Similarweb Ltd.

Hello and welcome, everyone, joining today's SimilarWeb Q2 Fiscal 2026 Earnings Call. At this time, all participants are in a listen-only mode. Later, you have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded. We are standing by should you need any assistance. It is now my pleasure to turn the meeting over to Rami Myerson, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Welcome, everyone, to our second quarter 2026 earnings conference call. Joining me today are our CEO and co-founder, Or Offer, our chief financial officer, Ran Vered, and Maoz Lakovski, our chief business officer. This morning, we released our results for the second quarter and published an investor presentation with a strategic overview of the business, as well as a summary presentation of second quarter results on our investor relations website at ir.solarweb.com. Certain statements made on the call today constitute forward-looking statements which reflect management's best judgment based on the currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release and our most recent annual report on Form 20F filed with the SEC on March 2, 2026 for more information on the risk factors that could cause actual results to differ from our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed in the call today. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation. We will begin with Or and Ran's highlights of the quarter, and then we will open up the call to questions from sales side analysts. With that, I'll turn the call over to Or. Or, please go ahead.

Thank you, Rami, and welcome everyone today. I'm extremely proud of what the similar web team delivered in the second quarter. SimilarWeb is at inflection point. Our core business is getting stronger while AI is opening a significant new growth opportunity. Larger deal, longer commitments, improving retention, and expanding profitability are validating the strengths of our business. At the same time, strong demand from leading AI companies demonstrate that our proprietary digital data has become critical infrastructure for the AI ecosystem. Over the last several quarters, we have been very focused on three things. Strengthening our data moat, deepening our relationship with the largest enterprise in the world, and positioning SimilarWeb to capture the enormous opportunity created by AI. In Q2, we started to see those pieces come together. We delivered the strongest quarter in similar red history for net new ARR. We had one of the strongest quarter ever for growth retention. We achieved positive gap operating profit for the first time ever. NRR improved to 100% across all customer and 107% for customer above $100,000 of ARR. We exceeded our expectations for both revenue and operating profit and are raising our full year guidance for the second time this year. AI-related revenue reached 13% of revenue in the second quarter, up from 11% at the end of the fourth quarter of 2025, and we will continue to expand it moving forward. and perhaps most importantly, we signed three very large multi-year enterprise contracts representing more than $60 million of accumulated contract value. So when I look at this quarter, I see more than just a strong set of numbers. I see evidence that the strategy we've been executing is working. Let me walk you through why I believe this is so important. And let's start with the financial performance. Revenue grew 9% year-over-year to $77.2 million above the top end of our guidance. We also delivered non-GAAP operating profit above our expectation and for the first time in our history, positive GAAP operating profit. This is a direct result of the operational disciplines we have been implementing across the company. We have been very focused on improving sales productivity, sharpening our go-to-market execution, and becoming more efficient across the organization. At the same time, we continue to invest in opportunities where we believe we can generate the highest long-term returns. We generate $8.7 million of normalized free cash flow in the quarter, representing an 11% free cash flow margin, Moving into the second half of 2026 and beyond, we remain committed to expanding our margin and leveraging the operational efficiencies that come with our increased scale. So we are seeing the combination we have been working on. Growth, improving retention, profitability, and strong cash generation. Our customer metrics also continue to improve. NRR increased 200% across all customers and 207 for customers above $100,000 of ARR. This is particularly encouraging because as we discussed in the last several quarters, we have been focused on improving the expansion motion with our existing enterprise customers. We are seeing better growth retention, stronger customer engagement, and increasing demand for additional similar web data and products. And we believe there is more room for improvement from here. But the part of the quarter that I am most excited about is what we are seeing with the largest enterprise. Our strategy to move up market is working. During Q2, we signed three very large multi-year contracts with a cumulative value of more than $60 million. Those are strategically important contracts. They are also very different from the way SimilarWeb historically sold. For many years, our model was primarily a land and expand model. We would land the customer with a relatively small initial contract and then expand over time across additional products, teams, and geographies. That model remains important, but something new is happening. The largest companies in the world are increasingly looking at SimilarWeb not simply as a software application, but as a strategic source of digital data. And when they do that, the size and scope of relationship change dramatically. Those contracts require a significant amount of work across sales, R&D, data scientists, finance, and legal. And I want to recognize the entire team because those deals are truly company-wide efforts. The strategic ALO go-to-market team that we created at the end of 2025 specifically focused on AI, LLM and OEM opportunities has been instrumental in this success. The team is building relationships with some of the most sophisticated companies in the world and is creating a pipeline that is materially larger than what we have historically seen. In fact, in July we signed a fourth large contract. and we continue to see a very strong pipeline of additional opportunities like never before. And let me explain to you why this is different. Historically, large seven-figure contracts were relatively rare for Singular Web. As recently as 2025, we were still seeing large seven-figure opportunities infrequently a handful of times a year at most. That has changed. The number and size of opportunities we're seeing from large enterprises has increased significantly, and I believe there is a very important reason for that. AI is changing the economics of data. Let me explain to you what I mean. Historically, the value an enterprise could extract from a similar web was limited in part by the number of people who could actually work with the data. You had an analyst. That analyst needed to understand our data. They needed to know how to query it. They needed to analyze it. They needed to connect different data sets. And then they needed to turn those insights into recommendations for the business. That is powerful, but it's still constrained by human capacity. AI fundamentally changed this equation. Now you can take similar web digital data and make it available to an AI system that can analyze an enormous amount of information across thousands of questions and use cases at a speed and scale that humans simply cannot match. The result is that the ROI from the same underlying data can increase dramatically. And this is the part of the story that I think is still underappreciated. AI doesn't make our data less valuable, it makes our data much more valuable. Because the better the AI becomes at reasoning, the more valuable high-quality comprehensive and trusted data becomes. This is why I believe the opportunity for SimilarWeb goes far beyond simply selling data for LLM training. But still, the LLM opportunity is big and growing. One of the largest contracts we signed this quarter is with the leading big tech company for data use to train its large language model. Following this expansion, this customer became our third customer with more than $10 million of ARR engagement. It is remarkable to see how similar web data become a fundamental source of digital intelligence for top large language model in the world. But what excites me even more is that the other large contracts are not only about LLM training. They demonstrate that enterprises can use similar web data at scale for many different AI-driven use cases and applications. And that is a much bigger opportunity. Because if our data can be used across multiple AI use cases and applications inside a large enterprise, the potential consumption of our data increases dramatically. One customer can have multiple teams. Multiple teams can have multiple use cases. And each use case can consume more data. This creates powerful expansion opportunities. The more use cases we unlock, the more valuable our data becomes. And the more valuable the data becomes, the more SimilarWeb can expand within the organization. This is a very different model from setting seats of software. We are increasingly monetizing access to data and the consumption of the data, and we believe AI will accelerate this transition. SimilarWeb has become an enterprise data company. You can already see this transformation in our business. The portion of our business driven by customers generating over $100,000 in ARR has reached almost 70%, a significant rise from 63% a year ago. Furthermore, the share of our revenue tied to a multi-year commitment expanded to 66% up from 57% a year ago. And we see this momentum continue. Those metrics underscore fundamental conditions. SimilarWeb has become more deeply integrated in the world's largest and most enduring enterprise organization. We are increasingly an enterprise-focused business, providing digital data to some of the largest, most sophisticated companies in the world. And our goal is to become even more deeply embedded in those organizations, not just with one product, not just with one team, but across multiple teams, multiple products, and multiple use cases. This is the expansion opportunity in front of us. Let me now turn into our AI strategy. Over the last several quarters, we have talked about our AI strategy through three pillars. Powering AI system with our data, building an AI native product ourselves, and expanding distribution through the AI ecosystem. We are seeing strong progress across all three. First, we are powering LLM and AI agent. We continue to see strong demand from leading AI companies for digital data for both pre-training and post-training use cases. But we are also seeing increased demand from AI agents. Agents need trusted, structured, and comprehensive information about the digital world in order to perform their tasks efficiently. Our data is good for both human and agent, and that is becoming increasingly important. Second, we are building our own AI native products. GenAI intelligence is shaping up as a huge opportunity. It's a lucrative, fast-growing market that is top of mind for every CMO and executive at large enterprise right now. We're already seeing an early sign we can win here and become a leader at this category. Our solution helps brands understand how they can show up across generative AI platforms. We think it's an entirely new category and our data gives us a real edge. And earlier this year, We launched SimilarWeb AI Studio. The response has been extremely strong. AI Studio changed the way people interact with SimilarWeb. Instead of needing to know exactly which report to open or which data set to use, a user can simply ask a business question in natural language and receive an actionable answer with insight and recommendation. This dramatically expands who can use SimilarWeb. And importantly, it creates a new consumption-based monetization model. We believe this is the direction the industry is moving. Third, we are expanding distribution. Increasingly, research and decision-making are happening inside AI platforms, so we want SimilarWeb to be there. Our data is available through MCP on Cloud and ShedGPP. During the quarter, we expanded our relationship with Poplexity to bring SimilarWeb digital data directly into its AI native workflow. and we expand our partnership with Manos following the successful launch of SimilarWebData on the platform. Those partnerships are more than integration. They are new distribution channels for SimilarWeb. They allow us to reach users who we couldn't not reach through our traditional go-to-market motion. They expand our time and they reinforce our position as a critical data layer for AI-driven research and decision making. So now let me walk you through what I believe is happening. First, our core business is getting healthier. Growth retention is improving, NRL is infected, sales productivity is improving, and we are seeing better expansion across enterprise customers. Second, our enterprise strategy is working. We are seeing larger contract, longer commitment, More multi-product relationship and increasing demand from the world's largest companies for our digital data. And third, AI is dramatically expanding the opportunity for our data. It creates new customers, There are a few ways to monetize consumption. Those three things reinforce each other. And this is why I believe Q2 represents an important inflection point for SimilarWeb. And as I have to say before, AI is the engine, but data is the fuel. Regarding the CEO search, we are making good progress and we are interviewing very strong candidates. And with that, I will hand it over to Ran, our CFO. Thank you all.