Similarweb Ltd.

Greetings. Welcome to SimilarWeb's third quarter fiscal 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Raymond Jones, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Operator. Welcome everyone to our third quarter 2022 earnings conference call. During this call, we will make forward looking statements related to our business. These statements may include the expected performance of our business and our future financial results, our strategy, the potential impacts of the COVID-19 pandemic and its associated global economic uncertainty, our anticipated long-term growth and overall future prospects. These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. Again, actual results and the timing of certain events may differ materially from the projected results or the timing predicted or implied by such forward-looking statements. Further, reported results should not be considered as an indication of future performance. Please review our Form 20-F filed with the SEC on March 25, 2022, In particular, the section entitled Risk Factors therein, for a discussion of the factors that could cause our actual results to differ from the forward-looking statements. Also, note that the forward-looking statements made on this call are based on the information available as of today's date, November 16, 2022. We undertake no obligation to update any forward-looking statements we make today, except as required by law. As a reminder, certain financial measures we use in presentations of results and on our call today are expressed on a non-GAAP basis. In particular, we reference non-GAAP operating loss, which represents GAAP operating loss, less share-based compensation, adjustments, and payments related to business accommodations, amortization of intangible assets, and certain other non-recurring items. We use this and other non-GAAP financial measures internally to facilitate analysis of our financial and business trends, and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability of the past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Our reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at ir.similarweb.com. Today, we will begin with brief prepared remarks from our CEO or offer and CFO, Jason Schwartz. Then we will open up the call to questions from sell-side analysts in attendance. Please note that we publish a detailed discussion of our third quarter 2022 results in a letter to shareholders for investors to reference, as well as an updated investor presentation with a strategic overview of the business, both of which are available on our investor relations website. With that, I will turn the call over to Orr Opper, CEO of SimulaWeb.

Thank you, RJ, and also thank you to everyone joining the call today. We reported a solid result in our third quarter as we navigated the challenging macroeconomic environment. Revenue grew 41% over Q3 last year to $50 million in the third quarter. The expansion of our global customer base consisting of SMB, enterprise, and strategic account stayed steady. Our customer base grew 21% year-over-year to 3,900% and our average account spends about $52,000 with us annually, up 15% over last year. Furthermore, over 53% of our annual recurring revenue come from customers who spend more than $100,000 per year with us. Today, 37% of our relationships consist of multi-year contracts, a metric that has expanded year over year since 2020. When we look back, to 2020, digital transformation become mission critical for every businesses and we benefit greatly. At the time, we became a public company, nearly doubled our revenue and we focus on continuing our rapid growth. Despite incredible trajectory we have been experiencing since the outset of the pandemic in 2022 and other plans, we are facing the impacts of continued war in Ukraine raising interest rate, global inflation, and customer with linear budgets. We now believe that the microeconomic condition will take longer to recover than we assumed and are looking at an entirely different economic climate in 2023. To succeed in this environment, we must adjust our priorities and sharpen our focus and take the right action for our company. This leads me to a truly difficult change I'm sharing with you today. We have decided to reduce the size of our team by about 10%, saying goodbye to similar webinars who mean a lot to us. To the incredibly talented webinars that we have to say goodbye to, I'm deeply sorry. Over the last couple of months, we made a lot of adjustments trying to adapt to the quickly changing market conditions. However, now I know that we were overly optimistic in our estimate of the duration of the recession, and it seems the market will take much longer to recover. With that in mind, we certainly need to make this change. In addition to the changes in our headcount, we will be reducing expenses across the company. Those changes will align to one key decision – accelerating our timeline to become free cash flow positive during 2023. To achieve this, we will match the pace of our investment with the realities around us, and we will sharpen our focus and deploy resources carefully on the core activities that create revenues. What is great about SimilarWeb is that our solution is very valuable in times like this. The visibility we give into the digital world are critical to companies to make decisions in those times. We will double down on our customer needs to survive and win in this unpredictable economy. As we adapt to the microeconomic environment with our customers, we greatly appreciate the support of our shareholders, all those who are navigating with us. Jason, I will turn the call over to you.