Similarweb's Q3 2025 Earnings Call: Contradictions in Upsell Strategy, Sales Pipeline, and AI Investments

Date of Call: November 12, 2025

Financials Results

• Revenue: $71.8M, up 11% YOY

Guidance:

• Full-year 2025 revenue guidance reiterated at $285M–$288M (~15% YOY at midpoint).
• Raised non-GAAP operating profit guidance to $8.5M–$9.5M for 2025.
• Expect to continue generating positive free cash flow on a quarterly basis.
• Expect to recognize ~68% of RPO as revenue over the next 12 months.

Business Commentary:

• Revenue and Customer Growth:
• Similarweb Ltd. reported revenue of $72 million for Q3, up 11% year-over-year, with customer base growing 15% year-over-year to more than 6,000 ARR customers.
• The growth was driven by new product launches and increased adoption of Gen AI data and solutions.

• Free Cash Flow and Financial Stability:
• The company reported its eighth consecutive quarter of positive free cash flow, generating $3 million in Q3, representing a 4% free cash flow margin.

• This financial stability is attributed to efficient operations and disciplined execution.

• Product and Strategic Focus:

• ARR from Gen AI Intelligence products grew rapidly, exceeding $1 million since launch, contributing to the company's fastest-growing revenue streams.
• The focus on Gen AI intelligence, data selling for LLMs, and AI agent deployment is positioning Similarweb for leadership in the AI-driven market.

• Sales and Marketing Efficiency:
• The company significantly improved sales productivity, leading to a beat and raise on operating profit guidance.
• This was achieved through optimizing sales resources and leveraging AI efficiencies to enhance productivity.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 11% revenue growth to $71.8M, 15% customer growth to >6,000 ARR customers, an eighth consecutive quarter of positive free cash flow, reiterated 2025 revenue guidance and raised non-GAAP operating profit guidance — signaling confidence and constructive execution.

Q&A:

• Question from Surinder Thind (Jefferies LLC): Or, could you maybe just talk about your gross revenue retention? It looks like things are trending in the right direction, but NRR would suggest even given the tough comps that maybe the upsell process has been a little bit more challenging. Any color there would be appreciated.
  Response: NRR is averaged over the last four quarters and understates current expansion because much recent growth came from one-time LLM evaluation bookings; management expects conversions to ARR to lift NRR over time.

• Question from Surinder Thind (Jefferies LLC): That's helpful. And then maybe, I guess, since you mentioned kind of the LLMs and the training data partnerships in the pipeline, can you maybe talk about how that's evolving at this point? In the past, you've announced a number of kind of these upfront data purchases that aren't in your ARR. So should we be expecting conversion? Is this something where the clients maybe take 6 months to evaluate whether they want to enter into a longer-term relationship? Or how should we think about what's coming down the pipeline here?
  Response: LLM engagements start as lengthy evaluations of large historical datasets; sales cycles are long but management is confident a majority will convert to multiyear ARR based on existing conversions.

• Question from Raimo Lenschow (Barclays Bank PLC): Perfect. I had 2 questions as well. So first of all, great to see the App Intelligence customer count grow and ARR reaching almost $10 million there. Can you help us understand where these customers are coming from? Are they cross-sell or net new? Like can you speak to that, please? And then I have one follow-up.
  Response: Majority of App Intelligence customers are cross-sells from the existing >6,000 customer base rather than net-new.

• Question from Raimo Lenschow (Barclays Bank PLC): Yes. Okay. Perfect. And then if you look at the -- to the last question, you talked a little bit about the days in the quarter as well. But the -- if I look at the sequential add this quarter was kind of more on the lower side of what we've seen historically. Can you speak a little bit to -- were there other factors? Or was it just what you mentioned to the first question?
  Response: Phasing: some evaluation contracts booked earlier in Q2 reduced Q3 sequential adds; large-deal timing creates quarter-to-quarter variability.

• Question from Hoi-Fung Wong (Oppenheimer & Co. Inc.): This one might build on the response you just gave, Rami. But just wanted to get thoughts on kind of why the ARPU declined slightly even with the focus on upmarket customers. How are we thinking about the trend on ARPU going forward?
  Response: ARPU decline is mix-driven—many new customers are below average ARPU; management prioritizes growing customer count and executing land-and-expand, so ARPU will fluctuate.

• Question from Hoi-Fung Wong (Oppenheimer & Co. Inc.): Okay. Perfect. And then a broader theme, we just wanted to kind of pick your brain on with SEO traffic coming down, I know you guys have some AI tools that are helping customers kind of focus on other channels. But any impact you're seeing in terms of demand for web intelligence and some of your core products with some customers maybe deemphasizing web traffic?
  Response: Declining SEO increases demand for Web Intelligence as customers seek competitive visibility; Web Intelligence 4.0 and new pricing show initial signs of monetization.

• Question from Willow Miller (William Blair & Company L.L.C.): I'm Willow Miller on for Arjun Bhatia. So curious to hear more about the sales rep ramp that were added a few quarters ago now that we're through the third quarter and into the fourth quarter. In the past, you mentioned you were looking forward to the newer sales resources closing more deals in the back half of the year. Is that playing out?
  Response: Yes — go-to-market is improving quarter-over-quarter with a record and increasing number of salespeople participating in revenue generation.

• Question from Tyler Radke (Citigroup Inc.): So just going back to the results and the guidance. I mean, I think we're used to Similarweb, probably vast majority of your quarters as a public company, beating the midpoint, if not the entire guidance range and raising at least on revenue. So I just wanted to make sure I understood the dynamics. Certainly, can appreciate the quarterly dynamics in terms of the revenue that sort of got accelerated last quarter. But just relative to your guide, was it simply deal timing, linearity of the quarter when these deals closed? Are you building in more conservatism just given the CFO transition? Just help us understand sort of the lack of a beat and raise on revenue.
  Response: No revenue beat largely due to deal timing/phasing and earlier-than-expected Q2 evaluation bookings; the company deliberately emphasized margin optimization, which drove the profit beat-and-raise.

• Question from Tyler Radke (Citigroup Inc.): Okay. And then on the margin side, you talked about a pretty healthy growth in the number of sales reps that you had this quarter. But sort of what's driving that incremental raise? Like where are you taking costs out? Is it more sort of not hiring as many sales and marketing people? Is it more R&D and GA? Maybe you're seeing some AI efficiencies in the business? Would love to just hear specifically what's driving the lower costs here for the full year?
  Response: Margin gains stem from disciplined cost control, AI-driven productivity improvements and optimizing the salesforce—overhired early, then removed lower performers to raise productivity.

• Question from Kincaid LaCorte (Citizens JMP Securities, LLC): Great. This is Kincaid on for Pat. Congratulations on the quarter, guys. So I was just curious if you could highlight any customer conversations that you've had around the Gen AI products? And what's really driving uptake with these seeing a lot of love for?
  Response: Strong customer interest: Gen AI products address new channels (chatbots, brand sentiment); both corporate C-suite and LLM builders are eager for Similarweb's data to improve models and measure impact.

• Question from Lucas John Horton (Northland Capital Markets): Just wanted to talk a little bit about the customer side. And kind of are you seeing any mix shift between enterprise versus mid-market customers, especially with kind of the new use cases and product launches that you guys have made over the past year?
  Response: No — management has not observed any meaningful mix shift between SMB and enterprise.

• Question from Lucas John Horton (Northland Capital Markets): Fair enough. And then just kind of piggybacking off of that into the competitive landscape here. Just have you seen an uptick in competition here, especially with, I mean, a couple of other companies out there kind of doing similar cadence of new product launches and trying to capture this Gen AI demand. Just curious your thoughts on the overall competitive landscape.
  Response: Not concerned — management believes Similarweb's unique datasets and client relationships position it to be dominant; focus is on market education and product execution rather than competitors.

• Question from Lucas John Horton (Northland Capital Markets): Okay. Fair enough. And then just last one here. Apologies if this one has already kind of been asked and answered, but just looking at the implied revenue guidance for 4Q, it's sort of a wider band here. Just wondering if that's kind of more so due to uncertainty around the timing of some of these larger deals flowing through or just kind of the puts and takes on the implied 4Q revenue guide?
  Response: Wider Q4 guidance band reflects timing uncertainty for several very large deals in a strong pipeline.

• Question from Adam Hotchkiss (Goldman Sachs Group, Inc.): I just wanted to ask on your RPO metric that was strong for a second consecutive quarter here. Maybe just comment a little bit on contract duration and how we should think about the interplay of revenue growth versus that higher RPO growth rate.
  Response: RPO strength is driven by multiyear commitments; 58% of revenue is under multiyear contracts, underscoring stickiness and future revenue visibility.

• Question from Adam Hotchkiss (Goldman Sachs Group, Inc.): Great. That's really helpful. And then just on sales and marketing, I appreciate the comments on the ramping of sales employees. I did notice that sales and marketing expense did come in a little light of expectations this quarter and sequentially, which I think was potentially part of the profit outperformance. I know or we had talked about you taking a real-time approach to sales rep productivity and trying to understand that relative to margin performance, particularly when you gave the guide earlier this year. So maybe comment on if there are any changes in what you're seeing there and if anything flowed through the sales and marketing number in Q3 that we should be aware of?
  Response: S&M was lighter because the company overhired to ramp and then optimized the team—cutting underperformers and improving yield, which reduced S&M spend.

• Question from Patrick Walravens (Citizens JMP Securities, LLC): Can I ask 2 follow-ups? First of all, what kind of big deals do you have in that pipeline? What the very big deals are, obviously, not the companies, but just like if you could characterize them? And then secondly, how should we think about next year?
  Response: Big deals are primarily LLM/data arrangements—lengthy evaluations that convert into sticky, long-term commitments; company will provide next-year guidance in the next quarter.

Contradiction Point 1

Upsell Strategy and Execution

It highlights inconsistencies in the company's narrative regarding its focus on upselling and expansion strategies, which are crucial for revenue growth and market position.

How is gross revenue retention trending, and has upsell activity become more challenging despite tough comps? - Surinder Thind (Jefferies LLC)

2025Q3: The NRR trend is influenced by expansion activities, especially the data for LLMs, which start as significant one-time tests before converting into ARR deals. As these big deals convert, the NRR is expected to improve. - Or Offer(Co-Founder, CEO & Director)

Can you discuss the recent behavior of your larger clients and current discussions? - Surinder Thind (Jefferies)

2025Q1: The decline in NRR of 1% was due to the upsell not being as big as in the previous year. There is significant engagement from Fortune 100 companies and digital-first companies. - Or Offer (Co-Founder and CEO)

Contradiction Point 2

Sales Pipeline and Revenue Growth

It involves differing statements regarding the company's sales pipeline and revenue growth expectations, which are critical for investor confidence and financial planning.

How is the Q4 sales pipeline shaping up? Is uncertainty increasing? - Lucas John Horton (Northland Capital Markets, Research Division)

2025Q3: The strong pipeline includes large deals, contributing to a wider revenue guidance range. We are confident in achieving the guidance. - Or Offer(Co-Founder, CEO & Director)

What visibility do you have into the deals driving the revenue reacceleration for the second-half of the year? - Unidentified Analyst (Barclays)

2025Q1: We expect 80% of the new hires to be ramped by Q3, allowing for delivery in the second-half of the year. - Or Offer (Co-Founder and CEO)

Contradiction Point 3

Investment Focus and Growth Strategy

It reflects differing priorities and strategies regarding investment in growth and profitability, which impact financial forecasts and company direction.

Can you explain the factors affecting gross revenue retention and NRR, particularly the challenges in upselling despite tough comparables? - Surinder Thind (Jefferies LLC)

2025Q3: The NRR trend is influenced by expansion activities, especially the data for LLMs, which start as significant one-time tests before converting into ARR deals. As these big deals convert, the NRR is expected to improve. - Or Offer(Co-Founder, CEO & Director)

Can you break down the incremental $20 million spend between go-to-market strategy and R&D allocations? And how should we expect the hiring pace for the year? - Surinder Thind (Jefferies)

2024Q4: The 15% growth outlook reflects limited execution softness in Q4 due to management changes and ForEx pressures. The company anticipates significant growth acceleration in the latter half of the year, driven by increased hiring and go-to-market investments. - Or Offer (CEO and Co-Founder)

Contradiction Point 4

Product Innovation and AI Investment

It highlights differing perspectives on the focus and impact of AI investments, which are crucial for the company's future growth and competitiveness.

What customer conversations are driving Gen AI product adoption? - Kincaid LaCorte (Citizens JMP Securities, LLC)

2025Q3: Customers are interested in understanding consumer interactions and brand perception through Gen AI, especially in chatbot conversations. Our products help optimize these interactions. - Or Offer(Co-Founder, CEO & Director)

Regarding your AI investments, you mentioned product-side investments in data collection and forecasting to prepare for the generative AI revolution. Can you elaborate? - Arjun Bhatia (William Blair)

2024Q4: The company is focusing on integrating AI solutions into their platform to enhance insights and customer value. This involves shifting teams to develop AI-driven innovations and collect more granular data for chatbot analysis. - Or Offer (CEO and Co-Founder)

Contradiction Point 5

Sales Pipeline and Revenue Guidance

It relates to the company's sales pipeline and revenue guidance, which are crucial for investor confidence and financial planning.

What's the status of the Q4 sales pipeline? Are there increased uncertainties? - Lucas John Horton (Northland Capital Markets, Research Division)

2025Q3: The strong pipeline includes large deals, contributing to a wider revenue guidance range. We are confident in achieving the guidance. - Or Offer(Co-Founder, CEO & Director)

What factors are driving your confidence in the productivity gains and acceleration reflected in the Q4 results? - Greyson Hunter Sklba (Goldman Sachs Group, Inc., Research Division)

2025Q2: We are starting to see a better level of visibility and conversion in the second half, especially with the new products we have introduced. - Jason E. Schwartz(CFO)