SEMrush (SEMR) - 2024 Q4 - Annual Report

Financial Performance - Company achieved $411.6 million in Annual Recurring Revenue (ARR) as of December 31, 2024, up from$337.1 million in 2023, representing a growth of 22%[242] - Revenue for the year ended December 31, 2024, was $376.8 million, an increase of$69.1 million or 22% compared to $307.7 million in 2023[279] - Non-GAAP income from operations for 2024 was$45.8 million, compared to $11.6 million in 2023, showing a significant improvement[256] - Free cash flow increased to$35.3 million in 2024 from $0.3 million in 2023, marking a substantial rise[260] - Gross profit for 2024 was$311.3 million, reflecting a 22% increase from $255.3 million in 2023, maintaining a gross margin of 83$3,522 in 2024 from $3,125 in 2023, reflecting an increase of 12.7$3,522 as of December 31, 2024, from $3,125 as of December 31, 2023, driven by strong upsell activity[279] - The number of paying customers grew to approximately 117,000 as of December 31, 2024, up from nearly 108,000 as of December 31, 2023[279] Expenses and Costs - Cost of revenue increased by$13.2 million or 25% to $65.5 million in 2024, primarily due to higher integration and data costs, depreciation, and personnel costs[280] - Sales and marketing expenses rose by$17.5 million or 14% to $144.3 million in 2024, with personnel costs being the primary driver[281] - Research and development expenses increased by$22.6 million or 39% to $80.1 million in 2024, largely due to higher personnel costs and increased headcount[282] - General and administrative expenses increased by$1.2 million or 2% to $78.6 million in 2024, primarily driven by higher professional services costs[283] Cash Flow and Investments - Net cash provided by operating activities for 2024 was$47.0 million, resulting from net income of $7.4 million adjusted for non-cash charges of$51.1 million[290] - Cash and cash equivalents as of December 31, 2024, totaled $48.9 million, with short-term investments at$186.7 million and accounts receivable at $9.0 million[286] - Net cash used in investing activities for 2024 was$58.2 million, primarily due to $151.2 million for short-term investments and$25.9 million for acquisitions[292] - Net cash provided by financing activities for 2024 was $1.9 million, consisting of$4.1 million from stock option exercises, offset by $1.6 million in debt repayment[295] - Cash flows from operations and cash on the balance sheet are expected to meet capital needs for at least the next 12 months[288] Strategic Initiatives - The company launched the general availability of the Enterprise SEO solution in 2024, contributing to its product innovation strategy[239] - The company plans to continue investing in product development to enhance its technological capabilities and expand its product offerings[248] - The company expects to continue investing in research and development to enhance its platform and customer experience[267] - The company anticipates fluctuations in cost of revenue as it expands its customer base and invests in data center operations and customer support[265] Other Financial Metrics - The company’s dollar-based net revenue retention rate slightly decreased from 107$0.2 million to $12.1 million, representing 3$9.3 million to $13.0 million, accounting for 3.5$8.5 million due to the addition of new customers and business expansion[290] Currency and Investments - The company has not engaged in hedging of foreign currency transactions but may evaluate this as international operations expand[314] - The company’s investments are primarily in short-term investments and money market funds, totaling $235.6 million as of December 31, 2024[312]