to a range of $443 million to $446 million, down from the previous estimate of $448 million to $453 million. This adjustment reflects the challenges faced in the lower market segment and increased acquisition costs.
Currency Exchange Headwinds
The company faced a notable foreign exchange headwind due to a weaker U.S. dollar, which impacted its operating margin. Approximately 30% of Semrush’s expenses are denominated in euros, exacerbating the situation.
Forward-Looking Guidance
Looking ahead, Semrush provided guidance for the third quarter and full year of 2025. The company anticipates Q3 revenue to range between $111.1 million and $112.1 million, with a non-GAAP operating margin of around 11.5%. For the full year, revenue guidance was adjusted to $443 million to $446 million, representing an 18% growth at the midpoint. Despite the near-term revenue headwinds, the company remains focused on high-growth segments like enterprise and AI, which are expected to drive sustainable growth.
In conclusion, Semrush Holdings, Inc.’s earnings call revealed a company navigating a complex landscape with both opportunities and challenges. While the enterprise and AI segments show promising growth, issues in the lower market segment and increased acquisition costs have led to a cautious revenue outlook. Nevertheless, the company’s strategic initiatives, including a share repurchase program, reflect a positive long-term growth trajectory.