SEMrush Holdings, Inc.

Good day and thank you for standing by. Welcome to the SEMrush Holdings second quarter 2021 results conference call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Bob Giubardi. Please go ahead.

Good morning. I'm Bob DiGiardini, VP of Investor Relations, and welcome to SEMrush Holdings' second quarter 2021 results conference call. We'll be discussing the results announced on our press release after market close on Monday. With me on the call is our CFO, Evgeny Petitsov, and our CFO, Eugene Levin. Before we begin, I'd like to highlight our participation in several virtual investor conferences to be held during the third quarter. We'll attend the KeyBank Virtual Technology Leadership Conference on August 11th and the Piper Sandler Global Technology Conference on September 14th. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigations Reform Act of 1995. Forward-looking statements include statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and demand for our products and features, expected investments and their anticipated benefits, industry and market trends, our competitive position, market opportunities, and our guidance for the third quarter of 2021 and the full year of 2021, and can be identified by words such as expect, anticipate, intend, 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 duty 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. For a discussion of the risks and important factors that could affect our actual results, Please refer to our final IPO perspectives filed with the Securities and Exchange Commission, our quarterly reports on Form 10Q, as well as other filings with the SEC. Also, during the course of today's call, we referred to certain non-GAAP financial measures. There's a reconciliation schedule showing the GAAP versus non-GAAP results currently available on our press release issued after a market close, which can be found on our website at investors.femrush.com. And with that, let me turn the call over to Oleg.

Thank you, and good morning to everyone on the call. I am pleased with our performance in the second quarter. Revenue of $45 million was up 58% year-over-year and up 13% sequentially. We saw strength across all our major markets, but particular strength from markets outside the United States and United Kingdom, which grew 65% year-over-year. Our paid users grew 29% year-over-year, while the average check grew by approximately 19% year-over-year. Looking at some of the product highlights from the quarter, we saw strong traction with our digital media marketing tools. As I mentioned in May, we transitioned these tools to a free-to-use model with the goal of driving wider adoption. The initial results look promising as we had over 30,000 active users at the end of June. According to G2 rankings, We are a leader in social media management and I believe the stronger adoption of our solutions is further validation of our leadership position. Many investors ask about the primary use case that drives customers to adopt SEMrush. It's an interesting question because our product offering is far broader than the point solutions offered by our competitors. There is a wide variety of use cases and I would like to highlight a couple of those to help investors better understand what is driving our growth. 3D Chimney Sweeps is a contractor in the Washington DC area that provides critical services related to safety, upkeep and construction of chimneys and fireplaces. Preedy is a new service provider in a market dominated by larger brands with much larger advertising budgets. Preedy engaged with Ardent Growth, a digital marketing agency, to revamp the company's digital marketing strategy. Using SEMrush tools, ArdentGrowth conducted research to plan an effective site architecture, SEO, and content strategy that could rapidly increase previous topical authority. The results speak for themselves. First page rankings went from approximately 30 in September of 2019 to over 300 as of October 2020, and organic traffic increased by over 2,000%. When a prospect searches for chimney sweep in Washington, D.C., pre-decline is ranking third behind angel's list and yellow. We improved visibility translated directly to an increase in traffic and conversions. And as a result, 3D chimney sweeps revenue has grown substantially. And amid a global pandemic that saw many SMEs struggle, the company is preparing to expand. We are focused on solutions for SMEs, but our solutions are widely deployed across enterprise customers as well. Universal Health Services is a leading provider of hospital and healthcare services. UHS corporate marketing is the internal resource supporting marketing and communication strategies and multi-channel tactics for UHS corporate and its subsidiaries. In November 2019, the UHS SEO team purchased a SEMrush license and began analyzing the state of the pilot facilities websites. The SEO team quickly realized the facility sites were lacking content that would drive relevant traffic. Using the SEMrush Keyword Tool, SEO Writing Assistant and Topic Research, the SEO and content teams began producing content around behavioral health and saw immediate results. With SEMrush, we streamlined the process of creating highly effective content and grew conversions by 49% in five months. With the help of SEMrush, UHS grew the number of in-house campaigns by 10x in one year, while also cutting costs by 60% as compared to outsourcing the work to agencies. I would like to close with a few comments. on the breadth of our data assets. A few investors were confused about what data we collect and analyze. I want to make it clear that while building the map of the Internet for working on producing other insights, SEMrush collects billions of discrete data points through a combination of internal and external sources. We take that data and transform it into actionable insights for customers. However, we only collect publicly available data, which does not include sensitive non-public data like credit scores, financial assets, and payment information. Our practices are designed to comply with identity for advertisers regulations in the United States and the general data protection regulation GDPR in Europe. Looking ahead, I do believe we will see a reduction in micro-targeting and it may result in less paid ad spending on the part of SMEs. A lot of opt-in rates could make it extremely difficult to measure returns on paid advertising for sites that generate relatively modest traffic, which includes many SMS. I don't believe the overall marketing budget at SMS will shrink, as it is more challenging than ever to reach potential customers. Rather, I believe a portion of this bad budget will shift to paid and organic search. I believe this would be a tailwind for SEMrush as we offer a best-in-class solution focused on improving organic and paid search results. With that, I would like to pass the call to Evgeny for a more detailed discussion of our financials.