Summary
Semrush posted second-quarter fiscal 2024 revenue of $90.95 million, up 21.8% from the prior-year quarter, and year-to-date revenue of $176.76 million, up 21.4%. Annual recurring revenue reached $377.7 million as of June 30, 2024, up 25% year over year, and ARR per paying customer rose to $3,253 from $2,904 a year earlier. The platform finished the quarter with over 116,000 paying customers, up 11.5%, and roughly 1.1 million registered free active customers. Dollar-based net revenue retention was 107%, consistent with the previous quarter. Customers spending more than $10,000 a year grew 37% year over year, and the Enterprise SEO product picked up new deals with Digital Ocean, HSBC and the Royal Bank of Canada.
The quarter produced GAAP profitability. Operating income was $3.39 million, a swing to a profit from a prior-year quarter loss, and operating margin was 3.7%, up 6.8 percentage points. Net income attributable to Semrush Holdings was $1.66 million, and diluted EPS came in at $0.01. Year to date, operating income was $4.86 million and net income attributable to the company was $3.80 million, both swung to a profit from losses in the prior-year period. Diluted EPS for the six months was $0.03.
Gross profit rose 23.1% to $75.99 million, and gross margin was 83.6%, up 0.9 percentage points. Operating cash flow was $12.14 million for the quarter, up $18.46 million from the prior-year quarter. Capital expenditures were $2.15 million. Free cash flow, a non-GAAP measure, was $7.6 million, an 8.4% margin. Deferred revenue, current portion, was $66.59 million, up 19.0%, and remaining performance obligations were $1.21 million, up 33.2%. The company ended June 30, 2024 with $69.6 million in cash and cash equivalents and $161.9 million in short-term investments.
Non-GAAP income from operations was $12.2 million, with a non-GAAP operating margin of 13.4%. Semrush changed the definition of that measure during the quarter to also exclude amortization of acquired intangible assets, acquisition related costs and restructuring costs, on top of the prior exclusion of stock-based compensation. Management guided third-quarter 2024 revenue growth of approximately 23% year over year at the midpoint and a non-GAAP operating margin of about 11.0%. For the full fiscal year 2024, the outlook calls for revenue growth of 21% to 22%, a non-GAAP operating margin of 10.5% to 11.5%, and a free cash flow margin of about 8.0%.
Costs remain the main pressure point. Research and development was the fastest-growing expense line in the quarter, with headcount up 9% year over year, while general and administrative expense decreased. The company keeps a full valuation allowance against net deferred tax assets, and tax expense reflects earnings at profitable foreign subsidiaries plus the requirement to capitalize and amortize research and development costs, which creates a current U.S. provision with no matching deferred benefit. The majority stake acquired in Brand24 put a redeemable noncontrolling interest of $8.73 million on the balance sheet at June 30, 2024, and the net loss attributable to noncontrolling interests reduced reported net income for the quarter. Guidance is not reconciled to the closest GAAP measures because of the variability of share-based compensation and related tax effects.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $91.0M | $85.8M | +6.0% | $74.7M | +21.8% |
| Gross profit | $76.0M | $71.2M | +6.8% | $61.7M | +23.1% |
| Gross margin | 83.5% | 82.9% | +0.6 pp | 82.6% | +0.9 pp |
| Research & development | $19.3M | $17.3M | +11.5% | $14.1M | +36.6% |
| Sales & marketing | $35.0M | $33.9M | +3.2% | $30.2M | +15.8% |
| General & administrative | $18.3M | $18.5M | -0.9% | $19.4M | -5.5% |
| Total operating expenses | $72.6M | $69.7M | +4.2% | $64.0M | +13.3% |
| Operating income (loss) | $3.4M | $1.5M | +131.2% | -$2.3M | +245.7% |
| Operating margin | 3.7% | 1.7% | +2.0 pp | -3.1% | +6.8 pp |
| Net income (loss) | $1.4M | $2.0M | -32.1% | -$279.0K | +587.8% |
| Net margin | 1.5% | 2.3% | -0.8 pp | -0.4% | +1.9 pp |
| Diluted EPS | $0.01 | $0.01 | ±$0.00 | $0.00 | +$0.01 |
Risks
The provision for income taxes increased for the three and six months ended June 30, 2024 compared with the prior-year periods, primarily due to taxes on profitable foreign subsidiaries and the requirement to capitalize and amortize certain research and development costs, which creates a current U.S. tax provision without a deferred tax benefit because the company maintains a full valuation allowance. This can continue to reduce net income even when operating results improve.
Research and development costs increased for the three and six months ended June 30, 2024, driven by a 9% increase in headcount and higher outsourcing, while sales and marketing costs also rose. If these investments do not produce offsetting revenue growth, operating margin could be pressured.
Stock-based compensation expense increased across cost of revenue, sales and marketing, research and development, and general and administrative functions for the three and six months ended June 30, 2024. This raises personnel costs and may dilute existing shareholders, and the company excludes it from non-GAAP profitability measures.
During the six months ended June 30, 2024, the company used cash to acquire businesses, fund an investment loan receivable, and incurred acquisition-related costs, net. Integrating these acquisitions may divert management attention or fail to deliver expected benefits.
The company has multi-year commitments with certain data providers expiring at various dates through 2026, and cost of revenue includes data acquisition costs. Failure to renew these agreements on favorable terms could increase costs or disrupt the platform.
SaaS KPIs
All quarters →ARR per Paying Customer
Paying Customers
ARR
Dollar-Based Net Revenue Retention
Free cash flow
Free cash flow margin
Registered Free Active Customers
Non-GAAP operating margin
Non-GAAP income from operations
Customers Paying More Than $10,000 Annually
Summary, forecast, risks and KPIs are extracted from SEMrush Holdings, Inc.'s SEC filings for Q2 FY2024 (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 6, 2026.