Summary
Semrush ended FY2023 Q4 with revenue of $83.39 million, up 21.2% from the prior-year quarter. Full-year revenue was $307.68 million, up 21.0%. The company crossed $300 million in ARR during 2023 and finished the year with nearly 108,000 paying customers at December 31, 2023, up from over 95,000 a year earlier. ARR was $337.1 million, up from $275.1 million, and ARR per paying customer was $3,125, compared with $2,868. Management points to a 41% compound annual growth rate in revenue between the years ended December 31, 2017 and December 31, 2023. The company also acquired Traffic Think Tank and a controlling interest in Datos during the year. The soft spot is expansion inside the installed base: dollar-based net revenue retention slipped to 107% from 118%.
Profitability improved sharply. Q4 gross profit was $69.71 million, up 22.7%, and gross margin was 83.6%, up 1.0 percentage point. Full-year gross margin reached 83.0%, up 2.1 percentage points. Q4 operating income was $2.68 million, up $17.96 million from the prior-year quarter, and the operating margin was 3.2%, up 25.4 percentage points. For the full year, the operating loss narrowed to $7.67 million, an improvement of $28.71 million, and the operating margin was negative 2.5%, up 11.8 percentage points. Q4 net income was $6.87 million, up $20.78 million from the prior-year quarter. Full-year net income was $0.95 million, up $34.80 million, and diluted EPS was $0.01, up $0.25.
Cash generation turned positive. Q4 operating cash flow was $11.55 million, up $21.18 million from the prior-year quarter, and full-year operating cash flow was $7.99 million, up $17.61 million. Q4 capital expenditures were $1.42 million, up $1.20 million, while full-year capital expenditures were $2.49 million, down $1.75 million. Deferred revenue, current portion, stood at $58.31 million at December 31, 2023, up $8.96 million. Remaining performance obligations were $1.42 million. The company had $45.0 million available under its revolving credit facility, which matured on January 12, 2024. On a non-GAAP basis, free cash flow was $335 thousand for 2023, compared with negative $15.56 million for 2022, and free cash flow margin was 0.1%. Non-GAAP income from operations was $7.67 million for 2023, compared with a non-GAAP loss from operations of $28.98 million for 2022.
Cost discipline did part of the work. Sales and marketing expense remained relatively flat year over year, as lower spending on paid video and paid search offset higher personnel costs. Research and development and general and administrative costs both rose. The company expects cost of revenue to increase in absolute dollars while staying near current levels as a percentage of revenue. It plans to keep investing in research and development for new products and features, and it expects general and administrative expense to fall as a percentage of revenue over time. Exit costs tied to the Russia relocation are not expected in future periods. Those expectations cover the next quarter and the full fiscal year, but the filing does not attach figures to them.
Risks are the familiar ones for a subscription platform. Competition in online visibility software is intense, and the company has to keep shipping products that stand apart from point solutions. Hiring and retaining talent is another pressure point, especially with headcount growing in higher cost locations. Foreign currency swings move other income and expense. The company also keeps a full valuation allowance against its net deferred tax assets, so current U.S. losses generate a tax provision without a matching deferred benefit. Customer concentration is not a concern, since no single customer accounted for more than 10% of revenue. The bigger question is whether the 107% net revenue retention rate stabilizes, because at that level growth leans more on new customers than on expansion of existing accounts.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $83.4M | $78.7M | +5.9% | $68.8M | +21.2% |
| Gross profit | $69.7M | $65.7M | +6.1% | $56.8M | +22.7% |
| Gross margin | 83.6% | 83.4% | +0.2 pp | 82.6% | +1.0 pp |
| Research & development | $15.4M | $14.1M | +9.2% | $13.3M | +15.9% |
| Sales & marketing | $31.0M | $30.1M | +3.2% | $39.6M | -21.6% |
| General & administrative | $20.6M | $18.8M | +9.8% | $17.4M | +18.5% |
| Total operating expenses | $67.0M | $62.9M | +6.5% | $72.1M | -7.0% |
| Operating income (loss) | $2.7M | $2.7M | -2.4% | -$15.3M | +117.6% |
| Operating margin | 3.2% | 3.5% | -0.3 pp | -22.2% | +25.4 pp |
| Net income (loss) | $6.9M | $4.2M | +63.1% | -$13.9M | +149.4% |
| Net margin | 8.2% | 5.3% | +2.9 pp | -20.2% | +28.5 pp |
| Diluted EPS | $0.05 | $0.03 | +$0.02 | -$0.10 | +$0.15 |
Risks
Substantially all revenue comes from premium subscriptions, and customers predominantly choose monthly terms that can be terminated or adjusted monthly. The dollar-based net revenue retention rate was approximately 107% as of December 31, 2023, compared with 118% as of December 31, 2022, which could pressure future growth if renewal or expansion trends do not improve.
The market is intensely competitive and rapidly evolving due to changing technologies, social media, and AI platforms such as ChatGPT. The company must develop integrations and functionality for these platforms, requiring significant compliance, research and development, sales and marketing resources, and licensing fees, or demand for its products could decline.
The platform depends on publicly available, internally developed, and paid third-party data sources, including social media APIs and negotiated data provider agreements that can be terminated or renewed on less favorable terms. Loss of access or limits on data use could harm product functionality and competitiveness.
The company has experienced security incidents, including a brute force attack that resulted in access to affiliate program partner contact information, and faces increasingly sophisticated attacks. A breach of customer personal data could lead to liability, mandatory notifications, and loss of customer confidence.
The use of cookies and tracking technologies is subject to evolving laws such as the EU e-Privacy Directive and CCPA, and the company has received inquiries from European data protection authorities regarding cookie practices. Restrictions could limit marketing, retargeting, and certain product capabilities.
Changes by search engines and social networking sites to algorithms or policies, such as anti-spam policies or backlink ranking changes, may reduce the efficacy of products like backlink analytics and Prowly. The company may need to recalibrate or discontinue affected offerings at significant cost.
A significant portion of operations is outside the United States, with design and development in the Czech Republic, Cyprus, Spain, Serbia, Armenia, Germany, the Netherlands, and Poland, and approximately 52% of 2023 revenue from customers outside the United States. Geopolitical instability, military conflicts, foreign exchange fluctuations, and local law changes could disrupt operations and increase costs.
Operations rely on two data centers in Virginia and two Google Cloud locations in Virginia and South Carolina, with no guarantee of uninterrupted access. Disruptions, ransomware, natural disasters, or supply chain delays could interrupt platform availability and harm customer satisfaction.
The company is integrating AI into offerings and expects increasing regulation, such as the EU AI Act anticipated to enter into force in Spring 2024 and become effective 24 months thereafter. Compliance could require higher data quality, transparency, and human oversight, increasing costs and legal risk.
The labor market is increasingly competitive and the company has experienced labor cost pressures, including costs and operational complexities from relocating personnel. It also relies on executive officers and key employees in research and development, operations, security, marketing, sales, and customer service.
The company is subject to income taxes in the United States and multiple foreign jurisdictions, and global tax developments such as BEPS 2.0 Pillar Two global minimum tax effective in 2024 in 24 countries could increase tax liabilities. Changes in tax laws, transfer pricing challenges, and tax examinations could adversely affect cash flows.
The company acquired Traffic Think Tank in February 2023 and a majority stake in Datos in December 2023, and expects to continue evaluating acquisitions. Integration may be difficult, costs may exceed expectations, and acquired technologies or data may not deliver expected benefits.
Spending depends on worldwide economic and geopolitical conditions and may be reduced by customers, especially SMBs, which make up a large portion of the paying customer base. Most paying customers are on month-to-month premium subscriptions that can be canceled at any time.
Although a previously disclosed material weakness was recently remediated, future material weaknesses could affect timely financial reporting, lead to regulatory sanctions or NYSE listing issues, and cause investors to lose confidence.
SaaS KPIs
All quarters →ARR per Paying Customer
Paying Customers
ARR
Dollar-based net revenue retention rate
Summary, forecast, risks and KPIs are extracted from SEMrush Holdings, Inc.'s SEC filings for Q4 FY2023 (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.