• Q4 Revenue: $65.6 million, a 16% increase year over year.
• Full Year 2024 Revenue: $249.9 million, representing 15% growth over 2023.
• Non-GAAP Operating Margin Q4: 4%.
• Full Year 2024 Non-GAAP Operating Margin: 6%, an 800 basis point improvement over 2023.
• Normalized Free Cash Flow Q4: $2.7 million.
• Full Year 2024 Free Cash Flow: $27.7 million, reflecting an 11% margin.
• Net Revenue Retention (NRR): Overall NRR at 101%; NRR for $100k ARR customers at 112%.
• Customer Base Growth: 17% year over year, ending with over 5,500 ARR customers.
• $100,000 ARR Customers: 405 customers, an 11% increase year over year.
• Average ARR per Customer: Increased 7% year over year to approximately $376,000.
• Multi-Year Contracts: 49% of ARR contracted under multi-year agreements, up from 42% last year.
• Remaining Performance Obligations (RPO): $246 million, up 26% year over year.
• 2025 Revenue Guidance: $285 million to $288 million, representing 15% growth at the midpoint.
• Q1 2025 Revenue Guidance: $66 million to $66.5 million.
• 2025 Operating Profit Guidance: $1 million to $4 million.
• Q1 2025 Non-GAAP Operating Loss Guidance: $1 million to $1.5 million.

• Warning! GuruFocus has detected 6 Warning Sign with SMWB.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Similarweb Ltd (NYSE:SMWB) reported a 15% year-over-year revenue growth for 2024, reaching nearly $250 million.
• The company achieved a non-GAAP operating profit for the first full financial year, demonstrating disciplined execution.
• Similarweb Ltd (NYSE:SMWB) signed significant multi-year agreements with S&P Global and Bloomberg, highlighting the strength of their data assets.
• The customer base grew by 17% year-over-year, with more than 5,500 ARL customers and 15 new seven-figure contracts signed in Q4.
• The company is capitalizing on AI opportunities by embedding AI solutions into their platform and expanding R&D and go-to-market teams.

Negative Points

• The increased investment in R&D and go-to-market teams is expected to reduce operating profit in the short term.
• There was some softness in Q4 execution due to managerial changes and low performance, impacting sales.
• FX headwinds affected revenue growth, with a 1% to 2% impact on a run rate basis.
• Gross margin decreased sequentially due to investments in new data capturing for Gen AI and integration of new data sets.
• The guidance for 2025 reflects increased operating expenses, with a non-GAAP operating loss expected in Q1.

Q & A Highlights

Q: Can you provide more details on the incremental $20 million spend? How is it divided between go-to-market strategy and R&D, and what is the hiring cadence for the year? A: The majority of the spend is for accelerating our go-to-market efforts, with a significant portion also allocated to R&D. The hiring cadence will be focused on ramping up these areas to capture growth opportunities while maintaining profitability. - Or Offer, CEO

Q: With the revenue growth guidance at 15% for 2025, similar to 2024, is the expectation for acceleration in 2026? A: Yes, the 15% growth guidance is a starting point. We expect to see significant growth acceleration in the latter part of 2025, leading into 2026, as we ramp up our go-to-market teams and address forex pressures. - Or Offer, CEO

Q: How did the Q4 revenue results compare to expectations, and were there any one-time impacts like FX? A: We achieved the high end of our guidance for Q4, with FX pressures impacting results by about 1% to 2%. Despite these headwinds, we saw strong growth in larger customer segments and new multi-year relationships. - Jason Schwartz, CFO

Q: Can you elaborate on the AI investments, particularly on the product side? A: We are integrating AI to enhance insights from our data, making it easier for customers to derive value. This involves developing new capabilities for data collection and analysis, particularly around chatbots and Gen AI, to provide brands with better visibility into consumer behavior. - Or Offer, CEO

Q: What is the expected payback period for the increased investments in AI and go-to-market strategies? A: We anticipate seeing returns in the second half of 2025, with a focus on positioning the company for strong growth and profitability by 2026. Our strategy is to balance growth with maintaining profitability. - Or Offer, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.