8-K
SEMrush Holdings, Inc. (SEMR)
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Date of Report (Date of earliest event reported): February 22, 2025
Semrush Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware(State or Other Jurisdictionof Incorporation)
| 001-40276 | 84-4053265 |
|---|---|
| (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
| 800 Boylston Street, Suite 2475<br><br>Boston, Massachusetts | 02199 |
| (Address of Principal Executive Offices) | (Zip Code) |
(800) 851-9959 (Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, If Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) | | --- | --- || Securities registered pursuant to Section 12(b) of the Act: | | --- || Title of each class | Trading<br>Symbol | Name of each exchange<br>on which registered | | --- | --- | --- | | Class A Common Stock, par value $0.00001 per share | SEMR | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 26, 2025, Semrush Holdings, Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Resignation of Oleg Shchegolev as CEO and appointment as CTO
On February 22, 2025, Oleg Shchegolev notified the Board of, and the Board accepted, his voluntary resignation from the role of the Company’s Chief Executive Officer (“CEO”), subject to and contingent upon the commencement of his successor in the CEO role. On February 22, 2025, the Board also appointed Mr. Shchegolev to the role of Chief Technology Officer (“CTO”) and appointed William Wagner as the new CEO, each effective March 10, 2025 (the “Transition Date”). In addition to serving as CTO, Mr. Shchegolev will remain as a member of the Company’s Board of Directors (“Board”). Mr. Shchegolev’s decision to resign as CEO did not result from any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Other than the change in title, there are no other changes to Mr. Shchegolev’s employment agreement or other compensatory arrangements with the Company. Mr. Shchegolev recused himself from any Board votes regarding his appointment as CTO.
Appointment of William Wagner as CEO
On February 22, 2025, William Wagner, age 57, was appointed by the Board as the CEO, effective as of the Transition Date. Mr. Wagner will continue to serve as a Class II director of the Board, which term on the Board expires at the Company’s 2026 annual meeting of stockholders. Mr. Wagner will not be entitled to any additional awards of compensation in connection with his Board service, and he resigned as the chairperson and as a member of the Board’s talent and compensation committee and as a member of the Board’s nominating and corporate governance committee effective February 22, 2025. Mr. Wagner recused himself from any Board or committee votes regarding his appointment as CEO and his compensation.
Mr. Wagner has served as a member of the Board since September 2022. Mr. Wagner currently serves on the board of directors of Akamai Technologies, Inc., a position he has held since April 2018, Avery Dennison Corp, a position he has held since October 2022, and Blackline, a position he has held since December 2023. In addition, Mr. Wagner serves on the board of directors of ChurnZero, a customer success software provider. From December 2015 until January 2022, Mr. Wagner served as the president and CEO of GoTo Group, formerly known as LogMeIn, Inc., a global SaaS company and pioneer in remote work technology. Mr. Wagner joined LogMeIn as chief operating officer in 2013 from Vocus, Inc. where he was executive vice president and chief operating officer. As part of his three decades in the technology industry, he previously served in positions at Fiberlink Communications Corporation and AT&T Corporation. Mr. Wagner has an MBA from the Wharton School of the University of Pennsylvania, as well as a BA from Lafayette College.
Mr. Wagner does not have family relationships with any of the Company’s other directors or executive officers. There are no other arrangements or understandings between Mr. Wagner and any other person pursuant to which Mr. Wagner was selected as the Company’s CEO. Mr. Wagner has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Wagner Employment Agreement
In connection with his appointment as CEO, the Company entered into an employment agreement (the “Wagner Employment Agreement”) on February 24, 2025. Pursuant to the Wagner Employment Agreement, effective as of the Transition Date, Mr. Wagner will receive a base salary of $500,000 per year and will have an initial target bonus opportunity equal to 100% of his base salary, subject to the achievement of corporate and individual bonus objectives set by the Board or its talent and compensation committee. In addition, the Board granted to Mr. Wagner an award of $10 million restricted stock units (“RSU Award”) and an award of $12 million in performance stock units (“PSU Award”), both of which generally require Mr. Wagner’s continued performance of services through the applicable vesting date and, for the PSU Award, achievement of specified performance metrics.
Each of the RSU Award and the PSU Award were granted under the 2021 Stock Option and Incentive Plan (the “2021 Plan”) and form of award agreements thereunder. The amount of shares comprising each of the RSU Award and the PSU Award will be based upon the grant date value of the shares on the Transition Date. The RSU Award will vest in quarterly installments over three years following a one year cliff, subject to Mr. Wagner’s continued employment with the Company through each vesting date. The PSU Award will be earned based on the achievement of the percentile rank of the Company as compared to the Russell 2000 Index during a 3-year performance period, commencing on January 1, 2025 and ending on December 31, 2027. Mr. Wagner will be eligible to vest in a number of PSUs ranging from 0% to 200% of the target number of PSUs granted, based on attainment of the applicable performance goals during the three-year performance period with such PSUs vesting at the end of such 3-year performance period.
The Wagner Employment Agreement also provides that if Mr. Wagner resigns for “good reason” or the Company terminates his employment without “cause” (each as defined in the Wagner Employment Agreement), then Mr. Wagner will be eligible to receive the following severance benefits (less applicable withholdings), contingent upon Mr. Wagner executing and not revoking a separation agreement, including, among other things, a general release of claims in favor of the Company (the “Separation Agreement and Release”): (1) severance pay equal to 100% of his then-current base salary for a period of twelve months paid in installments; and (2) reimbursement of COBRA premiums for Mr. Wagner and his eligible dependents from the last day of employment until the earlier of: (i) twelve months or (ii) the time Mr. Wagner accepts employment with another employer that provides comparable benefits. Alternatively, if Mr. Wagner resigns for good reason or his employment is terminated without cause by us or a successor, in either case within three months prior to, or within 12 months following, a “sale event” (as defined in the Wagner Employment Agreement), Mr. Wagner will be eligible to receive the following severance benefits (less applicable withholdings), contingent upon executing and not revoking a Separation Agreement and Release: (1) severance pay equal to 150% of his then-current base salary for a period of 12 months, paid in a single lump sum within 60 days following his last day of employment; (2) a bonus calculated at 100% achievement of all Company and individual performance objectives, paid in a single lump sum within 60 days following his last day of employment; (3) reimbursement of COBRA premiums for Mr. Wagner and his eligible dependents from the last day of employment until the earlier of: (i) 18 months or (ii) the time that Mr. Wagner accepts employment with another employer that provides comparable benefits; and (4) in the event such awards are assumed or continued, 100% of the shares subject to his equity awards that are subject to time-based vesting will vest and become exercisable. In the event the parties to such sale event do not provide for the assumption, continuation or substitution of Mr. Wagner’s time-based equity awards, upon the effective time of the sale event, subject to Mr. Wagner’s employment with the Company at such time or his termination without cause or resignation for good reason within 3 months prior to such sale event, 100% of the equity awards subject to time-based vesting will vest and become exercisable.
Pursuant to the Wagner Employment Agreement, Mr. Wagner is eligible to participate in the employee benefit plans generally available to the Company’s employees and is subject to customary confidentiality covenants.
The foregoing summary of the Wagner Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Wagner Employment Agreement, a copy of which will be filed with the Company’s next Annual Report on Form 10-K filed with the Securities and Exchange Commission and is incorporated by reference.
In connection with his appointment as CEO, Mr. Wagner will also enter into the Company’s standard form of indemnification agreement for executive officers, a copy of which has previously been filed on March 16, 2021, as Exhibit 10.19 to the Company’s Registration Statement on Form S-1/A.
Resignation of Vitalii Obishchenko as Chief Operating Officer and appointment as Chief Product Officer
On February 25, 2025, Vitalii Obishchenko voluntarily resigned as the Company’s Chief Operating Officer (“COO”) and will transition to serving as the Company’s Chief Product Officer, effective as of the Transition Date. Mr. Obishchenko’s decision to resign as COO did not result from any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Other than the change in title, there are no other changes to Mr. Obishchenko’s employment agreement or other compensatory arrangements with the Company. The roles and responsibilities that Mr. Obishchenko previously performed as COO will be assumed by Mr. Wagner in his role as CEO.
Item 7.01. Regulation FD Disclosure
On February 26, 2025, the Company issued a press release announcing the Company leadership changes described herein. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference.
The information contained in this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 8.01 Other Events
Other Board Committee Changes
In connection with the leadership changes described herein, and effective February 22, 2025, (1) Trynka Shineman Blake joined the talent and compensation committee, (2) Dylan Pearce joined the nominating and corporate governance committee, and (3) Steven Aldrich is now serving as the chair of the talent and compensation committee.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release issued by the registrant on February 26, 2025, furnished herewith. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SEMRUSH HOLDINGS, INC. | ||
|---|---|---|
| Date: February 26, 2025 | By: | /s/ David Mason |
| Name: David Mason | ||
| Title: Chief Legal Officer and Secretary |
Document
Exhibit 99.1
Semrush Announces Fourth Quarter and Full Year 2024 Financial Results
•SaaS industry veteran and Semrush Director William (Bill) R. Wagner to become CEO
•Co-Founder Oleg Shchegolev, CEO for over 16 years, to focus exclusively on product innovation and AI as new CTO
•Fourth quarter revenue of $102.6 million, up 23% year-over-year
•Full year revenue of $376.8 million, up 22% year-over-year
•Achieved ARR of $411.6 million, up 22% year-over-year
•Net cash provided by operating activities of $11.9 million in Q4 and $47.0 million for 2024
February 26, 2025 — BOSTON — (BUSINESS WIRE) — Semrush Holdings, Inc. (NYSE: SEMR), a leading online visibility management SaaS platform, today reported financial results for the fourth quarter and full year ended December 31, 2024.
Announced today, William (Bill) R. Wagner, has been named Chief Executive Officer (“CEO”) of Semrush, effective March 10, 2025. Oleg Shchegolev, Co-Founder and current Chief Executive Officer, will assume the role of Chief Technology Officer (“CTO”).
A SaaS industry veteran with over 30 years in the technology sector, Mr. Wagner has served as a member of the Semrush Board of Directors (the “Board”) since September 2022. He was previously president and CEO of GoTo Group, formerly known as LogMeIn, Inc., a global SaaS company and pioneer in remote work and support technology. During his time at LogMeIn, the company grew from less than $200 million to well over one billion in revenue before going private in 2020. Before LogMeIn, Mr. Wagner held COO and CMO roles at Vocus and Fiberlink, respectively, after beginning his career at AT&T.
“I am excited to step into the CEO role and partner with Oleg and the team as Semrush continues to bring its fully-integrated, AI-powered digital marketing platform to organizations of all sizes," said Mr. Wagner. "As a Board member over the last several years, I've had a chance to get to know Oleg and the entire Semrush leadership team while also having a seat at the table as the Company developed its strategies, pushed into AI, and recently introduced an enterprise product that has already found early traction in the market. As a successful entrepreneur, Oleg's passion has always been developing cutting-edge technology to help marketers, and I'm thrilled to work alongside him to continue growing the business and accelerating our innovation."
“Bill has been one of my closest advisors since joining the Board nearly three years ago, and I’ve had the pleasure of collaborating with him as we’ve built out the leadership team, grown the Company, and become more profitable,” said Oleg Shchegolev, Co-Founder and current CEO of Semrush. “He has deep experience scaling software companies through both product-led growth and enterprise sales motions, and I’m confident he is the right person to drive the next phase of growth at Semrush. This move also allows me to focus 100% of my time on my passion to leverage AI, drive innovation and expand our product offerings.”
“The Board believes we have created the strongest and most experienced SaaS leadership team, with the powerful combination of Bill and Oleg, to accelerate Semrush’s growth. By leveraging Oleg’s passion for innovation combined with Bill’s expertise at scaling SaaS companies, we have the ultimate win for the company, customers and importantly, shareholders,” said Mark Vranesh, Chairman of the Board.
Fourth Quarter and Full Year 2024 Financial Highlights
•Fourth quarter revenue of $102.6 million, up 23% year-over-year and full year 2024 revenue of $376.8 million, up 22% year-over-year.
•Income from operations of $1.7 million for the fourth quarter and income from operations of $8.3 million for the full year.
•Fourth quarter operating margin of 1.7% and full year operating margin of 2.2%.
•Non-GAAP income from operations of $11.8 million for the fourth quarter, compared to non-GAAP income from operations of $8.3 million in the prior year period.
•Non-GAAP income from operations of $45.8 million for the full year 2024, compared to non-GAAP income from operations of $11.6 million for the full year 2023.
•Non-GAAP operating margin of 11.5% for the fourth quarter and full year non-GAAP operating margin of 12.2%.
•Q4 free cash flow of $9.5 million and free cash flow margin of 9.3%.
•ARR of $411.6 million as of December 31, 2024, up 22% year-over-year.
•Approximately 117,000 paying customers as of December 31, 2024, up 8% from a year ago.
•Dollar-based net revenue retention of 106% as of December 31, 2024.
See “Non-GAAP Financial Measures & Definitions of Key Metrics” below for how Semrush defines ARR, dollar-based net revenue retention, non-GAAP income from operations, non-GAAP operating margin, free cash flow, and free cash flow margin, and the financial tables that accompany this release for reconciliations of each non-GAAP financial measure to its closest comparable GAAP financial measure.
Fourth Quarter 2024 Business Highlights
We remain committed to empowering our customers with a best-in-class platform designed to boost their online presence and gain an edge in the market. In the fourth quarter, we advanced and expanded many of our offerings:
•Semrush Enterprise SEO Solution is receiving strong demand; ending the year with over $9 million in ARR across 144 enterprise customers.
•Continued investments in Generative AI to provide enhanced, more efficient content creation and marketing capabilities through Semrush’s platform and App Center:
◦Added AI Social Assistant, a solution that streamlines the content curation process for businesses, helping them build a social media following and grow their brand presence.
◦Introduced AI Strategic Market Insights, a solution that automates and simplifies the market research process for customers, enabling quicker and more informed strategic decision-making.
◦Released Video SEO Builder, a solution that leverages AI video generation and a planning dashboard to help marketers plan, schedule, and execute long-term video SEO strategies.
•Semrush customers who pay more than $10,000 annually grew by 40% year-over-year.
•Ended the year with over 1.0 million registered free active customers.
“Our strong business momentum continued throughout the year, ending the fourth quarter exceeding our guidance and delivering revenue growth of 23% and ARR growth of 22% year-over-year. We reported an impressive fourth quarter in SEO Enterprise sales, closing over 40 deals in December alone and more SEO Enterprise deals in Q4, than the rest of the year combined,” said Oleg Shchegolev, CEO and Co-Founder of Semrush.
“We delivered a solid fourth quarter across the board - overachieving on our top line growth and profitability, advancing our strategic priorities and positioning Semrush for our next phase of growth,” said Brian Mulroy, CFO of Semrush. “Our strong revenue performance was driven by an expansion of our average revenue per customer as we continue to execute on our cross-sell and up-sell strategy, and in particular, we saw accelerated adoption during the quarter of our enterprise SEO solution. We continued to improve our profitability and delivered positive non-GAAP operating income of $11.8 million, resulting in a non-GAAP operating margin of 11.5%, up 150 basis points year-over-year, and cash flow from operations of $11.9 million. Looking ahead, we are confident about our ability to drive growth, profitability and free cash flow generation in 2025.”
Based on information as of today, February 26, 2025, we are issuing the following financial guidance:
First Quarter 2025 Financial Outlook
•For the first quarter, we expect revenue in a range of $103.9 million to $104.7 million, which at the mid-point would represent growth of approximately 22% year-over-year.
•We expect first quarter non-GAAP operating margin to be approximately 11%.
Full-Year 2025 Financial Outlook
•For the full year, we expect revenue in a range of $448 to $453 million, which represents growth of approximately 20% year-over-year at the mid-point.
•We expect a full year non-GAAP operating margin of approximately 12%.
•We expect the full year free cash flow margin to be approximately 12%.
Reconciliations of non-GAAP operating margin and free cash flow margin guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
Conference Call Details
Semrush will host a conference call and webcast to discuss its financial results, business highlights, outlook and other matters, the details for which are provided below.
Date: Thursday, February 27th, 2025
Time: 8:30 a.m. ET
Hosts: Oleg Shchegolev, CEO, Eugene Levin, President, Brian Mulroy, CFO and Bill Wagner, Board Member
Conference ID: 448113
Participant Toll Free Dial-In Number: +1 833 470 1428
Participant International Dial-In Number: +1 929 526 1599
Registration:
The live webcast of the conference call as well as the replay can be accessed for a limited time from the Semrush investor relations website at http://investors.semrush.com/.
About Semrush
Semrush is a leading online visibility management SaaS platform that enables businesses globally to run search engine optimization, advertising, content, social media and competitive research campaigns and get measurable results from online marketing. Semrush offers insights and solutions for companies to build, manage, and measure campaigns across various marketing channels. Semrush is headquartered in Boston and has offices in Dallas, Amsterdam, Barcelona, Belgrade, Berlin, Limassol, Prague, Warsaw, and Yerevan.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “positioning,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements include, but are not limited to, guidance on financial results for the first quarter and full year of 2025 (including revenue, non-GAAP operating margin, and free cash flow margin); statements about future changes to our executive management team; statements regarding the expectations of demand for our products and cash flow generation; statements about improvements to and expansion of our products and platform, and launching new products; statements about future operating results, including revenue, growth opportunities, variability of expenses, ability to realize efficiencies, future spending and incremental investments, business trends, our ability to deliver profits, and growth and value for shareholders.
The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission (“SEC”), including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations'' in our filings with the SEC, including our most recent annual report on form 10-K, and our subsequently filed quarterly reports and other SEC filings. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. The
forward-looking statements in this release are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Additional information regarding these and other factors that could affect our results is included in our SEC filings, which may be obtained by visiting our Investor Relations page on its website at investors.semrush.com or the SEC's website at www.sec.gov.
Non-GAAP Financial Measures & Definitions of Key Metrics
We believe that providing non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but also to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. We also believe that the use of non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. We also believe free cash flow margin is useful to investors as we monitor it as a measure of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allows us to better understand the cash needs of our business. The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Investors are encouraged to review the reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release.
Annual Recurring Revenue (ARR) is defined as the total subscription revenue as of a given date that we expect to contractually receive over the subsequent 12 months from customers on an annualized basis, assuming no increases, reductions or cancellations.
This ARR definition has been updated to simplify the explanation of our calculation around the treatment of monthly and longer-term contracts, and to be more consistent with other SaaS businesses, which we believe improves the ability for investors to compare our metric against other businesses. Additionally, our definition has been updated to note that we do not assume there will be any increases, reductions, or cancellations. Given our efforts to retain and win back customers, and our belief that we will be successful in many of those retention efforts, we believe the updated definition is more accurate. We are not recasting ARR results to conform ARR under the prior definition to the updated definition as there is no variance between the two definitions for the periods presented.
Dollar-based net revenue retention is defined as (a) the revenue from our customers during the twelve-month period ending one year prior to such period as the denominator and (b) the revenue from those same customers during the twelve months ending as of the end of such period as the numerator. This calculation excludes revenue from new customers and any non-recurring revenue.
Free cash flow and free cash flow margin. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software development costs. We define free cash flow margin as free cash flow divided by GAAP revenue.
Non-GAAP income (loss) from operations, and non-GAAP operating margin. As described above, we have updated our definitions for non-GAAP income (loss) from operations and have introduced non-GAAP operating margin; the updated definitions, which apply to our guidance for the fourth quarter and full year 2024, are as follows. We define non-GAAP income (loss) from operations as GAAP income (loss) from operations, excluding Stock Based Compensation, Amortization of Acquired Intangible Assets, Acquisition Related Costs, Restructuring Costs and other one-time expenses outside the ordinary course of business (for example, our Exit Costs incurred primarily in 2022). We define non-GAAP operating margin as non-GAAP income (loss) from operations divided by GAAP revenue. We believe investors may want to consider our results with and without the effects of these items in order to compare our financial performance with that of other companies that exclude such items and to compare our results to prior periods.
Stock-based compensation.
Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense allows for financial results that are more indicative of our operational performance and provide for a useful comparison of our operating results to prior periods and to our peer companies because stock-based compensation expense varies from period to period and company to company due to such things as differing valuation methodologies, timing of awards and changes in stock price.
Amortization of acquired intangible assets.
Excluding amortization of acquired intangible assets from non-GAAP expense and income measures allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation.
Restructuring and other costs.
Restructuring and other costs include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business. Restructuring expenses consist of employee severance costs, charges for the closure of excess facilities and other contract termination costs. Other costs include litigation contingency reserves, asset impairment charges, relocation expenses associated with the migration of employees in 2022 that occurred throughout 2022 and early 2023, and gains or losses on the sale or disposition of certain non-strategic assets or product lines.
Acquisition-related costs.
In recent years, we have completed a number of acquisitions, which result in transition, integration and other acquisition-related expense which would not otherwise have been incurred, are unpredictable and dependent on a significant number of factors that are deal-specific or outside of our control, are not indicative of our operational performance (or that of the acquired businesses or assets) and are likely to fluctuate as our acquisition activity increases or decreases in future periods. By excluding acquisition-related costs and adjustments from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us.
Semrush Holdings, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three months ended December 31, | Fiscal Year ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||
| Revenue | $ | 102,642 | $ | 83,394 | $ | 376,815 | $ | 307,675 |
| Cost of revenue ¹ | 18,812 | 13,684 | 65,477 | 52,327 | ||||
| Gross profit | 83,830 | 69,710 | 311,338 | 255,348 | ||||
| Operating expenses | ||||||||
| Sales and marketing ¹ | 39,730 | 31,044 | 144,340 | 126,871 | ||||
| Research and development ¹ | 21,305 | 15,371 | 80,080 | 57,442 | ||||
| General and administrative ¹ | 21,054 | 20,613 | 78,610 | 77,410 | ||||
| Exit Costs | — | — | — | 1,292 | ||||
| Total operating expenses | 82,089 | 67,028 | 303,030 | 263,015 | ||||
| Income (loss) from operations | 1,741 | 2,682 | 8,308 | (7,667) | ||||
| Other income, net | 2,927 | 5,585 | 12,094 | 12,313 | ||||
| Income before income taxes | 4,668 | 8,267 | 20,402 | 4,646 | ||||
| Provision for income taxes | 1,375 | 1,393 | 13,027 | 3,696 | ||||
| Net income | 3,293 | 6,874 | 7,375 | 950 | ||||
| Net loss attributable to noncontrolling interest in consolidated subsidiaries | (52) | — | (861) | — | ||||
| Net income attributable to Semrush Holdings, Inc. | $ | 3,345 | $ | 6,874 | $ | 8,236 | $ | 950 |
| Net income attributable to Semrush Holdings, Inc. per share attributable to common stockholders—basic: | $ | 0.02 | $ | 0.05 | $ | 0.06 | $ | 0.01 |
| Net income attributable to Semrush Holdings, Inc. per share attributable to common stockholders—diluted: | $ | 0.02 | $ | 0.05 | $ | 0.06 | $ | 0.01 |
| Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders—basic: | 146,763 | 143,620 | 145,865 | 142,593 | ||||
| Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders—diluted: | 149,483 | 146,889 | 148,862 | 146,065 | ||||
| ¹ includes stock-based compensation expense as follows: | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three months ended December 31, | Fiscal Year ended December 31, | |||||||
| 2024 | 2023 | 2024 | 2023 | |||||
| Cost of revenue | $ | 70 | $ | 48 | $ | 239 | $ | 130 |
| Sales and marketing | 1,535 | 887 | 4,742 | 3,077 | ||||
| Research and development | 2,192 | 749 | 5,906 | 2,213 | ||||
| General and administrative | 4,346 | 2,889 | 17,112 | 9,917 | ||||
| Total stock-based compensation | $ | 8,143 | $ | 4,573 | $ | 27,999 | $ | 15,337 |
The following table sets forth a reconciliation of our income from operations and operating margin to non-GAAP income from operations and non-GAAP operating margin (percentage amounts may not sum due to rounding):
| Three months ended December 31, | Fiscal Year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Reconciliation of Non-GAAP income (loss) from operations | () | (%) | () | (%) | () | (%) | () | (%) | ||||
| Income (loss) from operations | 2 | % | 3 | % | 2 | % | (2) | % | ||||
| Stock-based compensation | 8,143 | 8 | % | 4,574 | 5 | % | 27,999 | 7 | % | 15,337 | 5 | % |
| Amortization of acquired intangibles | 1,384 | 1 | % | 680 | 1 | % | 4,346 | 1 | % | 2,307 | 1 | % |
| Restructuring and other costs | (101) | — | % | — | — | % | 2,230 | 1 | % | 1,292 | — | % |
| Acquisition-related costs | 652 | 1 | % | 372 | — | % | 2,917 | 1 | % | 372 | — | % |
| Non-GAAP income from operations | 12 | % | 10 | % | 12 | % | 4 | % |
All values are in US Dollars.
The following table sets forth a reconciliation of our net cash provided by operating activities to free cash flow (percentage amounts may not sum due to rounding):
| Three months ended December 31, | Fiscal Year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Reconciliation of Free cash flow | () | (%) | () | (%) | () | (%) | () | (%) | ||||
| Net cash provided by operating activities | 11.6 | % | 13.9 | % | 12.5 | % | 2.6 | % | ||||
| Purchases of property and equipment | (391) | (0.4) | % | (1,421) | (1.7) | % | (3,802) | (1.0) | % | (2,486) | (0.8) | % |
| Capitalization of internal-use software costs | (2,020) | (2.0) | % | (1,252) | (1.5) | % | (7,862) | (2.1) | % | (5,165) | (1.7) | % |
| Free cash flow | 9.3 | % | 10.6 | % | 9.4 | % | 0.1 | % |
All values are in US Dollars.
Semrush Holdings, Inc.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands)
| As of | ||||
|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 48,875 | $ | 58,848 |
| Short-term investments | 186,693 | 179,721 | ||
| Accounts receivable | 8,955 | 7,897 | ||
| Deferred contract costs, current portion | 10,044 | 9,074 | ||
| Prepaid expenses and other current assets | 21,617 | 10,014 | ||
| Total current assets | 276,184 | 265,554 | ||
| Property and equipment, net | 6,534 | 6,686 | ||
| Operating lease right-of-use assets | 11,126 | 14,069 | ||
| Intangible assets, net | 32,055 | 16,083 | ||
| Goodwill | 56,139 | 24,879 | ||
| Deferred contract costs, net of current portion | 3,080 | 3,586 | ||
| Other long-term assets | 5,825 | 633 | ||
| Total assets | $ | 390,943 | $ | 331,490 |
| Liabilities and stockholders' equity | ||||
| Current liabilities | ||||
| Accounts payable | $ | 10,463 | $ | 9,187 |
| Accrued expenses | 20,216 | 19,891 | ||
| Deferred revenue | 71,827 | 58,310 | ||
| Current portion of operating lease liabilities | 4,669 | 4,274 | ||
| Other current liabilities | 6,913 | 2,817 | ||
| Total current liabilities | 114,088 | 94,479 | ||
| Deferred revenue, net of current portion | 235 | 331 | ||
| Deferred tax liability | 1,621 | 839 | ||
| Operating lease liabilities, net of current portion | 7,602 | 10,331 | ||
| Other long-term liabilities | 1,045 | 1,195 | ||
| Total liabilities | 124,591 | 107,175 | ||
| Stockholders' equity | ||||
| Class A common stock | 1 | 1 | ||
| Class B common stock | — | — | ||
| Additional paid-in capital | 322,586 | 291,898 | ||
| Accumulated other comprehensive loss | (2,221) | (752) | ||
| Accumulated deficit | (63,762) | (71,998) | ||
| Total stockholders' equity attributable to Semrush Holdings, Inc. | 256,604 | 219,149 | ||
| Noncontrolling interest in consolidated subsidiaries | $ | 9,748 | $ | 5,166 |
| Total stockholders’ equity | 266,352 | 224,315 | ||
| Total liabilities and stockholders' equity | $ | 390,943 | $ | 331,490 |
Semrush Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Fiscal Year Ended December 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Operating Activities | ||||
| Net income | $ | 7,375 | $ | 950 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||||
| Depreciation and amortization expense | 10,068 | 6,790 | ||
| Amortization of deferred contract costs | 12,451 | 10,379 | ||
| Amortization (accretion) of premiums and discounts on investments | (3,270) | (6,067) | ||
| Non-cash lease expense | 4,570 | 3,940 | ||
| Stock-based compensation expense | 27,999 | 15,337 | ||
| Non-cash interest expense | — | 209 | ||
| Change in fair value included in other income, net | (1,114) | (3,552) | ||
| Deferred taxes | (1,094) | 301 | ||
| Intangible asset impairment expense | 511 | 122 | ||
| Other non-cash items | 978 | 858 | ||
| Changes in operating assets and liabilities | ||||
| Accounts receivable | 708 | (3,789) | ||
| Deferred contract costs | (12,915) | (13,982) | ||
| Prepaid expenses and other current assets | (4,786) | (2,347) | ||
| Accounts payable | 450 | (7,394) | ||
| Accrued expenses | 1,384 | 1,627 | ||
| Other current liabilities | (507) | (238) | ||
| Deferred revenue | 8,479 | 8,755 | ||
| Other long-term liabilities | 91 | — | ||
| Change in operating lease liability | (4,382) | (3,913) | ||
| Net cash provided by operating activities | 46,996 | 7,986 | ||
| Investing Activities | ||||
| Purchases of property and equipment | (3,802) | (2,486) | ||
| Capitalization of internal-use software costs | (7,862) | (5,165) | ||
| Purchases of short-term investments | (151,170) | (257,516) | ||
| Proceeds from sales and maturities of short-term investments | 147,500 | 241,641 | ||
| Purchases of convertible debt securities | (3,650) | (326) | ||
| Funding of investment loan receivables | (7,757) | — | ||
| Cash paid for acquisition of assets and businesses, net of cash acquired | (25,902) | (5,066) | ||
| Purchase of noncontrolling interest | (5,383) | — | ||
| Purchases of other investments | (196) | (150) | ||
| Net cash used in investing activities | (58,222) | (29,068) | ||
| Financing Activities | ||||
| Proceeds from exercise of stock options | 4,118 | 2,240 | ||
| Proceeds from issuance of shares in connection with Employee Stock Purchase Plan | — | 264 | ||
| Repayment of acquired debt | (1,618) | — | ||
| Payment of finance leases | (630) | (2,523) | ||
| Net cash provided by (used in) financing activities | 1,870 | (19) | ||
| Effect of exchange rate changes on cash and cash equivalents | (432) | 184 | ||
| Decrease in cash, cash equivalents and restricted cash | (9,788) | (20,917) | ||
| Cash, cash equivalents and restricted cash, beginning of period | 58,848 | 79,765 | ||
| Cash, cash equivalents and restricted cash, end of period | $ | 49,060 | $ | 58,848 |
INVESTOR
Brinlea C. Johnson
The Blueshirt Group
Semrush Holdings, Inc.
ir@semrush.com
MEDIA
Jena Sullivan
Senior Public Relations Manager
Semrush Holdings, Inc.
jena.sullivan@semrush.com