Summary
Semrush Holdings reported FY2021 Q3 revenue of $49.25 million, up 53.0% from the prior-year quarter, and year-to-date revenue of $134.26 million, up 51.8%. The customer count passed 79,000 as of September 30, 2021, up approximately 23% from a year earlier. ARR reached $199 million as of September 30, 2021, up 47% year over year, and dollar-based net revenue retention was 124%, up from 121% in the previous quarter. Management said revenue growth was broad based and most pronounced in the United States. The gain came from more paying customers, a higher subscription price for the core product, and growth in user licenses, add-ons, and attach rates.
Gross profit was $37.89 million in the quarter, up 54.9%, and gross margin was 76.9%, up 0.9 percentage points from the prior-year quarter. Operating loss narrowed to $0.33 million, and operating margin was negative 0.7%, up 1.7 percentage points. Net loss narrowed to $0.62 million. Diluted EPS was $0.00, up from the prior-year quarter. On a year-to-date basis, operating income was $1.16 million and net income was $0.58 million, both swung to a profit from prior-year losses. The company reported one reportable segment, and no single customer accounted for more than 1% of revenue.
Cash generation improved sharply. Operating cash flow was $8.69 million in the quarter, up 969.0%, and year-to-date operating cash flow was $18.75 million, up 956.9%. Capital expenditures were $0.81 million in the quarter, up 579.0%, while year-to-date capital expenditures were $1.56 million, down 18.5%. Deferred revenue was $36.05 million at September 30, 2021. Free cash flow for the first nine months was $16.759 million, and free cash flow margin was 12.5%.
Operational momentum came from product add-ons and higher customer usage. Semrush .Trends revenue grew more than 70% year over year in the third quarter. Additional user licenses rose over 80% year to date, helping drive year-over-year average revenue per customer growth of more than 20%. Attach rates for the Agency Growth Kit add-on approached 5% for agency customers less than 12 months after launch. The company expanded Local Listings Management to Canada, making the add-on available in six countries, including the United States, United Kingdom, and Australia. ARR per paying customer was $2,518 as of September 30, 2021, compared with $2,117 a year earlier.
Guidance points to continued investment. For the fourth quarter of 2021, Semrush guided revenue of $51.8 million to $52.3 million, up 42% to 43% year over year, and a non-GAAP net loss of $5.5 million to $5.0 million. For the full year 2021, revenue is expected to be $186 million to $186.5 million, up 49% year over year, and non-GAAP net loss is expected to be $3.1 million to $2.6 million. Management said it will continue its pace of investment to capitalize on a large market opportunity.
The main risks are spending and future losses. Semrush expects to continue to incur operating losses and negative cash flows for the foreseeable future as it invests in research and development, sales and marketing, and general and administrative functions. Future capital requirements will depend on subscription growth, renewal activity, billing frequency, and the timing of spending. If the company cannot raise additional capital or generate cash flows needed to expand, its business, results of operations, and financial condition could be adversely affected. The credit facility includes a $45.0 million revolving credit facility and matures on January 12, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $49.3M | $45.0M | +9.4% | — | — |
| Gross profit | $37.9M | $34.8M | +9.0% | — | — |
| Gross margin | 76.9% | 77.3% | -0.3 pp | — | — |
| Research & development | $6.2M | $6.0M | +3.5% | — | — |
| Sales & marketing | $20.7M | $18.3M | +13.0% | — | — |
| General & administrative | $11.4M | $10.5M | +8.1% | — | — |
| Total operating expenses | $38.2M | $34.8M | +9.9% | — | — |
| Operating income (loss) | -$330.0K | -$15.0K | -2100.0% | — | — |
| Operating margin | -0.7% | -0.0% | -0.6 pp | — | — |
| Net income (loss) | -$615.0K | -$279.0K | -120.4% | — | — |
| Net margin | -1.3% | -0.6% | -0.6 pp | — | — |
| Diluted EPS | $0.00 | $0.00 | ±$0.00 | — | — |
Risks
Substantially all revenue depends on paying customers renewing premium subscriptions, and as of September 30, 2021 approximately 76% of paying customers purchased monthly plans that can be terminated or adjusted monthly as external factors change. The filing warns this can cause results of operations to fluctuate significantly from quarter to quarter.
The market is fragmented, rapidly evolving, highly competitive with relatively low barriers to entry, and demand is price sensitive. Competitors may offer lower-priced or free products or bundle solutions, forcing Semrush to cut prices, offer discounts, or increase sales and marketing spend; sales and marketing expense increased 47% in the three months ended September 30, 2021.
The platform relies on third-party data sources and APIs, including Facebook, Twitter, Instagram, Pinterest, and LinkedIn, with relationships mostly governed by standard terms that providers can change with little or no notice. Loss of access or less favorable terms could increase costs, reduce platform functionality, and harm results.
Approximately 55% of revenue for the three months ended September 30, 2021 was generated from paying customers outside the United States, and design and development is primarily conducted by subsidiaries in Russia, the Czech Republic, Cyprus, and Poland. The filing cites geopolitical and economic instability, military conflicts, sanctions complexity, and foreign exchange fluctuations as risks.
Adverse economic conditions may reduce spending on sales and marketing technology, with SMBs making up an important segment of the paying customer base and most customers on month-to-month subscriptions. COVID-19 previously caused the paying customer growth rate to decline in April 2020, and weak conditions could lead to reduced spending, renegotiated contracts, or non-renewal.
The company has experienced a brute force attack that resulted in access to affiliate program partner contact information, and it notes ongoing residual supply chain attack risk such as SolarWinds. A breach or unauthorized access to customer data could lead to liability, loss of customers, and reputational harm.
The filing states Semrush has a history of net losses, had an accumulated deficit of $35.2 million as of September 30, 2021, and expects to continue to incur net losses in the future despite reporting net income of $0.6 million for the nine months ended September 30, 2021. MD&A also says it expects to continue to incur operating losses and negative cash flows for the foreseeable future.
The company 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 is intense in its office locations including Boston, Prague, Cyprus, St. Petersburg, and Warsaw. Difficulty hiring or retaining employees could harm growth.
The platform relies on third-party data centers and Google Cloud locations, and the filing states it experienced delays migrating to a new data center in Virginia due to limited availability of required hardware from COVID-19-related supply chain delays. A significant outage or inability to restore availability could harm customer satisfaction and results.
Paying customers grew from over 64,000 as of September 30, 2020 to over 79,000 as of September 30, 2021, and the company has seven offices across the globe. Rapid growth places demands on management and operational resources, and COVID-19 has made integrating and managing dispersed teams more challenging.
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 Q3 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.