Similarweb Ltd. Q4 FY2021 Earnings Call

Greetings and welcome to Similarweb Quarter Four Fiscal 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Annie Rosenberg. Thank you, and over to you, ma'am.

Thank you, operator. During this call, we will make forward-looking statements related to our business, including statements related to the expected performance of our business, future financial results, strategy, the potential impacts of the COVID-19 pandemic and associated global economic uncertainty, 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. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please review our filings with the SEC, including our final prospectus and the section entitled Risk Factors therein filed with the SEC on May 12, 2021, for a discussion of the factors that could cause our results to differ. Also, note that forward-looking statements on this call are based on information available as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. As a reminder, certain financial measures we use in this presentation and on our call, today are expressed on a non-GAAP basis. We use these 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. With that, I will turn the call over to Or Offer, CEO of Similarweb.

Thank you, Annie, and thank you all for joining us here today for our Q4 2021 earning call. It's great to be here with all of you this morning. We finished 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, which represents an increase of 15 percentage points of growth over the 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 2022, we are seeing very strong tailwinds for the business and increasing demand for our solution. In light of those favorable conditions, we will continue to invest across the business to further nurture and grow our customer base, as well as strengthen our product portfolio and data assets. The strength of our customer base has also improved. In 2021, our most significant growth came from our largest and most strategic customer segments, 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 doubled our rate of new customer acquisition versus 2020. We continue to see our customer growth driven by a diverse set of industries. In 2021, the new logos we added included 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 customers signed to multi-year contracts, an 8 percentage point increase from the 25% of ARR last year, and even more significantly, we have increased our customer total lifetime value, with the NRR hitting an all-time high. We closed Q4 with an overall NRR of 113% and 125% for the critical $100,000 ARR customer segment, making both a 12 percentage point improvement over Q4 2020 numbers. I want to pause here for a moment to reflect on what I see as the most important market driver for our business growth. We believe that today the number one mission from 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 is possible to almost instantly reach and sell to audiences at a global scale. In this world where growth potential is almost unlimited, data is king. We will see and capture the growth opportunities. Every company is looking for better market data. They need a complete picture of what's happening in the markets to ensure they 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 insight that guides them on 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. This is why we see a huge term 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 for this product. Shopper Intelligence is a highly differentiated solution that provides our customers with incredible insight into consumer behavior within online marketplaces. In Q4, we expanded this offering significantly, improving our marketplace insights by adding Walmart, Target, Best Buy, and Chewy to 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 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 are continuing to add major enhancements to our other offerings 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 over 400 million contacts with digital traffic, engagement insights, and technographic data. We believe this combination of data and insight is ideal for sales organizations targeting digital-first businesses, such as e-commerce, publishing, payment and digital advertising. Now, with just one Similarweb solution, sales representatives can identify qualified accounts, connect with the right decision-makers and influencers, and engage those prospects with a compelling pitch that leverages our proprietary digital insights. Finally, as you may have seen, I am very excited about today's announcement of a new data licensing agreement with App Annie, a market leader in mobile app insights. The agreement gives us access to an important set of App Annie mobile application data, which we will incorporate into our platform. We plan to launch a new offering based on the App Annie data and insights in Q2. By bringing together our respective best-in-class data, we believe Similarweb will be able to deliver an even more accurate and 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 a unified approach to optimizing their digital strategy across platforms. In 2021, we also enhanced and expanded our product offering by completing two acquisitions, SimilarTech and Embee Mobile. Both transactions demonstrate our ability to execute on smart acquisition opportunities and improve our customer value. SimilarTech technographic data is now used across the board in almost every Similarweb product, from our free offering to solutions like Sales Intelligence and Investor Intelligence, as well as API and data feeds. Embee Mobile, which was completed in Q4, is already being used to enhance our offerings 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 segments every category and brand on Amazon according to education level, household size, income, and employment status. We believe it is a highly distinct feature in the market, and it would not have been possible without data from the Embee Mobile acquisition. Finally, in 2021, we continued to invest in our people, aggressively scaling our organization to support our growth. We expanded geographically, adding new offices in Munich and Northern Virginia, and we are working hard to build out our new Similarweb headquarters, which will be located in the center of the Tel Aviv metropolitan area. When it's completed, we believe it will be a significant attraction that will help us 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 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-in-all 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 are continuing to add to and improve our product portfolio and offering, both organically and inorganically, expanding our TAM 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 one of the best-in-class SaaS businesses. Most importantly, we are a leader in the 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 our progress and the opportunity we have going forward. We delivered a strong Q4, culminating in a year of tremendous acceleration in our business. We are confident about our growth strategy and our ability to capture a large share of a very valuable market.

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 by both 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. The 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 commitments, 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 Embee 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 at $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 for 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 expenses totaled $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 a 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 investments we are making to further expand our data modes through strategic moves such as the acquisitions of SimilarTech and Embee Mobile, as well as the data licensing agreement with App Annie. This also includes a 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 million 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 are heading into 2022 with strong momentum.

At this time, we will be conducting a question-and-answer session. The first question comes from the line of Brent Thill with Jefferies. Please go ahead.

Hi. This is John Gaunt for Brent. Thanks for the question. Just two questions: first on the aggressive investment plan for '22 that you are continuing. If you could go a little bit more detail as to where those things would be focused or prioritized across OpEx and other investment needs? And then in terms of the ARR 2024, I mean, that looks like a pretty big growth and just wondering how you're thinking about the bridge from last year's $165 million to that number in '24? Thank you.

Thanks so much. Look, as we mentioned in the first part of the call, we're seeing a great opportunity ahead of us, and the momentum that we're seeing in the business in terms of both unit economics and revenue growth is significant. We see the demand coming in, and you're seeing the guidance we’re giving for the upcoming year, and we see that the opportunity ahead of us and the big TAM, and our market position is not going away.

The next question comes from the line of Bhavan Suri with William Blair. Please go ahead.

Hi, Jason. Hi, Or. This is actually Arjun Bhatia on for Bhavan. Great quarter, guys. If I can ask on the App Annie partnership, can you just give us a sense for how the data assets that you're getting through App Annie differ from Embee Mobile? Are these going to be complementary in the new offering that you're planning to introduce in Q2 here, or do they both end up feeding into that offering? Just help us understand the difference how the data differs between the two assets there?

Hi. Of course, it's a great question. And first of all, there is a significant difference between Embee mobile data and App Annie data. Embee data is based more on a metered panel where you have a small sample of the panel but a lot of deep data about demographics, and one example that we discussed here and there means how we're using this data to enrich our shopper solution about what people buying online look like demographically. Embee data also presents in-app activity that is somewhat different than the data that App Annie provides. So there is a significant difference and different use cases for all those assets.

Perfect. Very helpful. And then I wanted to touch on large customer activity; it seems like deal sizes are getting larger overall, and even amongst your largest customer deal sizes are getting larger. Can you maybe just give us a sense of where digital data and intelligence is on the investment priority list for enterprises today? And then I would love to understand this 2024 target that you put out where enterprise activity and large deals actually flow into that, I think it's like a 40% to 45% CAGR that you've implied in that 2024 target? Thank you.

I think that as our offering is growing and we are improving our product—not only to access the data but the insights we pull—and our ability to train and teach our customers how to drive more ROI from the market data we provide, they start to see ROI, and then their willingness to pay goes up. If you think about Similarweb’s resource solution five years ago compared to what we're offering them today, the offering is dramatically bigger. So we are presenting more deep and more advanced software that illuminates the customer's ability to pay, and their willingness is increasing. This is one element. The second is our transition of the company to a multi-offering solution. Historically, we used to lend only with research solutions, now we are reaching out to enterprises, and we have a full suite of offerings to them. We have substantial capability not just in research but also in marketing and sales enablement, which all drives more growth. So, I think all those combinations are contributing to the increasing value and average contract value you see growing very nicely over the past few years.

The next question comes from the line of Sterling Auty with JP Morgan. Please go ahead.

Hi. This is Maya on for Sterling. And so looking at the 75% gross margins during the quarter, does most of that come from the App Annie licensing deal and just how are you thinking about gross margins moving forward?

Yeah. I will address part, and if Jason wants to join, he can. The App Annie deal will only take effect in Q1, so the gross margin you're observing is from Q4 and it's primarily derived from the acquisition of Embee. We have to integrate there and manage the metered panel and the personnel involved. This acquisition was to strengthen our moat around our data, and we are very bullish about it. We think strategic moves like all these will help us increase our data acquisition over the long term and build a unique offering that will bring the company to an 80% gross margin, which is our target. But that's my perspective. Jason, do you want to add anything?

Like you said, Or, the App Annie licensing agreement will only go into effect in 2022. Most of our costs in our cost of revenue are fixed costs, and as we integrate Embee Mobile and see the revenue that comes in, we get a lot of leverage out of those fixed costs, both on the data side as well as on personnel.

Okay. Great. And then just a follow-up. So between now and those fiscal '24 targets, do you see that 125% retention rate for the top bucket of customers as kind of a target retention rate between now and then?

Of course not. We are only getting started is what I would like to say.

Like we are excited about the performance we've had this year and the transformation from 2020 into 2021 has been significant. We are pleased with the momentum and, as Or said, there's a lot of business to be done over the next few years.

The next question comes from the line of Jason Helfstein with Oppenheimer. Please go ahead.

Hey, guys. Thanks. So, just on Embee, how much or how much would we all have that factored into our gross margin for the quarter? I guess how fast would you expect the gross margin to recover as you scale those costs? I mean, again, by the end of this year would the gross margins be coming back to historical levels? And then, I guess on top of that, and maybe the answer is no, how are you thinking about the impact of App Annie this year on revenue, gross margins, and EBITDA? And then I guess, I don't think you did, but maybe opine on the deal laying the terms, why not buy them, anything you want to share? Thanks.

Sure. Let me start with the financial questions you had. I think you're exactly right; we're expecting to see gross margins start returning to historical levels by the end of this year, consistent with what we've done in the past. When you look at the historical gross margin progression, you saw gross margin go from 54% in 2018 to 71% in 2019 and then 77% to 78% last year as we added additional datasets and increased our data moat, and then leveraged that as we grew and accelerated our revenue. I think you'll see the same trend continue here. In terms of the impact of App Annie, the App Annie deal is factored into our guidance that we provided earlier today.

I guess, I'm asking how much of the guidance is attributed to App Annie versus not App Annie? And then Or can answer the other question.

We’re feeling very comfortable with the guidance that we've given and are looking forward to a strong year.

I'm trying to be careful here because we have an agreement with App Annie that I'm not 100% sure what we can disclose or not disclose, but the terms involve a fixed price that we pay. We have a really great relationship with the App Annie management and highly respect them, and we're very excited that we're able to establish this partnership that strengthens our collaboration. Time will tell.

The next question comes from the line of Pat Walravens with JMP Securities. Please go ahead.

Great. Thank you, and congrats on the 51% growth, you guys. So, first of all, Jason, I emailed you about this during the quarter, but when I was using the product, which we do, there was a message that popped up in January that said, we're having issues with the app analysis section that began in January, and we expect to have it resolved sometime in February. Can you talk about what that was and was that related to the App Annie data?

Yeah. I will address that. So first, what happened is that it was a bug in our R&D team; one of them deployed a code on a Friday night that created a bug and caused some issues. It took them two days to discover and fix it, so that’s what occurred. This was just a silly mistake, and there is nothing to do with the App Annie deal as you can probably tell. The discussion and relationship with App Annie has been ongoing for many months, so there is no relation between those issues.

Okay. Great. And then, Jason, can you maybe, if you look at the operating income or really operating loss guidance versus the Street, for 2022, it's a $35 million delta. Can you bucket that for us, a third this, a third that or half this, half that just roughly? How does that $35 million break down?

The bulk of that is what you will see in both our R&D and our sales and marketing expenses, which is really focused on making the investments in order to drive the growth of the business. We had strong conviction when we started 2021 that we had hit an inflection point that the business was solid. Remember, at the end of 2020, we were effectively a cash flow breakeven business. We know how to manage a cash flow breakeven operation. However, what we saw in front of us was this big TAM and the big opportunity, along with the strong unit economics and the efficient land-and-expand model. This is not only reflected in revenue growth, but also in our strong NRR. This is our proof that our conviction was right. Therefore, we are continuing to invest to capture the TAM we see ahead of us. I'll break down the costs for you offline. But, it's primarily focused on headcount and marketing activities to leverage growth opportunities.

Thank you. The next question comes from the line of Ryan MacWilliams with Barclays. Please go ahead.

Thanks for taking the questions and I am pleased to hear about the opportunity ahead for Similarweb. Or, how can Similarweb benefit from Amazon retiring alexa.com in May? Do you view this primarily as a source of new logo growth or do you think this could be a meaningful revenue opportunity? Thanks.

I think this is a great opportunity for Similarweb for two reasons. One is traffic and awareness. Alexa.com, which was owned by Amazon, was a significant source for ranking digital assets and was attracting, I think, a few million visitors that will need to find a new home for ranking and statistics. They will come to us, so we would be the only place to provide this data. The second reason is that I think there is a great amount of business that will look for a new home and an alternative. While I can't predict the exact numbers, I can assume we have many customers that I think Similarweb is the right place to turn to as an alternative. So, I think we will benefit from this, but I can't quantify how much.

Perfect. And then maybe for Jason, have you quantified what Embee Mobile contributed to revenue this quarter and then maybe into the guidance for next year? And you mentioned targeted investments to support new products, so what does that investment look like for Shopper Intelligence to capitalize on the early momentum there? Thanks.

Hi. Thanks, Ryan. The Embee standalone contribution to Q4 2021 revenue was not significant, nor material. But one of the things we mentioned when we announced the acquisition last quarter is that the data moat that it creates and the enhancements it enables on our existing solutions is impactful. As Or mentioned earlier, we are enhancing Shopper Intelligence and providing demographic data that we couldn't do before because we could now leverage that data from Embee Mobile, and we are excited about the positive impact it has on our existing products and the ongoing net retention we expect to see when selling to our existing customer base along with acquiring new customers. As for the investments on the investment side—we do not break down allocations for specific solutions—but we regard Shopper Intelligence as being in the very early stages of growth, and we foresee significant contributions from that product reflected in the guidance we've provided today. Thanks so much.

The next question comes from the line of Tyler Radke with Citi. Please go ahead.

Hey. Good morning. Thanks for taking the question. Wanted to ask you just about what you saw in the quarter in terms of seasonality. I think if I look at the net new ARR contribution last year, Q4 was your biggest quarter; this year it looks like Q3 came in ahead of Q4. So anything to call out from a seasonality perspective, and would you expect with accelerated sales and marketing investments that ARR growth should accelerate next year as well? Thank you.

Yes, Tyler. Thanks for the question. Last year was an outstanding Q3, this year Q4 was great performance overall, exceeding all expectations—both what we had guided to and what you guys expected, so we're proud of the results in Q4. More importantly, the momentum we see going into this year is part of the guidance we have updated and released now for 2022. I think we are already seeing favorable unit economics from the investments we've made in sales and marketing. This is represented in the revenue growth and the strong net retention rates you observe. Overall, metrics across the board—like customer lifetime value—are increasing, leading to an increase in net retention and pricing. The number of customers is also rising rapidly, and we're seeing continual growth among customers generating $100,000 in ARR or more—now representing 51% of our overall revenue. We are experiencing strong performance and ROI on these investments and anticipate witnessing the same as part of our strategy moving forward.

Thanks. And just a follow-up: as we think about your long-term guidance here in 2024 and 2025, if you consider the investments you need to make on the data acquisition side, do you feel like with this App Annie partnership and Embee you have completed the portfolio? What gives you confidence that you can go forward with multi-year commitments, given the rapidly evolving landscape and the investments you've made recently? Thank you.

First, this is a good question. I think from our perspective that with Embee and the App Annie partnership, we're fully covered for everything on the mobile side of things, and I don't think we will incur much more expense down the road on this. Therefore, I think we’re in a good place right now with data expenses. So looking into the future, I don’t foresee an increase. Jason, would you like to contribute anything further?

I think, Tyler, you also asked about our confidence to enter into multi-year commitments on investments. The metrics from the past quarter stand as evidence of that confidence. 33% of our ARR is contracted under multi-year agreements—this reflects a positive development. Furthermore, we observe a 60% growth in our remaining performance obligations or RPO. Thus, we have visibility into expected revenue and consequently the impetus to elevate expectations for Q1 and the full year of 2022.

Ladies and gentlemen, we have reached the end of question-and-answer session. I would like to turn the call back to Or Offer, Co-Founder and CEO for closing remarks. Thank you.

Thank you everyone. We appreciate you for joining us today and for your time. As I said before, we're just getting started, and we are very excited heading into Q1 2022 with this great momentum. Here’s to an amazing year ahead. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.