Summary
Semrush reported FY2024 Q3 revenue of $97.4 million, up 23.7% from the prior-year quarter. Year-to-date revenue reached $274.2 million, up 22.2%. The top line grew in all regions, and management tied the increase to a larger paying customer base, which rose to over 117,000 from more than 106,000 a year earlier. Annual recurring revenue was $400.7 million as of September 30, 2024, up from $322.8 million as of September 30, 2023. Dollar-based net revenue retention was approximately 107% at both September 30, 2024 and December 31, 2023, and ARR per paying customer was $3,414, up from $3,022. The company operates one reportable segment and says no single customer accounted for more than 10% of revenue in the quarter or the nine-month period.
Profitability was mixed. Gross profit rose 22.3% to $80.3 million in the quarter, but gross margin slipped 1.0 percentage point to 82.5%. Operating income fell 38.0% to $1.7 million, and operating margin dropped 1.7 percentage points to 1.8%. Net income attributable to Semrush declined 74.0% to $1.1 million, while diluted EPS was $0.01, down from the prior-year quarter. On a year-to-date basis, operating income was $6.6 million, a swing from a $10.3 million loss, and operating margin improved 7.0 percentage points to 2.4%. Year-to-date net income was $4.9 million, compared with a $5.9 million loss, and diluted EPS was $0.03, up from a $0.04 loss. Year-to-date gross margin was 83.0%, up 0.2 percentage point. Non-GAAP income from operations for the nine months was $34.0 million, and non-GAAP operating margin was 12.4%. The gap between GAAP and non-GAAP results reflects stock-based compensation, amortization of acquired intangibles, restructuring and other costs, and acquisition-related costs.
Cash generation improved. Operating cash flow was $8.1 million in the quarter, up 28.1% from the prior-year quarter, and $35.1 million year to date, up 1083.0% from the prior-year period. Capital expenditures were $0.5 million in the quarter, up 367.6%, and $3.4 million year to date, up 220.3%. Free cash flow, a non-GAAP measure, was $25.8 million year to date, with a 9.5% free cash flow margin, compared with negative $8.5 million in the prior-year period. Deferred revenue rose 24.9% to $69.0 million. Remaining performance obligations fell 8.0% to $1.18 million, a small part of the backlog picture.
Management's commentary points to continued investment. R&D headcount increased 12% year over year, and the company plans to keep investing in product development. It expects cost of revenue to rise in absolute dollars but stay near current levels as a percentage of revenue. Sales and marketing expenses may fluctuate as a percentage of revenue, and G&A is expected to decline as a percentage of revenue over time. No exit costs were incurred in the quarter, and the company does not expect future relocation exit costs.
Risks remain. The filing cites foreign currency fluctuations, a full valuation allowance on net deferred tax assets, and the possibility that additional financing may not be available on acceptable terms if needed. New sales personnel take time to become productive, and higher spending may not generate matching revenue in the same period. The company also notes that its historical results are not necessarily indicative of future performance.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $97.4M | $91.0M | +7.1% | $78.7M | +23.7% |
| Gross profit | $80.3M | $76.0M | +5.7% | $65.7M | +22.3% |
| Gross margin | 82.5% | 83.5% | -1.1 pp | 83.4% | -1.0 pp |
| Research & development | $22.2M | $19.3M | +15.0% | $14.1M | +57.6% |
| Sales & marketing | $35.7M | $35.0M | +2.0% | $30.1M | +18.6% |
| General & administrative | $20.8M | $18.3M | +13.4% | $18.8M | +10.7% |
| Total operating expenses | $78.6M | $72.6M | +8.3% | $62.9M | +25.0% |
| Operating income (loss) | $1.7M | $3.4M | -49.8% | $2.7M | -38.0% |
| Operating margin | 1.8% | 3.7% | -2.0 pp | 3.5% | -1.7 pp |
| Net income (loss) | $718.0K | $1.4M | -47.2% | $4.2M | -83.0% |
| Net margin | 0.7% | 1.5% | -0.8 pp | 5.3% | -4.6 pp |
| Diluted EPS | $0.01 | $0.01 | ±$0.00 | $0.03 | -$0.02 |
| Customers | 10,000 | — | — | — | — |
| Net retention rate | 80.0% | — | — | — | — |
Risks
Operating expenses increased significantly, primarily due to research and development costs rising $8.1 million, or 58%, for the three months ended September 30, 2024, driven by a 12% headcount increase and higher stock-based compensation. This contributed to operating income declining 38.0% and net income declining 74.0% for the quarter ended September 30, 2024.
The provision for income taxes increased 512% for the three months ended September 30, 2024 and 406% for the nine months ended September 30, 2024, primarily due to taxes on profitable foreign subsidiaries and the requirement to capitalize and amortize research and development costs, which creates a current U.S. tax provision without a deferred tax benefit because of a full valuation allowance.
New sales personnel require training and may take several months or more to achieve productivity, so costs incurred in hiring are not typically offset by increased revenue in the same period and may not result in new revenue if these personnel fail to become productive.
The company incurred $21.1 million in cash paid for businesses, net of cash acquired, and $4.9 million for purchase of noncontrolling interest during the nine months ended September 30, 2024, and acquisition-related costs increased professional services expenses. Integration of these acquisitions may increase costs and operational complexity.
SaaS KPIs
All quarters →ARR per Paying Customer
Paying Customers
Annual Recurring Revenue (ARR)
Dollar-based net revenue retention rate
Summary, forecast, risks and KPIs are extracted from SEMrush Holdings, Inc.'s SEC filings for Q3 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.