Semrush Q3 Earnings

Revenue: $49.3 (53.1% YoY, 9.5% QoQ)

Slight deceleration, but they did mention that the back half of the year might be more moderate. 9.54% sequential growth is not bad though.

Q4 Guide: $52.3 M (43.5% YoY, 6.09% QoQ)

I think this was a strong guide, better than their Q3 guide which was just under 6% sequentially. Assuming they do a 4% beat, that’ll be 10% sequential growth.

DBNRR: 124% vs. 121% in Q2 and 116% in Q1

In their earnings remarks, they mentioned average contracts increased by greater than 20% YoY which is an improvement from 19% the previous quarter.

Customers: 79k+ (23% YoY, 3.95% QoQ)

Definitely the one part of their report I was not thrilled about since it’s their slowest customer add in the past few months. Something to definitely keep an eye on.

Gross margins: 76.9% vs. 76% last year and 77.3% the previous quarter

Not sure for why the margins dropped, it’s the 3rd consecutive quarter of declining margins, but it’s still higher than the previous years

Overall, I think the results were pretty solid. Their DBNRR is accelerating, their revenue growth has been pretty consistent and their Q4 guide gives room for some acceleration in revenue growth sequentially. Only red flag I noted was the decline in customer growth QoQ, hopefully the earnings transcript will address that.

Compared to Amplitude which has a 67 EV/S and similar TTM revenue, I divested from Amplitude and added considerably to my Semrush position which only has a ~20 EV/S with plenty of upside. Compare this to Sprout Social, which has a ~40 EV/S, I think there is definitely some room for multiple expansion.

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