Estimated read time: 3 minutes
Publication date: 17th Jun 2021 23:02 GMT+1
In a world where most businesses are looking to establish an online presence, it makes sense to look at companies that provide digital marketing solutions to enterprises. Two such companies are SEMrush (NYSE: SEMR) and Similarweb (NYSE: SMWB). Both these stocks recently went public and let’s see which company is a better buy right now.
Similarweb stock is valued at a market cap of $1.64 billion
Similarweb is an Israel-based company that provides website traffic solutions through AI-driven analytics. It offers digital research solutions allowing enterprises to analyze and benchmark performance against competitors while exploring trends in the market. Its suite of solutions enables users to conduct in-depth research and study audience behavior.
Similarweb also provides shopper intelligence solutions where product managers can view the customer journey as well as monitor consumer demand and improve brand visibility in the process.
Additionally, the company offers investor intelligence solutions to investment professionals and provides them with a comprehensive view of the market, sector, or even a particular company.
Similarweb stock went public last month after it sold 8 million ordinary shares in its IPO. In 2019, the company reported sales of $70.59 million and it rose to $93.48 million in 2020. However, its gross profit rose from $50 million to $72 million in this period which meant its gross margin was up from 70.8% in 2019 to 77% in 2020.
However, its operating expenses rose from $66 million to $91.47 million. It also suggests Similarweb’s operating loss widened from $16 million in 2019 to over $19.6 million in 2020. Similarweb stock is trading at a trailing price to sales multiple of 17.6x which is steep especially for a company that still unprofitable. However, the company is debt-free and is rapidly expanding into other business verticals which will allow it to grow revenue at a stellar pace in 2021 and beyond.
SEMrush has a market cap of $2.43 billion
SEMrush develops online visibility management SaaS (software-as-a-service) platform. It helps businesses to run SEO (search engine optimizations), pay-per-click, content, social media, and competitive research campaigns. The company also offers insights and solutions to build, manage and measure campaigns across multiple marketing campaigns.
In the first quarter of 2021, SEMrush sales were $40 million, indicating a growth of 44% year over year. Its annual recurring revenue was up 53% at $168 million. The company’s stellar top-line growth allowed it to end Q1 with an adjusted net income of $2.1 million, compared to a loss of $1.7 million in the prior-year period.
SEMrush also ended the March quarter with 72,000 customers, an increase of 29% year over year. We can see that existing customers increased their spending on the SEMrush platform that allowed the company to grow its sales by 44%. Its dollar-based net retention rate stood at 116%. The net retention rate represents the revenue growth of a company from its existing base of customers.
SEMrush forecasts revenue between $42.2 million and $42.7 million in Q2 of 2021, which is a growth of 49% year over year. Its net loss is forecast between $4.4 million and $4.1 million. In 2021, SEMrush expects sales between $175 million and $177 million, a rise of 41% at the midpoint range. Adjusted net loss is expected to be in the range of $7.9 million and $6.3 million.
SEMrush stock IPO’d on the NYSE on March 26, 2021, and closed trading at $11.8 that day. It has since risen 51.36% to currently trade at $17.86, valuing it at a market cap of $2.42 billion.
It suggests the stock is trading at a forward price to sales multiple of 13.8x.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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