Q3 2025 Similarweb Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to the similar web.
Q3 for school, 2025 earnings call.
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A question and answer session will follow the formal presentation.
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Thank you, operator, welcome everyone to our third quarter 2025 earnings conference call. Joining me today are our CEO and co-founder or offer and our chief business officer yesterday after market closed. We released our results for the third quarter and published a discussion of our results in a letter to shareholders, as well as an investor presentation with a strategic overview of the business, on our investor relations website at ir.com
certain statements made on the call today. Constitute forward-looking statements which reflect Management's best judgment based on the currently available information. These segments evolve, risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release. And our most recent annual report filed them for 20, f, for more information on the risk factors. That could cause actual results to differ from our forward-looking statements, additionally, certain non-gaap Financial measures will be discussed on the call today, reconciliations to the most directly comparable. Gaap, Financial measures are available in the earnings release. And the earnings presentation, we will begin with O's highlights of the quarter. And then I will provide an overview of the financials. Then we will open up the call to questions from Southside analysts with that. I'll turn the call over to all or please, go ahead.
Thank you, Ramy, and welcome everyone joining the call today. I'm super proud of the third quarter of financial result that we reported yesterday Revenue increase by 11% year-over-year to 72 million in line with our expectation. Our customer base. Grew 15% year-over-year to more than 6,000, our customer at quarter end, we reported an 8 quarter of positive free cash flow.
And we are reiterating guidance for 2025 revenues and raising our profit guidance for the year.
Customer interests in our gai data. And solution is amazing and revenues from our Genai data, and new solution, continue to expand and are 1 of our fastest, growing revenue streams
We remain focused on free. I impact opportunities with similar web is highly positioned to lead.
The first 1 is the genii intelligence. Our genii intelligence Suite has been well received by our customer in October, we launched a web intelligence. 4.0 that integrate our Genai capabilities into our web intelligence solution. Providing an even more comprehensive view of the digital world.
Hello from G intelligent, products is going rapidly and to more than 1 million dollars since the launch in April, a great milestone for this product.
The second 1 is our data selling for llm. We are supplying our unique and fresh Digital Data to companies that are building their own llm and generative AI applications. And the third 1 is our AI agent. We continue to roll out AI agents to help our customers maximize the value and automate. The workflow enabling them to extract Insight from our data in the shortest time possible.
Utilization of our AI agent continue to grow. For example, 27% of our sales. Intelligent customers. Use our AI meeting prep and our new AI Outreach agent with adoption. And utilization is going quarter over quarter.
In September, we launched our new similar web mCP server that can deliver trusted digital marketing that are directly into AI agent and workflows.
this new product in power, our customer with the tools to integrate our Digital Data Insight at scale, their llms and automation tools, including Cloud, co-pilot open, AI agent Builder and more
The mCP is an exciting milestone in our deployment of data-driven, AI products, and services.
I'm super proud of the strong adoption of the Similarweb app intelligence that we launched in Melts. At the end of Q3, more than 580 of our customers were using our app intelligence.
And they are rather increased rapidly to above 10 million. Similar web digital app data today, cover over 4 million IOS and Android apps across 58 countries. Providing our client with with comprehensive coverage of data that includes ranking, download usage engagement retention and audience demographics.
Here. And we are seeing encouraging improvement in yield.
I'm super proud that we continue to operate efficiently and we folded our 8 quarter of positive free cash flow in Q3 generating, 43 million of free cash flow in the past, 8 quarters.
We remain focused on delivering profitable growth over time, as well as achieving our long-term profit and free cash, flow targets.
I'm super excited that a new CFO will join us. The sender has over 20 years of finance experience and a proven track record of driving growth, efficiency, and strategic transformation. He has worked as a CFO at several companies, including U.S. traded public companies, and recently at a SaaS enterprise data company.
I would like to thank Jason Schwartz for 10 years of service at similar web and wish him good luck and success and as I like to say, we are just getting started.
Thank you everyone, for the call and for the continued support. And with that, I will turn the call back to Army.
Thanks, all. I provide heart of our financial performance and then we'll open the call up to questions.
We generated 71.8 million of Revenue in Q3 and 11% increase relative to Q3 2024. Revenue growth was driven by the 15% growth in overall customers as well as increased revenues from some of the new products we launched in 2025, including app, intelligence and Jenner intelligence, the quarterly growth rate, reflects a strong, Q3 24, comparison and the earlier recognition of llm evaluation revenues in Q2, which we had originally expected in Q3,
as we discussed with you last quarter,
We are proud that 58% of our contracted revenues are under multi-year contracts, up from 45% last year. We believe this demonstrates the durability of our revenues and the importance of our data to our customers. We generated $3 million of normalized free cash flow in the quarter, a 4% free cash flow margin, and an eighth consecutive quarter of positive free cash flow. We plan to continue to generate positive free cash flow on a quarterly basis going forward.
Our remaining performance obligations or RPO total 268 million, at the end of Q3 up. 26% year-over-year. We expect to recognize 68% of total RPO as Revenue over the next 12 months.
In Q3 overall NRL was 98% across all customers and 105% for customers with over hundred thousand dollars per. They are the decline in NR, reflects a strong expansion activity in 2024, particularly from large contracts, booked during the second and third quarter of last year.
We are very encouraged by the improving Trends in gr that increase sequentially in Q3 and was our highest in 2 years, moving to Gardens for the year. We are reiterating our Revenue guidance before we have 2025, and expect total revenue in the range of 285 million, to 288 million representing 15% year-over-year. Growth at the midpoint of the range. We are raising a non-gaap operating profit guidance to between 8.5 million and 9.5 million, and increase from our previous expectations and significantly higher than the guidance. We provided at the beginning of the year.
This is due to our focus on disciplined execution.
With that all my hours and myself are ready to answer your questions.
Thank you, sir. Ladies and gentlemen.
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Thank you. Our first question comes from surrender of Jeffrey's. Please go ahead.
Um, thank you.
Um, could you maybe just talk about your gross revenue retention? It looks like things are trending in the right direction.
But NR would suggest uh, even given the tough comps that maybe the upsell process has been a little bit more challenging. Um, any color there would be appreciated
And so then how we report is uh is the average of the 4 Less quarter of the past like past 12 months. And in this past 12 months, a lot of the expansion we were we're doing is mostly um like big part of the big expansion where those engagement on the data for llms. And the way this uh, work is usually start as a 1-time task that is significant.
And then down the road. It's uh converting into a ll deals.
So, because a lot of the expansion comes from those in the past 12 months,
And you don't see it in the end of the hour, because the end of our only only reflect an hour deals. So, I hope that there's a lot of those pipelines of the big deals we have for selling data. For llms will convert into a lot is going forward. This trend uh will will change in go up down the road.
that support, and then maybe
It's I guess since you mentioned kind of the the llms and the training data Partnerships and in the pipeline, can you maybe talk about how that evolving at this point in the past? You've announced you know a number of kind of fees upfront data purchases um that aren't in your ARR. Um, so should we be expecting conversion? Is this something where?
The clients maybe take 6 months to evaluate whether they want to enter into a longer-term relationship, or how should we think about, um, what's coming down the pipeline here?
Yeah. Hi, it's an excellent question. Thank you.
So, indeed, the answer is ECS. It's a long, uh, process of a cell, and when you use it, it provides, um, a big chunk of historical data that those companies are...
Trying to use and analyze and prove that it will improve their accuracy of the models.
So those processes usually take a long time, and there are many different data sets. You know, Similarweb is the leading digital company in the world with so many different data sets that there are so many assumptions and so many things we see how it's improving. So, there are many tests going on, and there are different companies. I feel very confident that the majority of those engagements will convert to ARR and deals going forward because we already have a few of them that are already in our pipeline with long-term commitments. So, we see the impact.
And driving on other players. So we're very confident that we can drag this impact on all the other players.
Thank you.
Our next question comes from Romo Lynch show of Barclays. Please go ahead. Perfect, thank you. Um uh, I had 2 questions as well. Um, uh, so first of all, great to see the app intelligent customer account grow and are reaching almost 10 million there. Can you have us understand where these customers are coming from? Are they cross sell or net new like, you know, can you speak to that, please? And then I had 1 follow up.
Yeah, of course we very excited about the new product that we're launching into the market. So not only the app intelligent that is like super successful or also a gen AI offering that just passed a million dollar in like in super fast time. So regarding the customer, I think the majority of the customer is cross. Sell you think that we have more than 6 files and customers that we engage with, buying our Digital Data to increase the market, share all across the digital world. So they have intelligent is is like spot on for them. Like they all usually have websites and apps, so it's an easy sale, they love us. They try to stuff. So we see a very big success and the more we increasing the coverage of countries. We provide and the metrics, uh, it's going to be very successful. So we're very happy. We've seen. Good success that the product that we innovate and build
Build and launch are adopting by our customers.
Yeah. Okay.
As well. But the, um, if I look at the, the sequential add this quarter was kind of more on the lower side of what we've seen historically. Can you speak a little bit to where the other factors or was it just what you mentioned to the first question? Thank you.
so,
You know, some some of the deals are are big, so it's like how to forecast them. And but overall, I think that like, we really able to land spot on and what we like,
Maybe Rami, if you have anything to think about that.
Hi Ramo. Uh yes just to add to that as you remember we had some contracts that came in earlier than expected some of those evaluation contracts in Q2 and so the phasing isn't linear and so we booked revenues in Q2 earlier than Q3 if we would have booked those revenues in Q3, then the uh sequential Improvement. Would have been more gradual.
The next question comes from Ken Wong of Oppenheimer and Co please go ahead.
Great. Thank you for taking my question. Um, you know, this this 1 might build on the the response you just gave uh
Ramey. But just wanted to get get get thoughts on kind of why the rpu decline slightly even with the with the focus on up Market customers. You know how, how are we thinking about the trend on our poo going forward?
So I think that, uh, alpu is impacted by the number of customers that we added. And uh, so for the larger customers,
On the, are we added some uh uh mainly the large end. Some 1-time customers. We didn't add. We saw an increase in revenues was a lot of the customers that are crossing. The, the trend are coming through below average, but, you know, we expect us to to fluctuate over time. What most at the start is the increase in customer count, because that ultimately means that we have big range of customers that we can then, uh, sell an upsell to and move them from single product into multi products. We can move them from uh single geographies to multi multi geographies as we we mentioned uh, in the shareholder letter. We have customers that have increased 6X over time or 10x over time. Uh and so once they're in the the pipeline then we can work on them and land and expand and implement the Playbook. So a quarterly fluctuation or decline or an increase, uh, it's very, very small and that's really have a big impact on, uh, on the way we think about the business.
Okay, okay, perfect. Um, and then a broader theme we just wanted to kind of pick your brain on, you know, with SEO traffic coming down. I know you guys have some AI tools that are helping customers, you know, kind of focus on other channels. But any impact you're seeing in terms of demand for, for...
Web intelligence and some of your core products were, uh, with some customers, maybe deemphasized.
Hey, and so.
Maybe the opposite. I think that you know a lot of those uh, digital companies that have website and now getting less traffic from SEO. Now, they need to close those Gap from other channels and then they come to us, we are the leading digital company gives us the ability to the market. So they want to understand how how they position is the decrease. This is worse or better than the competition and what action, they need to do to drive more more traffic. So, so for us, those those Market changes and dynamic, only increasing, the, the need, and the demand for the solution. We, we provide
Very helpful. Thank you.
Yeah, I think so I would just add that. Um, first we are, you know, we are following and seeing what the users are. And we are making sure that you are able to track and have comparing offer. And we are investing a lot in the go Ayo for and it's also important to mention that we launched a web intelligence 4.0 um, a new pricing scheme schema um about a month or a month and a half ago. And we're seeing initial good signs of monetization of our core products. We are optimistic about it and think that our monetization strategy will uh uh, make sure that we keep growing our core offering.
Ken, does that conclude your questions?
Yeah. Yes it is. Thank you very much.
Thank you.
Our next question comes from Arjun bio of William Blair and Company. Please go ahead.
Hi team. I'm Willow Miller on for Argentia, thanks for taking your question. Uh, so curious to hear more about the sales rep ramp that were added a few quarters ago now that we're through the third quarter, and into the fourth quarter and the past you mentioned you were looking for to the newer sales, Resources closing more deals in the back, half of the year is that playing out?
Um Improvement in the go to market uh quarter of a quarter. And and I think last quarter, we said that we have record high of sales, people closing bills, and I think even this quarter, we saw even higher numbers of people of sales people that are participating generating revenues. And and of course the CEO you are, you always want better and bigger. So, uh, you always and, you know, optimizing that go to market will be much more, uh, stronger and better.
Understood, thank you.
Our next question comes from Tyler ratke of City. Please go ahead.
Yeah, good morning. Thank you for taking the question. Um, so so just going back to the
The results in, in the guidance. I mean, I think we're, we're used to similar web. Probably vast majority of your quarters as a public company, um, beating the midpoint, if not the entire guidance range and, and raising at least on on Revenue. Um, so so I just wanted to make sure I understood, uh, the dynamic certainly can can appreciate the quarterly Dynamics, in terms of the revenue, uh, that sort of got accelerated last quarter but just relative to your guide was it was it simply deal timing, you know, linearity of the quarter when these deals closed or you? Are you building in more conservative than just
Given.
Uh, you know, the CFO, uh, transition just just help us understand, sort of the lack of a, a beaten raise on on, uh, on Revenue.
I think that, uh, overall I think, of course, everything you said uh, is part of that. But I think that also, you know, when we started the year we were and even now we we very Optum, very focused on optimizing the, the margin, the margin and this is where we, we felt that we can drive good impact and this is, as you can see, we doing very nice bit and Rays.
On that running, a very efficient and disciplined execution.
And so I think this is where we put our Focus.
Okay. And and then on the margin side, um, you know, you talked about a pretty healthy growth in the number of sales reps.
Uh, the that you had this quarter but sort of what's, what's driving that incremental? Uh raise like where are you taking costs out? Um, is it is it more sort of not hiring as many um, sales and marketing? People? Is it is it more R&D and GA maybe, maybe you're you're seeing some AI efficiencies in the business would love to just hear specifically, what's driving the, the lower costs
I think it's combination of uh we decided to become better and that metrics and did come more disciplined around it and of course you have the AI Tailwind that is helping increase productivity.
so you can uh run a a a very tight engineering without growing the the R&D resource and of course around the go to market as you go and you optimize this start and at the beginning of the year you know hiring a
And many people to execute and the 1 that were not performing you. You let go. So basically you keep with the with the best ones and they are becoming more productive. And and I think this was the majority of the, of the cost-saving we we look into now
Okay, thank you.
Our next question comes from, Patrick Wall Ravens of Citizens Bank, please go ahead.
so, I was just curious, if you could highlight any customer conversations that you've had around the Gen AI products and
What, what what what's really driving uptake with these?
seeing a lot of, uh, a lot of love for
Yeah, I think it's very interesting. It's it's kind of uh, the Gen AI, you know, optimization product that we sell, you know. It's it's a new channel for all of our customers. It's, you know, it's channel that up and Rising this year and there's many questions about, you know, getting these abilities and understand how to be successful. It's a very interesting dynamic because
Customer perceptions on Brands and, uh, this the purchase decision making. So it's very important to them to understand, uh, you know, how many consumer asking about their brand. And what are the answer? What is the sentiment? So, you know, as you work with the customers and you basically building and developing the product they need, in order to be more successful in this new channel, that arrives
Thank you so much.
This is Ramy. I I can just jump on and yeah we've uh we've had some uh meetings out there, the leadership that are coming back from meetings with the range of customers uh around the US and around the world. I think this General excitement in the business about the opportunities, C suite are very very keen to understand how generalized impacting the business. On the 1 hand, the other hand, all the leading llms are very, very keen to understand how the data we provide them can help them improve their modeling. So I think that, you know, when we combine those 2 parts of the market, on the 1 hand, the interest we getting from all the model uh, generators and creators. And from the corporate, the business is being impacted and disrupted by AI, it really gives us a lot of access, very excited about the opportunities we have from that part of the market.
Thank you Romy. Appreciate it.
The next question comes from Luke Horton of Northland Securities. Please go ahead.
Yeah. Hey guys, thanks for taking the questions. Um just wanted to to talk a little bit about the customer side and kind of are you seeing any mixed shift between Enterprise versus mid-market customers especially with kind of the new new use cases and, and product launches that you guys have made over the past year
And not really, I think the the mix between smv and Enterprise, uh, stay the same. We didn't observe any, any change in that.
Okay, fair enough. And then it just kind of piggybacking off of that into, uh, the competitive landscape here. Um, just have you seen an uptick in competition here, especially with, I mean, a couple other companies out there kind of
Doing similar Cadence of of new product launches and, and trying to capture this gen AI demand. Um, just curious your thoughts on the the overall competitive landscape.
Yes, ma'am. Thank you for the question. Um, we there is a lot of interest and a lot of demand, uh, for Jai products. Uh, but we are confident that we can, uh, be a dominant player in this space. Uh, we have a unique data sets, um, that enable us to be the, uh, the best solution in this field. We have great client relationships and we get a lot of demand both from new prospects and from existing clients, um, it's a very horizontal play many of our clients. Of course, Brands agencies Publishers, they all care about Chi visibility. Um, so we are not too concerned. We are focusing, we are building a great product. We have great data sets on this landscape. We are really allowing Brands to understand visibility within the engines. Um, so for what is more about market growth and Market education, it's not really about uh, this competitor this competitor at this point.
Okay fair enough and then just last 1 here apologies if this 1's already kind of been asked and answered. But just looking at the implied Revenue guidance for 4q um it it sort of a a wider band here just wondering if that's kind of more. So due to uncertainty around the timing of some of these larger deals flowing through or or just kind of the puts and takes on the on the implied for Q Revenue guide.
Yeah, it's um, basically because uh, we have a very strong uh, Pipeline and a very big deals, you know. So we want to, we want to keep it uh in that range to understand. We're very confident we land on the Range and we want to to see hot material lines.
Got it. Awesome. Well, thanks for taking the questions. Yes.
Thank you, ladies and gentlemen, just a reminder, if you have asked a question, he won't be the key in store and then 1 2 Place itself in the question queue.
Our next question comes from Adam Hotchkiss of Goldman Sachs. Please go ahead.
With strong for a second consecutive quarter here. Um maybe just comment a little bit on on contract duration and you know how we should think about the interplay of of Revenue growth versus that higher RPO growth rate.
Yeah, thank you, Adam for, for the questions. And indeed, we seeing a, a good success with the multi-year commitment, we see more and more of our customers, you know, loving our products and monetize it getting great Roi and from that and and willing to engage with us for a multi-year. Um and as very important as we now have 58% of the revenue H is closed for multi years, that we very, very proud with that metrics and it's a very strong indication of the of the value of the data we give to our customers. So with that success and every quarter, we getting better and more customers, uh, engage with us, it's also helping to get a better Alpo.
Great, that's really helpful. Um, and then just on on sales and marketing, appreciate the comments on on the ramping of sales employees, they did notice that, um, sales and marketing expense did come in a little light of of expectations, this quarter, and and sequentially, which I think was potentially part of the, the prophet outperformance. I I know, or we had talked about, you know, you um, taking a real-time approach to sales
Rep productivity and trying to understand that relative to to margin performance. Particularly when you gave the guide earlier this year. So maybe comment on um if there are any changes in what you're seeing there and if if anything um
Flowed through the sales and marketing uh, number in Q3 that we should be aware of thanks.
Yeah, so the the the ramp up of the the sales people is know is on on track as you try to scale.
Go to market organization, you know what we did in q1? We we over higher in a lot of those areas this to make sure that we can ramp the people, and then we can have the options to double down on the 1 that are successful and uh, can show um, um, the indication that they can, uh, be successful selling our solution. So, uh, the process, you know, you little bit over higher you see who is successful who can, you know, be part of our culture and then as as you go through, you know, you start optimizing and and that go on the 1 that are less successful than as you're doing that. You you, your SNM is getting better and able to start getting more yield for from the sales people. So, I think this is what you're seeing in the numbers.
Okay, great. Thank you very much.
Question comes from Patrick or Ravens of citizens. Please go ahead.
Oh great. Thank you. Can I have 2 follow-ups personal or what kind of big deals do you have in that pipeline? So, you know,
Um, with a very big deal with our obviously, not the company, but just like, you know, if you could characterize them and then secondly, how should we think about next year? Thank you very much.
So I I'm I'm will try to answer what I heard because I think the line was was not super clear.
I think the first question was around the big deals that we have that. Um, as we said over the past few quarters, we've seen big success on selling data for llm companies, you know, companies that are trying to create the best llms for this new AI world. And we think that our Digital Data is a critical element in and building training those llms and ones.
So able to engage and show the the value of our data, after those long process of evaluation, we get in a very good uh engagement that is very sticky and very long-term and we and we becoming a critical part.
I was building and developing those llms. This is around the big deal.
And the second question that I I I heard I think it's about about next year. We we're going to give guidance to next year in the next quarter. So, um, yeah, that's
Okay, thank you.
Okay, so I want to thank you, ladies and gentlemen,
Thank you, sir. Ladies and gentlemen, with no further questions in the question queue, we have reached the end of the question and answer session. I will hand back over to our officer for closing comments.
For joining the call and especially our shareholder for the support. We look forward for speaking you again, over the coming weeks, thank you. All
Lovely, thank you very much sir. Ladies and gentlemen, that concludes this event. Thank you for attending and you may now disconnect your lines.