Similarweb Reports Q1 2026 Results: Full Earnings Call Transcript

Similarweb (NYSE:SMWB) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

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Summary

Similarweb reported a 10% year-over-year revenue growth to $73.9 million for Q1 2026, at the top end of their guidance range.

The company announced a leadership transition, with the CEO planning to step down by mid-2027 as they reach a 20-year milestone.

An increased focus on AI-related revenues and partnerships with LLM platforms has led to strong customer adoption and expanded commercial opportunities.

Net Revenue Retention (NRR) has stabilized, with a 98% overall rate and 103% for customers above $100,000, indicating strong customer retention.

Similarweb raised the lower end of its 2026 revenue guidance, expecting $307 million to $315 million, citing a strong commercial pipeline and improved fundamentals.

New product launches, such as Retail Intelligence and Ad Intelligence, are expected to drive growth by leveraging AI-driven insights and expanding market reach.

The company maintained a positive normalized free cash flow for the tenth consecutive quarter, emphasizing profitability and operational efficiency.

Management expressed confidence in the second half of 2026, driven by a strong sales pipeline and improved sales productivity.

Full Transcript

OPERATOR

Greetings and welcome to the Similarweb first quarter fiscal year 2026 earnings call. this time all participants are in a listen only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance, please press Star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Rami Male, Vice President, Investor Relations. Please go ahead.

Rami Male (Vice President, Investor Relations)

Thank you operator. Welcome everyone to our first quarter 2026 earnings conference call. Joining me today are our CEO and co founder Ofer, our Chief Financial Officer Ron Verid and Marles Yakovsky, our Chief Business Officer. This morning we released our results for the first quarter and published an investor presentation with a strategic overview of the business as well as a summary presentation of first quarter results on our Investor Relations website at ir.Similarweb.com certain statements made on the call today constitute forward looking statements which reflect management's best judgment based on the currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release and our most recent annual report filed on Form 20F for more information on the risk factors that could cause actual results to differ from our forward looking statements. Additionally, certain non GAAP financial measures will be discussed on the call today. Reconciliations the most directly comparable GAAP financial measures are available in the Earnings release and the Earnings presentation. We will begin with OR and runs highlights of the quarter and then we will open up the call to questions from Sales five analysts. With that I'll turn the call over to Ofer. Please go ahead.

Ofer (Chief Executive Officer and Co-Founder)

Thank you Rami and welcome everyone joining. the call today. Just before I start reviewing Q1 results, I want to address the announcement we made this morning. Today is a symbolic date for me. Today is exactly five years since our IPO and running Similar web as a public CEO. This is also my 19th year of service since start working on similar web in June 2007. My promise to myself and to my wife was always that When I reached 20 years of service, I realign my priorities and spend more time with my family. This moment is about to be reached as I enter my 20th year leading similar Web next month. Similar web has been my life's work. I founded this company nearly 20 years ago and as I approach that milestone, I believe this is the right moment to begin identifying the leader who will take the company forward. The board and I are fully aligned on the timing and the process and we have initiated a search with a leading executive search firm. I will continue to serve as the CEO through the conclusion of the search and the transition period with my successor. With the leadership transition expected to be completed by mid-2027, I remained fully focused on the execution of our strategy for our shareholders, our customers and our employees. We came out with a great Q1 result and I have a very strong confidence for this year's performance. There is no change in our strategy, our operation or our financial outlook. I'm proud of the business we have. Once again we demonstrated our ability to deliver and the resilience of our business. Turning to the highlights of the first quarter, revenue and operating profits came in the top end of the guidance range. We delivered a 10th quarter of positive normalized free cash flow. Our NRR has stabilized and we expected this metric to improve in 2026 driven by execution of our customer expansion playbook. Growth retention trends in the quarter were excellent. The pipeline of the commercial opportunities is very strong, growing and providing confidence for the remaining of the year and beyond. AI related revenues continue to expand and adoption of our AI solution is growing. First quarter performance provide a solid base for 2026 and we have decided to raise the lower end of our guidance for 2026 to reflect increased confidence. Turning to our Results, revenue grew 10% year over year to $73.9 million. At the top end of our guidance range, we are starting to see tangible returns on the investments we made in the salesforce and product portfolio in 2025. Sales productivity increased for the third quarter in a row and this is contributed to the best Q1 increase in ARR since 2022. We reported non GAAP operating profit at the top end of our guidance range. We generated $6.6 million in normalized free cash flow in the first quarter, reinforcing our commitment to profitable and durable growth. Net revenue retention for all customers was 98% and 103% for customers above $100,000. We are very encouraged that those metrics have stabilized in the first quarter and that growth retention continues to improve. We are focused on driving an improvement in NRR specifically in the upsell motion in 2026 by executing our customer expansion playbook and leveraging our diverse product portfolio. Demand for our Genai data and solution is truly amazing. Our AI revenues continue to expand and we are engaging with more AI native companies as well as companies of all sizes that have realized that they need to understand what's happening in the new digital world. During the quarter we signed one of the large LLM contract the that were pushed back from the fourth quarter of 2025. We continue to progress on the second, the third deal as well as on multiple deals for our unique digital data and view of the digital world. We believe we are well positioned to be an AI winner with multiple commercial opportunities across data, product and distribution partners and we are excited about the potential. Let me run through our AI data and product strategy how we power the ecosystem, build an AI first solution and expand distribution at scale first, we are powering LLM and AI agents. We are seeing strong traction in licensing our data directly to leading LLM companies for both pre and post training use case. At the same time, autonomous agents require trusted structured digital intelligence to operate efficiently that exactly what we provide our data is built for both humans and agents and we see accelerating demand for both. Second, we are building our own AI native solution with Genai Intelligence. We are helping brands to improve their Genai visibility and sentiment. We are seeing strong market validation on this front, including recognition of our leadership by G2. We believe our data provides an important competitive advantage in this new market and we are on a journey to become a market leader in this category as well. Last quarter we launched similar web aistudio and the response from the customers has been truly amazing. Aistudio is an AI powered interface that allows users to ask business questions in plain language and multiple languages and instantly receive actionable insights. What used to take time and specialized skills can now happen quickly and easily across all of our data sets. AI Studio expands the number of users who can leverage similar web increases engagement, enables faster and smoother insight generation and unlock a new consumption based monetization model. We are seeing strong adoption and utilization across our customer base. AI Studio represents a huge shift in how users interact with similar web data. Third, we are expanding distribution at scale through partnership with leading LLM and agent platforms such as Manos and through MCP integration we are embedding similarwell directly into AI ecosystem. We want to meet our users where they are and increasingly research and decision making is happening inside the new AI platform. Last quarter we shared that our MCP was available in CLAUDE and today I'm super proud to share that we have launched McP integration with ChatGPT. This integration is the same as our MCP CLAUDE connector providing seamless access to our data and tools. Claude and ChatGPT are two of the largest AI platform in the market and today hundreds of our customers can plug in similar web directly into them, building automation, powering agents and asking complex questions on the fly and receive insight, recommendation and action wherever they choose to work. Yesterday we announced an expansion of our partnership with Manos which we told you about last quarter. This partnership has been a big success and we are glad to expand the data Manus user can access and also enable our customer to connect to Manos via an MCP to generate even more valuable Seamlessly combining our data and Manos tools and capabilities, this ecosystem partnership unlock new customers, expand our time and position our digital data as critical ingredients for AI driven research and decision making. Our AI pipeline is expanding rapidly with a healthy combination of large deals and continued expansion across our enterprise customers. We're excited about the potential. As part of this mission, we continue to develop and launch innovative products that empower our customers with the tools and capabilities to win in their markets. In March, we launched similar web Retail Intelligence, a new product that combines Amazon data and cross retail coverage of more than 650 online stores and marketplaces. Retail Intelligence gives brand, sellers and retailer a unified view of shopper behavior, digital sales performance, product mix availability and pricing across fragment e commerce channels. It also adds keyword optimization, competitive benchmarking and digital shelf automation as AI reshapes product discovery and retailers expand marketplace and retail media networks. Retail Intelligence help customers understand where demand is forming, how brands are winning and which action can improve sales performance so that they can win in a highly competitive e commerce market. Also during March we also launched similar web Ad Intelligence, leveraging the synergies with the Ad Metric which we acquired in 2024. AD Intelligence delivers a unified view of paid media across search, social and display and soon LLM ads revealing who investing what's bringing more traffic and who gaining share across every channel and region and help brands understand paid marketing roi. The solution addresses the most severe pain points advertising face today. Knowing what competitors are spending and where if ad spending is due, generating the decent return and helping advertisers identify where they are overspending, underspending or missing opportunities across channels. Until now advertisers had to rely on fragment data that leads to inefficient ad spend and wasted budget. With this product we empower brand agencies and publishers to work smarter, helping them to spot growth opportunities, benchmark performance and optimize spend across every channel and market. To summarize, during the first quarter we have taken action to improve our performance. We are sharpening our go to market strategy, refining processes and building scalable playbook to drive cross sell and expansion. We are seeing encouraging signs of improvement across the business and this has increased our conviction. In 2026 we believe that we are well positioned to capture long term AI driven opportunities. Our AI first portfolio is scaling, ecosystem partnership are expanding and we are targeting high growth segments like LLM companies, large big tech players and OEM with our own dedicated go to market teams and focus. We remain focused on disciplined execution and acceleration and with that I will hand it over to Juan.

Juan

Thanks all. I'll provide highlights of our financial performance and guidance for the second quarter and full year of 2026. Turning to our quarterly results, we generated $73.9 million of revenue in Q1, a 10% increase relative to Q1 2025. At the top end of our guidance range, revenue growth was driven by good performance across our business including new sales and upsells as well as growth in AI related revenues. Non GAAP operating profit for the quarter was $2.4 million reflecting a 3% margin compared to loss of $1.3 million in the first quarter of 2025. Non GAAP operating profit was also at the top end of our guidance range thanks to top line growth and disciplined cost control. Non GAAP interest expense was $3,000 and the non GAAP tax expense was $1.3 million in the quarter compared to 0.1 million and 1.2 million respectively in the first quarter of 2025. To help with remodeling, we expect these items to remain at approximately these levels on the quarterly basis for the rest of the year. Non GAAP diluted Earnings per share was $0.01 compared to a loss per share of $0.03 in Q1 2025. We are proud that 64% of our ARR is contracted under multi year contracts up from 52% last year. We believe that this metric coupled with strong demonstrates the durability of our revenues. It also provides us with confidence in the value we provide to our customers. Good cash generation and a strong balance sheet are critical for business at any stage of life cycle. We generated $6.6 million of normalized free cash flow reflecting seasonal strength. We believe we will generate positive normalized free cash flow on a