Q2 2024 Summary
Published Jan 15, 2025, 2:30 PM UTC- Strong growth among large customers, with revenue from $100,000+ customers growing above 20%, indicating successful upselling and increased adoption among large enterprises. The company also signed its first 8-figure ARR customer, significantly increasing from a previous 7-figure deal.
- Increasing demand from large tech companies for Similarweb's data to train their Large Language Models (LLMs), presenting a significant new revenue opportunity. Similarweb expects this offering to accelerate as the AI revolution evolves.
- Successful customer acquisition strategy is leading to an acceleration in customer growth, particularly through the self-serve model, which has very good margins. The company is also seeing a positive trend in net revenue retention (NRR), indicating improved customer retention and the effectiveness of prior efforts.
- The company's focus on smaller customers with lower entry points may lead to decreasing average order value (AOV), potentially impacting revenue growth in the short term. While Similarweb is confident in increasing AOV over time, the reliance on customers expanding their usage may pose risks if upselling efforts are not successful.
- The planned increase in headcount, particularly in sales and customer success roles, may lead to higher operating expenses. This could result in expenses outpacing revenue growth, potentially affecting profitability and margins.
- Recent acquisitions like 42matters are small and not materially contributing to the company's revenue or profit guidance. This raises concerns about the effectiveness of their acquisition strategy to significantly drive growth.
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8-Figure Deal Uplift
Q: How much did the 8-figure deal grow from before?
A: The 8-figure deal was previously a 7-figure deal, and we were able to significantly increase it. This customer started nine years ago with a few tens of thousands of dollars in ARR and has now grown to well over $10 million, using multiple products across many departments and geographies. -
Selling Data for LLMs
Q: How do you ensure value and pricing when selling data for LLMs?
A: We're seeing increased demand from large tech companies building LLMs who want to consume more digital data. Pricing and packaging are new and quite custom, as customers have various ways they want the data. We're building trust and working closely with them to build great solutions. -
Growth in Large Customers
Q: What's driving the growth in $100k+ customers?
A: We're seeing more success with strategic accounts, becoming better at serving them. Our first 8-figure customer this quarter exemplifies this. We've intentionally made it easier for customers to start with Similarweb 3.0, allowing them to grow from initial smaller engagements to significant expansions over time. -
42matters Acquisition Impact
Q: What is the impact of the 42matters acquisition on guidance?
A: The acquisition of 42matters, a small business, is built into our guidance. While it adds some incremental contribution, the overall impact on the top and bottom line is small. The expansion in our profit guide results mainly from efficiencies in our core business. -
Macro Impact on Business
Q: How is the macro environment affecting your business?
A: We've improved our strategic and self-serve motions, driving great growth and success. In challenging markets, companies double down on market data to understand their positioning, which benefits us. Our solutions help companies gain visibility in a tough environment, providing a tailwind to our business. -
Retention for Smaller Clients
Q: Any updates on net revenue retention for smaller clients?
A: We're seeing a positive trend in retention. Efforts started a year ago are now bearing fruit, and we agree that trends are improving. -
Increased Headcount Plans
Q: What's driving your increased headcount plans?
A: The increase is mostly sales-related. With strong momentum and increasing revenue, we need more customer success staff to deliver our growing book of business. We're seeing a lot of opportunity ahead. -
Similarweb 3.0 and ARR Per Customer
Q: Will Similarweb 3.0 continue driving lower ARR per customer?
A: Yes, we've made it easier for customers to start with us, resulting in accelerated logo growth. We're seeing great success with self-serve customers who can begin with a credit card and grow over time. This strategy proves effective for easy landing and future growth. -
Margins on Smaller Customers
Q: Are margins better on smaller customers?
A: Yes, especially with self-serve customers, margins are very good. While we're increasing overall customers at the lower end, we're confident in our ability to increase AOV over time. -
Product Demand Inflection
Q: Where is demand inflecting higher across your products?
A: We see strong demand for our Data-as-a-Service (DaaS) offerings, as customers want to implement our data into their own dashboards. Our stock intelligence product for public investors is also doing well this quarter. Both lines of business performed strongly. -
New Data Version Accuracy
Q: Can you quantify the accuracy improvements in the new data version?
A: Our internal measurements show significant improvements across the board. We've increased accuracy by country, website size, and vertical. We've also added over 30 million more websites to our estimations, enhancing both accuracy and coverage.