Similarweb Ltd.

Greetings, and welcome to the SimilarWeb First Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, RJ Jones, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Operator. Welcome, everyone, to our first quarter 2023 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 impact of rising interest rates, rising global inflation, and current macroeconomic conditions, challenges in our business and in the markets in which we operate, 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. Further, reported results should not be considered as an indication of future performance. Please review our Form 20F filed with the SEC on March 23, 2023, and in particular, the sections entitled Cautionary Statement Regarding Forward-Looking Statements and risk factors for discussion of the factors that could cause our actual results to differ from the forward-looking statements. Also note that any forward-looking statements made on this call are based on information available as of today's date, May 10, 2023. We undertake no obligation to update any forward-looking statements that 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 combinations, 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 with 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. A 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 Swartz. Then we will open up the call to questions from self-taught analysts in attendance. Please note that we publish a detailed discussion of our first quarter 2023 results in a letter to shareholders or 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 SimilarWeb.

Thank you, RJ, and welcome everyone joining the call today. We reported a solid result in the first quarter. Despite the challenging microeconomic environment, we grew revenue by 19% over Q1 last year to $52.8 million. Our global customer base consisting of SMB, enterprise and strategic accounts grew 14% year over year to nearly 4,200 customers. And our average customer spends about $51,000 with us annually, up 4% over the last year. We have much to be proud of this quarter when looking at our path to profitability. First, our gross margin was nearly 80%, a new record. Next, our investment in marketing and R&D are showing strong returns. In marketing, metrics at the top of the funnel are very positive and show increasing trends. Our R&D team made advances with our data and solution and will provide more value to our existing and prospective customers. Lastly, our operation margin shows an amazing improvement of 31 percentage points compared to last year. Earlier this year, we announced our goal to achieve sustained positive free cash flow by Q4. Our Q1 results show we are making great progress. We are focused on deploying resources carefully on the core activities that create revenues and improve profitability. With this in mind, we are reducing our headcount by 6% in Q2. We are excited to see all progress happening in the world of AI. With all the new capabilities AI will bring, we see a lot of opportunities for our company on a few fronts. The first one is to improve our data analysis at scale, using AI to excel in speed, accuracy, and quality. Next, it will enhance our product development by using AI capabilities of finding and analyzing insight in our unique data, which is extremely powerful. What will be different for us is when those AI will meet our unique data assets. We are one of the only companies that have this comprehensive data on activity of the digital world covering more than 10 years. Once AI will be training on all the coverage that similar web digital data has, we will be able to develop new capabilities to conduct extensive analysis for companies from simple queries of their specific needs and provide prediction of what will be next. We are uniquely positioned to benefit from the AI change and how it will use our data to help companies to win in the digital world. We believe that similar web digital data is best of its kind available anywhere. We help our customers generate revenues and enhance their monetization in the digital world. Our customers tell us that they make better decisions navigating this uncertain environment because of SimilarWeb. We remain determined to help our customers overcome the challenges to win in this unpredictable economy and beyond. Jason, I will turn the call over to you.