Q1 2025 Semrush Holdings Inc Earnings Call
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Unknown Executive: Good morning. Thank you for attending today's Semrush First Quarter 2025 Earnings Conference Call.
Megan: Good morning. Thank you for attending today's Semrush first quarter 2025 earnings conference call. My name is Megan and I'll be your moderator for today.
Brinlea Johnson: My name is Megan and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad.
Megan: All lines will be made at the presentation portion of the call with an opportunity for questions and answers at the end.
Megan: If you would like to ask a question, please first start on your telephone keypad.
Brinlea Johnson: I would now like to pass the call over to Brinlea Johnson with Blue Shirt Group. Please go ahead.
Speaker Change: I would now like to repress the call over to Brinley Johnson with BlueShirt Group. Please go ahead. Good morning and welcome to Semrush Holdg's first quarter 2025 conference call. We'll be discussing the results announced in our press release issued after Market Close on May 7th.
Bill Wagner: Good morning and welcome to Semrush Holdings First Quarter 2025 Conference Call. We'll be discussing the results announced in our press release issued after market close on May 7th. With me on the call is our CEO, Bill Wagner, and our CFO, Brian Mulroy.
Speaker Change: Bergman McCall is our CEO , Bill Wagner, and our CEO , Brian Mulroy
Bill Wagner: Today's call will contain four looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Four looking statements include, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and existing and future demand for existing and any new products and features, our expected growth of our customer base and specific customer segments, the continued development of our products, industry and market trends, our competitive position, market opportunities and growth strategies, sales and marketing activities and strategies, future spending and incremental investments, our guidance for the second quarter of 2025 and for the full year 2025, statements about future pricing and operating results, including margin improvements, revenue growth and profitability, statements about transition and the impact of recent changes to our executive management team, and assumptions regarding foreign exchange rates.
Speaker Change: Today's hall will contain four-looking statements which are made pursuant to the safe harbor provisions of the Private Security's litigation reform act of 1995.
Speaker Change: For looking statements include, that are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and existing and future demand for our existing and any new product and features.
Speaker Change: Our expected growth of our customer base and specific customer segments.
The continued development of our products, industry, and market trends.
Our Competitive Position, Market Opportunities and Gross Strategies
Sales and Marketing Activities and Strategies.
Speaker Change: Future spending and incremental investments are guided to the second quarter of 2025 into the full year 2025.
Speaker Change: Statements about Future Pricing and Operating Results, including Martin Improvement, Levin and Grossman Positability, statements about transition and the impact of recent changes to our executive management team, and assumptions regarding foreign exchange rates.
Bill Wagner: Four looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, could, plan, believe, seek, or will. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date and we do not undertake any duties to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements.
Speaker Change: For looking statements or statements other than statements of facts and can be identified by words such as expect, can, anticipate, could, plan, believe, seek or will.
Speaker Change: New Statements reflect our views as of today only, we should not be relied upon as representing our views at any subsequent date, and we do not undertake any duties to update these statements.
Speaker Change: Fordlifting statements are just a matter that is subject to risks and uncertainties that could cause actual results to defer materially from these fordlifting statements. For discussion of the risks and important factors that could affect our actual results, please refer to the term of recent annual report on form 10K, filed with the Securities and Exchange Commission, as well as other filings with the SEC.
Bill Wagner: For discussion of the risks and important factors that could affect our actual results, please refer to our most recent annual report on Form 10-K, filed with the Securities and Exchange Commission, as well as other filings with the SEC.
Bill Wagner: And finally, during the course of today's call, we refer to certain non-GAAP financial measures. There's a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued yesterday after market close, which can be found at theinvestors.semrush.com.
Speaker Change: And finally, during the course of today's call, we refer to certain non-GAAP financial measures. There's a reconciliation schedule showing the gap versus non-GAAP results currently available in our press release issued yesterday after the market closed, which can be found at theinvestors.semrush.com Now, let me expand on the call over to Bill.
Bill Wagner: Now, let me turn the call over to Bill. Thank you and good morning. I'm thrilled to be joining you all on my first earnings call as the CEO of Semrush. As a Semrush board member over the last several years, I've had the opportunity to watch the company grow and evolve from a single product SEO solution for specialists to the leading digital marketing platform for companies of all sizes. Now as CEO, I'm excited to work with the team as we continue on the next stage for Semrush, an era in which we will be expanding our best-in-class data platform, seizing the emerging opportunity presented by AI, adding new capabilities to our platform, and expanding our reach into the enterprise market.
Thank you and good morning.
Bill Wagner: I'm thrilled to be joining you all on my first earnings call as the CEO of Semrush.
Bill Wagner: As a Semrush Board member over the last several years, I've had the opportunity to watch the company grow and evolve from a single product SEO solution for specialists to the leading digital marketing platform for companies of all sizes
Bill Wagner: Now with CEO , I'm excited to work with the team as we continue on the next stage for Semrush.
Bill Wagner: An era in which we will be expanding our best-in-class data platform, seizing the emerging opportunity presented by AI, adding new capabilities to our platform, and expanding our reach into the enterprise market.
Bill Wagner: We reported revenues of $105 million in Q1, representing more than 22% year-over-year growth and exceeding the high end of our guidance. We delivered non-GAAP operating margin of 11.6% and increased our free cash flow margin by 360 basis points over the same period last year. We are especially pleased by the strong performance of our enterprise SEO solution, as we now have nearly 200 paying customers at an average ARR per customer of approximately $60,000, almost 20% higher than the expectations we shared at our Analyst Day last fall. We are also encouraged by the customer reaction to our AI products, which in a short period of time have grown to over $4 million in ARR.
Bill Wagner: We reported revenues of $105 million in Q1, representing more than 22% year-over-year growth and exceeding the high end of our guidance.
Bill Wagner: We delivered non-GAAP operating margin of 11.6% and increased our free cash flow margin by 360 basis points over the same period last year.
Bill Wagner: We are especially pleased by the strong performance of our enterprise SEO solution.
Bill Wagner: As we now have nearly 200 paying customers at an average ARR per customer of approximately $60,000, almost 20% higher than the expectations we shared at our analyst day last fall.
Bill Wagner: We are also encouraged by the customer reaction to our AI products, which in a short period of time have grown to over $4 million in ARR.
Bill Wagner: This includes AI Toolkit, which we launched in Q1 and quickly became one of the fastest growing new products in the company's history.
Bill Wagner: This includes AI Toolkit, which we launched in Q1 and quickly became one of the fastest-growing new products in the company's history.
Bill Wagner: As I step back and reflect on my first 60 days in the CEO seat, I want to share some early observations. Over the past eight weeks, I've been spending time with employees and customers alike from around the world, and without a doubt, I am even more optimistic about the market opportunity and future of Semrush. A few takeaways. First, AI and the emergence of AI driven search presents a once in a generation opportunity for Semrush. While it's still early, companies I've spoken with are anxious to understand the impact of answer engines on their business. We expect Semrush will become the go-to source companies will turn to analyze, monitor, and proactively shape their brand presence within these new AI-driven search environments.
Speaker Change: I'd like to step back and reflect on my first 60 days in the CEO's seat. I want to share some early observations.
Speaker Change: Over the past eight weeks, I've been spending time with employees and customers alike from around the world, and without a doubt, I am even more optimistic about the market opportunity and future of SEMrush.
A few takeaways.
Speaker Change: First, AI and the emergence of AI-driven search presents a once-in-a-generation opportunity for Semrush.
Speaker Change: While it's still early, companies I've spoken with are anxious to understand the impact of the answer engines on their business.
Speaker Change: We expect Semrush will become the go-to source. Companies will turn to you to analyze, monitor and proactively shape their brand presence within these new AI-driven search environments.
Bill Wagner: Second, the enterprise SEO experiment for Semrush is over and the results are in. We are confident the enterprise market will become a significant growth driver for Semrush for years to come. We now expect Enterprise SEO Solution, which we released less than 12 months ago, to exit the year with $30 million in ARR.
Speaker Change: Second, the enterprise SEO experiment for Semrush is over and the results are in. We are confident the enterprise market will become a significant growth driver for Semrush for years to come.
Speaker Change: We now expect Enterprise SEO Solution, which we released less than 12 months ago to exit the year with $30 million in ARR.
Bill Wagner: Third, even though I was closely connected with the company as a director, I still did not fully appreciate the value of our data platform. It is essentially a data warehouse for digital marketing, turning messy, fragmented marketing signals across almost every digital channel into clear, real-time insights that drive action. The vastness and quality of our data, along with our ability to continue adding new data sources, represents a unique moat that is highly valued by our customers.
Speaker Change: Third, even though I was closely connected with the company as a director, I still did not fully appreciate the value of our data platform.
Speaker Change: It is essentially a data warehouse for digital marketing, turning messy, fragmented marketing signals across almost every digital channel into clear real-time insights that drive action.
Speaker Change: The vastness and quality of our data, along with our ability to continue adding new data sources, represents a unique mode that is highly valued by our customers.
Bill Wagner: Lastly, I've been inspired by our employees. Now I'm sure most CEOs think their employees are special, but as I've traveled our offices and spoken to hundreds of employees, I've been particularly impressed with their adaptability and their innovation. Two traits that will serve us well on the next part of our journey.
Lastly, I've been inspired by our employees.
Speaker Change: Now, I'm sure most CEOs think their employees are special, but as I've traveled our offices and spoken to hundreds of employees, I've been particularly impressed with their adaptability and their innovation.
Speaker Change: Two traits that will serve us well are the next part of our journey.
Bill Wagner: Of course, I still have a lot to learn as I continue to work with the team and talk to customers, but my early observations have allowed me to form early conviction around four immediate priorities. First, we will double down on AI and extend our early leadership position in AI-driven visibility. We know AI is a game changer and I am confident no company is better positioned than Semrush to help companies of all sizes build their brands and generate online visibility across both search engines and answer engines. In addition to the introduction of AI specific products, we are already leveraging AI within our products to automate workflows and help customers move more quickly and efficiently.
Speaker Change: Of course, I still have a lot to learn as I continue to work with the team and talk to customers, but my early observations have allowed me to form early condition around four immediate priorities.
Speaker Change: First, we will double down on AI and extend our early leadership position in AI-driven visibility.
Speaker Change: We know AI is a game changer and I am confident no company is better positioned than Semrush to help companies of all sizes build their brands and generate online visibility across both search engines and answer engines.
Speaker Change: In addition to the introduction of AI-specific products, we are already leveraging AI within our products to automate workflows and help customers move more quickly and efficiently.
Bill Wagner: But honestly, I think we are just scratching the surface and the teams are excited to push even harder in this direction.
Speaker Change: But honestly, I think we are just scratching the surface and the teams are excited to push even harder in this direction.
Bill Wagner: Second, we will accelerate the pace of innovation and new product introductions to drive even more growth in the enterprise segment. We have proven we can successfully sell into the world's largest brands, even if this initial success has been driven by a single SEO solution. Our next solution for the enterprise market, AI optimization, is now an open beta, and we have already seen strong interest from our customer base. We expect AI optimization to go GA later this quarter and to be followed by several additional enterprise solutions later this year.
Speaker Change: Second, we will accelerate the pace of innovation and new product introductions to drive even more growth in the enterprise segment.
Speaker Change: We are proven we can successfully sell into the world's largest brands, even if this initial success has been driven by a single SEO solution.
Speaker Change: Our next solution for the enterprise market, AI Optimization, is now in open beta, and we have already seen strong interest from our customer base.
Speaker Change: We expect AI optimization to go GA later this quarter and to be followed by several additional enterprise solutions later this year.
Bill Wagner: Third, we will make it easier for our customers of all sizes to purchase and use our platform. True to our belief that marketing should be accessible to every business, in the second quarter, we are introducing a new guided onboarding flow, as well as AI assistance that helps users get started, highlights opportunities to increase visibility, and automatically optimizes campaigns in real time. These changes remove friction and deliver value faster, especially for smaller, resource-constrained teams. Later this year, we'll be making additional enhancements to purchase and onboarding flows to continue to reduce friction and decrease the time to value for our customers.
Speaker Change: Third, we will make it easier for our customers of all sizes to purchase and use our platform.
Speaker Change: True to our belief that marketing should be accessible to every business, in the second quarter we are introducing a new guided onboarding flow, as well as AI assistance.
Speaker Change: that helps users get started, highlights opportunities to increase visibility, and automatically
Speaker Change: These changes remove friction and deliver value faster, especially for smaller resource constrained teams.
Speaker Change: Later this year, we'll be making additional enhancements to purchase and on boarding flows to continue to reduce friction and decrease the time to value for our customers.
Bill Wagner: Lastly, we will further strengthen our best-in-class data platform. Our early success in AI underscores the value of our structured data, and the team and I believe we have an opportunity to increase the richness of our data and extend the durability and value of our data platform. This will require some additional focus from our product and engineering teams, but we expect to cover any additional expenses by reallocating existing resources.
Lastly, we will further strengthen our best in class data platform.
Speaker Change: Our early success in AI underscores the value of our structured data and the team and I believe we have an opportunity to increase the richness of our data and extend the durability and value of our data platform.
Speaker Change: This will require some additional focus from our product and engineering teams, but we expect to cover any additional expenses are reallocating existing resources.
Bill Wagner: In summary, there's a great deal to be excited about. My first 60 days makes me believe that there is a much bigger opportunity in front of the company. Of course, we have a lot of work to do, and like everyone else, I'm mindful of the uncertain geopolitical and macroeconomic environment. I believe Semrush has built an incredibly strong and durable platform and we remain focused on unlocking opportunities to accelerate both top-line growth and profitability.
Speaker Change: In summary, there's a great deal to be excited about. My first 60 days makes me believe that there is a much bigger opportunity in front of a company. Of course, we have a lot of work to do, and like everyone else, I'm mindful of the uncertain geopolitical and macroeconomic environment.
Speaker Change: I believe Semrush has built an incredibly strong and durable platform and we remain focused on unlocking opportunities to accelerate both top line growth and profitability.
Brian Mulroy: With that, I will turn the call over to Brian to walk you through the financial results of the quarter. Brian. Thank you, Bill. We had a solid first quarter across the board, further demonstrating our ability to consistently grow revenue, while also increasing our profitability. Our first quarter revenue was $105 million, exceeding the high end of our guidance and growing 22% year over year. Growth was driven primarily by an expansion of our average revenue per customer, as we continue to execute on our cross-sell and up-sell strategy, as well as an increase to the overall number of paying customers.
Speaker Change: With that, I will turn the call over to Brian to walk you through the financial results of the quarter.
Brian?
Brian Mulroy: Thank you, Bill. We had a solid first quarter across the board further demonstrating our ability to consistently grow revenue while also increasing our profitability. Our first quarter revenue was 105 million exceeding the high end of our guidance and growing 22% year over the year.
Speaker Change: Growth was driven primarily by an expansion of our average revenue per customer as we continue to execute on our cross sell and upsell strategy as well as an increase to the overall number of paying customers.
Brian Mulroy: For more information visit www.FEMA.gov In addition, we saw very strong adoption of our enterprise SEO solution during the quarter. We achieved positive non-GAAP operating income of $12.2 million in the first quarter, also exceeding our guidance and resulting in a non-GAAP operating margin of 11.6%, up approximately 30 basis points year over year. Cash flow from operations was $22.1 million in the first quarter for a cash flow from operations margin of 21.1%. We generated $18.5 million of free cash flow in the first quarter, leading to a free cash flow margin of 17.6%. We ended the quarter with cash and cash equivalents and short-term investments of $261.8 million, up $26.2 million from the previous quarter.
Speaker Change: In addition, we saw a very strong adoption of our enterprise SEO solution during the quarter.
Speaker Change: We achieve positive non-GAAP operating income of 12.2 million in the first quarter, also exceeding our guidance in resulting in a non-GAAP operating margin of 11.6 percent of approximately 30 basis points year-over-year.
Speaker Change: Cash Flow from Operations was 22.1 million in the first quarter for a cash flow from operations margin of 21.1%. We generated 18.5 million of free cash flow in the first quarter, leading to a free cash flow margin of 17.6%.
Speaker Change: We ended the quarter with cash and cash equivalents and short-term investments of 261.8 million and up 26.2 million from the previous quarter.
Brian Mulroy: Annual recurring revenue for the quarter grew 20% year over year to $424.7 million. Our calculated average ARR per PAN customer grew to over 3,600, up more than 14% year-over-year, versus the same quarter last year. As part of our continued momentum in our enterprise segment, the number of customers paying over $50,000 increased 86% year-to-year to 388. In addition, we now have over 5,000 customers paying over $10,000, which grew approximately 40% year-to-year. This strong growth is a direct result of our investments in our enterprise selling motion and launch of our enterprise SEO solution. Our enterprise SEO solution now has nearly 200 paying customers with an average ARR per customer of approximately 60,000.
Speaker Change: Annual Recurring Revenue for the Quarter, Group 20% Year of the Year to 424.7 million.
Speaker Change: Our calculated average ARR for PAN customer grew to over 3600, up more than 14% year of a year, versus the same quarter last year.
Speaker Change: As part of our continuum momentum in our enterprise segment, the number of customers paying over $50,000 increased 86% year-to-year to $388.
Speaker Change: In addition, we now have over 5,000 customers paying over 10,000, which grew approximately 40% year of the year. This strong growth is a direct result of our investments in our enterprise selling motion and launch of our enterprise SEO solution.
Speaker Change: Our Enterprise SEO solution now has nearly 200 paying customers with an average ARR per customer of approximately 60,000.
Brian Mulroy: We ended the quarter with 11 million of ARR from our new enterprise SEO solution. As of March 31, 2025, we had approximately 118,000 paying customers. Our dollar-based net revenue retention at the end of the first quarter was 106%. We continue to believe that our dollar-based net revenue retention will remain strong and increase as we expect our more sophisticated accounts to grow as a percentage of our mix, and these customers have higher net retention than our company average.
Speaker Change: We enter the quarter with 11 million of ARR from our new enterprise SEO solution.
Speaker Change: As of March 31, 2025, we had approximately 118,000 paying customers.
Speaker Change: Our dollar-based net revenue retention at the end of the first quarter was 106 percent.
Speaker Change: We continue to believe that our dollar-based net revenue retention will name strong and increase as we expect our more sophisticated accounts to grow as a percentage of our mix. And these customers have higher net retention than our company average.
Brian Mulroy: I'll now provide our outlook for the second quarter and the full year 2025. For the second quarter of 2025, we expect revenue in a range of $108.2 million to $109.2 million, which at the midpoint would represent growth of approximately 20% year over year. We expect our second quarter non-gap operating margin to be approximately 11%.
Speaker Change: I'll now provide our outlook for the second quarter and the full year 2025.
Speaker Change: For the second quarter of 2025, we expect revenue in a range of 108.2 million to 109.2 million, which at the midpoint would represent growth of approximately 20% year over year.
Speaker Change: We expect our second quarter non-GAAP operating margin to be approximately 11%.
Brian Mulroy: As a reminder, we closed the brand 24 acquisition in early Q2 24. The transaction added about 7.5 million of annual recurring revenue and contributed a little over two months of recognized revenue in that quarter. Beginning in Q2 25, we mostly lapped that contribution. So brand 24 no longer creates a year over year uplift in a reported growth rate. For 2025, we are reiterating our previous revenue guidance of $448 million to $453 million, which translates to growth of approximately 20% at the midpoint.
Speaker Change: As a reminder, we close the brand 24 acquisition in early Q224.
Speaker Change: The transaction added about $7.5 million of annual recurring revenue and contributed a little over two months of recognized revenue in that quarter.
Speaker Change: Beginning in Q225, we mostly lap that contribution, so Brin 24 no longer creates a year-over-year uplifting in a reporting growth rate.
Speaker Change: 4 2025, we are reiterating our previous revenue guidance of 448 million to 453 million, which translates to growth of approximately 20% of the midpoint.
Brian Mulroy: Given the uncertain geopolitical and macro economic environment, we believe it is possible that we could see elongated sales cycles and deferred spending by our customers. As a result, despite our outperformance in the first quarter and positive momentum in our business, we are reiterating the full-year revenue guidance we gave last quarter. As it relates to full year 2025 non-GAAP operating margins, we are also reiterating the guidance we gave last quarter of approximately 12%. However, this guidance now absorbs an incremental $8 million expense headwind due to the recent movements in exchange rates. Our previous guidance assumed a euro to US dollar exchange rate of 1.05, and we are now modeling an exchange rate of 1.13.
Speaker Change: Given the uncertain geopolitical and macroeconomic environment, we believe it is possible that we could see elongated cell cycles and deferred spending by our customers.
Speaker Change: As a result, despite our outperformance in the first quarter and positive momentum in our business, we are reiterating the full year revenue guidance we gave last quarter.
Speaker Change: As it relates the full year 2025 non-GAAP operating margins, we're also reiterating that guidance we gave last quarter of approximately 12%. However, this guidance now absorbs an incremental $8 million spent headwind due to the recent movements in exchange rates.
Speaker Change: Our previous guidance assumed a euro to US dollar exchange rate of 1.05 and we are now modeling an exchange rate of 1.13.
Brian Mulroy: Approximately 30% of our expenses are denominated in euros, and today our revenue is entirely denominated in US dollars. So our margins are effectively unhedged against this exchange rate movement. If we were not impacted by fluctuations in the exchange rate, our full year operating income would have benefited from the leverage in our model as demonstrated by our strong first quarter performance. Similarly, we continue to expect our free cash flow margin to be approximately 12% up 260 basis points compared to 2024. Our free cash flow benefits from expanded profitability, as well as continued growth in our enterprise cohort, and in particular, our enterprise SEO solution deals that we typically structure with a minimum annual commitment with annual billing.
Speaker Change: Approximately 30% of our expenses are denominated in euros and today our revenue is entirely denominated in US dollars.
Speaker Change: So our margins are effectively unhedged against this exchange rate movement. If we were not impacted by fluctuations in exchange rate, our full-year operating income would have benefited from the leverage in a model as demonstrated by our strong first quarter performance.
Speaker Change: Similarly, we continue to expect our free castle margin to be approximately 12% up to 260 basis points compared to 2024.
Speaker Change: Our free cash flow benefits from expanded profitability, as well as continued growth in our enterprise tovour and in particular our enterprise SEO solution deals that we typically structure with a minimum annual commitment with annual billing.
Brian Mulroy: In closing, we started off 2025 with strong Q1 results, exceeding guidance. We are executing on our cross-sell and up-sell strategy and continue to see strong adoption of our enterprise SEO solution.
Speaker Change: In closing, we started off 2025 with strong Q1 results, exceeding guidance.
Speaker Change: We are executing on our cross-cell and up-cell strategy and continue to see strong adoption of our enterprise SEO solution. I remain optimistic about our ability to continue to drive growth, strong profitability, and free cash flow.
Brian Mulroy: I remain optimistic about our ability to continue to drive growth, strong profitability, and free cash flow.
Unknown Executive: With that, we are happy to take any of your questions. Operator, please open the line for questions. Absolutely. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to retract your question for any reason, please press star followed by 2. Again, to ask a question, please press star 1. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to register.
Speaker Change: With that, we are happy to take any of your questions. Operator, please open the line for questions.
Speaker Change: Absolutely. If you would like to ask a question, please press star 4 by 1 under telephone keypad. If you would like to retract your question for any reason, please press star 4 by 2.
Speaker Change: As a reminder, if you're using your speaker phone, please remember to pick up your handsets before asking your question. We will pause here briefly to allow questions to register.
Mark Murphy: Our first question will go to the line of Mark Murphy with J.P. Morgan. Mark, your line is open. Oh, thank you so much.
Speaker Change: Our first question will go to line of Mark Murphy with JP Morgan. Mark, your line is open.
Oh, thank you so much. So...
Bill Wagner: So, Bill, I wanted to ask you because AI-driven search is coming up in the news again with with Apple saying that search volumes on Safari had declined month over month for the first time in April. And so and they're mentioning search CPT and perplexity and CLOD. What exactly should your customers be doing about that? You know, what are you advising them to do? And how do you think about the positive and negative ramifications for Semrush?
Bill Eiffel,
Speaker Change: I wanted to ask you because AI-driven search is coming up in the news again with Apple saying that
Surge volumes on Safari had declined.
Speaker Change: month-over-month for the first time in April . And so, and they're mentioning search GPT and perplexity and clod.
Speaker Change: What exactly should your customers be doing about that? What are you advising them to do and how do you think about the positive and negative ramifications for Semrush and then have a quick follow-up?
Bill Wagner: And then I have a quick follow-up. Sure, Mark. Thanks for the question. As I said, Mike, in my prepared remarks, you know, from a online visibility perspective, we see AI as a once-in-a-generation opportunity for us. And our brands are trying to figure out, in addition to how they show up in search, how do they show up in AI-enabled search or AI-driven search? And that is net new for them. So, I mean, our enterprise, the demand for our enterprise AI product, I think, is an example of that. AI Toolkit, which I mentioned earlier, it's one of our fastest-growing, if not the fastest-growing product we ever launched.
Speaker Change: Sure, Mark, thanks for the question. As I said, Mike, in my prepare remarks, you know, from an online visibility perspective, we see AI as a once in a generation opportunity for us, and our brands are trying to figure out.
Speaker Change: In addition to how they show up in search, how do they show up in AI-enabled search or AI-driven search, and that is net new for them. So, I mean our enterprise, the demand for our enterprise,
A.I. product, I think, is-
Speaker Change: is an example that AI Toolkit, which I mentioned earlier, it's one of our fastest growing, if not the fastest growing product we ever launched.
Bill Wagner: And, you know, the demand we're seeing from customers around AI optimization in the enterprise space, really strong. So, you know, look, it's early days. You saw the news yesterday about Apple and Google use in Safari. But what we think overall, it's expanding the pie. And that's the opportunity for us.
Speaker Change: and the man we're seeing from customers around AI optimization in the enterprise space.
Speaker Change: Really strong. So, you know, look, it's early days, you saw the news yesterday about Apple and Google use in Safari, but what we think overall, it's expanding the pie, and that's the opportunity for us.
Mark Murphy: So, you know, we're Thank you, Mark. Okay, and then just as a follow up, I guess, for you, Laura, Brian, the, you know, you've got the goal of growing 20% plus.
Brian Mulroy: Okay, and then just as a follow-up, I guess for you, Lord Brian , you've got the goal of growing 20% plus.
Brian Mulroy: Is the ARR result this quarter, because I think it's just a tick under 20%, is it somehow constrained or just a tick lower than you might have hoped? Or did you model it out that way? I think we're I'm trying to understand if maybe Q1 was a little bit of a low watermark on the net new ARR, or what was their modest macro impact in certain industries? Anything like that would be very helpful. Yeah, hey, Mark, I think that's exactly right, the right framing for it. We did plan for it that way. It's due to seasonality, and in particular, the mix of our business skewing more towards higher value than, let's say, lower volume customers.
Speaker Change: Is it somehow constrained or just a tick lower than you might have hoped or did you model it out that way? I think we're...
Brian Mulroy: I'm trying to understand if maybe Q1 was a little bit of a low water mark on the net new ARR or what was their modest macro impact in certain industries, anything like that would be very helpful.
Speaker Change: Hey, Mark, I think that's exactly right, the right framing for it. We did plan for it that way.
Brian Mulroy: It's due to seasonality, and in particular, the mix of our business skewing more towards.
Higher Value Than It's A Lower Volume Customers
Brian Mulroy: That shift is intentional, so we've tuned our sales and marketing to attract and focus on higher quality customers, and in particular focus on enterprise and our new AI solutions.
Brian Mulroy: That ship is intentional, so we've tuned ourselves in marketing to attract and focus on higher quality customers.
Brian Mulroy: and a particular focus on enterprise in our new AI solutions.
Mark Murphy: That shift is going to drive a little bit of a different seasonality than we've seen in the past, so we're absolutely committed to our CAGR that we mentioned at Analyst A and see the first quarter more as a seasonality dynamic than any indication of a difference in that trend. Okay, thank you very much. Thank you, Mark.
Brian Mulroy: That shift is going to drive a little bit of a different seasonality than we've seen in the past. So we're absolutely committed to our cater that we mentioned the Danilist day and see the first quarter more as a seasonality dynamic than any indication of a difference in that
Okay, thank you very much.
Thank you, Mark.
Elizabeth Porter: Our next question will go to the line of Elizabeth Porter with Morgan Stanley. Elizabeth, your line is now open. Great, thank you so much. Really encouraging to see the enterprise SEO momentum and the target for 30 million ARR in the year. It looks like that target reflects customers about doubling from the you have today.
Speaker Change: Our next question will go to the line of Elizabeth Porter with Morgan Stanley . The Elizabeth here line is not open.
Elizabeth Porter: Great. Thank you so much. Really encouraging to see the Enterprise SEO momentum and the target for 30 million ARR in the air. It looks like that target reflects customers about doubling from the you have today.
Bill Wagner: So I just wanted to double click on kind of what gives you the confidence in that acceleration on the customer side, just given some of the comments around longer enterprise deal cycles. Yeah, thanks for the question, Elizabeth, this bill. So I think not only have we seen some success and we came up a strong Q1, a strong Q4, and then a good Q1, we expect momentum to build through the year, for sure on the enterprise side. And again, I think that's largely on the backs of one product and a scaling sales force. So that we launched last year, less than 12 months ago.
Speaker Change: So I just wanted to double click on kind of what gives you the confidence in that acceleration on the customer side, just given some of the comments around longer enterprise deal cycles.
Speaker Change: for sure on the enterprise side. And again, I think that's largely on the backs of one product in a scaling sales force.
Speaker Change: So that we launched last year, less than 12 months ago. So, you know, there's a lot of momentum there and when I came aboard and spoke with the sales leaders and spoke with the product leaders and spoke with customers.
Bill Wagner: So, you know, there's a lot of momentum there. And when I came aboard and spoke with the sales leaders and spoke with the product leaders and spoke with customers, you know, just a significant amount of enthusiasm. And that's our existing product. And we're about to launch AI optimization for enterprise customers. And so we think that's going to not only boost average sale price, but, you know, I've seen a really strong funnel from our customer base. So one of the first things I saw was actually the size of the opportunity there and funnel. So we're excited about the launch of a new product.
Speaker Change: You know, just a significant amount of enthusiasm and that's our existing product and we're about to launch AI optimization for enterprise customers and so we think that's going to not only boost.
average sale price. But, you know, I've seen
Speaker Change: A really strong funnel from our customer base. So one of the first things I saw was actually the size of the opportunity there and funnel. So we're excited about the launch of a new product.
Bill Wagner: Frankly, you know, that would be that would be additive to what we see today. Right now, we're just focused on the existing product. So we'll have to see how the reception is, but we're excited.
Speaker Change: Frankly, you know, that would be that would be additive to what we see today. Right now, we're just focus on the existing product, so we'll have to see how the reception is, but we're excited.
And then here's for Brian to follow up.
Brian Mulroy: And then maybe for Brian, just to follow up, the NRR of 106, I think it could come in maybe a little bit lower than we were looking for, just given the stabilization that we had had at 107. So given some of the enterprise momentum, you know, are we seeing incremental weakness in that SMB type side of the bucket? So if you could just kind of balance out, you know, what might be holding that NRR back, that'd be helpful. Yeah, sure. It's the right question to ask. We've been in the 106% to 107% range for a while here.
and the NRR of 106.
Speaker Change: I think it could come at them maybe a little bit lower than we were looking for just given the stabilization that we had at 107. So, given some of the enterprise momentum, you know, are we seeing incremental weakness in that SMB type side of the bucket, so if you could just kind of balance out, you know, what might be holding that NRR back that be helpful?
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Speaker Change: Yeah, sure. It's the right question to ask. We've been in the 106% to 107% range for a while here.
Brian Mulroy: I think what's key is just remember our net revenue retention metric is a backwards looking indicator. So between the numerator and the denominator, we're measuring across a 24-month period. It's a really long time. And of course, it takes a long time to influence that number.
Speaker Change: I think what's key is just to remember our net revenue retention metric is a backwards looking indicator.
Speaker Change: So between the numerator and the denominator, we're measuring across a 24 month period, it's a really long time and of course takes a long time to influence that number.
Brian Mulroy: What we'll continue to say and we remain optimistic about is our net revenue retention will increase in the long run. We're continuing to gain success and traction with cross-sell and up-sell, and in particular, our enterprise portfolio. As Bill mentioned this morning, our enterprise SEO product is gaining strong momentum and growing and scaling at a nice rate. We've just launched our AIO product, and there'll be more enterprise features, capabilities, and products in the future. So we're confident that overall in the long run, our net revenue retention will reflect that success. All right. Thank you.
Speaker Change: What we'll continue to say and we remain optimistic about is our net revenue retention will increase in the long run. We're continuing against success.
and Traction with Crossel and Upsel, and in particular Enterprise Portfolio.
as Bill mentioned this morning, or Enterprise SEO product, who's
Speaker Change: Gaining strong momentum and growing and scaling at a nice rate. We've just launched our AIO products and there will be more enterprise features, capabilities and products in the future. So we're confident that overall in the long run on net revenue retention will reflect that success. Thank you very much.
Thank you.
Jackson Ader: Thank you, Elizabeth. Our next question will go to the line of Jackson Ader with KeyBank Capital Markets. Jackson, your line is open. Great morning, thanks for taking our questions.
Thank you, Elizabeth.
Speaker Change: Our next question will go to a line of Jackson Ader with Keybank Capital Market. Jackson, your line is open.
and Oleg Shchegolev.
Jackson Ader: Great morning. Thanks for taking our questions. I guess if I could just follow up on the, you know, given that the metric Brian is so so backwards looking right, taking into account things happened 24 months ago, can you give us an idea of maybe what NRR in period or more of a real time retention rate would look like?
Brian Mulroy: I guess if I can just follow up on the, you know, given that the metric, Brian is so, so backwards looking, right, taking into account things happened 24 months ago, can you give us an idea of maybe what NRR in period or more of a real time retention rate would look like? Yeah, and for our enterprise cohort, so we've talked about the 8,000, it's now 8,500 or above 8,500 enterprise sized accounts, so companies that have more than 500 employees, we're seeing that number continue to rise. We talked about that at our analyst day. It's very strong.
Jackson Ader: Yeah, and for our enterprise cohort, so we've talked about the 8,000, now 8,500 or above 8,500 enterprise size accounts, so companies that have more than 500 employees.
Jackson Ader: We're seeing that number continue to rise. We talked about that at our analyst day. It's very strong. We're seeing growth overall for accounts.
Brian Mulroy: We're seeing growth overall for accounts paying over 10,000, above 40%, accounts paying over 50,000, over 80% growth. So we're seeing really good, strong momentum in the enterprise and the mix of our business is skewing toward that. So it's not only improving within the enterprise cohort, but as that becomes a larger part of the business, it will also influence the overall consolidated number. Okay, all right, understood.
paying over $10,000, above 40% accounts paying over $50,000.
Jackson Ader: Over 80% growth, so we're seeing really good, strong momentum in the enterprise, and the mix of our business is skewing towards that. So it's not only improving within the enterprise cohort, but as that becomes a larger part of the business, it will also influence the overall consolidated number.
Okay. All right. Understood. And then build the-
Bill Wagner: And then Bill, the... The $30 million or $30 million in ARR on the enterprise to exit the year. Is there any reason why, you know, that $30 million versus the $11 million where you stand today? you know, wouldn't be all incremental, you know, is there anything in the $30 million that would be different from the 11 at the end of the first quarter? Thanks. Hey, Jackson, if I if I understand the question, I think the way to think about that 30 million is it includes mostly SEO, our enterprise SEO product that makes up the bulk of that 30 million.
Speaker Change: The $30 million, or $30 million in ARR on the enterprise to exit the year, is there any reason why, you know, that $30 million versus the $11 million, where you stand today,
Speaker Change: You know, wouldn't be all incremental. You know, is there anything in the $30 million that would be different from the 11 at the end of the first quarter? Thank you.
Speaker Change: Hey Jackson, if I understand the question, I think the way to think about that 30 million is it includes mostly SEO or enterprise SEO product that makes up the bulk of that 30 million so there's not there's not other things kind of in that number. It's enterprise SEO sales.
Bill Wagner: So there's not there's not other things kind of in that number. It's, it's enterprise SEO sales. You know, I think in future quarters, obviously, we're going to talk a lot about the receptivity of AIO, our enterprise AI product that we're that's now in open beta. So I think, you know, hopefully that will add on to that number from there. But right now, that number is, is, is our SEO number for enterprise. Okay. All right.
Speaker Change: You know, I think it's future quarters. Obviously we're going to talk a lot about the receptivity of
Speaker Change: AIO, our enterprise AI product that's now in open beta. So I think, you know, hopefully that will add on to that number from there, but right now that number is our SEO number for enterprise.
Okay. All right. Great. Thank you.
Jackson Ader: Great. Thank you.
Jackson Ader: Thank you, Jackson.
Speaker Change: Thank you Jackson. Our next question will go to the line of Adam Hotchkiss with Goldman Sachs. Adam, your line is open.
Adam Hotchkiss: Our next question will go to the line of Adam Hotchkiss with Goldman Sachs. Adam, your line is open. Great, thanks so much for taking the questions. I guess to start, you mentioned AI optimization being the next product for Enterprise GA. Could you just talk a little bit about your pipeline or selection process for enterprise functionality and what's on your roadmap? And as you continue to innovate and launch products, what do you see the potential for AARPC going to over time, you know, potentially even in excess of that $60,000 level? Yeah, I think on the enterprise side, first of all, Adam, I think we're, you know, we've given a lot of data here on the call about what we see as the opportunity, the pipeline is, you know, we have 1000 people, 1000 accounts that are on our watch list for people who have expressed interest in our AI products.
Adam Hotchkiss: Great. Thanks so much for taking the questions. I get to start. You mentioned AI optimization being the next product for Enterprise GA. Could you just talk a little bit about your pipeline or selection process for enterprise functionality and what's on your roadmap? And as you continue to innovate in launch products.
Speaker Change: What do you see the potential for AARPC going to over time? You know, potentially even in excess of that $60,000 level.
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Speaker Change: Yeah, I think on the enterprise side, first of all, Adam, I think we're, you know, we've given a lot of data here on the call about what we see is the opportunity. The pipeline is is.
Speaker Change: We have a thousand people, thousands of accounts that are on our watch list for people who have expressed interest in our AI products.
Bill Wagner: So that's a great pipeline, great way to get started. But, you know, it's not even GA yet. So we want to be tempered in our outlook and as enthusiastic as we are about the product and the early interest from our customers. That said, as Brian just pointed out, we have 8500 enterprise customers who are using our kind of core products, we only have 200 who are using enterprise SEO. So that's a lot of opportunity for us. And then when you layer in the AI opportunity, that's probably why we're so excited.
Speaker Change: So that's a great pipeline, a great way to get started, but you know, it's not even GA yet, so we want to be tempered in our outlook and as enthusiastic as we are about the product and the early interest from our customers.
Speaker Change: That said, as Brian just pointed out, we have 8,500 enterprise customers who are using our kind of core products. We only have 200 who are using enterprise SEO. So that's a lot of opportunity for us.
Speaker Change: and then when you layer in the AI opportunity, that's probably why we're so excited.
Bill Wagner: And that's it. Great. Really appreciate that. Good job. Just on your average error question, we've been talking about enterprise SEO alone, driving the average up to 50,000, and we've proven that out with the initial cohort of nearly 200 enterprise SEO customers. That number goes up, so as we build and scale our enterprise portfolio, and we did hint at this at Analyst Day, our expectation is that the average will approach and even exceed 100,000. Even today with the existing portfolio, we do have accounts that are well into the hundreds of thousands, so the possibility and expectation is there.
[inaudible]
That's a great relief to see it. Good job.
Speaker Change: Yeah, just on your average error, our question, we've been talking about enterprise SEO alone.
Speaker Change: Driving the average up to 50,000 and we've probably proven that out with the initial cohort of 200.
Nearly 200 Enterprise SEO customers.
Speaker Change: That number goes up. So as we build and scale our enterprise portfolio, and we did hint at this at analyst day, our expectation is that the average will approach and even exceed 100,000. Even today with the existing portfolio, we do have accounts that are well into the hundreds of thousands of the possibility and expectation is there.
Bill Wagner: Okay, yeah, that's really helpful. Thanks.
Speaker Change: Okay, yep, that's really helpful, thanks. And then just anything, any more color you can give on the early feedback from the A optimization product and close beta, how do customers want to measure success with a product like that, and how do they think about ROI?
Bill Wagner: And then just anything, any more color you can give on the early feedback from the AI optimization product in closed beta? How do customers want to measure success with a product like that? And how do they think about ROI? I think it's probably too early to share our customer feedback. I think we need a little bit more volume other than anecdotal. What I do know in talking to customers and talking to our sales team is, you know, I had the question earlier on the call, companies are trying to figure out how they show up and how they appear in AI-driven results.
Speaker Change: I think it's probably too early to share our customer feedback. I think we need a little bit more volume other than anecdotal. What I do know in talking to customers and talking to our sales team is, you know, I had the question earlier on the call, companies are trying to figure out how they show up and how they appear in AI driven results.
Bill Wagner: So no one's backing away from search. What they're trying to do is understand how they can shape content, how they can monitor how they're showing up in LLMs. And how they can create content, how they can monitor what other competitors are doing. That's all opportunity for us. And we think we are perfectly positioned to do that. And customers look to us to be the leader in that space. And that's the opportunity we intend to fulfill. Okay, great. Thanks, Bill. Thanks, Brian.
Speaker Change: So no one's back in the way from search. What they're trying to do is understand how they can shape the content, how they can monitor how they're showing up in LLLM's.
Speaker Change: and how they can create content, how they can monitor what other competitors are doing. That's all opportunity for us. And we think we are perfectly positioned to do that. And customers look to us to be the leader in that space, and that's the opportunity we intend to fulfill.
Okay, great. Thanks Bill. Thanks, Brian .
Adam Hotchkiss: Thank you, Adam.
Speaker Change: Thank you, Adam. Our next question will go to line of Luke Horton with Northland Capital Market. Luke's Your line is open.
Luke Horton: Our next question will go to the line of Luke Horton with Northland Capital Market. Luke, your line is open. Yeah, hey guys, congrats on the quarter. Just wanted to touch on kind of how April month of April has been trending just sort of the macro uncertainty. It's those conversations with customers, you're starting to see some of those longer sales cycles. And I guess just anything else around here as as we progress into 2Q.
Luke Horton: Yeah, hey guys, congrats on the quarter. I just wanted to clutch on kind of how April , month of April has been trending just sort of the macro uncertainty. It's those conversations with customers you're starting to. Yeah.
Luke Horton: He's some of those longer sales cycles, and I guess just anything else around here as a
He's re-progressing the QQ.
Brian Mulroy: Hey, Lucas, Brian. Yeah, we're not seeing it yet. So we had a great first quarter, delivered 22%, more than 22% growth and overachieved on our guidance. We're seeing strong momentum with enterprise SEO and optimistic about AIO and other enterprise capabilities. As of now, we're not seeing any incremental direct impact from the uncertainty in the environment that we're all hearing about in the headlines. The growth drivers that are powering our business remain firmly in place, and we're excited about what the year ahead holds for us. We'll keep you posted on what we see for sure, though.
Speaker Change: Yeah, we're not seeing it yet, so we had a great first quarter, delivered 22% or the 22% growth and
Over to you, then our guidance.
Speaker Change: We're seeing strong momentum within a prize SEO and optimistic about AIO and other enterprise capabilities. As of now, we're not seeing any incremental direct impact from the uncertainty and the environment that we're all hearing about in the headlines.
Speaker Change: The growth drivers that are powering our business remain firmly in place and we're excited about what the year ahead holds for us. We'll keep you posted on what we see for sure though.
Luke Horton: Got it. Thanks.
Bill Wagner: And then I know we've talked about the AIO solution here quite a bit, but just was wondering as far as how that will be offered to customers, will that be like an upsell to the existing enterprise SEO solution? Will there be tiers to the AIO solution or kind of, I guess, sort of pricing strategy and kind of how, how customers will will be accessing? Yeah, with this bill, so I, we haven't finalized our pricing, which we'll do before we go GA here later this quarter, but you should expect that we'll sell it as a add-on to our enterprise SEO product, and also as a standalone product to enterprise.
Got it, thanks, and then...
Speaker Change: I know he's talked about the AIO solution here quite a bit, but just was wondering as far as-
Speaker Change: I can upsell to the existing Enterprise SEO solution, will there be tiers to the AIO solution, or kind of, I guess, sort of pricing strategy and kind of how
How customers will be accessing it?
Speaker Change: Yeah, with this bill. So we haven't finalized our pricing, which we'll do before we go GA here later this quarter, but you should expect that we'll sell it as a add-on to our enterprise SEO product and also as a standalone product enterprise. So we'll sell both ways.
Bill Wagner: So we'll sell it both ways. That may, that may come as a bundle, may become as two different standalone products, but we intend to have the opportunity that customers can just pick and choose, but I suspect, based on the data we're seeing, is that customers will buy both. Okay, yeah. I guess then, would there also be a lower end of the offering geared towards your smaller customers, those freelancers and solopreneurs that they could also be purchasing? Luke, I think that's really that's where AI toolkit is really our entry level product started starts at $99. It helps the smaller companies, maybe less sophisticated marketers just quickly understand how they show up in, in AI driven search.
Speaker Change: That may come as a bundle, may become as two different standalone products, but we intend to have the opportunity that customers can just take and choose, but I suspect based on the data we're seeing is that customers will buy both.
Okay, yeah.
Speaker Change: Would there also be a lower end of the offering geared towards your smaller customers, those freelancers and solopreneurs that they could also be purchasing?
Speaker Change: Luke, I think that's really, that's where AI Toolkit is really, our entry level product started, started at $99.00.
Speaker Change: It helps the smaller companies, maybe less sophisticated marketers, just quickly understand how they show up in AI-driven search. And as we mentioned, it's one of, if not the fastest-growing product we've ever launched. So we feel like we're off to a good start on that end of the market as well.
Luke Horton: And as we mentioned, it's our it's one of if not the fastest growing product we've ever launched. So we feel like we were off to a good start on that end of the market as well. Awesome. Great. Well, thanks for taking the questions, guys, and congrats again on the quarter. Thank you, Liz.
Speaker Change: Awesome. Great. Well, thanks for taking the questions, guys, and congrats again on the quarter.
Thank you.
Thank you, Luke.
Scott Berg: Our next question will go to the line of Scott Berg with Needham. Scott, your line is open. Hi, everyone, thanks for taking my questions here and welcome, Bill, looking forward to working with you more. I guess a couple here, I just wanted to clarify the comments I think that Brian made a moment ago around the Enterprise SEO and the ARPU movement this year is, by my math, it sounds like to get to your guidance here this year, ARPU probably this year still moves up about 50 percent from current levels. Is that purely driven by, I guess, more seats, a larger number of seat counts in those in those particular customers or is there something else in the pricing mechanics to drive that type of ARPU?
Thank you.
Speaker Change: Hi everyone, thanks for taking my questions here and welcome Bell looking forward to working with you more.
Thank you.
Speaker Change: I guess a couple here, I just want to clarify the comments I think that Brian made a moment ago around.
Um...
Speaker Change: The Enterprise SEO and the R-Poo movement this year is by my math, it sounds like to get to your guidance here this year, R-Poo, probably this year still lose up.
Speaker Change: about 50% from current levels. Is that clearly driven by, I guess, more seats, the larger number of seat out in those particular customers or is there something else in the pricing mechanics to drive that type of
Brian Mulroy: Yeah, hey, Scott, just to clarify and make sure I'm understanding the question to get to the enterprise SEO target that Bill mentioned requires ARPU expansion? Correct, yes. Yeah, I mean, look, we're, we've been successful in both acquiring new customers, expanding existing from our core up to enterprise and expanding existing customers that have already adopted our enterprise SEO solution to higher average ARR, so we expect that to continue. To get to that number, it's a combination of continuing to expand our average ARR from the company average up to that 50,000 to 60,000 range that we've seen.
Speaker Change: Yeah, hey Scott, just to clarify and make sure I'm understanding the question, to get to the enterprise SEO target that Bill mentioned requires our poo expansion.
Correct, yes.
and Oleg Shchegolev.
Speaker Change: Yeah, I mean, look, we've been successful in both acquiring new customers.
Speaker Change: Customers that have already adopted our enterprise FCO solution to higher average ARR.
Speaker Change: So we expect that to continue. To get to that number, it's a combination...
Speaker Change: of continuing to expand our average ARR from the company average up to that 50 to 60 thousand range that we've seen for enterprise SEO. We expect that will continue. And of course, acquiring new customers. So I wouldn't say that we're going to go higher than 50 to 60 thousand to get to the 30 million. It's mostly a function of getting more customers to adopt it.
Brian Mulroy: We expect that will continue and, of course, acquiring new customers. So I wouldn't say that we're going to go higher than 50 to 60,000 to get to the 30 million. It's mostly a function of getting more customers to adopt it.
Bill Wagner: Great. And then from a follow-up, I know you're all excited about your AIO solution, which certainly should be given the changes in how consumers and users are searching for, you know, Internet-based data out there. But as you look at, you know, opportunities to sell AIO going forward, does that cannibalize or put additional, you know, kind of new pressure on your ability to sell the core SEO solutions, or is it really more of an enhancement to sell online?
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Speaker Change: Great. And then from a follow-up, I know you're all excited about your AIO solution, which, you know, certainly should be, you know, given the changes in how consumers and users are searching for.
Speaker Change: and other internet-based data out there. But as you look at opportunities to sell AIO going forward, does that cannibalize or put additional, kind of new pressure on your ability to sell the core SEO solutions, or is it really more of an enhancement to selling those products?
Thank you.
Bill Wagner: Hey, Scott, this is Bill. Thanks for the question and the welcome. So, no, keep in mind, we're talking about very sophisticated users in the enterprise segment, and that's why our enterprise SEO product is done so well, because it's a really powerful tool with deep insight. They want the same insight on the AI side, so they need both. And really, that's what our data says and what we believe. Again, we have to go out and sell it in the upcoming quarters, so we'll have to wait and see. But we don't see it as a trade-off. We see it as net additive.
Bill Wagner: Hey Scott, this is Bill. Thanks for the question and the welcome. So now we keep in mind, we're talking about very sophisticated users in the enterprise segment and
Bill Wagner: It's done so well because it's a really powerful tool with deep insight. They want to stay on the AI side, so they need both.
Bill Wagner: And really, that's what our data says and what we believe. Again, we have to go out and sell it in the upcoming quarters, so we'll have to wait and see, but we don't see it as a trade-off. We see it as net additive. And I've not heard from any large enterprise that they're going to be. It's a trade-off.
Scott Berg: And I've not heard from any large enterprise that they're going to, you know, have one and not the other. To me, I think it's going to be additive and increase the opportunity for us. And then keep in mind, as I mentioned in my prepared remarks, we intend to introduce other products for the enterprise market later this year. So we're very bullish. Understood. Thank you for taking my question. Thank you, Scott.
Bill Wagner: have one and not the other. To me, I think it's going to be additive and increase the opportunity for us. And then keep in mind, as I mentioned in my prepared remarks, we intend to increase, introduce other products for the enterprise market later this year. So we're very bullish.
Thank you.
Understood. Thank you for taking my questions.
Speaker Change: Thank you Scott. There are no additional questions waiting at this time so I'll pass the conference back over to the management team for closing remarks.
Unknown Executive: There are no additional questions waiting at this time, so I'll pass the conference back over to the management team for closing remarks.
Bill Wagner: Thank you all for joining us today. We reported a strong quarter as our positive momentum continued into 2025. I'm excited to be part of Semrush and remain focused on introducing new innovations and driving more value for our customers while consistently delivering strong growth, profitability, and free cash flow.
Speaker Change: Thank you all for joining us today. We reported a strong border as our positive momentum continued into 2025.
Speaker Change: I'm excited to be part of SEMrush and remain focused on introducing new innovations and driving more value for our customers while consistently delivering strong growth, profitability, and free cash flow.
Unknown Executive: That concludes today's Semrush first quarter 2025 earnings conference call. Thank you for your participation. I hope you have a wonderful rest of your day.
Speaker Change: That concludes today's FEMRESH first quarter 2025 earnings conference call. Thank you for your participation. I hope you have a wonderful rest of your day.
Speaker Change: This is a production of the Center for Autism and Related Disorders, Center for Autism and Related Disorders