Marketing analytics software Semrush (NYSE: SEMR) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 22.4% year on year to $105 million. The company expects next quarter’s revenue to be around $108.7 million, close to analysts’ estimates. Its GAAP profit of $0.01 per share was $0.01 below analysts’ consensus estimates.
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Semrush (SEMR) Q1 CY2025 Highlights:
- Revenue: $105 million vs analyst estimates of $104.1 million (22.4% year-on-year growth, 0.9% beat)
- EPS (GAAP): $0.01 vs analyst estimates of $0.02 ($0.01 miss)
- Adjusted Operating Income: $12.21 million vs analyst estimates of $11.23 million (11.6% margin, 8.8% beat)
- Q2 adjusted operating margin guidance of 11% missed expectations of closer to 12%
- The company reconfirmed its revenue guidance for the full year of $450.5 million at the midpoint
- Operating Margin: -0.1%, down from 1.7% in the same quarter last year
- Free Cash Flow Margin: 17.6%, up from 9.3% in the previous quarter
- Customers: 118,000, up from 117,000 in the previous quarter
- Net Revenue Retention Rate: 106%, in line with the previous quarter
- Market Capitalization: $1.50 billion
Company Overview
Started by Oleg Shchegolev while still in university, Semrush (NYSE: SEMR) is a software-as-a-service platform that helps companies optimize their search engine and content marketing efforts.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Semrush’s sales grew at a solid 24.5% compounded annual growth rate over the last three years. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, Semrush reported robust year-on-year revenue growth of 22.4%, and its $105 million of revenue topped Wall Street estimates by 0.9%. Company management is currently guiding for a 19.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 18% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and indicates the market is baking in success for its products and services.
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Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Semrush’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 107% in Q1. This means Semrush would’ve grown its revenue by 6.5% even if it didn’t win any new customers over the last 12 months.
Semrush has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.
Key Takeaways from Semrush’s Q1 Results
Revenue beat slightly and adjusted operating profit beat more convincingly. Looking ahead, next quarter's adjusted operating margin guidance missed. Overall, this quarter was mixed, and the stock traded down 4.1% to $9.75 immediately following the results.
So do we think Semrush is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
