Similarweb Ltd. Q2 FY2025 earnings call

• Revenue increased 17% YOY to $71M, customer base grew 18% YOY to ~6,000 ARR customers. • Seventh quarter of positive free cash flow and returned to positive operating profit. • Gen AI data and solutions contributed ~8% of Q2 revenues, growing. • Focus on 3 high-impact opportunities: Similarweb Gen AI Intelligence (AI traffic, AI brand visibility), AI Agents (usage growing 60% MoM since launch), generative AI and LLM data. • Launched Similarweb Ad Intelligence, expanded mobile app and shopper intelligence. • Go-to-market investment ramping, salespeople booking deals up 50% YOY. • $71M revenue in Q2, 17% YOY growth; NRR for overall customer base 100%, renewal rate highest in 3 years; 57% of ARR contracted under multiyear contracts; RPO totaled $274M at end of Q2, up 26% YOY; non-GAAP operating profit 3% in Q2; normalized free cash flow $4M, 5% margin.

Revenue increased by 17% year-over-year to $71 million. Customer base grew 18% year-over-year to almost 6,000 ARR customers at quarter end. Revenues from Gen AI data and new solution were approximately 8% of second quarter revenues. Non-GAAP operating profit was 3% in Q2. Normalized free cash flow was $4 million, a 5% free cash flow margin and seventh consecutive quarter of positive free cash flow.

• Maintain 2025 revenue guidance: $285M-$288M (15% YOY midpoint). • Raise profit guidance for 2025: non-GAAP operating profit between $5M and $7M. • Q3 2025 revenue expected: $71.5M-$72M. • Q3 2025 non-GAAP operating profit expected: $1.5M-$2M.

• Certain statements are forward-looking involving risks and uncertainties that may cause actual results to differ from expectations. Refer to earnings release and annual report for risk factors.

Q: Congrats on the results. Can we talk about the large customer and mechanics of the data licensing?

A: Usually, companies pay onetime fee for testing data to train LLMs, then engage for long-term multiyear commitments.

Q: On NRR dip and customer adds?

A: NRR dip due to 2024 cohort lapping, customer adds up 18%, large customers over $100,000 grew 13%, sequential customer adds up 22, highest in 3 years.

Q: Gen AI data prospects converting?

A: Sales cycle involves testing, validation; confident in pipeline as Similarweb is #1 digital data company.

Q: AI Agent customer conversations?

A: Gen AI has strong traction, fast-growing product, strong pipeline.

Q: 3Q guide and profitability?

A: Confidence from pipeline conversion, go-to-market productivity, top line beat flows to bottom line, disciplined execution for profitable growth.

Q: Allocating success factors?

A: New products like Gen AI, app intelligence driving RPO, multiyear contracts contributing to RPO durability.

Q: Pricing and mix shift of data licensing?

A: Big data deals, multiple datasets, strong pipeline for AI offerings including Gen AI model, AI Agents.

Q: Confidence in licensing durability?

A: Engagements not onetime, process is evaluation leading to long-term multiyear commitments, confident in pipeline upside.

Q: Lessons from stock movement?

A: Need to improve communication to smooth investor experience.