Summary
Semrush Holdings reported revenue of $45.0 million for the quarter ended June 30, 2021, up 58.2 percent from $28.5 million in the prior-year quarter. Year to date revenue reached $85.0 million, up 51.1 percent from $56.2 million. Gross profit rose 62.5 percent to $34.8 million, and gross margin expanded to 77.3% from 75.2%. The quarter still ended with a net loss of $279,000, an improvement from a loss of $2.1 million a year earlier, and an operating loss of $15,000 against a loss of $1.9 million. Diluted earnings per share were $0.00, up from a loss of $0.02.
Customer growth and pricing drove the top line. Paying customers reached 79,087 at June 30, 2021, up from 60,458 a year earlier. The earnings release put the figure at more than 76,000 customers, up 29 percent, and noted that count excludes Prowly customers. ARR was $188 million at quarter end, up 57 percent year over year. ARR per paying customer rose to $2,351 from $1,969. Dollar-based net revenue retention was 121 percent, up 500 basis points from the prior quarter. Management tied the revenue increase to 29 percent growth in paid users and 19 percent growth in average check.
Add-on products carried much of the expansion. Total add-on revenue grew more than 75 percent from the previous year, and Local Listing Management revenue more than doubled. The Social Media Marketing toolkit finished the quarter with more than 30,000 active users, up about 25 percent sequentially. New releases included Core Web Vitals reporting inside the Site Audit product and a new Keyword Difficulty score. Revenue increased in every region, most sharply in the United States. Roughly 75 percent of paying customers bought monthly plans as of June 30, 2021, down from 76 percent a year earlier, and no single customer accounted for more than 1 percent of revenue.
Cost growth stayed behind revenue growth, which is why gross margin improved. Headcount rose across the business. Research and development headcount was up 26 percent, general and administrative headcount up 34 percent and sales and marketing headcount up 4 percent for the three months ended June 30, 2021. Cash generation improved alongside the income statement. Operating cash flow was $1.05 million for the quarter, up 163.0 percent from $400,000 a year earlier. For the six months ended June 30, 2021, operating cash flow was $10.1 million versus $961,000. Capital expenditures fell to $584,000 in the quarter from $708,000. Free cash flow, a non-GAAP measure, was $9.0 million for the first half against negative $1.5 million a year earlier, and free cash flow margin was 10.6 percent against negative 2.7 percent. Deferred revenue was $34.7 million at June 30, 2021.
Guidance for the third quarter of 2021 points to revenue growth of 47 to 48 percent year over year, with a non-GAAP net loss of $4.5 million to $4.0 million. Full-year 2021 guidance points to revenue growth of 46 to 47 percent, with a non-GAAP net loss of $7.9 million to $6.3 million. Both loss figures exclude stock-based compensation. The company said it cannot reconcile the non-GAAP net loss guidance to the closest GAAP measure without unreasonable effort, given the variability of stock-based compensation, employer taxes and tax deductions tied to equity awards.
Management expects to keep incurring operating losses and negative cash flow for the foreseeable future while it invests in the business. Semrush said its existing cash should cover operating and capital needs for at least the next 12 months, and it warned that additional equity or debt financing may be needed on terms that are not acceptable, or may not be available at all. The company has a $45.0 million revolving credit facility that matures on January 12, 2024, with availability tied to a borrowing base on annualized retention applied to monthly recurring revenue. New sales hires take several months or more to become productive, so hiring costs land before the revenue they produce. Other income remains exposed to foreign currency moves, mainly at Prowly in Poland. Non-GAAP net income was $290,000 for the quarter, against a non-GAAP loss of $1.9 million a year ago.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $45.0M | $40.0M | +12.5% | — | — |
| Gross profit | $34.8M | $31.2M | +11.3% | — | — |
| Gross margin | 77.3% | 78.1% | -0.8 pp | — | — |
| Research & development | $6.0M | $5.4M | +11.3% | — | — |
| Sales & marketing | $18.3M | $16.5M | +11.2% | — | — |
| General & administrative | $10.5M | $7.9M | +33.1% | — | — |
| Total operating expenses | $34.8M | $29.7M | +17.0% | — | — |
| Operating income (loss) | -$15.0K | $1.5M | -101.0% | — | — |
| Operating margin | -0.0% | 3.8% | -3.8 pp | — | — |
| Net income (loss) | -$279.0K | $1.5M | -119.0% | — | — |
| Net margin | -0.6% | 3.7% | -4.3 pp | — | — |
| Diluted EPS | $0.00 | $0.01 | -$0.01 | — | — |
Risks
Substantially all revenue and cash flows come from premium subscriptions, and customers predominantly choose monthly terms that can be terminated or adjusted monthly. The filing states monthly plans were approximately 75% of paying customers as of June 30, 2021, exposing results to renewal, downgrade, and churn risk.
The market for online visibility tools is fragmented, rapidly evolving, and highly competitive with low barriers to entry. Point solutions and larger competitors may offer lower-priced or free products, and pricing pressure could force discounting or higher sales and marketing spend.
The platform depends on publicly available and paid third-party data, including social media APIs and clickstream data, under standard terms that can change with little notice. Loss of data access or less favorable terms could reduce product functionality and require costly alternatives.
Changes by search engines, social networking sites, and other third parties to algorithms or anti-spam policies may reduce the efficacy of products such as backlink analytics and Prowly email distribution. For example, if Google stops penalizing unnatural backlinks, customers may devalue backlink audit tools.
The company has design and development operations in Russia, the Czech Republic, Cyprus, and Poland, and approximately 54% of revenue for the three months ended June 30, 2021 came from paying customers outside the United States. Geopolitical instability, military conflicts, sanctions, and foreign exchange restrictions could disrupt operations and delay product releases.
The business depends on CEO and co-founder Oleg Shchegolev, COO and co-founder Dmitry Melnikov, and Chief Product Officer Vitalii Obishchenko, and competition for software engineers and sales professionals in Boston, Prague, St. Petersburg, and other office locations is intense. Loss of key personnel or inability to hire could harm growth.
Paying customers grew from over 60,000 as of June 30, 2020 to over 79,000 as of June 30, 2021, and the company operates seven offices globally. Failure to scale operational, financial, and management controls could harm service quality, customer satisfaction, and execution.
The $45.0 million revolving credit facility is subject to a borrowing base based on 400% of annualized retention applied to monthly recurring revenue. Covenants restrict indebtedness, liens, dividends, acquisitions, and capital expenditures, and a default could accelerate repayment and permit lenders to exercise remedies over substantially all assets.
Adverse or weakened general economic conditions may reduce spending on sales and marketing technology, particularly among SMBs and marketing agencies that make up a large portion of the customer base. Prolonged slowdowns could lead to non-renewals, requests to renegotiate contracts, or payment defaults.
The pandemic remains uncertain and could further reduce technology spending by SMB and agency customers, as seen when paying customer growth declined in April 2020. The company also faces semiconductor-related hardware lead times affecting data center infrastructure as of June 30, 2021.
Use of cookies and tracking technologies may become restricted by unfavorable legislation, user controls, or technical changes, which could limit customer acquisition and certain products. Compliance with evolving privacy and security laws, such as the CCPA, may increase costs and constrain data use.
The company has experienced breaches, including a brute force attack that accessed affiliate program partner contact information, and remains exposed to residual risk from the SolarWinds supply chain attack. A customer data breach could lead to liability, termination rights, and reputational harm.
As of June 30, 2021, directors, executive officers, and affiliates held 92% of voting power, and 124,905,954 shares were restricted from immediate resale, with 33% of lock-up shares released on August 11, 2021. Future sales or equity issuances could depress the stock price and dilute stockholders.
SaaS KPIs
All quarters →ARR per Paying Customer
Paying Customers
ARR
Dollar Based Net Revenue Retention
Gross Margin
Summary, forecast, risks and KPIs are extracted from SEMrush Holdings, Inc.'s SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.