SEMrush Holdings, Inc.

Good morning and thank you all for attending the SEMrush Holdings fourth quarter and full year 24 results conference call. My name is Brika and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Brynley Johnson, Investor Relations at SEMrush Holdings. Thank you. You may proceed, Brynley.

Good morning and welcome to Stavros Holdings' fourth quarter and full year 2024 conference call. We will be discussing the results announced in our press release issued after market close on Wednesday, February 26. With me on the call is our current CEO, Oleg Shlegolov, our new CEO, Phil Wagner, 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 changes to our executive management team, expected growth, adoption, and existing future demand for our 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 first quarter of 2025 and the full year 2025, and statements about future pricing and operating results, including margin improvements, revenue growth and profitability, and assumptions regarding foreign exchange rates. Forward-looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, could, 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 report on Form 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission, as well as other filings with the SEC. And finally, during the course of today's call, we referred to certain non-GAAP financial measures. There is 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.samrush.com. Now, let me turn the call over to Oleg.

Thank you and good morning. Samrush had an outstanding 2024. We began 2024 with a clear set of goals and a focused agenda. I am pleased to report that we delivered on both achieving our financial commitments and executing our strategic objectives, including expanding our customer base, increasing our average error per customer and broadening our product portfolio. We ended the year with accelerating positive momentum, exceeding our fourth quarter guidance and closing out a record year. Our numbers underscore our execution. Fourth quarter revenue grew 23% year-over-year and error growth exceeding 22% year-over-year. We reported income from operations of 1.7 million, non-GAAP income from operations of 11.8 million, and non-GAAP operating margin of 11.5%. For the full year 2024, we grew revenue 22%, delivered full-year income from operations of 8.3 million, and non-GAAP income from operations of 45.8 million, For the full year 2024, we reported a non-GAAP operating margin of 12.2%, generated net cash from operating activities of 47.0 million, and ended the year with cash equivalents and short-term investments of 235.6 million. We have solidified our leadership position in online visibility across all business segments. and extended our reach with a new enterprise-focused solution to a number of world's largest businesses. Importantly, we are successfully combining strong durable growth with profitability and shrinkage flow generation. In 2024, we also continued our strong track record of success on the product development and integration front. We innovated and expanded our product offering to help companies create brand orders, generate traffic, and ultimately convert traffic to paying customers, while we also successfully integrated the several acquisitions we made throughout the year. We also extended the capabilities of our social media offerings, adding new AI features that we have started to monetize. I am particularly pleased with our enterprise sales in the fourth quarter, which by any measure were impressive and saw momentum build in each quarter following the release. We closed over 40 deals in December long and more deals in Q4 than the rest of the year combined. The prices for our customers now include Amazon, Birkenstock, Colgate, Dick's Sporting Goods, Disney, and Ticketmaster. and many more added in Q4 2024. Considering enterprise owner launched mid-year, and we now have 144 Enterprise SEO customers, I couldn't be prouder of our team for what we have accomplished and importantly, for what lies ahead. Looking into 2025, we plan to further evolve our platform and are focused on aiding product dev across our search engine optimization, data advertising, social media, local marketing, brand marketing, content marketing, and data and intelligence solutions. We are realizing the benefits of carefully investing in enterprise-grade features for sophisticated marketers. And by leading with AI, we believe we can bring together the best of what AI has to offer to ensure our customers have access to the most accessible and actionable digital marketing platform. Our enterprise future is not just a show. Our ultimate plan and vision is to extend our reach even further. We plan on enhancing our product portfolio with more enterprise capabilities, adding sophisticated enterprise products across all channels, including AI optimization. which we'll be referring to as AIO going forward. Looking ahead to the first half of 2025, we plan to launch our new AI optimization solution in closed beta. SEMrush is thriving, and at the same time, we see unique opportunities for rapid advancements. With AI shaping the landscape, SEMrush is uniquely positioned to lead, and the path ahead demands relentless focus. My patient has always been at the intersection of product innovation and emerging technologies. And as I think about driving Simrush's next wave of technology breakthroughs, I have decided to shift my role. Effective much 10th, I will step into the position of chief technology officer dedicating 100% of my energy to product development while continuing to serve on Simrush's board. To ensure a seamless transition and sustain our market leadership, the board and I, after careful consideration, have appointed Bill Wagner, an experienced leader and current SEMRush board member, to take the helm as CEO. Bill's track record, vision, and deep understanding of our culture make him the perfect fit to lead us into our next phase of growth. I have absolute confidence in SEMrush's trajectory, leadership, and ability to execute. We remain committed to delivering world-class tools that empower businesses to maximize their online visibility. We are seeing strong positive momentum continue into 2025 as we strengthen our customer relationships, further extend our enterprise capabilities, grow and invest in enterprise go-to-market, and launch new products. I look forward to continuing to drive similar product and technology strategy, and I am excited that the best is yet to come. With that, please join me in welcoming our soon-to-be CEO, Bill Wagner.