SEMrush Holdings, Inc.

Good morning and welcome to SEMrush Holdings second quarter 2023 earnings call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, there will be a question and answer session. If you would like to ask a question at this time, please press star followed by number one on your telephone keypad. To withdraw your question, again, press star one. I would now like to turn the call over to Brinley Johnson with the Blue Shirt Group. Please go ahead.

Good morning and welcome to Semrush Holdings' second quarter 2023 conference call. We'll be discussing the results announced in our press release issued after market close on Thursday, August 3rd. With me on the call today is our CEO Oleg Shlegelov, our President Eugene Levin, and our CFO Brian Mulroy. 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, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and demand for our existing and any new products and features, our app center expansion, industry and market trends, our competitive position, market opportunities, sales and marketing activities, our leadership position, the sufficiency of our staffing levels, our guidance for the third quarter of 2023 and the full year 2023, and statements about future operating results, including margin improvements, revenue growth, and profitability. Forward-looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, intend, plan, believe, speak, 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 discussion of the risks and important factors that could affect our actual results, please refer to our most recent quarterly reports on Form 10-Q and our annual report on Form 10-K, filed with the Securities and Exchange Commission, as well as our 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 in our press release issued yesterday after market closed, which can be found at investors.semrush.com. And with that, let me turn the call over to Oleg.

Thank you, and good morning to everyone on the call. Our team performed well during the second quarter, with revenue of $74.7 million, up 19% year-over-year. Importantly, we shifted to strong profitability, generating non-GAAP net income of $3.5 million. Our strong performance this quarter has positioned us to raise our overall full-year guidance. We are raising our full-year revenue guidance as we continue to benefit from our expanded portfolio. We are also raising our full-year non-government income guidance as we continue to drive towards sustained profitability. We have returned to our roots and have a healthy business focused on growth and profitability. Our impressive results are a testament to the value we provide our customers and our strategic position. Before talking about the quarter in more detail, I want to take a few moments to talk about why we are excited about the future for SEMrush. Over the last 12 years, we have heavily invested in a unique combination of data assets and products to build a new category of software that helps customers improve their online visibility across all major channels, such as search engine optimization, search engine advertising, social media marketing, digital PR, content marketing, and Amazon marketing. This forms the basis of our platform. And while we see point product competitors, we believe SEMrush has become the platform of choice for businesses of all sizes. across all industries, all over the world. We spend all market segments from solopreneurs all the way up to global agencies and Fortune 100 accounts. Our platform encompasses numerous separate tools and provides our customers with one-stop shopping for all their marketing technology needs. We are very differentiated in the market. We collect data from multiple different sources to build complete online visibility profiles of virtually every domain on the Internet. We then use this data to understand what specific market tactics are best suited for each of our customers in each geography in which they operate. Using this unique data asset, we give our customers actionable insights and the steps that we need to take to improve the online visibility. Once these steps are taken, we monitor the outcomes and help our customers report on the ROI of their marketing efforts. We are uniquely positioned to help our clients in ways that others cannot. There are two main differentiators. First, our strong data assets, and second, industry dynamics. Let's take each of them separately. On the topic of our unique data assets, the data in the SEMrush system is what we have collected ourselves, some of which is extremely difficult to do. It's a unique combination of code, historical data we have collected from our customers, in combination with data from several other locations across the internet, and new data that's being fed into our algorithms that generates this highly accurate data set with predictive capabilities. This creates a network effect since when our customers share their data with us, it makes our algorithms stronger and even more predictive. This is something that would be very difficult for any of our competitors to replicate. From an industry dynamics perspective, The big tech giants with huge data assets theoretically come to mind when you think about companies with a lot of R&D data and reach. However, these companies make money primarily from advertising. So we believe their tools are designed to get their clients to optimize their paid advertising on their platform. Because of this, it is not in their best interest to give their clients unbiased advice on optimal use of their marketing efforts, particularly if the best ROI comes from organic efforts or on a platform other than their own. SEMrush, on the other hand, provides unbiased advice to its customers and the highest expected ROI marketing activities across all platforms and is able to provide its customers with information on how their competitors are doing. something we believe the tech giants are unlikely to do because it would negatively affect the economics of their core advertising business. Before I conclude, I want to take a moment to highlight a couple of recent changes to our board of directors. Starting yesterday, Anna Bird, who has been on the board since March, assumed the role of the audit committee chairperson. Anna has impressed me from day one and has more than 30 years of experience working with Silicon Valley companies to scale teams and enable growth. I'm also pleased to announce that Mark Ranesh, who has been on our board since 2019 and served as an advisor two years prior, has been appointed chairperson of the board effectively yesterday. Mark is an accomplished CFO and advisor with broad financial and tech experience. He is passionate about building strong teams and partnerships with employees, business partners, and shareholders, driving new and innovative business models, and organizing businesses for rapid scaling and global expansion. This transition is a result of my desire to focus more on the day-to-day management of the company. as our chief executive officer. Mark, we're excited to have your guidance and financial expertise to help dive our strategy of balancing revenue growth with focus on profitability. We're excited about where we sit today and what the future holds for Semrush. I will now turn the call over to Eugene and Brian to discuss the results of our quarter in more details.