Similarweb Ltd. Earnings Call Highlights Growth and Innovation

Similarweb Ltd. ((SMWB)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call of Similarweb Ltd. painted a generally positive picture, underscored by strong revenue growth and customer base expansion. Despite facing some challenges, such as a non-GAAP operating loss and slower growth in billing and current RPO, the company’s advancements in product innovation and revenue growth were significant highlights that outweighed these setbacks.

Revenue Growth

Similarweb Ltd. reported a robust 14% increase in revenue year-over-year, reaching $67 million, surpassing market expectations. This growth is a testament to the company’s strategic initiatives and market positioning, which have successfully driven financial performance.

Customer Base Expansion

The company saw a 19% year-over-year increase in its customer base, now boasting over 5,700 ARR customers. This expansion reflects Similarweb’s ability to attract and retain clients, highlighting the value and demand for its offerings in the competitive market.

Positive Free Cash Flow

For the sixth consecutive quarter, Similarweb reported positive free cash flow, contributing $5 million, which represents a 7% free cash flow margin. This consistent cash flow generation underscores the company’s operational efficiency and financial health.

Product Innovations

The earnings call highlighted several new product launches, including GenAI, traffic intelligence, and free AI agents, all of which received positive customer feedback. These innovations demonstrate Similarweb’s commitment to enhancing its product suite and staying ahead in the digital intelligence space.

App Intelligence Launch

Similarweb expanded its app data coverage to over 4 million iOS and Android mobile apps across 58 countries, with 484 customers already signed up. This expansion enhances the company’s data capabilities, providing more comprehensive insights to its clients.

AI Chatbot Traffic Intelligence

The introduction of AI Chatbot traffic intelligence into the platform marks a significant advancement, offering clients valuable insights into traffic generated by chatbots, a growing area of interest in digital analytics.

Multi-Year Contracts Increase

The proportion of ARR under multi-year contracts increased to 52%, up from 42% last year. This shift indicates a strengthening relationship with clients and a commitment to long-term partnerships.

Non-GAAP Operating Loss

Despite the positive developments, Similarweb reported a non-GAAP operating loss of 2% in Q1, attributed to increased investments in sales and R&D. This strategic investment is expected to drive future growth and innovation.

NRR Decline for Over $100,000 Customers

The Net Revenue Retention (NRR) for customers spending over $100,000 decreased by 100 basis points sequentially, highlighting a challenge in maintaining high-value customer engagement.

Billing Slower Growth

Billing growth experienced a slowdown in Q1, which the company attributed to seasonal shifts and large upsells in the prior year, suggesting a temporary dip rather than a long-term trend.

Current RPO Growth Slowdown

Current RPO growth slowed to 9% year-over-year, reflecting the impact of large deal comparisons from previous quarters, indicating potential challenges in maintaining momentum in this area.

Forward-Looking Guidance

Looking ahead, Similarweb maintained its guidance for the full fiscal year 2025, projecting total revenue between $285 million and $288 million, representing a 15% year-over-year growth at the midpoint. The company also anticipates a non-GAAP operating profit ranging from $1 million to $4 million. For Q2 2025, revenue is expected to be between $68.6 million and $69 million. Despite the Q1 operating loss, the company expects to continue generating positive free cash flow throughout 2025.

In conclusion, Similarweb Ltd.’s earnings call highlighted a strong performance in revenue and customer growth, alongside significant product innovations. While challenges such as a non-GAAP operating loss and slower billing growth were noted, the overall sentiment remains positive, with forward-looking guidance indicating continued growth and financial health.