SEMrush Holdings, Inc.

Good morning. My name is Rex and I will be your conference operator today. At this time, I would like to welcome everyone to the SEMrush Holdings second quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. Thank you. A transcript of the prepared remarks will be available at investors.semrush.com after the call. At this time, I'd like to introduce Bob Gugivardi, VP of Investor Relations. You may begin your conference.

Good morning. I'm Bob Gugivardi, VP of Investor Relations, and welcome to SEMRush Holdings' second quarter 2022 results conference call. We'll be discussing the results announced in our press release issued after market close on Wednesday. With me on the call is our CEO, Oleg Shigalov, our CFO, Evgeny Petisov, and our President, Eugene Levin. Before we begin, I would like to highlight our participation in the Goldman Sachs Communicopia and Technology Conference in San Francisco the week of September 12th. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation 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, investments and acquisitions and their anticipated benefits, industry and market trends, our competitive position, our market strategies, market opportunities, our guidance for the third quarter of 2022 and the full year 2022, and our ability to successfully relocate employees outside Russia, including executing our relocation plans on the timeline we expect and at the anticipated cost, 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 annual report on Form 10-K, filed with the Securities and Exchange Commission, our quarterly reports on Form 10-Q, as well as our other filings with the SEC. Also during the course of today's call, we'll refer 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 market close, which can be found at investors.samrush.com. And with that, let me turn the call over to Oleg.

Thank you, and good morning to everyone on the call. I'm very pleased with our execution in the second quarter. We delivered strong growth with revenue up 39% year-over-year and solid new customer additions. As most of you know, our sales cycles are typically very short and our average deal size is relatively small. So despite complicated market conditions in Europe and delayed decision-making, it didn't affect our second quarter results much. listings was a standout performer in the second quarter, as revenue grew more than 70% from the previous year. Local listings is our second most popular add-on, but attach rates remain in the mid-single digits. We believe listing management alone is a $500 million market, and we have a long runway for growth. I am pleased to see our customer mix continue to improve in the quarter. The number of customers who paid more than $10,000 annually was up more than 80% from a year ago. We remain focused on the SMB market, but we continue to see rapid growth from mid-market and enterprise customers as well. I believe our brand marketing campaigns contributed to the new customer growth year to date. And I would like to provide insight on our plans for second half of the year. We saw good success with our campaign in the streaming service Hulu. And we expect to expand to other streaming platforms in the third quarter. According to Nielsen, streaming is poised to become the most popular form of video consumption. and it appears to be a very efficient channel for reaching new customers. SMBs are facing a more challenging macroeconomic environment, and we plan to adjust our campaigns to reflect the new reality. In the back half of 2022, we expect to have a more balanced span between brand and product marketing, with emphasis on value selling campaigns. Our focus here today has been in paid traffic. However, we have not ignored investment in organic traffic opportunities as well. As many of you will recall, we acquired Beklinka in the first quarter. Beklinka is one of the most visited sites for SEO training and our rationale for acquiring the site was that we could get better monetization of the traffic by improving our conversion rates. This played out in the second quarter as we doubled the number of conversions from Betlinka as compared to the year ago. Finally, I want to highlight three key changes to the organization. First, we promoted Eugene Levin to the role of president. Many of you know Eugene and will agree he is intimately involved in operations and strategy at SEMrush. His promotion reflects the reality that his contribution goes far beyond this of chief strategy officer. In conjunction with that announcement, we also promoted Vitaly Abyshchenko to the role of chief operating officer. We are a product-led growth company and believe there is nothing more important to our future success than introducing compelling new products. Vitaly was previously head of product development and has a track record of bringing great software products to market. In his new role, he will have more authority to make sure we execute on our product roadmap. Second, we have made key changes to our sales organization. We now have multiple teams dedicated to executing on our land and expense strategy. At Rewarden, our CMO will focus on new customer acquisition. Brian Wool, our SVP of sales, will focus on upsell of existing customers through new products and additional user licenses. And finally, Steve Margo, our SVP of retention, will be focused on retention of existing customers. Each of these sales motions requires a different skill set, and therefore it was logical to create dedicated teams led by experienced executives. Third, We have made remarkable progress in relocations. We opened multiple offices across Europe and relocated nearly all of our full-time employees. As of today, we have no operations in Russia. I'm extremely proud of the SEMrush team. The complexity and scale of relocating so many people over a short period of time was immense, but we rose to the challenge and made it happen. I will now turn the call over to Evgeny for a more detailed recap of our financial performance and our forward guidance.