Similarweb Ltd 6-K, filed Aug 6, 2024
Similarweb Ltd. (SMWB)
6-K
2024-08-06
For: 2024-06-30
View Original
Added on
April 07, 2026
About this 6-K
Similarweb Ltd filed this 6-K on August 6, 2024.
FORM 6-K
___________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2024
Commission File Number: 001-40394
___________________________
Similarweb Ltd.
(Translation of registrant’s name into English)
___________________________
33 Yitzhak Rabin Rd.,
Givatayim 5348303, Israel
(Address of principal executive offices)
___________________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
EXHIBIT INDEX
On August 7, 2024, Similarweb Ltd. will hold a conference call regarding its financial results for the second quarter ended June 30, 2024. A copy of the related press release is furnished as Exhibit 99.1 hereto.
Exhibit 99.1, other than the portions of Exhibit 99.1 under the caption "Financial Outlook", is hereby expressly incorporated by reference into the registrant’s registration statements on Form S-8 filed with the Securities and Exchange Commission on February 28, 2024 (File no. 333-277449), on March 23, 2023 (File no. 333-270793), on April 15, 2022 (File no. 333-264307) and on May 20, 2021 (File No. 333-256324).
| Exhibit No. | Description | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Similarweb Ltd. | ||||||||
| Date: August 6, 2024 | By: | /s/ Jason Schwartz | ||||||
| Jason Schwartz Chief Financial Officer | ||||||||
Exhibit 99.1
SIMILARWEB ANNOUNCES SECOND QUARTER 2024 RESULTS
Revenue growth accelerated for the third consecutive quarter
Fourth consecutive quarter of non-GAAP operating profit
Raising guidance for 2024 revenue and non-GAAP operating profit
TEL AVIV, ISRAEL -- Aug 6, 2024 -- Similarweb Ltd. (NYSE: SMWB) ("Similarweb" or the "Company"), a leading digital data and analytics company powering critical business decisions, today announced financial results for its second quarter ended June 30, 2024. The Company published a letter to shareholders from management discussing these results, which can be accessed at the link: https://ir.similarweb.com/financials/quarterly-results, located on the Company's investor relations website.
“We delivered another strong quarter with accelerating revenue and customer growth, record profitability and solid free cash flow, providing us with the confidence to raise our 2024 revenue and profit guidance,” stated Or Offer, Co-Founder and CEO of Similarweb. “Revenue growth in the second quarter accelerated to 13%, the third consecutive quarter of accelerating growth. We believe revenue growth will continue to accelerate in the second half of 2024 and have reflected this in our outlook. We increased our customer base by 17% to more than 5,000 customers, including our first eight-figure ARR customer.” Offer concluded, “We are just beginning to tap into the vast potential of our data and the addressable markets we serve.”
Second Quarter 2024 Financial Highlights
•Total revenue was $60.6 million, an increase of 13% compared to $53.7 million for the second quarter of 2023.
•GAAP operating loss was $(1.0) million or (2)% of revenue, compared to $(9.8) million or (18)% of revenue for the second quarter of 2023.
•GAAP net loss per share was $(0.01), compared to $(0.12) for the second quarter of 2023.
•Non-GAAP operating profit was $5.3 million or 9% of revenue, compared to non-GAAP operating loss of $(3.5) million or (6)% of revenue for the second quarter of 2023.
•Non-GAAP operating profit per share was $0.07, compared to non-GAAP operating loss per share of $(0.04) for the second quarter of 2023.
1
Exhibit 99.1
•Cash and cash equivalents totalled $61.8 million as of June 30, 2024, compared to $71.7 million as of December 31, 2023.
•Net cash provided by (used in) operating activities was $7.3 million, compared to $(2.3) million for the second quarter of 2023.
•Free cash flow was $6.3 million, compared to $(2.8) million for the second quarter of 2023.
Recent Business Highlights
•Grew number of customers to 5,034 as of June 30, 2024, an increase of 17% compared to June 30, 2023.
•Grew number of customers with ARR of $100,000 or more to 383, an increase of 8% compared to June 30, 2023.
•Secured the first 8-figure ARR customer after signing a large contract with an existing customer.
•Customers with ARR of $100,000 or more contributed 60% of the total ARR as of June 30, 2024, compared to 55% as of June 30, 2023.
•Dollar-based net retention rate for customers with ARR of $100,000 or more was 109% in the second quarter of 2024, an increase from the first quarter of 2024.
•Overall dollar-based net retention rate was 99% in the second quarter of 2024, an increase from the first quarter of 2024.
•44% of our overall ARR is contracted under multi-year subscriptions as of June 30, 2024, as compared to 42% as of June 30, 2023.
•Remaining performance obligations increased 24% year-over-year, to $216.6 million as of June 30, 2024, as compared to $174.8 million as of June 30, 2023.
•Acquired 42matters AG, a leading app intelligence provider based in Zurich, Switzerland, on July 1, 2024.
•Extended the $75 million SVB Credit Facility for an additional 2-year term through December 31, 2026.
2
Exhibit 99.1
Financial Outlook
"Revenue growth continued to accelerate this quarter, driven by new customer acquisition and improving retention,” stated Jason Schwartz, Chief Financial Officer of Similarweb. “Our operational performance this quarter highlights our commitment to disciplined execution." He further noted, “We achieved a fourth consecutive quarter of operating profit and generated $16 million in free cash flow in the first half of 2024. Given these results, which exceeded our expectations, we are raising our revenue and non-GAAP operating profit outlook for the full year 2024." Schwartz emphasized the company's progress, saying, “We are making significant strides towards our long-term profit and free cash flow targets.”
•Q3 2024 Guidance
◦Total revenue estimated between $62.5 million and $63.0 million, representing approximately 15% growth year over year at the mid-point of the range.
◦Non-GAAP operating profit estimated between $2.8 million and $3.2 million.
•FY 2024 Guidance
◦Total revenue estimated between $246.0 million and $248.0 million.
◦Non-GAAP operating profit estimated between $13.0 million and $15.0 million.
The Company’s third quarter and full year 2024 financial outlook is based upon a number of assumptions that are subject to change and many of which are outside the Company’s control. Actual results may vary from these assumptions, and the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
The Company does not provide guidance for operating loss and gross margin, the most directly comparable GAAP measures to non-GAAP operating loss and non-GAAP gross margin, respectively, and similarly cannot provide a reconciliation of these measures to their closest GAAP equivalents without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.
3
Exhibit 99.1
Conference Call Information
The financial results and business highlights will be discussed on a conference call and webcast scheduled at 8:30 a.m. Eastern Time on Wednesday, August 7, 2024. A live webcast of the call can be accessed from Similarweb’s Investor Relations website at https://ir.similarweb.com. An archived webcast of the conference call will also be made available on the Similarweb website following the call. The live call may also be accessed via telephone at (888) 437-3179 toll-free and at (862) 298-0702 internationally.
About Similarweb: Similarweb powers businesses to win their markets with Digital Data. By providing essential web and app data, analytics, and insights, we empower our users to discover business opportunities, identify competitive threats, optimize strategy, acquire the right customers, and increase monetization. Similarweb products are integrated into users’ workflow, powered by advanced technology, and based on leading comprehensive Digital Data.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our guidance for the third quarter and full year of 2024 described under "Financial Outlook". Forward-looking statements include all statements that are not historical facts. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. These forward-looking statements reflect our current views regarding our intentions, products, services, plans, expectations, strategies and prospects, which are based on information currently available to us and assumptions we have made. Actual results may differ materially from those described in such forward-looking statements and are subject to a number of known and unknown risks, uncertainties, other factors and assumptions that are beyond our control. Such risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) our expectations regarding our revenue, expenses and other operating results; (ii) our ability to acquire new customers and successfully retain existing customers; (iii) our ability to increase usage of our solutions and upsell and cross-sell additional solutions; (iv) our ability to achieve or sustain profitability; (v) anticipated trends, growth rates, rising interest rates, rising global inflation and current macroeconomic conditions, challenges in our business and in the markets in which we operate, and the impact of Israel's war with Hamas and other terrorist organizations and potential hostilities with Iran or Lebanon on geopolitical and macroeconomic conditions or on our company and business; (vi) future investments in our business, our anticipated capital expenditures and our estimates regarding our capital
4
Exhibit 99.1
requirements; (vii) the costs and success of our sales and marketing efforts and our ability to promote our brand; (viii) our reliance on key personnel and our ability to identify, recruit and retain skilled personnel; (ix) our ability to effectively manage our growth, including continued international expansion; (x) our reliance on certain third party platforms and sources for the collection of data necessary for our solutions; (xi) our ability to protect our intellectual property rights and any costs associated therewith; (xii) our ability to identify and complete acquisitions that complement and expand our reach and platform; (xiii) our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business, including in Israel, the United States, the European Union, the United Kingdom and other jurisdictions where we elect to do business; (xiv) our ability to compete effectively with existing competitors and new market entrants; and (xv) the growth rates of the markets in which we compete.
These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Form 20-F filed with the Securities and Exchange Commission on February 28, 2024, and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. Except as required by law, we undertake no duty to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.
Non-GAAP Financial Measures
This press release contains certain financial measures that 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
5
Exhibit 99.1
as a substitute for, financial information prepared in accordance with GAAP. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures and capitalized internal-use software costs. Normalized free cash flow represents free cash flow less capital investments related to the Company's new headquarters, payments received in connection with these capital investments and deferred payments related to business combinations. Non-GAAP operating income (loss), non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses and non-GAAP general and administrative expenses represent the comparable GAAP financial figure operating income (loss) or expense, less share-based compensation, adjustments and payments related to business combinations, amortization of intangible assets and certain other non-recurring items, as applicable and indicated in the below tables.
Other Metrics
Customer acquisition costs (CAC) represent the portion of sales and marketing expenses allocated to acquire new customers. Customer retention costs (CRC) represent the portion of sales and marketing expenses allocated to retain existing customers and to increase existing customers’ subscriptions. Annual recurring revenue (ARR) represents the annualized subscription revenue we would contractually expect to receive from customers assuming no increases or reductions in their subscriptions. CAC payback period is the estimated time in months to recover CAC in terms of incremental gross profit that newly acquired customers generate. Net retention rate (NRR) represents the comparison of our ARR from the same set of customers as of a certain point in time, relative to the same point in time in the previous year ago period, expressed as a percentage.
6
Exhibit 99.1
Press Contact:
David Carr
Similarweb
press@similarweb.com
Investor Contact:
Rami Myerson
Similarweb
rami.myerson@similarweb.com
7
Exhibit 99.1
Similarweb Ltd.
Consolidated Balance Sheets
U.S. dollars in thousands (except share and per share data)
Consolidated Balance Sheets
U.S. dollars in thousands (except share and per share data)
| December 31, | June 30, | ||||||||||
| 2023 | 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 71,732 | $ | 61,791 | |||||||
| Restricted deposits | 10,020 | 10,309 | |||||||||
| Accounts receivable, net | 47,869 | 38,631 | |||||||||
| Deferred contract costs | 11,165 | 10,962 | |||||||||
| Prepaid expenses and other current assets | 5,599 | 7,704 | |||||||||
| Total current assets | 146,385 | 129,397 | |||||||||
| Property and equipment, net | 28,630 | 27,141 | |||||||||
| Deferred contract costs, non-current | 9,845 | 9,465 | |||||||||
| Operating lease right-of-use assets | 36,007 | 35,815 | |||||||||
| Goodwill and Intangible assets, net | 17,652 | 19,989 | |||||||||
| Other non-current assets | 494 | 447 | |||||||||
| Total assets | $ | 239,013 | $ | 222,254 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Borrowings under Credit Facility | $ | 25,000 | $ | — | |||||||
| Accounts payable | 8,422 | 5,037 | |||||||||
| Payroll and benefit related liabilities | 20,437 | 16,755 | |||||||||
| Deferred revenue | 99,968 | 108,000 | |||||||||
| Other payables and accrued expenses | 23,263 | 24,760 | |||||||||
| Operating lease liabilities | 7,095 | 6,834 | |||||||||
| Total current liabilities | 184,185 | 161,386 | |||||||||
| Deferred revenue, non-current | 878 | 694 | |||||||||
| Operating lease liabilities, non-current | 35,329 | 32,885 | |||||||||
| Other long-term liabilities | 3,074 | 3,846 | |||||||||
| Total liabilities | 223,466 | 198,811 | |||||||||
| Shareholders' equity | |||||||||||
Ordinary Shares, NIS 0.01 par value 500,000,000 shares authorized as of December 31, 2023 and June 30, 2024 (unaudited), 78,653,046 and 80,921,451 shares issued as of December 31, 2023 and June 30, 2024 (unaudited), 78,650,878 and 80,919,283 outstanding as of December 31, 2023 and June 30, 2024 (unaudited), respectively; | 216 | 222 | |||||||||
| Additional paid-in capital | 367,558 | 379,799 | |||||||||
| Accumulated other comprehensive income (loss) | 872 | (8) | |||||||||
| Accumulated deficit | (353,099) | (356,570) | |||||||||
| Total shareholders' equity | 15,547 | 23,443 | |||||||||
| Total liabilities and shareholders' equity | $ | 239,013 | $ | 222,254 | |||||||
8
Exhibit 99.1
Similarweb Ltd.
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Comprehensive Income (Loss)
U.S. dollars in thousands (except share and per share data)
| Six Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Revenue | $ | 106,431 | $ | 119,619 | $ | 53,681 | $ | 60,637 | |||||||||||||||
| Cost of revenue | 24,651 | 25,240 | 12,575 | 12,544 | |||||||||||||||||||
| Gross profit | 81,780 | 94,379 | 41,106 | 48,093 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 28,253 | 25,778 | 13,902 | 12,239 | |||||||||||||||||||
| Sales and marketing | 55,088 | 51,097 | 26,422 | 25,857 | |||||||||||||||||||
| General and administrative | 21,276 | 21,141 | 10,539 | 10,950 | |||||||||||||||||||
| Total operating expenses | 104,617 | 98,016 | 50,863 | 49,046 | |||||||||||||||||||
| Loss from operations | (22,837) | (3,637) | (9,757) | (953) | |||||||||||||||||||
| Finance income, net | 1,965 | 1,278 | 610 | 823 | |||||||||||||||||||
| Loss before income taxes | (20,872) | (2,359) | (9,147) | (130) | |||||||||||||||||||
| Provision for income taxes | 255 | 1,112 | 146 | 608 | |||||||||||||||||||
| Net loss | $ | (21,127) | $ | (3,471) | $ | (9,293) | $ | (738) | |||||||||||||||
| Net loss per share attributable to ordinary shareholders, basic and diluted | $ | (0.27) | $ | (0.04) | $ | (0.12) | $ | (0.01) | |||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 77,222,490 | 79,969,425 | 77,579,279 | 80,570,892 | |||||||||||||||||||
| Net loss | $ | (21,127) | $ | (3,471) | $ | (9,293) | $ | (738) | |||||||||||||||
| Other comprehensive loss, net of tax | |||||||||||||||||||||||
| Change in unrealized (loss) gain on cashflow hedges | (232) | (880) | 45 | (363) | |||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | (232) | (880) | 45 | (363) | |||||||||||||||||||
| Total comprehensive loss | $ | (21,359) | $ | (4,351) | $ | (9,248) | $ | (1,101) | |||||||||||||||
9
Exhibit 99.1
Share-based compensation costs included above:
U.S. dollars in thousands
| Six Months Ended June 30, | Three months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Cost of revenue | $ | 327 | $ | 390 | $ | 172 | $ | 223 | |||||||||||||||
| Research and development | 2,850 | 2,802 | 1,460 | 1,357 | |||||||||||||||||||
| Sales and marketing | 2,730 | 1,991 | 1,356 | 806 | |||||||||||||||||||
| General and administrative | 3,191 | 3,402 | 1,701 | 2,072 | |||||||||||||||||||
| Total | $ | 9,098 | $ | 8,585 | $ | 4,689 | $ | 4,458 | |||||||||||||||
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Exhibit 99.1
Similarweb Ltd.
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
U.S. dollars in thousands
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||
| Net loss | $ | (21,127) | $ | (3,471) | $ | (9,293) | $ | (738) | ||||||||||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||||||||||||
| Depreciation and amortization | 5,112 | 5,139 | 2,572 | 2,619 | ||||||||||||||||||||||
| Finance expense | 869 | 466 | 662 | 230 | ||||||||||||||||||||||
| Unrealized loss from hedging future transactions | 4 | 60 | 31 | 29 | ||||||||||||||||||||||
| Share-based compensation | 9,098 | 8,585 | 4,689 | 4,458 | ||||||||||||||||||||||
| Loss (gain) from sale of equipment | 1 | (7) | (1) | (3) | ||||||||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||||||||
| Change in operating lease right-of-use assets and liabilities, net | (2,415) | (2,513) | (1,190) | (242) | ||||||||||||||||||||||
| Decrease in accounts receivable, net | 5,633 | 9,619 | 4,989 | 2,626 | ||||||||||||||||||||||
| Decrease in deferred contract costs | 2,590 | 583 | 1,141 | 170 | ||||||||||||||||||||||
| Increase in other current assets | (880) | (2,917) | (1,130) | (1,593) | ||||||||||||||||||||||
| Decrease (increase) in other non-current assets | 417 | 47 | (14) | 14 | ||||||||||||||||||||||
| Increase (decrease) in accounts payable | 343 | (3,258) | 1,402 | (799) | ||||||||||||||||||||||
| Increase (decrease) in deferred revenue | 2,941 | 7,316 | (4,302) | 328 | ||||||||||||||||||||||
| (Decrease) increase in other non-current liabilities | (319) | 620 | (225) | 426 | ||||||||||||||||||||||
| Decrease in other liabilities and accrued expenses | (4,246) | (2,857) | (1,636) | (181) | ||||||||||||||||||||||
| Net cash (used in) provided by operating activities | (1,979) | 17,412 | (2,305) | 7,344 | ||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Purchase of property and equipment, net | (1,315) | (908) | (183) | (540) | ||||||||||||||||||||||
| Capitalized internal-use software costs | (707) | (469) | (274) | (469) | ||||||||||||||||||||||
| Increase in restricted deposits | (87) | (289) | (43) | (121) | ||||||||||||||||||||||
| Payment for business combinations, net of cash acquired | — | (3,833) | — | (24) | ||||||||||||||||||||||
| Net cash used in investing activities | (2,109) | (5,499) | (500) | (1,154) | ||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds from exercise of stock options | 1,830 | 3,057 | 438 | 386 | ||||||||||||||||||||||
| Proceeds from employee share purchase plan | 660 | 555 | 660 | 555 | ||||||||||||||||||||||
| Repayment of Credit Facility | — | (25,000) | — | — | ||||||||||||||||||||||
| Payments of contingent consideration, net | (2,363) | — | — | — | ||||||||||||||||||||||
| Net cash provided by (used in) financing activities | 127 | (21,388) | 1,098 | 941 | ||||||||||||||||||||||
| Effect of exchange rates on cash and cash equivalents | (869) | (466) | (662) | (230) | ||||||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (4,830) | (9,941) | (2,369) | 6,901 | ||||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 77,810 | 71,732 | 75,349 | 54,890 | ||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 72,980 | $ | 61,791 | $ | 72,980 | $ | 61,791 | ||||||||||||||||||
11
Exhibit 99.1
| Supplemental disclosure of cash flow information: | ||||||||||||||||||||||||||
| Interest received, net | $ | (40) | $ | (557) | $ | (46) | $ | (322) | ||||||||||||||||||
| Taxes paid | $ | 1,613 | $ | 848 | $ | 1,557 | $ | 16 | ||||||||||||||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||||||||||||||||||||
| Additions to operating lease right-of-use assets and liabilities | $ | 780 | $ | 4,453 | $ | 610 | $ | 2,055 | ||||||||||||||||||
| Share-based compensation included in capitalized internal-use software | $ | 33 | $ | 33 | $ | 33 | $ | 33 | ||||||||||||||||||
| Deferred proceeds from exercise of share options included in other current assets | $ | 42 | $ | 27 | $ | 26 | $ | 27 | ||||||||||||||||||
| Deferred costs of property and equipment incurred during the period included in accounts payable | $ | 41 | $ | 6 | $ | (80) | $ | 6 | ||||||||||||||||||
| Deferred payments in relation to business combinations held in escrow | $ | 1,269 | $ | — | $ | — | $ | — | ||||||||||||||||||
| Schedule A: Business combinations | ||||||||||||||||||||||||||
| Working capital (deficit), net (excluding cash and cash equivalents) | — | (217) | ||||||||||||||||||||||||
| Property, plant and equipment | — | 18 | ||||||||||||||||||||||||
| Goodwill and other intangible assets | — | 4,684 | ||||||||||||||||||||||||
| Deferred taxes, net | — | (152) | ||||||||||||||||||||||||
| $ | — | $ | 4,333 | |||||||||||||||||||||||
| Less non-cash: | ||||||||||||||||||||||||||
| Deferred cash payments | $ | — | $ | (500) | ||||||||||||||||||||||
| Total | $ | — | $ | 3,833 | ||||||||||||||||||||||
12
Exhibit 99.1
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Reconciliation of GAAP gross profit to non-GAAP gross profit
| Six Months Ended June 30, | Three months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||||
| GAAP gross profit | $ | 81,780 | $ | 94,379 | $ | 41,106 | $ | 48,093 | ||||||||||||||||||
| Add: | ||||||||||||||||||||||||||
| Share-based compensation expenses | 327 | 390 | 172 | 223 | ||||||||||||||||||||||
| Retention payments related to business combinations | 306 | 25 | 218 | 25 | ||||||||||||||||||||||
| Amortization of intangible assets related to business combinations | 2,335 | 2,224 | 1,167 | 1,138 | ||||||||||||||||||||||
| Non-GAAP gross profit | $ | 84,748 | $ | 97,018 | $ | 42,663 | $ | 49,479 | ||||||||||||||||||
| Non-GAAP gross margin | 80 | % | 81 | % | 79 | % | 82 | % | ||||||||||||||||||
Reconciliation of Loss from operations (GAAP) to Non-GAAP operating (loss) income
| Six Months Ended June 30, | Three months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||||
| Loss from operations | $ | (22,837) | $ | (3,637) | $ | (9,757) | $ | (953) | ||||||||||||||||||
| Add: | ||||||||||||||||||||||||||
| Share-based compensation expenses | 9,098 | 8,585 | 4,689 | 4,458 | ||||||||||||||||||||||
| Retention payments related to business combinations | 687 | 819 | 405 | 591 | ||||||||||||||||||||||
| Amortization of intangible assets related to business combinations | 2,403 | 2,347 | 1,201 | 1,227 | ||||||||||||||||||||||
| Non-recurring expenses related to termination of lease agreement and others | 13 | — | — | — | ||||||||||||||||||||||
| Non-GAAP operating (loss) income | $ | (10,636) | $ | 8,114 | $ | (3,462) | $ | 5,323 | ||||||||||||||||||
| Non-GAAP operating margin | (10) | % | 7 | % | (6) | % | 9 | % | ||||||||||||||||||
13
Exhibit 99.1
Reconciliation of GAAP operating expenses to non-GAAP operating expenses
| Six Months Ended June 30, | Three months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||||
| GAAP research and development | $ | 28,253 | $ | 25,778 | $ | 13,902 | $ | 12,239 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Share-based compensation expenses | 2,850 | 2,802 | 1,460 | 1,357 | ||||||||||||||||||||||
| Retention payments related to business combinations | — | 16 | — | 16 | ||||||||||||||||||||||
| Non-GAAP research and development | $ | 25,403 | $ | 22,960 | $ | 12,442 | $ | 10,866 | ||||||||||||||||||
| Non-GAAP research and development margin | 24 | % | 19 | % | 23 | % | 18 | % | ||||||||||||||||||
| GAAP sales and marketing | $ | 55,088 | $ | 51,097 | $ | 26,422 | $ | 25,857 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Share-based compensation expenses | 2,730 | 1,991 | 1,356 | 806 | ||||||||||||||||||||||
| Retention payments related to business combinations | 381 | 778 | 187 | 550 | ||||||||||||||||||||||
| Amortization of intangible assets related to business combinations | 68 | 123 | 34 | 89 | ||||||||||||||||||||||
| Non-recurring expenses related to termination of lease agreement and others | 13 | — | — | — | ||||||||||||||||||||||
| Non-GAAP sales and marketing | $ | 51,896 | $ | 48,205 | $ | 24,845 | $ | 24,412 | ||||||||||||||||||
| Non-GAAP sales and marketing margin | 49 | % | 40 | % | 46 | % | 40 | % | ||||||||||||||||||
| GAAP general and administrative | $ | 21,276 | $ | 21,141 | $ | 10,539 | $ | 10,950 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Share-based compensation expenses | 3,191 | 3,402 | 1,701 | 2,072 | ||||||||||||||||||||||
| Non-GAAP general and administrative | $ | 18,085 | $ | 17,739 | $ | 8,838 | $ | 8,878 | ||||||||||||||||||
| Non-GAAP general and administrative margin | 17 | % | 15 | % | 16 | % | 15 | % | ||||||||||||||||||
14
Exhibit 99.1
Reconciliation of Net cash (used in) provided by operating activities (GAAP) to Free cash flow and Normalized free cash flow
| Six Months Ended June 30, | Three months Ended June 30, | |||||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (1,979) | $ | 17,412 | $ | (2,305) | $ | 7,344 | ||||||||||||||||||
| Purchases of property and equipment, net | (1,315) | (908) | (183) | (540) | ||||||||||||||||||||||
| Capitalized internal use software costs | (707) | (469) | (274) | (469) | ||||||||||||||||||||||
| Free cash flow | $ | (4,001) | $ | 16,035 | $ | (2,762) | $ | 6,335 | ||||||||||||||||||
| Purchases of property and equipment related to the new headquarters | 1,100 | — | 52 | — | ||||||||||||||||||||||
| Payments received from escrow in relation to contingent consideration | (380) | — | — | — | ||||||||||||||||||||||
| Normalized free cash flow | $ | (3,281) | $ | 16,035 | $ | (2,710) | $ | 6,335 | ||||||||||||||||||
15
Exhibit 99.2 Dear Shareholders, Three years after our IPO, we are proud that Similarweb is a growing, profitable and cash generating company. In the second quarter of 2024 (Q2-24), revenue growth continued to accelerate and we delivered another record non-GAAP operating margin, representing a fourth consecutive quarter of operating profit. Our base of annual recurring revenue customers continued to grow and now exceeds 5,000 customers, including our first 8-digit ARR customer. We generated positive free cash flow for the third consecutive quarter and generated $16 million of free cash flow in the first half of 2024. And while Q2-24 was indeed a successful quarter, we believe that we are still only starting to realize the significant potential of our data and the markets that we serve. Our Unique Digital Data At our core, we are a data company. Our unique data asset, Similarweb Digital Data, provides the foundation for our solutions and consists of our proprietary estimations of the performance of companies, markets, products, consumer behavior and trends in the digital world. Our world-class team of nearly 300 data scientists, engineers, developers and analysts gathers billions of unrefined data points amounting to close to one percent of online transactions and interactions, and then transforms them into a comprehensive view of the internet across the web, mobile web and apps. We deliver Similarweb Digital Data to our customers via Software-as-a-Service (SaaS) solutions, Data-as-a-Service (DaaS), and recurring Advisory Services. Our customers rely on our mission-critical offerings to power data-driven growth decisions that they make in their businesses, to devise strategy, acquire customers, and increase monetization. We invest continuously in our technology and analytics to expand and enhance our data and deliver the most comprehensive and valuable understanding of the ever-changing digital landscape to empower our customers with the knowledge and tools to compete successfully in a rapidly evolving digital world. In July, we acquired 42matters AG, a Swiss app intelligence provider, to expand our data capabilities in the rapidly growing app analytics market. As of today’s date, 42matters’ app data covers 12 app store platforms, over 2.1 million publishers, 2,600+ SDKs, and more than 20 million apps. By combining 42matters and Similarweb, we have expanded our app intelligence offering across app store data, app engagement data, and mobile SDK data and can now provide enhanced insights for app owners into the performance of their own 1 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 apps versus those of their competitors, as well as more comprehensive visibility of user engagement and technology stacks. We expect that this will empower app owners to optimize their app distribution, marketing strategies and development roadmaps. We would like to welcome the 42matters team to Similarweb and look forward to working together to build a market leading app intelligence offering. Our commitment to delivering the most comprehensive and valuable insights into the digital world drives us to continually enhance our data. Last week, we released our newest data version. This new version significantly enhances the accuracy of our data sets by providing broader insights from more than 30 million new websites across many more countries compared to the previous data version. We have also updated our proprietary algorithms and now factor in our advanced web methodologies as well as industry changes. These enhancements follow the investments we are making in research and development to continuously improve the quality of our data. We believe that the new data version provides a more accurate and more complete representation of the digital world. We are excited with these new data sets and the impact we believe they will have in improved benchmarking and decision-making. We have already begun to receive positive feedback from customers around the world who share in our excitement. Our Business Performance Total revenue for Q2-24 was $60.6 million, an increase of 13% compared to $53.7 million for the second quarter of 2023 (Q2-23), exceeding the top end of our estimate range.The 13% revenue growth in the quarter follows 12% and 11% YoY growth in Q1-24 and Q4-23 respectively - a third consecutive quarter of accelerating revenue growth. 2 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 We continue to see strong demand at the top-of-funnel from companies of all sizes who appreciate the criticality of our Digital Data for their business. The graph above illustrates the revenue growth acceleration that reflects both the solid demand for our data and solutions and the successful implementation of our GTM strategy, which we discuss below. Our ARR customer base increased to 5,034 accounts, as of June 30, 2024, representing a 17% increase year-over-year and continues to grow faster than revenues, a good indication of the demand and the potential of our data and solutions. The average annual revenue per customer was approximately $49 thousand, slightly lower than Q2-23 and consistent with Q1-24. As we shared previously, this trend follows the launch of Similarweb 3.0 which enables new customers to begin realizing value from our solutions at lower entry-level pricing and packaging and expand over time, based on their data consumption and increased usage. 3 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 As our global customer base continued to expand overall in Q2-24, the number of customers who generate more than $100K in ARR grew from 356, as of June 30, 2023, to 383, as of June 30, 2024, representing an increase of 8% YoY. The ARR from this important customer segment has grown nearly 25% versus Q2-2023 and represents 60% of our total ARR, as of June 30, 2024. We are optimistic about the potential presented by Generative AI and large language models, or LLMs. These models require high quality, timely and scalable data sets to generate outputs and realize the potential of the technology. A number of leading LLMs are already training on Similarweb data. We are encouraged by the potential presented by 4 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 the increased demand from our customers for this use case combined with the indications of growing demand for LLMs. We believe that our proprietary and industry-leading Digital Data is proving to be a differentiated asset that is distinguishing us from many of our competitors. During the quarter, we signed a 7 figure ARR contract with an existing big-tech customer that is now Similarweb’s first 8 figure ARR customer. This customer already uses 4 of our solutions across multiple business units and geographies and prior to this expansion was already a multi-million dollar ARR customer. With this new order, the customer plans to use Similarweb’s data to train and improve its LLMs. This contract is an important expression of confidence in the quality of our Similarweb Digital Data and is also an important milestone in our efforts to monetize our data for Generative AI applications. This customer began its customer journey with us as a 5 figure customer in 2015 and has gradually increased the scope of its activities across users, solutions and geographies. The >450x increase in revenues from this customer over the last 9 years provides a valuable roadmap for our go-to-market (GTM) strategy. In Q2-24, we achieved an overall net revenue retention (NRR) rate of 99% and an NRR rate of 109% for our $100K+ annual recurring revenue customer segment, an increase from the results in Q1-24. We believe that this quarter’s NRR performance demonstrates a change of the trajectory and expect to see further improvement in the quarters ahead. 5 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Our GTM strategy is focused on two key motions that we often refer to as a “barbell strategy”. On one end of the barbell, we continue to sign up new customers at an entry price point that is typically lower than our average revenue per customer. Our GTM team can flexibly package these to match the customers’ requirements and budgets. Some customers, particularly SMBs, that we define as companies with less than 1,000 employees, opt to sign up for our skinnier self-service package that is priced competitively and does not entail significant onboarding and training costs. After more than a decade of experience, we have learned that once a customer has subscribed to our data or products and utilizes them regularly, they tend to develop expertise in deriving significant value from our data generating a positive return on their investment. This typically drives increased utilization as our customers seek to expand their access to our data to extract insights from additional geographies and data sets, increasing the share of their wallet they allocate to Similarweb. One of the key metrics we keep a close eye on is customer utilization of the platform, as this metric is often the most relevant leading indicator of the potential for retention and expansion or alternatively the risk of churn. At the other end of the barbell are the large enterprise customers. These customers typically generate ARR for us in the six to seven figure range. Like the eight figure customer discussed above, many of these customers began their journey as four or five figure ARR customers and have expanded over time. Our customer success team members are focused on ensuring that our new and existing customers have all the tools and resources to extract the significant value our Digital Data provides. To support our enterprise customers, we recently launched a series of dedicated portals for many of our customers. Each of these portals include a range of training resources to ensure the users can maximize the commercial opportunities that our data and solutions provide. Our Financial Results When examining our financial results, please note that references to expenses and operating results (other than revenue) are presented both on a GAAP and on a non-GAAP basis below, and that all non-GAAP results are reconciled to the most directly comparable GAAP results in the financial statements exhibits presented at the end of this letter. 6 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Revisiting our top line results, in Q2-24 we delivered revenue of $60.6 million, reflecting 13% growth as compared to Q2-23, driven primarily by an increase in the number of customers. The vast majority of our revenue is annual recurring revenue with minimum subscription terms of one year. We continue to increase the number of customers with multi-year subscription terms. As of the end of Q2-24, 44% of our ARR was generated from customers with multi-year subscription commitments, compared to 42% at the same time last year. We continue to believe this is a strong indicator of the long-term durability of our customer relationships and demand for our solutions. Our GAAP gross profit totaled $48.1 million and our non-GAAP gross profit totaled $49.5 million in Q2-24, compared to $41.1 million and $42.7 million in Q2-23, respectively. Non-GAAP gross margin expanded to 82% in Q2-24, versus 79% in Q2-23. Our GAAP operating expenses decreased to $49.0 million and our non-GAAP operating expenses decreased to $44.2 million in Q2-24, down from $50.9 million and $46.1 million in Q2-23, respectively, largely reflecting our focus on operating efficiency. Non-GAAP operating expenses represented 73% of revenue in Q2-24 as compared to 86% of revenue in Q2-23. Specific components of our second quarter 2024 operating expenses: Our GAAP research and development investment decreased to $12.2 million and our non-GAAP research and development investment decreased to $10.9 million in Q2-24, down from $13.9 million and $12.4 million in Q2-23, respectively. As a percentage of revenue, non-GAAP research & development expense was 18% in Q2-24, as compared to 23% in Q2-23. We expect non-GAAP research & development expenses to increase as we continue to invest in our data moat and innovation. GAAP sales and marketing expenses decreased to $25.9 million and non-GAAP sales and marketing expenses decreased to $24.4 million in Q2-24, down from $26.4 million and $24.8 million in Q2-23, respectively, driven primarily by our ongoing efforts to align our resources with our growth trajectory. As a percentage of revenue, non-GAAP sales & marketing expense was 40% in Q2-24, as compared to 46% in Q2-23. 7 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 An operating tenet in our model is that our sales and marketing costs are divided with approximately 50% to 55% attributable to new customer acquisition (land), and the remaining 45% to 50% attributable to retention, upselling and cross-selling (expand) of our existing customer base. When analyzing our investment in customer acquisition costs (CAC) for growth efficiency, we track an estimated payback period. This metric has historically averaged between 15 and 16 months on a gross profit basis over the trailing four quarters. As of Q2-24, the average payback is ranging between 20 and 21 months, primarily due to longer sales cycles over the last year. Payback from expansion and customer retention costs (CRC) is faster than payback on new customer CAC such that we are generating a 55%-60% contribution margin on our recurring customer base which contributes meaningfully to our growth efficiency. We intend to continue to invest in customer acquisition to support future growth, as well as in customer retention to drive NRR and to increase the lifetime value of our customers. GAAP general and administrative costs increased to $11.0 million from $10.5 million in Q2-23, and our non-GAAP general and administrative costs slightly increased to $8.9 million in Q2-24 from $8.8 million in Q2-23. As a percentage of revenue, non-GAAP general & administrative expense was 15% in Q2-24, an improvement of 1 percentage point compared to Q2-23. Looking at our bottom line, the Q2-24 GAAP operating loss was ($1.0) million or (2%) of revenue, compared to ($9.8) million or (18%) of revenue for the second quarter of 2023. Q2-24 non-GAAP operating profit was $5.3 million or 9% of revenue, compared to a non-GAAP operating loss of ($3.5) million or (6%) of revenue for the second quarter of 2023, and exceeded our forecast. This is our fourth consecutive profitable quarter on a non-GAAP basis. Our dedication to achieving profitable growth over the last year yielded significant operating efficiencies across the business, which drove an operating margin improvement of 15 percentage points year over year in Q2-24. 8 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 * non-GAAP We believe that a strong indication of future performance is our deferred revenue, which was $108.7 million at the end of Q2-24, compared to $97.1 million at the same time last year. Our Remaining Performance Obligations (RPO) totaled $216.6 million at the end of Q2-24, up 24% YoY from $174.8 million at the end of Q2-23. We expect to recognize approximately 75% of total Q2-24 RPO as revenue over the next 12 months. We ended the second quarter with $61.8 million in cash and cash equivalents and no outstanding debt. Net cash generated from operating activities was $7.3 million in Q2-24, compared to negative $2.3 million in Q2-23. Normalized free cash flow was $6.3 million in Q2-24, compared to negative $2.7 million in Q2-23. Importantly, this is our third consecutive quarter in which we achieved positive free cash flow, which we aim to sustain on a quarterly basis going forward. Earlier this week, we extended the term of our $75 million Loan and Security Agreement with Silicon Valley Bank, or the SVB Credit Facility, through December 31, 2026. We do not have any amounts drawn under the SVB Credit Facility, but believe that it provides additional financial and strategic flexibility to invest in profitable growth opportunities. . Our Business Outlook Based on the momentum that we have experienced in the first half of 2024, we are increasing our guidance for both revenue and non-GAAP operating profit for the remainder of the year. 9 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 In the third quarter of 2024 (Q3-24), we expect total revenue in the range of $62.5 million to $63.0 million, representing approximately 15% YoY growth at the midpoint of the range. For the full year of 2024, we expect total revenue in the range of $246.0 million to $248.0 million, an increase from our previous expectation. We expect non-GAAP operating profit for Q3-24 to be in the range of $2.8 million to $3.2 million. For the full year of 2024, we expect non-GAAP operating profit to be between $13.0 million and $15.0 million, an increase from our previous expectation. Our guidance reflects an increase in operating expenses, primarily related to increased headcount, in which we intend to invest to further accelerate our revenue growth, while maintaining non-GAAP operating profit and positive free cash flow. We are focused on working to become a “Rule of 40” company on an annual basis over time and we aim to achieve non-GAAP operating profit and positive free cash flow in each quarter of 2024. Our Focus on Profitable Growth We continue to focus on generating profitable growth. At the beginning of the year, we shared with you our four strategic objectives for the year and are pleased at the progress that we have made during the first half of 2024: (1) We seek to land more new strategic accounts and to retain and expand our current strategic accounts. We are pleased with the continued growth of our $100,000 customer cohort, which now comprises 60% of our ARR as well as growing our first 8-figure ARR customer. (2) We are focused on increasing net retention across our existing customers. We are encouraged with the increase in NRR rates during the quarter and continue to invest in our customers’ success to drive further improvement in the quarters ahead. (3) We intend to continue to innovate across our product line. We are proud of our product and data innovation including the launch of SAM in Q1-24 and the new data version last month. The recent acquisitions of AdMetricks and 42matters will expand our solutions in both Ad Intelligence and App Intelligence and contribute to revenue growth once the respective post-merger integrations are completed. 10 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 (4) We will continue to operate efficiently. We are enthused by the substantial improvement in our profit margins and growing free cash flow while accelerating revenue growth. As we shared with you previously, the global macroeconomic conditions may continue to present some challenges for our business and for our customers for the remainder of the year, but we believe that much of our strategic objectives to capture positive trends and improve our execution are within our control. We are proud of our dedicated global team who never cease to challenge one another to ideate, innovate and deliver. The results in the second quarter demonstrate our commitment to disciplined execution that continues to enable us to generate revenue growth and increase our customer base efficiently and profitably. We continue to make significant progress towards our long term profit and free cash flow margin targets and look forward to sharing our progress with you. As we like to say, we are still “just getting started”. Thank you for your continued support as a shareholder. Sincerely, Or Offer Founder and Chief Executive Officer Jason Schwartz Chief Financial Officer 11 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Consolidated Balance Sheets 12 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Consolidated Statements of Comprehensive Income (Loss) 13 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Share-based compensation costs included above: 14 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Consolidated Statements of Cash Flows 15 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 16 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Reconciliation of GAAP gross profit to Non-GAAP gross profit 17 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Reconciliation of GAAP operating loss to Non-GAAP operating (loss) income 18 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Reconciliation of GAAP operating expenses to non-GAAP operating expenses 19 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Reconciliation of net cash (used in) provided by operating activities (GAAP) to Free cash flow and Normalized free cash flow Forward-Looking Statements This letter to shareholders contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our guidance for the third quarter and full year of 2024 described under "Business Outlook,” the expected performance of our business, future financial results, strategy, long-term growth and overall future prospects, and our acquisitions and our offerings, our customers’ continued investment in digital transformation and reliance on digital intelligence and the size of, and our ability to capitalize on, our market opportunity. Forward-looking statements include all statements that are not historical facts. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” or similar words. These forward-looking statements reflect our current views regarding our intentions, products, services, plans, expectations, strategies and prospects, which are based on information currently available to us and assumptions we have made. Actual results may differ materially from those described in such forward-looking statements and are subject to a number of known and unknown risks, uncertainties, other factors and assumptions that are beyond our control. Such risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) our expectations regarding our revenue, expenses and other operating results; (ii) our ability to acquire new customers and successfully retain existing customers; (iii) our ability to increase usage of our solutions and upsell and cross-sell additional solutions; (iv) our ability to achieve or sustain profitability; (v) anticipated trends, growth rates, rising interest rates, rising 20 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 global inflation and current macroeconomic conditions, and challenges in our business and in the markets in which we operate, and the impact of Israel's war with Hamas and other terrorist organizations and potential hostilities with Iran or Lebanon on geopolitical and macroeconomic conditions or on our company and business; (vi) future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; (vii) the costs and success of our sales and marketing efforts and our ability to promote our brand; (viii) our reliance on key personnel and our ability to identify, recruit and retain skilled personnel; (ix) our ability to effectively manage our growth, including continued international expansion; (x) our reliance on certain third party platforms and sources for the collection of data necessary for our solutions; (xi) our ability to protect our intellectual property rights and any costs associated therewith; (xii) our ability to identify and complete acquisitions that complement and expand our reach and platform; (xiii) our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business, including in Israel, the United States, the European Union, the United Kingdom and other jurisdictions where we elect to do business; (xiv) our ability to compete effectively with existing competitors and new market entrants; and (xv) the growth rates of the markets in which we compete. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Form 20-F filed with the Securities and Exchange Commission on February 28, 2024, and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent our beliefs and assumptions only as of the date of this letter, August 6, 2024. Except as required by law, we undertake no duty to update any forward-looking statements contained in this letter as a result of new information, future events, changes in expectations, or otherwise. Certain information contained in this letter relates to or is based on studies, publications, surveys, and other data obtained from third-party sources and the Company's own internal estimates and research. While the Company believes these third-party sources to be reliable as of the date of this letter, it has not independently verified, and makes no representation as to the adequacy, fairness, accuracy, or completeness of any information obtained from third-party sources. In addition, all of the market data included in this letter involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while we believe our own internal research is reliable, such research has not been verified by any independent source. 21 Similarweb Q2 2024 Shareholder Letter
Exhibit 99.2 Non-GAAP Financial Measures This letter to shareholders contains certain financial measures that 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. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures and capitalized internal-use software costs. Normalized free cash flow represents free cash flow less capital investments related to the Company's headquarters, payments received in connection with these capital investments and deferred payments related to business combinations. Non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, and non-GAAP general and administrative expenses represents the comparable GAAP financial figures, less share-based compensation, adjustments, and payments related to business combinations, amortization of intangible assets, and certain other non-recurring items, as applicable and indicated in the above tables. Other Metrics Customer acquisition costs (CAC) represent the portion of sales and marketing expenses allocated to acquire new customers. Customer retention costs (CRC) represent the portion of sales and marketing expenses allocated to retain existing customers and to increase existing customers’ subscriptions. Annual recurring revenue (ARR) represents the annualized subscription revenue we would contractually expect to receive from customers assuming no increases or reductions in their subscriptions. CAC payback period is the estimated time in months to recover CAC in terms of incremental gross profit that newly acquired customers generate. Net retention rate (NRR) represents the comparison of our ARR from the same set of customers as of a certain point in time, relative to the same point in time in the previous year, expressed as a percentage. 22 Similarweb Q2 2024 Shareholder Letter