Strong Q2 ARR Performance
Q: What's driving the strong net new ARR in Q2?
A: Net new ARR was significantly higher in Q2, partly due to the acquisition of Brand24, which contributed over one-third of the increase. Beyond that, we saw substantial year-over-year growth driven by larger accounts adopting more of our portfolio, expanding beyond SEO into areas like competitive intelligence, social media, and AI products. Customers with more than $10,000 in ARR grew 37%, becoming a larger portion of our base and bolstering ARR performance.

Impact of Price Increases
Q: How did price increases affect growth rates?
A: In Q3 last year, we increased prices across core offerings for new customers and a small group of existing customers. This resulted in about $2.5 million to $3 million in additional revenue last year and an incremental $2.5 million to $3 million in the first half of this year. The price increases, approximately 5% to 8%, benefited ARR growth.

Acquisitions of Brand24 and Ryte
Q: Will Brand24 and Ryte accelerate revenue growth?
A: Yes, we expect these acquisitions to grow in line with Semrush until cross-selling efforts begin. By integrating them into our product framework, we aim to accelerate their revenue growth through expanding our cross-sell and upsell capabilities, enhancing average ARR per customer.

Increasing ARPU with Acquisitions
Q: How will acquisitions affect ARPU?
A: Brand24 and Ryte offer significant opportunities to increase ARPU through bundling and cross-selling. Brand24's products cater to both SMBs and large enterprises, enhancing our social media tools. Ryte targets companies with very large websites, complementing our enterprise SEO product. We are confident customers will increase spend, potentially boosting ARPU by another 10% to 15%.

Monetizing AI
Q: Are customers upgrading for AI capabilities?
A: Yes, we're monetizing AI through three strategies. First, including AI in base offerings to improve conversion and retention. Second, offering AI features on higher-tier plans, driving upgrades—for example, our premium local product at $40 per location per month includes AI features, doubling the price of the entry-level product. Third, launching stand-alone AI products like ContentShake, combining AI APIs with proprietary data.

Capital Allocation and M&A Strategy
Q: What's your approach to capital allocation and M&A?
A: With a strong balance sheet of $230 million in cash and equivalents, we're actively investing in the business through R&D, partnerships, and M&A, focusing on the strongest ROI. We seek opportunities to accelerate our roadmap, and when acquisitions offer great teams, synergies, and attractive financial terms, we pursue them.

Enterprise Solution Pricing
Q: Are you achieving expected pricing for the enterprise solution?
A: Yes, we've increased prices after launching in May due to customer feedback. Pricing remains in the 10x to 15x range of the core product but is now closer to the higher end.

Expansion into Performance Monitoring
Q: Why expand into website performance monitoring?
A: This is a must-have feature for large companies with millions of pages. It supports market expansion and fosters relationships with engineering teams in existing accounts. Technical optimization is crucial for online visibility, and these tools become part of deployment pipelines.

Generative AI's Impact on SEO
Q: How does generative AI affect SEO strategies?
A: We've monitored AI overviews and find they replace featured snippets, providing links to original content that users click on. The rules to get featured remain similar, so it's another step in a long journey.

Enterprise SKU Features
Q: Which features attract customers to the enterprise SKU?
A: The three key pillars are deep customization, automated AI workflows, and inclusion of services. Enterprises appreciate customization, automation helps manage large websites, and services connect them with experts.