Q1 2024 Similarweb Ltd Earnings Call
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Good day, ladies and gentlemen, and welcome to similar web quarter, one fiscal 2024 earnings call. All lines have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero on your telephone keypad to Rachel.
Operator.
Operator: on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Ramey Myerson. Sir, the floor is yours. Thank you, Operator.
At this time it is my pleasure to turn the floor over to your house Rami Myerson, Sir the floor is yours. Thank you operator welcome everyone to our first quarter 2024 earnings conference call. During the call. We will make forward looking statements related to our business. These statements may include the expected performance of our business and our future financial results.
Rami Myerson: I welcome everyone to our first quarter 2024 earnings conference call. During this call, we will make forward-looking statements related to our business. These statements may include the expected performance of our business and our future financial results, our strategy, the potential impacts of rising interest rates, rising global inflation, and current macroeconomic and geopolitical conditions, including the current war in Israel, challenges in our business and in the markets in which we operate, our anticipated long-term growth, and our overall future prospects.
The potential impact of rising interest rates rising global inflation current macroeconomic and geopolitical conditions, including the current one Israel challenges in our business and in the markets in which we operate our anticipated long term growth and overall future prospects.
Rami Myerson: These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. Further, reported results should not be considered as an indication of future performance. Please review the forward-looking statements discussion in our shareholder letter, along with our Form 20-F, filed with the SEC on February 28, 2024, and in particular, the sections entitled Cautionary Statements Regarding Forward-Looking Statements and Risk Factors Therein, for a discussion of the factors that could cause our actual results to differ from the forward-looking statements.
Statements are subject to known and unknown risks uncertainties and assumptions that could cause actual results to differ materially from those projected or implied during the call.
Reported results should not be considered as an indication of future performance. Please review the forward looking statements discussion in how shareholder letter none without form 20-F filed with the SEC on February 28, 2024, and in particular infection and Taco cautionary statement regarding forward looking statements and risk factors therein.
For a discussion of the factors that could cause our actual results to differ from the Florida state.
Rami Myerson: Also, note that any forward-looking statements made on this call are based on information available as of today's date, May 8, 2024. We undertake no obligation to update any forward-looking statements we make today, except as required by law.
Also note that any forward looking statements made on the school are based on information available as of today's date May eight 2020 full we undertake no obligation to update any forward looking statements, we make today, except as required by law.
Rami Myerson: As a reminder, certain financial measures we use in presentations of results and on our call today are expressed on a non-GAAP basis. In particular, we reference non-GAAP operating profit or loss, which represents GAAP operating profit or loss, less share-based compensation, adjustments in payments related to business combinations, amortization of intangible assets, and certain other non-recurring items. We use this and other non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes.
As a reminder, certain financial measures we use in presentations published out there on our call today I expressed on a non-GAAP basis in particular, we reference non-GAAP operating profit or loss, which represents GAAP operating profit or loss net share base compensation adjustments impairments related to business combination.
Intangible assets and certain other nonrecurring items, we use non-GAAP financial measures internally to facilitate medicines are financially constrained and clean internal planning and forecasting purposes. We believe these non-GAAP financial measures when taken collectively may be helpful to investors, because they provide consistency and compatibility with pulse financial performance Mike.
Rami Myerson: We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental information purposes only. They should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.
Certain items that may not be indicative about the results.
Results of operations.
However, non-GAAP financial measures have limitations as analytical tools and are presented for supplemental information.
They should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP, Arkansas.
Rami Myerson: A reconsideration of these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at pir.similarweb.com. Today, we will begin with brief prepared remarks from our CEO, Or Offer, and CFO, Jason Schwartz. Then we will open up the call to questions from self-held analysts in attendance. Please note that we published a detailed discussion of our first quarter 2020 results in a letter to shareholders for investment reference, as well as an updated investor presentation of the strategic overview of the business, both of which are available on our investor relations website. With that, I will turn the call over to Or Offer, CEO of SimilarWeb. Or, please go ahead. Thank you, Rami.
A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our Investor Relations website at IR <unk> com.
Today, we will begin with brief prepared remarks from our CEO author and CFO. Jason Schwartz then we will open up the call to questions from sell side analysts in attendance.
Please note that we published a detailed discussion of our first quarter 2020 for example in electric Michele for investments referenced.
Jason E. Schwartz: As well as an updated investor presentation with a strategic overview of the business both of which are available on our Investor Relations website with that I'll turn the call over to offer the Oh. Please go ahead.
Jason E. Schwartz: Rami I don't want to come to the team and your first conference call with us.
Or Offer: Thank you, Rami, and welcome to the team and your first conference call with us. And good morning, and welcome to everyone joining the call today.
Rami Myerson: And good morning, and welcome everyone joining the call today.
Or Offer: We kick off 2024 with continued momentum in both top line and bottom line performance and delivered very strong first quarter 2024 results. We grew our revenue by 12% over Q1 last year to $59 million, and we generated nearly $10 million of free cash flow, an amazing achievement we are proud of. Our global customer base grew 16% year-over-year to over 4,800 customers, and the demand for our solution at the top of the funnel remains strong. Our customers and prospects appreciate and value the importance of our digital market data for the business. As a result, our pipeline remains robust, and we are adding new customers and expanding our penetration into our market.
Rami Myerson: Kickoff 'twenty 'twenty four with continued momentum in both topline and bottom line performance and delivered a very strong first quarter 'twenty 'twenty four results. We grew our revenue by 12% over Q1 last year to $59 million and we generated nearly $10 million level free cash flow.
Rami Myerson: And the Amazing achievement, we are proud of.
Rami Myerson: Our global customer base grew 16% year over year.
Rami Myerson: Two over 4800, Costa nodes and the demand for us negotiate at the top of the funnel remains strong.
Rami Myerson: Our customer and prospect appreciate and value the importance of our digital market Doctor portal business. As a result, our pipeline remains robust and we are adding new customers and expanding our penetration into our market.
Or Offer: We continue to invest to expand and enrich our SimilarWeb digital market data. In Mars, we acquired Edmetrics, a digital ad intelligence leader. I would like to take this opportunity to welcome the Edmetrics team to SimilarWeb. Edintelligent is an important tool for corporations and marketing agencies. Online display advertising is estimated to attract more than $174 billion in spending in 2024, according to Statista. For certain global brands, it's already comprised 60% of their global advertising budget.
Rami Myerson: We continue to invest to expand I mean, we're just in the web digital market dumped on merits, we acquired Ed metrics and digital and intelligently, though.
Speaker Change: I would like to take this opportunity to welcome <unk> to the sustainable work.
Rami Myerson: As intelligently as an important tool for corporates and marketing agencies.
Rami Myerson: Online display advertising is estimate to attract more than 174 billion in spending in 2024. According to studies for.
Rami Myerson: For certain global brands, it's already compressed to about 60% of their global advertising budget.
Or Offer: We plan to leverage our digital ad data along with the Admetrics team's expertise to enhance our digital ad intelligent offering and launch what we believe will be the best and most comprehensive digital advertising intelligent data in the market. This will supercharge our competitive intelligent offering. We plan to integrate and monetize this ad intelligent data through all of our solutions as well. For example, for our shopper intelligent solution, we will add visibility into retail media online spend.
Rami Myerson: We plan to leverage digital and data along with Ed metrics teams expertise to enhance our digital and intelligent offsetting and launch what we believe will be the best and most comprehensive digital advertising intelligent about that in the market.
Rami Myerson: This will supercharge, our competitive intelligence offering.
Rami Myerson: We plan to integrate and monetize these intelligent data for all of our solution as well.
Rami Myerson: For our shopper intelligence solution, we would add visibility into retail and media and online spend far stock intelligent offering we would add for public company AD spend and I'd love it.
Rami Myerson: And for ourselves internally, James we will improve our ability to help Ed sales team with better data to file and qualified digital advertisers and publishers and this is why I'm very excited about this opportunity.
Rami Myerson: Last year, when introduced and successfully launched similar at all.
Rami Myerson: AI driven digital intelligent assistant.
Or Offer: For our stock intelligent offering, we will add value to public company ad spend and ad revenue. And for our self-intelligence, we will improve our ability to help improve self-esteem with better data to find and qualify digital advertisers and publishers, and this is why I'm very excited about this opportunity. Last year, we introduced and successfully launched SimilarESQ, our AI-driven digital intelligent assistant. Today, I am excited to tell you about Thind.
Rami Myerson: Today I am excited to tell you about that.
Or Offer: SEM is our AI-powered sales-assisted module. SEM is designed to enhance sales efficiency and effectiveness by automatically delivering precise data-driven insight about prospects directly into our customers' sales workflow. As we all know, our emails are bombarded with cold outreach emails from salespeople that we all market spam, making it very hard for sales teams to engage with our products. With SAM, salespeople can use AI text generation to suggest sales pitches that are much more likely to resonate with the potential customer.
Rami Myerson: Starting with our AI powered central system model, Sam is designed to enhance sales efficiency and effectiveness mathematically delivering precise data driven insight about prospect directly into our customers' workflow.
Rami Myerson: As we all know.
Rami Myerson: Our emails are bombarded with called outlet humans from salespeople that we all markets.
Rami Myerson: Making it very hard plus sales team to engage with our prospects.
Rami Myerson: With Sammy salespeople can use AI takes generation two suggests fed speech that are much more likely to resonate with a potential customer same utilize our market in play dotcom antifraud relevant database insight.
Or Offer: Please utilize our market insight data and prepare relevant database insight emails that explain to the prospect why they need to engage with the sales team. And we're already receiving fantastic feedback from early adopters of STEM. We have reported a significant increase in outreach response rates. For one of our customers, they increased response rates by 20x compared to their previous response rate.
Rami Myerson: That explained to the prospect why they need to engage with their sales teams.
Rami Myerson: And we already are.
Rami Myerson: Savings fantastic feedback from early adopters of Sam we have reported a significant increase in outlets response rates.
Rami Myerson: One of our customers some increase in spot rates by 20 X compared to their previous the spot rates. The same better is now a plan and we are looking forward to seeing and its adopting by our customers and its impact over time.
Or Offer: The same data is now open, and we are looking forward to seeing how it's adapted by our customers and its impact over time. I'm very proud of the continued profitability and free cash flow momentum. We delivered our third consecutive quarter of non-gap operating profit and a very strong free cash flow in the quarter.
Rami Myerson: I'm very proud of the continued profitability and free cash flow momentum.
Rami Myerson: We delivered our third consecutive quarter of non-GAAP operating profit and a very strong free cash flow in the quarter. This is a great achievement for us and is solely the result of the small to work and disciplined of the whole single game.
Or Offer: This is a great achievement for us and a solid result of the smart work and discipline of the whole SimilarWeb team. I'm also really happy to welcome Susan Dunn. Our new Chief Revenue Officer. Having spent 32 years at Nielsen IQ, including as its revenue officer, Susan knows the market research world inside and out. She has deep expertise in delivering business value and operating impact of market intelligence to many of the largest consumer brands in the world.
Rami Myerson: I'm also really happy to welcome Susan.
Rami Myerson: Our new Chief revenue office out having spent 32 years at Nielsen IQ, including as its revenue or is that because I know the market research world inside and out he has a deep expertise in delivering the business value and operating impact of the marketing that agenda to many of the largest consumer brands.
Rami Myerson: The world well.
Or Offer: Welcome, Susan. I'm confident that you are the ideal sales leader to drive our next phase of growth and expansion. Finally, I want to thank our team for another quarter of outstanding results and great execution. Remember, we are just getting started. Thank you, everyone, for your continuous support. With that, Jason, I will turn the call over to you.
Rami Myerson: Welcome Suzanne I'm confident that you all day deal tells me there to drive our next phase of growth and expansion.
Rami Myerson: Finally, I want to thank our team for another quarter of outstanding result, and great execution.
Rami Myerson: Remember we are just getting started.
Rami Myerson: Every one for your continued support with that Jason I will turn the call over to you.
Jason E. Schwartz: Thank you, War, and let me join you in welcoming Rami and Susan to the team as well. Thank you to everyone joining us on the call today to discuss our first quarter results. I will briefly address our financial performance, and then we will open up the call to questions. Our performance in the first quarter reflects good top-line and bottom-line momentum. Revenue was $59 million for the quarter, at the high end of our guidance range.
Jason E. Schwartz: Thank you Ward and let me join you in welcoming Rami and Susan to the team as well.
Jason E. Schwartz: Thank you to everyone joining us on the call today to discuss our first quarter results I will briefly address our financial performance and then we will open up the call to questions.
Jason E. Schwartz: Performance in the first quarter reflects good topline and bottom line momentum revenue was $59 million for the quarter at the high end of our guidance range.
Jason E. Schwartz: Our $100,000 ARR customer segment now represents 58% of our total ARR, an all-time high, and NRR was 107% consistent with Q4 2023. An area of strength for us was in our largest customers, where we closed four seven-digit contracts during the quarter, following the 10 seven-digit contracts we closed in the fourth quarter. An excellent result that supports our positive momentum.
Jason E. Schwartz: Our 100000 dollar AOR customer segment now represents 58% of our total AOR and all time high and an IRR was 107% consistent with Q4 2023.
Jason E. Schwartz: An area of strength for US was in our largest customers, where we close four seven digit contracts during the quarter. Following the 10 seven digit contracts we closed in the fourth quarter, an excellent result that supports our positive momentum.
Jason E. Schwartz: At the end of the first quarter, 42% of our ARR was contracted under multi-year commitments, demonstrating the strength and longevity of our customer relationship. Our remaining performance obligations also reached a new record of $214 million, up from $195 million at the end of Q4, providing a positive indicator of our performance durability going forward. While our results on the top line were towards the top end of expectations, we exceeded expectations on the bottom line.
Jason E. Schwartz: At the end of the first quarter, 42% of our AOR is contracted under multiyear commitments, demonstrating the strength and longevity of our customer relationships. Our remaining performance obligations also reached a new record of $214 million up from $195 million at the end of.
Jason E. Schwartz: Q4, providing a positive indicator of our performance durability going forward.
Jason E. Schwartz: While our results on the top line, we're towards the top end of expectations, we exceeded expectations on our bottom line.
Jason E. Schwartz: Our non-GAAP gross margin was 81% in the first quarter compared to 80% last year. Our first quarter gap operating loss was $2.7 million, while our non-gap operating profit was $2.8 million. This resulted in a non-gap operating margin of 5% and represented an improvement of 19 percentage points versus the prior year and the third consecutive quarter of non-gap operating profit. Our sustained focus on operating efficiency continues to deliver excellent results, and we generated $9.7 million in positive free cash flow in the first quarter, a 16% free cash flow margin, and the second consecutive quarter of positive free cash flow. As a result, we ended the first quarter with nearly $55 million in cash and cash equivalents and no outstanding debt.
Jason E. Schwartz: non-GAAP gross margin was 81% in the first quarter compared to 80% last year.
Jason E. Schwartz: Our first quarter GAAP operating loss was $2 $7 million, while our non-GAAP operating profit was $2.8 million. This resulted in a non-GAAP operating margin of 5% and represented an improvement of 19 percentage points versus the prior.
Jason E. Schwartz: Per year, and the third consecutive quarter of non-GAAP operating profit.
Jason E. Schwartz: Our sustained focus on operating efficiency continues to deliver excellent results and we generated $9 $7 million in positive free cash flow in the first quarter, a 16% free cash flow margin and the second consecutive quarter of positive free cash flow.
Jason E. Schwartz: As a result, we ended the first quarter with nearly $55 million in cash and cash equivalents and no outstanding debt.
Rami Myerson: Turning now to Q2 2024, we expect total revenue in the range of $60 million to $60.5 million. For the full year 2024, we continue to expect total revenue in the range of $242 million to $246 million, representing approximately 12% growth year-over-year at the midpoint of the range. Non-GAAP operating profit for the second quarter is expected to be in the range of $1.5 million to $2 million. For the full year, we expect our operating profit to be between $7 million and $9 million, up from our previous expectations of $6 million to $8 million.
Jason E. Schwartz: Turning now to Q2 'twenty 'twenty four we expect total revenue in the range of 60 million to $60.5 million for the full year 2024, we continue to expect total revenue in the range of 242 million to $246 million representing.
Jason E. Schwartz: <unk>, 12% growth year over year at the midpoint of the range non-GAAP operating profit for the second quarter is expected to be in the range job, one and a half million to $2 million for the full year, we expect our operating profit to be between 7 million and $9 million.
Jason E. Schwartz: From our previous expectations of $6 million to $8 million.
Rami Myerson: As we discussed at the beginning of the year, we are focused on delivering profitable growth and making further progress towards the rule of 40 over time. We anticipate being profitable on a non-gap basis and generating positive free cash flow in all of the remaining quarters of 2024. And with that, Laura and I are ready to answer your questions.
Jason E. Schwartz: As we discussed at the beginning of the year, we are focused on delivering profitable growth and making further progress towards the rule of 40 overtime, we anticipate being profitable on a non-GAAP basis and generating positive free cash flow in all of them.
Jason E. Schwartz: Of the remaining quarters of 2024.
Speaker Change: With that Laura and I are ready to answer your questions.
Operator: Thank you. The floor is now open to questions. If you do have a question, you may press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's star 1.
Laura: Thank you the floor is now open for questions. If you do have a question you May press star one on your telephone keypad at this time.
Speaker Change: <unk> has been answered you could remove yourself from the queue by pressing one.
Operator: Please hold while we pull for questions. And our first question comes from Arun Bhatia from William Blair. Go ahead, Arun.
Speaker Change: Ladies and gentlemen at Star one please hold while we poll for questions.
Speaker Change: And our first question comes from Arun Bhatia from William Blair Go ahead Arun.
Arjun Rohit Bhatia: All right, thank you. Hey Jason, hey Orr, congrats on the strong results here. I wanted to ask about the go-to-market changes and the pricing packaging adjustments that you've made, could you just share with us how customers are receiving them, both at the low end and maybe how you plan to adjust or where you are in the process of adjusting go-to-market on the enterprise side? And I know you hired a new CRO, Susan. I'm curious what initiatives she might implement as she gets up to speed here.
Arun Bhatia: Great. Thank you, Hey, Jason Hey, art Congrats on the strong results here.
Arun Bhatia: I wanted to ask on the go to market changes and.
Arun Bhatia: Pricing packaging adjustment that you've made.
Arun Bhatia: Could you just share with us how customers are receiving those both at the low end and maybe how you plan to adjust that.
Arun Bhatia: Or where you are in the process of adjusting go to market with on the enterprise side and I know you hired a euro Susan I'm curious what initiative.
Speaker Change: She might.
Speaker Change: Implement as she gets up to speed here.
Or Offer: Hi Arun. Thank you for the question. And so, from what I heard, there were two parts to the question. First one about the change we rolled into the go-to-market. So, I think there were.
Speaker Change: I R. One thank you for the course, then and.
Speaker Change: Hum.
Speaker Change: What I heard that there was two parts for that question.
Speaker Change: The first one both change we rolled into the go to market.
Speaker Change: Well I think they're worth.
Arun Bhatia:
Or Offer: Two big changes we did at the beginning of the year. One was to centralize and give more focus around customer success and effort to our lower part of our customer base for our SMB customers, so give them more focus on value.
Arun Bhatia: Two big changes, we did them at the beginning of the year.
Arun Bhatia: One is to centralize and give more focus around customer success.
Or Offer: And, and the second part is a line on our strat account, basically building more focus pods by sector in order to give better support and value to our strat account. So those two changes rolled out at the beginning of the year, and we've seen great success with them over the last few months. And regarding the second question about Susan joining, I'm so super excited. She just joined last week. So she and her boyfriend, literally, our second week.
Arun Bhatia: FERC to lower part of our customer for it.
Arun Bhatia: SMB customers, who will give them.
Arun Bhatia: And more focused on value.
Arun Bhatia: And the second part is in lying on our traffic count.
Arun Bhatia: Basically building more focus followed by sector or another to give better support and value to all stop it come.
Arun Bhatia: Those two changes rolled up in the beginning of the game and we've seen great success.
Arun Bhatia: With them there.
Arun Bhatia: A few months with all of them.
Arun Bhatia: And regarding the second question about Superman joining Cooper.
Speaker Change: Super excited Yeah, just joined last week, she and her.
Arun Bhatia: Literally every second week.
Or Offer: We're very excited. She came with a lot of experience selling data, insights, and market research, and I think she can help us. She will help us scale our strata and motion, which is new to us. We're getting better. As you heard from the earnings, we are closing more and more seven-figure deals, and we're seeing huge success and potential at the start as our data is very unique. We consider ourselves the top digital data provider in the world, and I think there's a lot of potential, especially with the start, and we're sure that Susan can help us a lot there. I hope that answers your question.
Arun Bhatia: We are very excited that she come with.
Arun Bhatia: A lot of experience in selling data insight markedly there it's.
Arun Bhatia: Hugh.
Arun Bhatia: And I think she can help at all she will help us scale. The locks are startling in motion.
Arun Bhatia: That is new to us we are getting better as you had some from the earning.
Arun Bhatia: Start closing more than more seven figure deals and we've seen you do that and.
Arun Bhatia: Access and potential and the stuff that is very unique we completed they'll really need.
Arun Bhatia: The top digital and other providers in the world and a lot of potential, especially with the Scorpion. We showed that Susan can help us love there I.
Arjun Rohit Bhatia: Yes, very helpful. Thanks, Orr.
Speaker Change: I hope it answer your question.
Arjun Rohit Bhatia: The other one I wanted to ask is sales intelligence, or maybe if we zoom out even where you're seeing incremental demand amongst your product suites, it sounds like you are making some investments in Sales Intelligence from a product perspective, which is why I brought that up. But yeah, if we could zoom out and just kind of think product by product and then on sales specifically, I'm curious how you plan to monetize SAM. Is that something that's just going to be embedded or something that you could potentially, you know, have an add-on pricing for?
Speaker Change: Yes very helpful.
Speaker Change: The other one I wanted to ask.
Speaker Change: Sales intelligence or maybe if we if we zoom out even.
Speaker Change: Where you are seeing incremental demand amongst your your product suite. It sounds like you are making some.
Speaker Change: Our investments in our sales intelligence from a from a product perspective.
Speaker Change: Which is why I brought that up but yeah, we could zoom out and just kind of think product by product.
Speaker Change: And then on sales specifically I'm curious how you plan to.
Speaker Change: Hi, Sam.
Sam: Is that something that's just going to be embedded or something that you could potentially.
Speaker Change: Potentially.
Sam: Having that.
Sam: <unk> core.
Or Offer: Yeah, of course. So I think you're right, it's looking good on a few products that we sell. Our innovation product is doing really nicely. We have shopper intelligence, our stock intelligence, it's the new products we introduced. And lately, they're doing well, and we have a lot of custom, product, people come and want some unique data more on the strategic side, and it's doing very well. And on the third intelligence, yeah, there's a lot of great innovation, mostly on AI.
Sam: Yeah of course, so I think you.
Sam: You're right. There is it's looking good on a few products that we send the one man.
Sam: Innovation product doing really nicely, even though we have a shopper intelligent our stock intelligence, it's new products we introduce.
Sam: Lately, the doing and when.
Speaker Change: And we have lots of costume.
Speaker Change:
Speaker Change: Product people come and won some unique that are more on the strategic side that are doing very well.
Speaker Change: And on the sell of intelligentsia, there's a lot of great innovation, mostly on AI.
Or Offer: And it was the first product we implemented an AI strategy in order to enrich the workflow for the user. And if you think about it, we are like a market research company, and the sales organization uses us to find the ideal prospect they should approach. And they use our platform to find interesting insights to share with those prospects to tell them, listen, I see this and this data in SimilarWeb. You should speak with me.
Speaker Change: It was the first product we implement today I've got the gene, although tool and enrich the workflow for their users.
Speaker Change: And if you think about it we were like a marketplace that's company and the central organization use us to find the most ideal processes. They should approach and they use our platform to find interesting insights to share with those prospects to tell them listen I see decent beef nothing similar web you should speak with me.
Speaker Change: I have a solution to help you solve this pain that they see.
Speaker Change: Now and with AI all of these workflow can be automatically so it's very nice. So you can tell day, I listen I'm, selling and marketing automation software claims.
Or Offer: I have a solution to help you solve this pain that I see. Now, with AI, all this work can be done automatically, so it's very nice. So you can tell the AI, listen, I'm selling marketing automation software. Please find me all the companies online whose email traffic is not doing well compared to their competition. And write me an email to send them to show them that they are not in a good place and they should speak with me.
Speaker Change: Claims find me all the company's online that to them.
Speaker Change: Email traffic is not doing well compared to the competition.
Speaker Change: And I to me email to send them to show them that they will not be in a good place and they should speak with me. So they I cannot tomorrow as all these cross the slide the email.
Or Offer: So the AI can automate all this process, write the email, and really help them open the door, and this is a very unique approach to selling because, as I said on the earnings call, we all feel this pain that we are bothered with a lot of emails from people trying to prospect you that are just cold emails that everybody markets spam. And when you get these kinds of insights that are personalized to you, that show you that you have a pain, and somebody can really help you, this approach to consultative services is very powerful. And really, we're seeing a great increase in response rate to the customer that works with them. So we're really excited about that.
Speaker Change: And really help them opened the door and this is a very unique approach to selling.
Speaker Change: As they said.
Speaker Change: On the call. We all feel this pain that we bought the lots of email.
Speaker Change: So if people try to prospect yield that they'll just called email.
Speaker Change: Body market spam and when you get these kinds of inside the tailor to that show you that you have the pain somebody that can really help you.
Speaker Change: This approach from 47 is very powerful and really we're seeing a great increase hopefully spun right to the customer to work with them. So we're really excited about it.
Arjun Rohit Bhatia: Perfect. Very helpful. Thank you all. Thank you, guys. Take care.
Speaker Change: Perfect very helpful. Thank you Ara. Thank you guys take care.
Speaker Change: Yeah.
Operator: And our next question comes from Ryan MacWilliams from Barclays. Go ahead, Ryan.
Speaker Change: And our next question comes from Ryan Macwilliams from Barclays Go ahead Ryan.
Ryan Patrick MacWilliams: Hi, thanks for taking the question. This is Pete Newton on for Ryan MacWilliams.
Speaker Change: Hi, Thanks for taking the question. This is Pete Newton on for Ryan Macwilliams or now that we're kind of further into the year. How have you seen macro impact your business at this point and how to enterprise spending budgets look for the rest of FY 'twenty four.
Or Offer: Or now that we're kind of further into the year, how have you seen macro impact your business at this point, and how do enterprise spending budgets look for the rest of FY24?
Or Offer: Yeah, so the macro environment is kind of the same, like we don't see it getting better like it used to be in 2021 or the beginning of 2022. It's kind of, I feel, going back to 2020 and when it was before. And we all just need to work harder and do a better job and execution to scale. So I think this is what we see. And there was a second question, but there was only one.
Pete Newton: Yeah, So mark microenvironment is.
Speaker Change: Kind of this thing like we don't see it getting better like it used to be in 'twenty 'twenty. One all beginning Stanton 'twenty, two it's kind of as I see them going back to 2020 and.
Speaker Change: It was before.
Speaker Change: And we all just need to do we work harder and do better job in execution to scale. So I think this is what we see and there was a second question, which was the only one.
Or Offer: That was just one for now, and then just how you think about budgets for the rest of the year on the enterprise side based on what you've seen so far this year.
Speaker Change: That was just one for now and then just how you're thinking about budgets the rest of the year on the enterprise side.
Speaker Change: Based on what you've seen so far early this year.
Speaker Change: Yeah.
Or Offer: I think it's looking good. I think it's in a good place.
Speaker Change: I think it's I think it's looking good thinking.
Speaker Change: Drinking cooking in a good place.
Or Offer: Okay, great. And then just a quick follow up. Anything to call out in one cue in terms of vertical performance?
Speaker Change: Okay, Great and then just a quick follow up anything to call out in <unk> in terms of vertical performance.
Speaker Change: Yeah.
Or Offer: Yeah, I think on the vertical performance, we have two teams that are doing a great job executing very well. And we have a vertical selling to invest in, and it still performs really nicely. And we have the OEM team, which sells to companies that want to integrate our data into their own solutions and software that is also doing really well.
Speaker Change: Yeah, I think on the vertical performance, we have two teams that are doing great job.
Speaker Change: Good thing value well, Oh, we have a vertical selling to invest all the time.
Speaker Change: Perform really nicely and we have been the OEM can sell to companies that want to integrate all dotcom.
Speaker Change: And to their own solution and software both are doing really well.
Or Offer: Very helpful. Thanks, guys.
Speaker Change: Very helpful. Thanks, guys.
Speaker Change: Yeah.
Operator: Thank you. And our next question comes from Brett Knoblauch from Cantor Fitzgerald. Go ahead.
Speaker Change: Thank you and our next question comes from Brett Knoblauch from Cantor Fitzgerald go ahead.
Brett Anthony Knoblauch: Hi guys, this is Tommy Shinski on for Brett.
Brett Anthony Knoblauch: Hi, guys. This is tommy shouldn't scale them for Brett Congrats on the great quarter.
Or Offer: Congratulations on a great quarter. Just on the acquisition of ad metrics, how should we be thinking about that? How much of the customer growth in the quarter can be attributed to customers coming over from that platform? And then how should we think about this contributing to the financials, both on revenue and, you know, margins as we progress throughout 2024 and beyond?
Brett Anthony Knoblauch: Just on the acquisition of AD metrics I'm, just I guess, how we should be thinking about that how.
Brett Anthony Knoblauch: How much of the customer growth in the quarter can be can.
Brett Anthony Knoblauch: Can be attributed to customers coming over from that platform and then how should we think about this contributing to the financials both on revenue and margins as we progressed throughout 'twenty 'twenty four and beyond.
Jason E. Schwartz: Yeah, hi, it's Jason. Thanks so much for the question. Edmetrics was really not a material contribution to the quarter. It's a great business, and what we think Edmetrics is really going to provide is: when we take their knowledge together with our data, we're going to be building out an outstanding ad intelligence product and intelligence data that can be monetized across not only our research intelligence solution but also our investor intelligence, stock intelligence, and shopper intelligence.
Brett Anthony Knoblauch: Yeah, Hi, it's Jason Tom Thanks, So much for the question.
Jason Tom: Ed metrics was really not a material contribution to the quarter.
Jason Tom: It's a great business I mean, what we think add metrics has really gone up provided to Uh huh.
Jason Tom: When we take their knowledge together with our data we're going to be building out a.
Brett Anthony Knoblauch: Outstanding AR add intelligence product and and intelligence data that can be monetized across not only our research intelligence solution, but also our investor.
Brett Anthony Knoblauch: Investor Intelligence back intelligent shopper intelligence, everybody really needs those data points to tell them, what's going wrong in whether you're an investor looking for that alternative data or whether you're a CPG.
Jason E. Schwartz: Everybody really needs those data points to tell them what's going on, whether you're an investor looking for that alternative data or whether you're a CPG company and trying to understand the trends of retail ads. So all that is stuff that we think is going to be the driver of that ROI on this acquisition. We're really excited about it.
Brett Anthony Knoblauch: CPG company and trying to understand the trends of retail.
Brett Anthony Knoblauch: Retail ads. So all of that is is that the we think it's going to be the driver of that Oh ROI on this acquisition really excited about it.
Brett Anthony Knoblauch: Awesome! It sounds great.
Speaker Change: Awesome sounds great. Thanks, Jason and then just if I may on a retention I guess good stabilization in the quarter you know, we're seeing broader broader software churn. So it's great to see this I guess, what what's driving the stabilization is at a at the new pricing and packaging model with similar similar web you know.
Speaker Change: Demand for AI I guess you guys you guys mentioned the Sam a lot on the call in the press release, So I'm just curious to hear on that thanks.
Brett Anthony Knoblauch: Thanks, Jason. And then, just, if I may, on retention, I guess good stabilization in the quarter. We're seeing broader software churn, so it's great to see this. I guess what's driving the stabilization? Is it the new pricing and packaging model with SimilarWeb? Demand for AI? I guess you guys mentioned SAM a lot in the call and the press release, so I'm just curious to hear about that. Thanks.
Or Offer: The intention is, um... Unknown Attendee No, it's historical data information. You think that the people that churned in Q1, they made it. Thank you. So we're talking about customers that decided to churn in November and December last year. So, they didn't enjoy all those nice benefits we launched now.
Speaker Change: The retention is.
Speaker Change: No.
Speaker Change: Oracle.
Speaker Change: Yeah.
Speaker Change: That information you can see that the people that churn in Q1, we made it.
Speaker Change: So when you're talking about customer that decided to Chinese in November December last year.
Speaker Change: So.
Speaker Change: They don't they don't didn't enjoy from all of those are nice benefits. The launch now I think if you're talking about the stabilization of alright.
Or Offer: I think if we're talking about the stabilization of the retention rate, we thought a lot of what we were pulling last year that we have now started collecting fruit. We still did a lot of great changes, as I said, around our customer success organization. And in Q1, we're very eager to see how it's going to impact retention going forward. As I said, we put a lot of CA around our SMB sector, and we moved most of the people there to be value people, focused on product engagement and education. So, I still hope that all these initiatives will help to increase retention over time.
Speaker Change: Yeah, sure pooling and last year that milestone.
Speaker Change: And collecting the fruits, we still need a lot of great change. It. They said that's the most except for organization and in Q in Q1 that we very you can go to see how it's going to impact.
Speaker Change: Attention going forward as they.
Speaker Change: We put the Lotto, let's see a around our SMB sectoral and we removed and most of the people there to be value people.
Speaker Change: Focus on product engagement and education.
Speaker Change: I hope that.
Speaker Change: All of these initiatives.
Speaker Change: He helped to increase retention of lifetime.
Brett Anthony Knoblauch: Awesome, thank you guys, and congrats again.
Speaker Change: Awesome. Thank you guys and congrats again.
Speaker Change: Thanks.
Speaker Change: Okay.
Operator: And our next question comes from Tyler Ray from Citi. Go ahead, Tyler.
Speaker Change: And our next question comes from Tyler <unk> from Citi Go ahead Tyler.
Tyler Maverick Radke: Hi, thanks for taking the question. Jason, maybe for you, I just wanted to see if you could put a little bit more color on the assumptions and the outlook. Obviously, you know, decent beat here in Q1, you got in Q2 slightly ahead, but not raising the full year. Is that just conservatism?
Tyler: Hi, Thanks for taking the question.
Tyler: Jason maybe for you just.
Tyler: I wanted to see if you could put a little bit more color on the.
Tyler: The assumptions in the outlook, obviously, you know a decent beat here in Q1.
Tyler: You're guiding Q2 slightly ahead, but not not raising the full year.
Jason E. Schwartz: I know there are some go-to-market changes, macro is a little bit shaky, but any changes that you'd like to highlight as you think about the second half relative to 90 days?
Jason: Is that just conservatism I know theres. Some some go to market changes macro is a little bit shaky, but any any changes that you'd like to highlight as you're thinking about the second half relative to 90 days ago.
Jason E. Schwartz: You know us. We like to give guidance that we know will meet our needs. We're really proud that we're hitting the numbers on the high end of the guidance that we've done. I think that we see that trend continuing. And on profitability, where we are seeing that efficiency coming through, we took the opportunity to raise the guidance on profitability from six to eight to seven to nine million for the year. So we are looking at that, and we see that it makes sense.
Speaker Change: Thanks Tyler.
Speaker Change: We'd like to give the guidance that we know to meet.
Jason: We were really proud that we're.
Tyler: And you are hitting the numbers on the high end of the guidance that we that we've done I think that we see that that trend continuing.
Tyler: And on the profitability, where we are seeing that efficiency coming through we are we took the opportunity to raise the guidance on the profitability from six to eight to 10 seven to nine.
Tyler: For the year. So we are looking at that where we see that makes sense.
Tyler Maverick Radke: And then as you think about SimilarWeb 3.0 with the lower upfront pricing, just as we're thinking about customer ARPU here, obviously, that's putting some short-term pressure on that. When do you think that stabilizes just in terms of that ARPU? Is that next quarter, or could this take a while, just given that you are still seeing pretty strong new customer additions? Yeah, I think that the way to think about the model of the business is that we really have two ends of a barbell. On the one hand, we've got these large
Speaker Change: Great and then as you think about the similar web three.
Speaker Change: <unk> with the lower upfront pricing.
Speaker Change: Just as we're thinking about customer ARP, who here, obviously, that's putting some short term pressure on that when do you think that stabilizes.
Speaker Change: You know is just in terms of that that <unk> is that next quarter or could this take a while and just given that you are still seeing pretty strong new customer additions.
Jason E. Schwartz: Yeah, I think that the way to think about the model of the business is that we really have two ends of a barbell. On the one hand, we've got these large customers, the over 100,000 that we take from starting at thousands or tens of thousands to get hundreds of thousands of dollars. And now you're seeing those guys taking up to millions of dollars in transactions.
Speaker Change: Yeah, I think that the way to think about a about the model of about the businesses that we really have two ends of that of a barbell on one hand, we've got these large customers the over 100000 that we take them from.
Speaker Change: Starting at thousands or tens of classes together hundreds of thousands of dollars and now you're seeing those guys take taking up to millions of dollars and transactions and that's a journey that we're really proud of back when you look at the 370 800000 dollar customers that we have at the end of the quarter.
Jason E. Schwartz: And that's a journey that we're really proud of. In fact, when you look at the $378,000, $100,000 customers that we have at the end of the quarter, the overwhelming majority of them started well less than $100,000. Most customers don't start at that level.
Speaker Change: The overwhelming majority of them started.
Speaker Change: Well less than $100000, most customers don't start at that level and so.
Jason E. Schwartz: And so what we've seen is that journey is the right thing for us to do, and we think that that has been our success over time. And that's one of the things that we're doubling down on. On the one end, you're going to see those large customers, those strategic accounts getting bigger. And at the same time, we want to keep on having flows of 100, 200 customers every single quarter that come in because those customers become the NRR for 2025 and 2026 and beyond. So we're actually very happy with the levels that we're seeing over here. $500 on overtime on the blended ARCO. We think that that's okay.
Speaker Change: What we've seen is that journey is the right way for us to do and we think that that's the that has been our success over time and that's one of the things that we're doubling down on one hand, you're going to see those large customers those strategic accounts getting bigger and at the same time, we want to keep on having flow out.
Speaker Change: Hi.
Speaker Change: <unk> 200 customers every every single quarter that come in because those customers become the MLR for 2025, and 2026 and beyond.
Speaker Change: So we're actually very happy with the with the levels that we're seeing over here and if it goes up or down by.
Speaker Change: $500 on.
Speaker Change: Over over time on the blended Arco, we think that that's okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Operator: Our next question comes from Pat Walravens from Citizen. Go ahead, Pat.
Speaker Change: Our next question comes from Pat well Evans from Citizen go ahead Pat.
Patrick D. Walravens: Thanks so much. This is Aaron Kimson on behalf of Pat.
Speaker Change: Thanks, So much this is Eric Johnson on for Pat.
Eric Johnson: First question.
Or Offer: First question, what sort of tailwinds are you seeing from tech customers using your data to train their large language models? And maybe can you help us quantify that in one cue relative to four cues and how do you expect it going forward?
Eric Johnson: <unk> are you seeing from tech customers using your data to train their large language models and maybe could you help us quantify that in <unk> relative to <unk> and how you expect that going forward.
Or Offer: I think we're still seeing nice momentum of companies looking to buy data to train their LLM in different ways. So we still saw some nice activity in the quarter.
Eric Johnson: I think we still seeing nice momentum.
Speaker Change: Companies are looking to buy data to train there and the land some angle.
Eric Johnson: We still saw some nice activity in the quarter.
Or Offer: Going forward, I don't know. It's an interesting question. We'll need to wait and see. This will still be a hot topic.
Eric Johnson: And going forward I don't know.
Speaker Change: An interesting question, we'll need to wait and see.
Speaker Change: We'll still be hot topic.
Or Offer: Got it. And then, Or, can you talk about the current state of the investor intelligence products? What's on the roadmap there? I think you mentioned in your prepared remarks adding ad revenue and how meaningful a driver of growth you anticipate investor intelligence being going forward.
Speaker Change: Got it and then or can you just about the current state of the Investor intelligence product what's on the roadmap. There I think you mentioned in your prepared remarks, adding heads and AD revenue.
Speaker Change: And how meaningful driver of growth you envision investor intelligence being going forward.
Or Offer: Thanks for this question. So I'm super bullish about this product, this solution for stock intelligence. And we know it's our product that helps you get all the different signals from the digital world so you can evaluate public company performance before they release their earnings. And this software is part of what we will call the alternative data market, which we assume is probably a $10 billion market and growing. And we believe that the more we're going to increase the coverage; right now, we support 3000 stocks in the basic data, which is mostly like traffic and engagement.
Speaker Change: Yes, I am thanks for this question, so I'm I'm Super bullish about this product.
Speaker Change: <unk> stock intelligent.
Speaker Change: And we know it's our program can that help you get all the different signals from the digital World that you can evaluate public company performance before they released their earnings.
Speaker Change: And this software with volatile Luckily little hard alternative data market.
Speaker Change: I assume it's probably 10 billion dull and market and growing.
Speaker Change: And we believe that the more we can increase the coverage right now we support 3000 stocks in the basic thought on it is mostly like a coffee can engagement and.
Or Offer: And we have, I think, around a little bit above 100 stocks that are more advanced when you can get signals that can show you revenue growth, customer growth, and get more signals that correlate with what the companies are reporting. And this is very exciting.
Speaker Change: And we have I think around a little bit above 100 stocked at all more than when you can get signals that can show you revenue growth customer growth and you get more.
Speaker Change: And signals that correlate with.
Speaker Change: Companies are reporting and this is very exciting and can really see.
Speaker Change: Clear a square that we can predict.
Speaker Change: And some companies that performance.
Or Offer: You can really see a very clear R square that we can predict some companies' performance, and it is very impressive. Now, going forward, we still have a lot of data assets we need to map to different signals and upload to this platform. So I know that in the roadmap, they're gonna introduce our app data. We have very good app data about usage, and think about that you can see how many people install the Tesla app on their phone.
Speaker Change: And it is very impressive now going forward, we still have a lot of data assets, we need to met two different signals and upload to this platform.
Speaker Change: I know that in their road map they can now introduce our appetite.
Speaker Change: Very good at that time about usage.
Speaker Change: And think about that you can see how many people installed Tesla app on their phone them is very strong correlation to how many Tesla cars are being sold all milk.
Or Offer: This has a very strong correlation to how many Tesla cars have been sold on them. So this data set will go into the platform in this quarter. And we have more data sets, like the Technographics about how many people implement Zendesk chat on their website. This is a very strong signal for Zendex to add customers in a quarter. Those are amazing signals. This technographic data set will also introduce all the data for this quarter or next quarter into the stock intelligent. So, very exciting things there, and I'm super bullish about this solution. Very helpful, thanks.
Speaker Change: So these data set we'll go into the platform in this call.
Speaker Change: And we have more of that as I said, let's take no graphic bell.
Speaker Change: About how many people implement Zen desk checks and our website.
Speaker Change: This is a very strong signal.
Speaker Change: Presented as a customer in a quarter that was an amazing signals.
Speaker Change: Techno graphics atmosphere will introduce also are this quarter or next quarter into the stocking diligent.
Speaker Change: Great exciting thing, there and I'm Super bullish about this solution.
Speaker Change: Great. Thanks, so much.
Operator: Very helpful, thanks so much. Again, ladies and gentlemen, it's star number one to ask a question on the phone.
Speaker Change: Again, ladies and gentlemen, Thats star one to ask a question on the phone.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Operator: And there appear to be no further questions at this time. I'd like to turn this back to management for any closing remarks.
Speaker Change: And there appear to be no further questions at this time I would like to turn this back to management for any closing remarks.
Or Offer: Thank you, everyone. Super excited about the quarter result, especially the almost $10 million free cash flow.
Speaker Change: Thank you everyone is super excited on the quarter result, especially the almost $10 million of free cash flow.
Or Offer: I'm super proud of that, and I'm just getting started. Thank you, everyone. Thank you. This does conclude today's conference. We thank you for your participation.
Speaker Change: And I'm Super proud on that.
Speaker Change: And just getting started and thank you everyone.
Speaker Change: Yeah.
Operator: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a one
Operator: [inaudible]
Speaker Change: Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a one.
Speaker Change: [music].