Similarweb Ltd.

here today for our Q4 2021 earning call. It's great to be here with all of us this morning. We finish off a very strong 2021 with excellent performance in Q4. GAAP revenue grew 51% year over year to $40.2 million, exceeding our guidance for the quarter I am very proud of our team for continuing to execute well and accelerating our growth. During today's call, our CFO Jason and I will provide more details around our Q4 and 2021 results and provide Q1 and full year guidance for 2022. So, let's discuss the results. In many ways, 2021 was a game-changing year for us. Most importantly, our growth trajectory has changed. In 2021, our total revenue grew by 47% to $137.7 million. That represents an increase of 15% point of growth over last year that was 32%. We ended this year with $165 million in ARR, concluding our third straight year of accelerating ARR growth. As we move into 2020, we are seeing very strong tailwind for the business and increasing time and rapidly expanding demand for our solution. In light of those favorable conditions, we will continue to invest across the business in order to further nourish and grow our customer base as well as strengthening our product portfolio and data assets. The strength of our customer base has also improved. In 2021, our most significant growth comes from our largest and most strategic customer segment, those companies that generate more than $100,000 in ARR. We grew the total number of those customers by 45%, and together they now represent more than 51% of our total ARR. Overall, we more than double our rate of new customer acquisition versus 2020. We continue to see our customer growth being driven from a diverse set of industries. In 2021, the new logos we added, including amazing global brands like Fiat Chrysler, Intel, 3M, Mondelez, DoorDash, Tesco, CVS Health, and many more. Our customers are more engaged with our solution and more committed to them than ever before. 33% of our ARR is generated from our customer signed to multi-year contract. This is an 8% point increase from the 25% of ARR last year. And even more significantly, we have increased our customer total lifetime value with NRR hitting an all-time high. We closed Q4 with overall NRR at 113%. and at 125% for the critical $100,000 ARR customer segment, both a 12% point improvement over our Q4 2020 numbers. I want to pause here for a second to reflect on what I see as the most important market driver for our business growth. We believe that today the number one mission for every CEO and business leader is to drive growth. And the biggest growth opportunities come from the digital world, a place without borders where it's possible to almost instantly reach and sell to audience at a global scale. In this world where growth potential is almost unlimited, data is king. To see and capture the growth opportunities, every company is looking for better market data. They need a complete picture of what's happening in their markets to answer the most strategic growth questions like, how do I grow my demand? How do I grow my product portfolio? How do I grow my market share? How do I grow my audience? And how do I grow my sales? This is what SimilarWeb does. We give companies visibility they don't have and insights that guide them to what to do next in order to grow. We believe our proprietary data and growth insights give our customers an advantage in their markets. So we believe the value we deliver is outstanding and that every company that wants to compete and win in the digital world needs us. And this is why we see a huge gap and potential for high growth for many years to come. In 2021, to accelerate our own growth rate, we expanded and improved our product portfolio. In Q2, we launched our Shopper Intelligence solution, and by Q3, we already signed our first seven-figure deal to this product. Shopper Intelligence is a highly differentiated solution that gives our customers an amazing insight into consumer behavior within online marketplaces. In Q4, we expanded this offering significantly, improving our marketplace insight coverage by adding Walmart, Target, Best Buy, and Chewy on top of our existing support for Amazon Insights. Our goal is to become the market standard in this emerging space and to be an essential growth enabler for every CPG or retail company looking to do business in the online marketplaces. Within our customer base alone, we identified over 700 companies that meet our target profile, so the opportunity for this product is huge. We'll continue to add major enhancements to our other offering as well. In Q4, we enhanced our sales intelligence solution by partnering with a leading data provider to add a contact database to our offering. That solution now brings together 400 million plus contacts with digital traffic and engagement insights and technographic data we believe this combination of data and insight is ideal for self-organization while targeting digital first businesses such as e-commerce publishing payment and digital advertising now with just one similar web solution self-represented can identify qualified accounts, connect with the right decision makers and influencers, and engage those prospects with a compelling pitch that leverage our proprietary digital insights. Finally, as you may have seen, I'm very excited about today's announcement of a new data licensing agreement with AppAmy, a market leader in mobile app insights. The agreement gives us access to an important set of AppAny mobile application data, which we will incorporate into our platform. We plan to launch a new offering based on the AppAny data and insight in Q2. By bringing together our respective best-in-class data, we believe SimilarWeb will be able to deliver an even more accurate, more comprehensive view of the digital world a powerful offering that will improve the insight and competitive advantage we create for our customers. And of course, this means that companies will be able to purchase industry-leading web and mobile app data and insights from a single source. We believe this will be a very compelling proposition in our markets and a game changer for companies looking to take unified approach to optimizing their digital strategy across platforms. In 2021, we also enhance and expand our product offering by completing two acquisitions, Similar Tech and MB Mobile. Both transactions demonstrate our ability to execute on smart acquisition opportunities and improve our customer value. Similar tech technographic data is now used across the board in almost every similar web product, from our free offering to solutions like sales intelligence and investor intelligence to our API and data feeds. MB Mobile, which was completed in Q4, has already been used to enhance our offering as well. For example, in Q4, we added a new feature to our shopper intelligence solution called shopper demographics, This feature enables e-commerce companies to get to know their audience on a deeper level so they can inform new product development and optimize buyer campaigns. Going beyond basic identifiers like age and gender, this new analysis segment, every category and brand on Amazon according to education level, household size, and income, and employment status. We believe it is a highly different feature in the market, and it would not have been possible without data from MB Mobile acquisition. Finally, in 2021, we continue to invest in our people, aggressively scaling our organization to support our growth. We expanded geographically and adding new offices in Munich and Northern Virginia, and we're working hard to build out our new similar web headquarters which will be located in the center of Tel Aviv metropolitan area. When it's completed, we believe it will be a significant attraction that will help us to continue to recruit top talent here in Israel. To summarize, we believe that 2021 was a pivotal year and we are entering into 2022 with a great momentum, including a track record of accelerating growth and growing market opportunities ahead of us. Back in May, we successfully completed our IPO on the New York Stock Exchange. Since then, we have delivered three consistent quarters of strong revenue growth, all known for 45% year-over-year growth, concluding this quarter with more than 50% year-over-year growth. Our story has improved materially since our IPO across all of our business. We continue to add and to improve our product portfolio and offering. both organically and inorganically, expanding our time where we are rapidly increasing our product value and stickiness resulting in double-digit growth in our net revenue retention. We believe our combination of consistently strong growth and solid gross margin positions us as a small group of best-in-class SaaS businesses. And most importantly, we are a leader in large and high value market with a unique opportunity to become a critical growth driver for every company that wants to compete and win in the digital world. I'm excited about the progress and opportunity we have going forward. We delivered a strong Q4, capping off a year of tremendous acceleration in our business. We are confident about our growth strategy and our ability to unlimitedly capture a large share of a very valuable market. I will now turn the call over to our CFO, Jason, to discuss more about our financial result and 2022 financial guidance. Jason?

Thank you, Or, and good morning, everyone. I will now walk you through our fourth quarter financial results before introducing our guidance for the first quarter and full year 2022. Total revenue for the fourth quarter of 2021 was $40.2 million, reflecting record 51% year-over-year growth. This increase was driven both by an increase in our total number of customers, which rose by 28% in Q4 to 3,487, also a record high for us, as well as an increase of 18% in our average revenue per customer to nearly $48,000 in Q4. For the full year 2021, total revenue was $137.7 million, reflecting 47% year-over-year growth. Dollar-based net retention rate, or NRR, was 113% overall and was 125% for our greater than $100,000 ARR customer segment, an increase of 12 percentage points for each of those metrics compared to last year. As you know, substantially all of our revenue is annual recurring revenue, or ARR, with a minimum subscription term of one year, but we continue to increase the number of our customers who commit to multi-year subscriptions. As of the end of Q4, 33% of our ARR is generated from customers with multi-year subscriptions compared to 25% last year. This trend towards increasing contractual commitment along with our high NRR reaffirms the value our customers see in SimilarWeb and speaks to the increasing health and durability of our ARR. Please note that unless otherwise stated, all references to our expenses and operating results are on a non-GAAP basis and are reconciled to the GAAP results in the earnings press release that was issued earlier today. Our gross profit totaled $30.2 million in the quarter, representing a gross margin of 75.1% versus 78.9% in Q4 2020. The decrease is primarily the result of the acquisition of Envy Mobile, which closed in Q4, whose fixed costs contributed to an increase in cost of revenue. Operating expenses grew to $48.5 million in Q4, up from $25.7 million in Q4 2020, largely reflecting the investment in personnel across the business to support our growth. The specific components of our operating expenses were research and development, $12.8 million versus $6.2 million in Q4 2020. This increase was driven primarily by growth in employee headcount, particularly among employees focused on our newer solutions, such as shopper intelligence, sales intelligence, and investor intelligence. As I discussed in Q3, we are already realizing revenue growth from these new solutions and believe that these investments will prove to be meaningful growth drivers in the future. Sales and marketing was $26.6 million versus $15.4 million in Q4 2020, driven principally by increased investment in sales and account management headcount and marketing activities, as we scale to build pipeline and support our plans for growth in 2022. General and administrative $9.1 million versus $4.2 million in Q4 2020, which includes $1.4 million of additional costs for the quarter that we now incur as a publicly traded company, as well as additional employee headcount required to support our growing operations globally. As a result, our non-GAAP operating loss for the quarter totaled $18.4 million better than our guidance compared to $4.7 million in Q4 2020. For the full year, our non-GAAP operating loss totaled $51.7 million better than our guidance compared to $14.9 million in 2020. Free cash flow for the quarter was negative $11.5 million compared to negative $1.4 million in Q4 2020, primarily as the result of the investment in employee hiring to drive our growth. These investments continue to show their value in the acceleration of ARR, customer growth, and higher NRR. Turning to the balance sheet, we ended Q4 2021 with $128.9 million in cash and cash equivalents and no debt. We believe that our cash balance and our $75 million credit facility, totaling $204 million of available funds, provides us with more than enough liquidity to execute on our growth plans and to take us to positive cash flow, which we plan to reach in 2024. Our deferred revenue increased 46% year over year to $78.8 million compared to $53.9 million at the end of Q4 2020. Our remaining performance obligations or RPO increased 60% year over year to $137.5 million compared to $85.7 million at the end of Q4 2020. We expect to recognize approximately 88% of total RPO as revenue over the next 12 months, and we believe these metrics are a good indicator of the health of our business and our revenue streams. As a result of our strong performance over the last three quarters since completing our IPO, as well as the product innovation that we continue to deliver and the market opportunity that we see ahead of us, we are issuing strong guidance for Q1 and for the 2022 fiscal year. For the first quarter of 2022, we expect total revenue in the range of $41.1 million to $41.5 million, representing 40% growth year over year at the midpoint. For the full year, we expect total revenue in the range of $193 million to $194 million, representing 41% growth year over year at the midpoint. Non-GAAP operating loss for the first quarter is expected to be in the range of $20.5 million to $20.9 million, and for the full year, between $83 million and $84 million. This is driven by the investments we are making to continue our strong growth, as well as the investment we are making to further expand our data moats through strategic moves such as the acquisitions of SimilarTech and MB Mobile, as well as the data licensing agreement with App Annie. This also includes negative impact due to foreign exchange movements, which we estimate at approximately $10 million of additional costs. In light of our strong unit economics and efficient land and expand model, which are reflected in our strong NRR, And in order to capitalize on our strong momentum and market opportunity, we expect to continue to make significant investments in the business through 2022 and 2023 as we execute on our plans to become cash flow positive on an ARR of between $450 to $500 million in 2024. As I mentioned, we are in a strong cash position and believe that our available funds provide us with more than enough liquidity to execute on our growth plan until we reach positive cash flow. To conclude, we've executed well since our IPO last year. Our business is performing extremely well across all of our major initiatives and our financial results and guidance indicate that we're heading into 2022 with strong momentum. And with that, Oren and I are happy to take your questions. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. The first question comes from the line of Brent Thiel with Jefferies. Please go ahead.