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Similarweb Announces Second Quarter 2021 Results

August 11, 2021 7:00 AM

Second quarter 2021 revenue grew 49% year-over-year to $32.5 million.

Gross margin improved by 253 basis points year-over-year to 78.5%.

220 customers with ARR of $100K or more, an increase of 52% year-over-year.

Company introduces strong guidance for Q3 and full-year 2021.

TEL AVIV, ISRAEL--(BUSINESS WIRE)-- Similarweb Ltd. (NYSE: SMWB) ("Similarweb" or the "Company"), a leading platform for digital intelligence, today announced financial results for its second quarter ended June 30, 2021.

“Similarweb delivered strong financial results in our first quarter as a public company. Companies around the world are investing in digital transformation, and Similarweb enables them to maximize their efforts as the measure of the digital world. Our growth accelerated in Q2, we added customers across all verticals and markets, expanded our existing customer relationships and continued to invest across the board in order to increase our scale, customer base and market penetration. We have a massive opportunity ahead of us and we will continue to invest in capturing it,” said Or Offer, Founder and CEO of Similarweb.

Second Quarter 2021 Financial Highlights

Recent Business Highlights

Financial Outlook

“We are pleased with the positive momentum going into the second half of 2021,” said Jason Schwartz, Chief Financial Officer of Similarweb. "Given our strong first half results and increasing demand for our solutions, we are introducing the following financial guidance for the third quarter and full year 2021.”

The Company’s third quarter and 2021 financial outlook is based on a number of assumptions that are subject to change and many of which are outside the Company’s control. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

The Company does not provide guidance for operating loss, the most directly comparable GAAP measure to non-GAAP operating loss, and similarly cannot provide a reconciliation between its forecasted non-GAAP operating loss and forecasted operating loss without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.

Conference Call Information

The financial results and business highlights will be discussed on a conference call and webcast scheduled at 8:30 a.m. Eastern Time today, August 11, 2021. A live webcast of the call can be accessed from Similarweb’s Investor Relations website at https://ir.similarweb.com. An archived webcast of the conference call will also be made available on the Similarweb website following the call. The live call may also be accessed via telephone at (877) 407-0726 toll-free and at (201) 689-7806 internationally. A telephonic replay of the conference call will be available until August 18, 2021 following the end of the conference call. To listen to the replay, please dial (877) 660-6853 or (201) 612-7415.

About Similarweb: As the most trusted platform for understanding online behavior, millions of people rely on SimilarWeb insights to strengthen their knowledge of the digital world. We empower anyone — from the curious individual to the enterprise business leader — to make smarter decisions by understanding why things happen across the digital ecosystem.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to the expected performance of our business, future financial results, strategy, the potential impacts of the COVID-19 pandemic and associated global economic uncertainty, long-term growth and overall future prospects and the size and our ability to capitalize on our market opportunity. Forward-looking statements include all statements that are not historical facts. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. These forward-looking statements reflect our current views regarding our intentions, products, services, plans, expectations, strategies and prospects, which are based on information currently available to us and assumptions we have made. Actual results may differ materially from those described in such forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) challenges associated with forecasting our revenue given our recent growth and rapid technological development, (ii) our history of net losses and desire to increase operating expenses, thereby limiting our ability to achieve profitability, (iii) challenges related to effectively managing our growth, (iv) intense competition in the market and services categories in which we participate, (v) potential reductions in participation in our contributory network and/or increase in the volume of opt-out requests from individuals with respect to our collection of their date, or a decrease in our direct measurement dataset, which could lead to a deterioration in the depth, breadth or accuracy of our data, (vi) our inability to attract new customers and expand subscriptions of current customers, (vii) changes in laws, regulations, and public perception concerning data privacy or change in the patterns of enforcement of existing laws and regulations, (viii) our inability to introduce new features or solutions and make enhancements to our existing solutions, (ix) real or perceived errors, failures, vulnerabilities or bugs in our platform, (x) potential security breaches to our systems or to the systems of our third-party service providers, (xi) our inability to obtain and maintain comprehensive and reliable data to generate our insights, (xii) changes in laws and regulations related to the Internet or changes in the Internet infrastructure itself that may diminish the demand for our solutions, and (xiii) failure to effectively develop and expand our direct sales capabilities, which could harm our ability to increase the number of organizations using our platform and achieve broader market acceptance for our solutions.

These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our final prospectus for our initial public offering filed with the SEC on May 12, 2021 in connection with our initial public offering and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.

Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. Except as required by law, we undertake no duty to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

Certain information contained in this press release relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the Company's own internal estimates and research. While the Company believes these third-party sources to be reliable as of the date of this press release, it has not independently verified, and makes no representation as to the adequacy, fairness, accuracy or completeness of any information obtained from third-party sources. In addition, all of the market data included in this press release involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while we believe our own internal research is reliable, such research has not been verified by any independent source.

Non-GAAP Financial Measures

This press release contains certain financial measures that are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures and capitalized internal-use software costs. Non-GAAP operating income (loss) represents GAAP operating income (loss) less share-based compensation, non-recurring acquisition related expenses and non-recurring expenses in relation to our initial public offering.

Similarweb Ltd.

Consolidated Balance Sheets

U.S. dollars in thousands (except share and per share data)

December 31,

June 30,

2020

2021

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

23,943

$

176,966

Short-term investments

30,000

—

Restricted deposits

1,454

1,965

Accounts receivable, net

25,257

19,843

Deferred contract costs

5,495

6,668

Prepaid expenses and other current assets

2,096

2,265

Total current assets

88,245

207,707

Property and equipment, net

6,090

6,168

Deferred contract costs, noncurrent

6,030

7,382

Intangible assets and goodwill

2,868

3,889

Other non-current assets

401

331

Total assets

$

103,634

$

225,477

Liabilities and shareholders' (deficit) equity

Current liabilities:

Borrowings under Credit Facility

$

26,853

$

—

Accounts payable

4,349

9,585

Payroll and benefit related liabilities

11,022

13,562

Deferred revenues

53,145

65,330

Other payables and accrued expenses

13,741

14,527

Total current liabilities

109,110

103,004

Deferred revenues, non-current

743

615

Deferred rent

3,012

2,785

Other long-term liabilities

19

6

Total liabilities

112,884

106,410

Commitments and contingencies

Convertible Preferred Shares, NIS 0.01 par value, 51,877,220 and 0 shares authorized as of December 31, 2020 and June 30, 2021 (unaudited), 50,657,042 and 0 shares issued and outstanding as of December 31, 2020, and June 30, 2021 (unaudited), liquidation preference of $202,483 and $0 as of December 31, 2020, and June 30, 2021 (unaudited), respectively;

135,810

—

Shareholders' (deficit) equity

Ordinary Shares, NIS 0.01 par value, 79,176,826 and 500,000,000 shares authorized as of December 31, 2020, and June 30, 2021 (unaudited), 15,328,449 and 74,378,855 shares issued as of December 31, 2020 and June 30, 2021 (unaudited), 15,326,281 and 74,376,687 shares outstanding as of December 31, 2020 and June 30, 2021 (unaudited), respectively;

42

203

Additional paid-in capital

25,908

317,778

Accumulated other comprehensive income

76

7

Accumulated deficit

(171,086

)

(198,921

)

Total shareholders' (deficit) equity

(145,060

)

119,067

Total liabilities, convertible preferred shares and shareholders' (deficit) equity

$

103,634

$

225,477

Similarweb Ltd.

Consolidated Statement of Comprehensive Income (Loss)

U.S. dollars in thousands (except share and per share data)

Six Months Ended June 30,

Three Months Ended June 30,

2020

2021

2020

2021

(Unaudited)

Revenues

$

42,491

$

61,920

$

21,890

$

32,507

Cost of revenues

10,416

13,266

5,262

6,993

Gross profit

32,075

48,654

16,628

25,514

Operating expenses:

Research and development

9,717

18,678

4,830

9,694

Sales and marketing

24,792

41,712

11,905

22,112

General and administrative

6,403

14,747

2,955

8,640

Total operating expenses

40,912

75,137

19,690

40,446

Loss from operations

(8,837

)

(26,483

)

(3,062

)

(14,932

)

Finance expenses, net

(691

)

(864

)

(323

)

(517

)

Loss before income taxes

(9,528

)

(27,347

)

(3,385

)

(15,449

)

Income taxes

157

488

90

272

Net loss

(9,685

)

(27,835

)

(3,475

)

(15,721

)

Net loss per share attributable to ordinary shareholders, basic and diluted

(0.69

)

(0.88

)

(0.25

)

(0.33

)

Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted

13,995,526

31,452,977

14,119,834

47,265,792

Net loss

(9,685

)

(27,835

)

(3,475

)

(15,721

)

Other comprehensive income (loss), net of tax

Change in unrealized gain (loss) on cashflow hedges

105

(69

)

242

191

Total other comprehensive income (loss), net of tax

105

(69

)

242

191

Total comprehensive loss

$

(9,580

)

$

(27,904

)

$

(3,233

)

$

(15,530

)

Share based compensation costs included above:

U.S. dollars in thousands

Six Months Ended June 30,

Three Months Ended June 30,

2020

2021

2020

2021

(Unaudited)

Cost of revenues

$

17

$

66

$

9

$

36

Research and development

206

2,041

103

676

Sales and marketing

220

1,338

109

712

General and administrative

603

1,682

342

821

Total

$

1,046

$

5,127

$

563

$

2,245

Similarweb Ltd.

Consolidated Statement of Cash Flows

U.S. dollars in thousands

Six Months Ended June 30,

Three Months Ended June 30,

2020

2021

2020

2021

(Unaudited)

Cash flows from operating activities:

Net loss

$

(9,685

)

$

(27,835

)

$

(3,475

)

$

(15,721

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,013

1,055

441

535

Finance income

(66

)

(92

)

(184

)

(241

)

Unrealized loss (gain) from hedging future transactions

138

(22)

118

53

Share-based compensation

1,046

5,127

563

2,245

Provision for accrued interest on Credit Facility

20

(53)

1

—

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable, net

2,693

5,414

(1,111)

4,489

Increase in deferred contract costs

(2,638

)

(2,525

)

(2,626

)

(1,407

)

(Increase) decrease in other current assets

(163)

(216)

(83)

24

Decrease in other non-current assets

60

70

60

1,357

Increase in accounts payable

643

3,951

154

1,962

Increase (decrease) in deferred revenue

2,283

11,836

(43)

2,388

Decrease in deferred rent

(258

)

(227

)

(121

)

(106

)

Increase (decrease) in other non-current liabilities

13

(13

)

(7

)

(7

)

Increase in other liabilities and accrued expenses

3,991

2,866

4,878

1,823

Net cash used in operating activities

(910

)

(664

)

(1,435

)

(2,606

)

Cash flows from investing activities:

Purchases of property and equipment, net

(302

)

(1,020

)

(66

)

(569

)

Capitalized internal-use software costs

38

(113

)

38

(113

)

Increase in restricted deposits

(77

)

(511

)

(106

)

(23

)

Decrease in short-term investments

447

30,000

76

20,025

Payment in relation to business combination

—

(500

)

—

(500

)

Acquisitions of intangible assets

—

(300

)

—

(300

)

Net cash provided by (used in) investing activities

106

27,556

(58)

18,520

Cash flows from financing activities:

Proceeds from PPP loan

1,759

—

1,759

—

Proceeds from exercise of stock options

487

428

55

90

Borrowings under Credit Facility

10,000

30,000

—

—

Repayment of Credit Facility

—

(56,800

)

—

(30,000

)

Proceeds from initial public offering, net of underwriting fees and commissions and other issuance costs

—

152,411

—

152,411

Net cash provided by financing activities

12,246

126,039

1,814

122,501

Effect of exchange rates on cash and cash equivalents

66

92

184

241

Net increase in cash and cash equivalents

11,508

153,023

505

138,656

Cash and cash equivalents, beginning of period

7,034

23,943

18,037

38,310

Cash and cash equivalents, end of period

$

18,542

$

176,966

$

18,542

$

176,966

Supplemental disclosure of cash flow information:

Interest paid

$

568

$

528

$

326

$

137

Taxes paid

$

71

$

254

$

(9)

$

120

Supplemental disclosure of non-cash financing activities:

Offering costs incurred during the period included in accounts payable and accrued expenses

$

—

$

1,745

$

—

$

1,745

Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP
Financial Measures

Reconciliation of Loss from operations (GAAP) to Non-GAAP operating loss

Six Months Ended June 30,

Three Months Ended June 30,

2020

2021

2020

2021

(In thousands)

Loss from operations

$

(8,837

)

$

(26,483

)

$

(3,062

)

$

(14,932

)

Share-based compensation expenses

1,046

5,127

563

2,245

Non-recurring fees related to initial public offering

—

1,214

—

1,214

Retention payment related to business combination

—

696

—

696

Non-GAAP operating loss

$

(7,791

)

$

(19,446

)

$

(2,499

)

$

(10,777

)

Reconciliation of Net cash used in operating activities (GAAP) to Free cash flow

Six Months Ended June 30,

Three Months Ended June 30,

2020

2021

2020

2021

(In thousands)

Net cash used in operating activities

$

(910

)

$

(664

)

$

(1,435

)

$

(2,606

)

Capital expenditure

(302

)

(1,020

)

(66

)

(569

)

Capitalized internal use software costs

38

(113

)

38

(113

)

Free cash flow

$

(1,174

)

$

(1,797

)

$

(1,463

)

$

(3,288

)

Press Contact:

Maayan Weiss

Similarweb

[email protected]

Investor Contact:

Annie Rosenberg

The Blueshirt Group, for Similarweb

[email protected]

Source: Similarweb Ltd.

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