Similarweb Ltd. Q4 FY2025 Earnings Call

Greetings. Welcome to Similarweb Fourth Quarter Fiscal 2025 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to Rami Myerson, Vice President, Investor Relations. Thank you. You may begin.

Thank you, operator. Welcome, everyone, to our fourth quarter 2025 earnings conference call. Joining me today are our CEO and Co-Founder, Or Offer; our Chief Financial Officer, Ran Vered, who started with us in late December 2025; and Maoz Lakovski, our Chief Business Officer, who is joining us as well. Yesterday, after market close, we released our results for the fourth quarter and published a discussion of our results in a letter to shareholders on our Investor Relations website at ir.similarweb.com. Today's webcast will be accompanied by an earnings presentation, which is new and underscores our commitment to Investor Relations and transparent communication. The webcast can also be accessed from our Investor Relations website. 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 filed on Form 20-F 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 on the call today. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation. Today, Or and Ran will walk through the highlights of the quarter and the full year, review the progress we are making on our profitable growth strategy and provide our initial outlook for 2026. Following our prepared remarks, we will open up the call to questions from sell-side analysts. With that, I'll turn the call over to Or. Or, please go ahead.

Thank you, Rami. Welcome, everyone, joining the call today, and a special welcome to Ran, who joined us as our new CFO in December 2025. I will begin with our Q4 and full year 2025 highlights, then cover our strategy and the progress we made in 2025, rolling out our innovative solution and conclude with our 2026 priorities and goals. Now let's look at our Q4 2025 performance on Slide 5. Revenue grew 11% year-over-year to $72.8 million. This was below our guidance, mostly due to the timing of two large LLM data training contracts that did not close yet, but remain active in our pipeline. Given the size and complexity of those AI contracts, sales cycles can take longer to complete. That said, once closed, we expect them to represent a very big multiyear revenue opportunity with strong expansion potential. We are working hard to close those deals. In addition, and despite the delay of those deals, we slightly exceeded the midpoint of our non-GAAP operating profit targets for the quarter through disciplined cost management. Despite the low topline performance, we delivered our ninth consecutive quarter of positive free cash flow and achieved our second consecutive year of positive operating profit. We generated approximately $13 million in free cash flow for the year, reinforcing our commitment to profitable and durable growth. Net revenue retention for all clients was 98% and 103% for clients above $100,000. We are focused on driving improvement in these metrics in 2026 by executing our customer expansion playbook. Later on, I will expand on the drivers behind that optimism and the action we are taking. Finally, customer demand for our AI offering continued to expand. AI-related revenue reached 11% of sales in the fourth quarter, up from 8% at the end of the second quarter of 2025, driven by our portfolio of AI solutions which we also will cover later in the presentation. Turning to Slide 6 and our key messages. First, 2025 was a build year. We built the platform to win in the AI era, while the market was dynamic we leaned into the opportunity forming around AI. We accelerated product innovation and launched new offerings such as App Intelligence, which was the fastest-growing product we had in 2025. We introduced ad intelligence, Gen AI intelligence, AI agent, and MCP integrations, which is a new industry standard for AI systems to access our data. Most recently, we launched an AI studio which is an AI-powered chatbot interface that makes it easier for more users to access our data and actionable insights and recommendations. These are commercial products already gaining traction. As said, in Q4, 11% of our revenue came from AI-related use cases. We see AI as a significant tailwind going forward. Second, we demonstrated the strength and durability of our model with AI revenue growing year-over-year and we achieved our second consecutive year of positive operating profit and free cash flow. One important highlight is that 60% of ARR is now multiyear, up from 49% a year ago. This is an important metric as it reflects deeper customer relationships, stronger alignment with our value proposition and greater revenue visibility. Most importantly, it shows that our customers are choosing to commit to our data and products for a longer period of time, which is a strong vote of confidence in the value we deliver. In addition, 63% of ARR comes from customers generating over $100,000 annually, reinforcing how embedded we are in mission-critical use cases in the enterprise segment. Third, our data moat matters more than ever. AI models and systems are only as strong as the data behind them. Our proprietary digital data now powers enterprises, LLM, and AI agents, and the quality of our data has been validated by both third parties and customers. For example, we expanded our integration within the Bloomberg terminal. This positions SimilarWeb as a premium alternative data provider for institutional investors and provides another proof point for the quality of the data we provide. Lastly, 2026 is a transformation year. We are moving from building to scaling as AI becomes embedded into workflows and trusted digital data becomes a strategic asset. We believe SimilarWeb is well positioned to power the next generation of digital intelligence. Let me walk you through how we are executing our strategy to build an AI-driven data powerhouse on Slide 7. Our strategy is built on three pillars: strengthening our data moat, deepening enterprise relationships, and scaling AI-first integrated solutions. We are a leader in the digital market data. For more than a decade, we invest hundreds of millions of dollars in developing and deepening our data moat, building deep expertise in collecting and estimating digital behavior at global scale. We continue to invest in R&D to enhance the quality, accuracy, and the breadth of the data sets that power our digital intelligence. We continue to expand coverage, accuracy, and freshness across web, app, search ads, and now chat-based channels, staying at the front wherever digital traffic is shifting. This is a hard-to-replace asset with compounding advantage and significant long-term commercial potential. AI depends on it; it's not replacing it. Second, we are powering leading enterprises with our trusted digital data. Many of the world's largest and most sophisticated companies are already our customers. We see significant opportunity to scale those relationships by applying our proven expansion playbook, increasing multiproduct adoption over time, and driving higher revenue. We already have two large tax customers generating over $10 million in ARR; those are broad multiproduct relationships across multiple teams and functions. Both have expanded into a data agreement that powered the LLMs, positioning SimilarWeb as a critical building block within the Reintec. Enterprise expansion will be a key focus area for us in 2026 and beyond. Third, we are doubling down on AI-first integrated solutions. We will continue to expand our AI portfolio to establish ourselves as a leader in the AI transformation. Our data sets are uniquely positioned to power both enterprise users and AI systems, a dual strategy built for people and for agents. Through ecosystem partnerships, data is embedded directly into AI-native workflows, especially for research-driven use cases. Just as financial data becomes essential for research platforms, chatbots, we believe that digital market data can play a similar role across all platforms and we expect it to become a significant commercial growth driver. As we execute on our three pillars, we remain fully committed to operational excellence to drive durable, profitable, and cash-generating growth. Looking at Slide 8, we made significant steps forward on our strategy in 2025. Starting with the data moat, in 2025, we launched multiple new data sets to further extend our 360-degree visibility across the digital world and establish our leadership in digital data. We significantly expanded our coverage across app data, ad spend data, chatbot activity data, and Gen AI visibility. These data sets are unique, and we believe we are uniquely positioned to provide a comprehensive view across web, app, search, e-commerce, advertising, and emerging AI-driven channels, covering the full digital journey across touchpoints. Moving to the enterprise pillar, we delivered a solid performance in 2025. Our customers generating over $100,000 grew 12% year-over-year and now represent 53% of ARR. Revenue for multiyear contracts increased significantly to 60% of ARR from 49% in 2024. Lastly, on our AI-first solution, we launched our innovative offerings, AI Studio, AI Agent, which are embedded across our business solutions to accelerate time to insight, Gen AI intelligence model which helps brands measure their visibility and sentiment across generative AI platforms, and a new chatbot MCP integration, including partnerships that opened an exciting new distribution and monetization channel. Our partnership extends our data sets into agent-driven workflows, where autonomous AI agents capable of performing complex tasks execute marketing analysis, competitive assessment, and strategic planning. This collaboration offers us significant revenue opportunities. Furthermore, it provides access to a much broader set of potential end users beyond our core subscriber base. These milestones reinforce our value proposition as a central data layer for the next generation of AI tools and serve as a strategic blueprint for more integrations to come. Those are some of the steps we took to strengthen our data moat, deepen enterprise relationships, and position SimilarWeb to win in the AI era. Slide 9 captures our AI data and product strategy on how we power the ecosystem, build AI-first solutions, and expand our tradition and scale. We are powering LLM and AI agents. We are seeing strong traction, licensing our data directly to leading LLM companies for both pre and post-training use cases. This is a strategic priority for us, and we expect it to become a strong revenue stream for us over time. At the same time, autonomous agents require trusted structured digital intelligence to operate efficiently; that's exactly what we provide. Our data is built for both humans and agents, and we see accelerating demand from both. Second, we are building our AI-native solutions. With Gen AI intelligence, we are helping brands to improve their AI visibility and sentiment. We are seeing strong market validation on this front, including recognition from G2Crowd, and we have recently launched it in a self-serve model with adoption from hundreds of customers. We believe our data provides an important competitive advantage in this new market, and we are on a journey to become a market leader in this category as well. We are also transforming our traditional software into an agent-first model, launching workflow-specific AI agents across marketing and sales use cases. This transition moves customers from insights to action with a faster time to value and stronger ROI. This effort is helping us to reach many more users and grow adoption. We are very excited about the potential of our own agentic strategy. Third, we are expanding distribution at scale. Our partnership with leading LLM and agent platforms is embedding SimilarWeb directly into the AI ecosystem. Our MCP is already available in the cloud and will soon be integrated into ChatGPT, enabling AI systems to seamlessly access our data, allowing users to consume SimilarWeb insights directly within their workflows. These ecosystem partnerships unlock new customers, expand our Total Addressable Market (TAM), and position our digital data as a critical ingredient for AI-driven research and decision-making. We believe we are well positioned to be an AI winner with multiple commercial opportunities across data products and partnerships, and we are excited about the potential. I would like to spend a moment on the AI Studio on Slide 10 because this is more than just a new product launch. AI Studio represents a huge shift in how users interact with SimilarWeb data. Historically, our platform delivered powerful data-driven insights, but often required technical expertise to express value. AI Studio changes that; with an AI-powered interface, users can ask business questions in plain language and receive actionable insights. What used to take time and specialized skills can now happen quickly and easily. This is a major step in providing access to our data across teams and workflows. AI Studio expands the number of users who can access SimilarWeb, increases engagement, enables faster and more seamless insight generation, and unlocks new monetization opportunities. The early feedback from better customers and since the launch has been amazing. We see AI Studio as a core part of our product strategy, an important driver of future growth. I encourage you to watch the demo video after the call via the link on the slide to see it in action. Let me close by reflecting back on 2025 and how it's set up for 2026 on Slide 11. 2026 is a pivotal year; we made real progress as I said, AI revenue grew 3x and now represents 11% of Q4 revenue. That is meaningful traction and globalization that AI is already contributing to the business. We also strengthened our durability of the model. Customers generating over $100,000 grew 12%, and 60% of ARR is now multiyear, up from 49% a year ago. This gives us better visibility and reinforces the depth of our enterprise relationships. At the same time, we acknowledge that 2025 was not without challenges. Overall, NRR stabilized at 98%, and we are not satisfied with that level. While NRR for our $100,000 customers was at 103%, we know we can execute better across the broader base. We have taken action by sharpening our go-to-market strategy, upgrading talent, refining processes, and building scalable playbooks to drive cross-sell and expansion. We see a clear opportunity to convert one-time AI evaluation deals into recurring revenues and to accelerate the adoption of our newer solutions across the installed base. That's why we have a strong conviction in 2026. We are well positioned to capture long-term AI spend. Our AI First portfolio is scaling, ecosystem partnerships are expanding, and we are targeting high-growth segments like LLM companies, large tech players, and OEMs with our dedicated go-to-market team and focus. With Ran joining as CFO, we will also strengthen our financial discipline and public market execution. So 2025 at this stage, and 2026 is about our disciplined execution and acceleration. With that, I will hand it over to Ran.

Thanks all. It's a pleasure to be here with you. I'll provide highlights of our financial performance and guidance for the first quarter and the full year of 2026. But before I do, let me first provide a short overview of my background, why I joined SimilarWeb and what my priorities are as your CFO. I'm very excited to join SimilarWeb at this juncture in our journey. Or and the team have built a digital data powerhouse. As we have discussed today, this unique asset is primed to take advantage of emerging opportunities in the AI generative era. SimilarWeb is my first role as a tech company CFO in over two decades. Previously, I was CFO of two U.S. listed tech companies and most recently I joined Foncia, a B2B self-intelligence Unicorn. I look forward to leveraging my experience and financial discipline to help execute our clear strategy to accelerate revenue growth to the next level, while doubling down on our commitment to expand profitability and deliver durable free cash flow. This is what I am committed to doing, all while ensuring we remain disciplined capital allocators. I look forward to meeting you over the coming weeks and months. Turning to Slide 14 in our quarterly results. We generated $72.8 million of revenue, an 11% increase relative to the fourth quarter of 2024. Revenue was lower than expected due to the delayed closing of two major LLM-related agreements that were anticipated in the fourth quarter; we remain in active discussions. Non-GAAP operating profit for the quarter was $3.4 million, reflecting a 5% margin compared to $2.6 million and a 4% margin in 2024. This was within our guidance range, thanks to disciplined cost control. Turning to the full year financials on Slide 15. I will not review each metric but will emphasize that despite lower revenue, operating profit came in ahead of our expectations at the beginning of the year due to our sustained focus on disciplined execution. 2025 was our second consecutive year of positive non-GAAP operating profit and free cash flow. We are committed to generating profitable growth going forward. Good cash generation and a strong balance sheet are critical for a business in any stage of the cycle and become even more important in periods of volatility. On Slide 16, you can see that we ended the year with $72 million of cash and cash equivalents and no debt. We also have an available line of credit of $75 million. After nine consecutive quarters of positive free cash flow, the business has a solid core and the financial flexibility to weather market headwinds, while maintaining focus on our long-term goals to maximize shareholder value. Our capital allocation priorities over the coming years will be: First, we will continue to invest in R&D at around 20% of revenues to improve our digital data and deepen our competitive moat; second, we will invest in M&A only when it meets our rigorous financial return criteria and aligns with our strategic goals to improve our data asset and product portfolio. Over the last two years, we completed several bolt-on acquisitions, including those that enhanced our app intelligence capabilities and ad metrics. The current market volatility is enriching the M&A pipeline. We remain committed to a strong balance sheet that provides us with financial and operational flexibility. Turning to our outlook for 2026 on Slide 17. For the full year 2026, we expect total revenue in the range of $305 million to $315 million, representing 10% year-over-year growth at the midpoint of the range. In Q1 2026, we expect total revenue in the range of $72 million to $74 million, representing 9% year-on-year growth at the baseline. For the full year, we expect our non-GAAP operating profit to be between $16 million and $19 million. Non-GAAP operating profit for the first quarter of 2026 is expected to be in the range of $0.5 million to $2.5 million. In providing guidance for the first time at SimilarWeb, we are taking a deliberately prudent approach. We recognize that pockets of end-market weakness persist, and we are grounding the initial outlook in the high visibility of our core business drivers while we are encouraged by the strong demand in the pipeline for larger AI deals. After delivering the second year of positive revenue growth, non-GAAP operating profit, and positive free cash flow, we remain committed to building a more durable franchise in SimilarWeb. With that, Or and I are ready to answer your questions. Following Q&A, Or will share some closing remarks.

Our first question is from Raimo Lenschow with Barclays.

I have two questions. Ran, welcome to the team and best of luck. First for Or, considering the large LLM contracts you are signing and the recent slight decline in large customer net revenue retention, do you see a need to view this as an addition or a potential replacement? The idea being that as more people adopt LLMs, they may rely less on their own services, which could impact the net revenue retention figures. Are these factors connected? Could you elaborate on that dynamic? I also have a follow-up question for Ran.

Yes. I believe there is no connection between our core business of selling regular software and the web and app intelligence that brands use to drive online traffic, compared to our approach of selling data for LLM applications. These are distinct use cases specifically aimed at training LLMs to be more intelligent and knowledgeable about the world. Therefore, I don’t think they support each other.

Yes. Okay. Perfect. Okay. Makes sense. And then the one for you, Ran, obviously, with these larger contracts coming through, as a CFO and as a new CFO, it's kind of difficult to guide them. How do you think about your guidance philosophy in terms of going forward? If those big deals are in the pipeline, is it worth maybe taking them out and they become like upside when they come through? How do you think about that dynamic?

Thanks for the question. First of all, I'm really happy to be on this call. So when we look at the guidance, we took a reasonable approach, and this is one of the reasons we widened the range. In prior years, the range we guided to the Street was around $3 million, and now due to these big LLM deals, we widened the range to $10 million just because we see these deals in the pipeline, but the timing of them to land is not that clear. As we noted in the prepared remarks, this is one of the main reasons we missed in Q4. When I look at it, some of the percentages are already baked into the guidance. But when they land, of course, we'll see how we adjust the guidance going forward.

Our next question is from Arjun Bhatia with William Blair.

Yes. Perfect. Or can we maybe just go back to the first question? I understand that the two demand drivers between LLMs and the core business are not correlated. But I think if I exclude your AI revenue, it seems like the core business is slowing quite a bit. I'm curious if you could just help us understand what's happening there, excluding your AI revenue. Is the core NRR obviously down? What are the challenges there going forward? And how do you sort of remediate that to get that core business back to stronger growth?

Yes. Thank you, Arjun, for the question. First of all, I think this quarter's numbers show that the core business is not falling; it's still growing because you basically saw an example of a quarter when the big data deals didn't come, they slipped for another quarter, and you still see growth in the revenue. So we do see growth in the core business even without the data for LLM, but the data for LLM are very big deals, and there are significant differences in the regular business where we sell deals between $20,000 and $30,000 at land, and the expansion can be $50,000 to $60,000. Those data for LLM are significant; it's seven figures and behave very differently, making them hard to predict and forecast. I hope this will give you some visibility. I know Maoz, our Chief Strategy Officer, may have additional thoughts on that topic.

Yes, happy to help. Thank you for the question. We believe we have gained good traction. We have 60% of the book of business, and the majority of it is still in non-AI under multiyear contracts. So we're seeing good durability of the core local business. We need to work on the expansion to increase NRR. We feel that some of the LLM one-time deals pushed our NRR down. But going forward, we are working hard to improve it, mainly focusing on the expansion. We have a great product portfolio from app intelligence, which is our very first priority, and we are seeing good success with our clients. Overall, the core business of ours is still growing, and our run rates are solid. Multiyear contracts provide great client feedback, and we are laser-focused on expanding it.

I understand. I have a question for Ran regarding the guidance range. It's helpful that the range is wider given the uncertainty with end customers and the variability involved. Could you elaborate on what you anticipate? What needs to occur for you to reach the high end of the range compared to the low end? What different scenarios have been considered within that broader guidance range?

Thanks for the question. I think we need to land the big LLM deals. So that is likely what can drive the difference between the low end and the high end of the range. Those deals are really sizable, seven figures, as Or also mentioned. We see them in the pipeline and we see also the engagement with the customers. I am encouraged by the pipeline and the fact that we are closing with these larger LLM companies. Again, I think it's mainly a matter of timing about when they will close and what will ultimately be their size. That’s why the range is in the $10 million bracket.

Our next question is from Ken Wang with Oppenheimer & Company.

I just wanted to check as far as the miss in the quarter, was that $4 million fully from the large AI LLM deals? And then how much of that is baked into the Q1 guidance?

Yes. So first of all, thank you for the question. Yes, the majority of the miss is because of those two very large deals that have been in the pipeline for a long time, and we started with the hope to get them to the finish line. Looking now at the Q1 guidance, we're taking more cautious steps. It's very hard to forecast them. One deal will probably come later in the year, and the other one was split into more smaller amounts. Some of that will come in Q1, I think. I hope this answers the question.

Got it. And so then when I think about the growth rate, assuming some of it is in Q1 that kind of perhaps puts your core business or your organic growth at high single digits. Is that the right way to think about it until you guys get the go-to-market motions and the product sorted out for '26?

These big deals are taking a lot from our go-to-market as well. I think that even when you have Salesforce salespeople, and some of them know that there are these opportunities of very big deals, a lot of effort goes into those directions. It’s part of the organic growth and takes attention from other pursuits because the big opportunities require focused efforts. What we did this year in order to be more disciplined around it, we built a dedicated team to focus solely on those opportunities so we can achieve better forecasting and execution. We also need to leverage more upside, as we currently have only single-digit customers in this LLM sector, but there are likely many more customers we can approach and onboard. I hope this dedicated team will give us better forecasting and execution on that.

Our next question is from Scott Berg with Needham & Company.

Lucas Mecca on for Scott Berg. First, you guys made some strong sales investments heading into fiscal 2025. We understand some sales cycles may be elongated, but in general, could you guys just talk about the productivity kind of through the year of the new investments? And then what type of additional sales investments does your fiscal 2026 guidance imply?

Yes. First of all, thank you for the question, and I think it's a good question. We were not very happy with the performance and the investment we made. We were hoping to get better yield from the investment at the beginning of the year to accelerate growth. We did see the yield of the sales improving every quarter, but the good news is that we will not need to make any further investment going into this year. We took steps to optimize the go-to-market motion. Once we saw that we weren't achieving the desired outcomes, we reduced layers of management, removed some lower performers, and started the year with a fully ramping team without needing additional investments to drive the results we're looking for this year.

Got it. That's helpful. One other question surrounding the net revenue retention compression: would you say that is primarily driven by the larger AI contracts lapping from late 2024? Or are there any other underlying changes in gross retention or expansion trends that we should be thinking about?

Yes, I think it's an excellent question. The answer is yes; you're right. Some of those big deals lapping into this year is impacting, of course, the NRR. But if you think about last year and all these new data for LLM that included sometimes one-time deals, they have not been reflected in NRR because there was a one-time component, and NRR is a measure of carrying revenue. This is why it looks like the NRR for big accounts is dropping, but in reality, we had much more revenue from those one-time deals last year. We expect the NRR metrics to improve going forward, particularly as more one-time trial data for LLM transitions to ARR, which will improve our performance over time.

Our next question is from Patrick Walravens with Citizens Bank.

Great. This is Kincaid on for Patrick. Or, I just wanted to know if you could give us a little breakdown of that 11% of revenue coming from AI solutions. What are the components that drive that? Also, I understand that two of these LLM deals slipped from this quarter. Can you give us any information on how many closed this quarter?

Yes. So the data for LLM deals, there was one or two completed last quarter, but they were not as large as the ones we expected; they were much smaller and from new players. Overall, the AI revenue is a category that includes several of our offerings, not only the data for LLM. We have the Gen AI model we sell to brands, including our partnership with Manus, which has revenue from the partnership and there is a usage-based component on top of that. So there are several revenue streams within that 11%; it's not just the LLM data. These components are new for us due to the AI revolution, and we view them as tailwinds going into this year.

Our next question is from Luke Horton with Northland Securities.

Just wanted to touch on some of the commercial execution shortfalls. Could you be a little more specific about whether this was around the hiring ramp or pricing in the sales cycle? What kind of changes have you made to the go-to-market organization to improve these win rates and pipeline conversion in 2026?

In 2025, we increased our sales team across the board, trying to accelerate revenue growth. There was a lot of noise added with many people in a short time, and it took a long time to ramp them up. We didn’t see the yield we were aiming for, especially on the enterprise side. We had to optimize the approach; as I said, we are going into this year with the right talent in place. Maoz, do you have anything to add?

The key for us is doubling down on growth opportunities. Or mentioned the team and the go-to-market investments we are making around AI, LLMs, and OEM, where we see a lot of growth potential. We are optimistic about our pipeline, we have large deals on the horizon. We are confident in our ability to meet our guidance through the year.

Got it. Lastly, I want to go back to the AI Studio as this is a pretty significant product for you guys. Can you provide clarity around the monetization of this? Is it sort of seat-based or consumption-based or perhaps a premium tier pricing? Any information around that would be great.

Maoz, you can answer that since you're in charge of pricing.

Yes, we're very excited about the AI Studio. We view this product as a means to reach many more users within organizations. It can help us bridge the gap and make data insights more available. The monetization model is twofold: data access based on customer needs and then data consumption. You might need to have access to specific data to query. We provide some level of consumption within packages and clients can scale as needed. We see this as a very strategic move to reach many more users, plus our Manus partnership unlocks opportunities for monetization.

I would add that for some of our large enterprise customers, they have unlimited user packages. We're not focused on a fee-based approach; it's primarily about data access and consumption. The AI Studio allows us to increase adoption because you can communicate with it in any language. We hope this will drive improved adoption and expansion as it offers immediate insight for business questions.

Our next question is from Adam Hotchkiss with Goldman Sachs.

Ran, nice to meet you in this forum. I wanted to dig in on the sales cycle comments. What is it specifically about the sales cycles that have perhaps been elongated to the extent you can share? I'm just trying to understand what needs to be done to get those over the finish line.

Yes, I think there are some lessons we learned from adding many salespeople at once. This disruption among managers lengthened the sales cycles. We are trying to build an outbound motion for enterprise that was much longer than we are used to. We have traditionally been an inbound-based business, receiving over 100 million visits to our website annually. This has usually fed our salespeople. We used to a specific sales cycle. When we tried to do more outbound enterprise sales, it didn't fit our model, which caused disruptions. During the year, we altered our approach to focus on landing and expanding; therefore we backed off the outbound enterprise approach, moving forward with what had already been established and optimizing our current book of business.

Great. I just want to touch on the broader competitive landscape and customer budget landscape. I think a lot has been made of the GEO/AIO market. It feels like there’s a lot of funding going into that space. Is that where you're seeing most of customer retention in budgets go, given what's happening on the LLM side? How do you feel you're positioned in that space?

Yes, I think it's a great question. The market is evolving, but we are still seeing openings for growth. There are many small players. We have launched compelling offers that have already shown traction, and G2 recognized us as a leader among enterprises. Many budgets are migrating into this space, but what’s more significant to note is that brands are already losing traffic due to other channels, including a decline in search. As brands attempt to make this transition, they need comprehensive solutions that can accommodate multiple channels, lest they risk some of their traffic in the process. The Similarweb solution offers full visibility, optimization, and insights across all channels, making us well positioned to address the challenges companies face. Our Gen AI offering is one of various products that address gaps in service delivery, while also maintaining a competitive edge.

I agree with Or. What we're hearing from the market is everyone is focused on web strategy while balancing the use of Gen AI. Companies want to understand how to navigate this environment effectively. We stand out as we provide a comprehensive solution that tackles various challenges they encounter in driving traffic, customer engagement, and optimization across multiple channels. We’re confident in our leadership and our ability to become a significant player moving forward.

This does conclude our question-and-answer session. I would like to turn the conference back over to Or for closing remarks.

Before we conclude, I would like to highlight four key takeaways on Slide 19. First, 2025 was a build year, establishing our data moat and positioning the company for the AI era. Second, we delivered solid growth; AI revenue grew 3x year-over-year, multiyear ARR increased, and we extended our track record of profitability and free cash flow. Third, our leadership in digital data has become even more valuable as AI adoption accelerates. Lastly, 2026 is about disciplined execution and scaling what we built. We have strong belief in the opportunities ahead. AI is a meaningful tailwind for companies like us, and as I like to say, we are just getting started. Thank you, everyone, on the call for your continued support. We look forward to speaking to you again over the coming weeks.

Thank you. This does conclude our conference. You may disconnect at this time, and thank you for your participation.