So there was a quiet SaaS IPO you could have missed within the craziness of 2021 — SEMRush, a instrument your advertising and marketing division fairly doubtless makes use of to maintain monitor of the efficiency of your website positioning and advertising and marketing website.
Immediately, Semrush is quietly doing $290,000,000 in ARR, with robust NRR, and rising a really respectful 24% a yr … and is price simply $1.2 Billion. It’s powerful on the market within the public markets, of us.
5 Fascinating Learnings:
#1. Crossed 100,000+ Paying Clients, So About $2,800 ACV Per Buyer. However $10k+ clients rising quickest. The basic “high-end of self-service” value level. But $10k+ customers are growing 45%, in order that’s the place the largest progress is.
#2. 885,000 Free Customers, so about 12% Convert from Free-to-Paid. This math isn’t as easy because it seems, relying on how invaluable the Free version is, and the way aggressive the “choke” from Free to Paid is. Nonetheless, at all times useful to see how any chief does free to paid at scale. And fascinating to see they’re rising the highest of the funnel, Free, quicker than Paid:
#3. 53% of Income is Outdoors U.S. Not a shock, and similar to HubSpot’s ratios right here — however at all times fascinating to see. And once more a problem to everybody in SaaS to go world.
#4. 2022 Development Was Down from 2021, However Virtually the Identical as 2020. Development was 35% in each 2022 and 2020. One other easy instance of 2021 being the outlier yr. Nonetheless, 2023 has began extra slowly.
#5. Not But Non-GAAP Worthwhile. This doubtless explains the modest a number of and market cap. Whereas SEMRush has grown impressively, it’s not extremely environment friendly even at $280,000,000 in ARR. The markets care once more about effectivity. With 1,500 workers, SEMRush is at about $190,000 in income per worker (1,500 workers). Getting worthwhile requires getting nearer to $300,000 usually.
And some different fascinating learnings:
#6. Stable NRR at 116%, down only a smidge from 118% final quarter. NRR is holding up.
#7. Spending a Hefty 50% of Income on Gross sales and Advertising. PLG and Self-Serve fashions aren’t at all times cheaper, and SEMRush is an instance. They spend a reasonably excessive 50% of all income on gross sales and advertising and marketing — and that’s up from final yr. Atlassian against this spends simply 15% of income on gross sales and advertising and marketing, one of many lowest of the general public SaaS corporations.
A really stable enterprise that continues to carry out effectively even with advertising and marketing spend underneath stress. A valuation of 4x ARR? Awfully low IMHO for what they’ve constructed.