Similarweb Ltd. (SMWB) Earnings

Management highlights

- Strategic Inflection and Core Business Improvements * Q2 2026 delivered the strongest net new ARR quarter in SimilarWeb's history, and the first ever positive GAAP operating profit, validating the company's executed strategy. * Net Revenue Retention (NRR) improved to 100% across all customers and 107% for customers with over $100,000 ARR, driven by operational changes including reorienting account management toward customer expansion. * The company is prioritizing large enterprise opportunities over smaller inbound SMB deals, leading to rising average account values: average value for customers over $25,000 ARR grew 19% year-over-year to $149,000, while average value for customers over $100,000 ARR grew 18% year-over-year to $438,000. * Operational efficiency initiatives delivered improved profitability and strong cash flow, with $73.2 million in cash and no debt at quarter-end, plus an available $75 million line of credit. - Enterprise Up-Market Strategy Success * Three large multi-year enterprise contracts totaling over $60 million in cumulative contract value were signed in Q2, with an additional large deal signed in July, marking a shift from the historical rare occurrence of large seven-figure contracts. * The strategic ALO go-to-market team launched in late 2025, focused on AI, LLM and OEM opportunities, has been instrumental in securing these large deals and building a much larger pipeline than historical levels. * The portion of the business from customers generating over $100,000 ARR has risen to nearly 70%, up from 63% year-over-year, confirming SimilarWeb's transformation into an enterprise-focused digital data company. - Three-Pillar AI Strategy Progress 1. Powering AI systems: Strong demand from leading AI companies for SimilarWeb's digital data for pre-training, post-training, and AI agent use cases; AI dramatically increases the ROI of the company's underlying data, as AI systems can process far more data at greater speed and scale than human analysts, making high-quality trusted data more valuable. 2. Building AI-native products: GenAI Intelligence, a solution that helps brands understand their presence across generative AI platforms, has seen strong early customer demand. AI Studio allows users to ask natural language business questions for actionable insights, expanding the pool of potential SimilarWeb users and enabling a new consumption-based monetization model. 3. Expanding distribution through the AI ecosystem: Partnerships with platforms including Poplexity and Manos have been expanded, creating new distribution channels that reach users not accessible via traditional go-to-market motions and reinforcing SimilarWeb's position as a critical data layer for AI-driven work. - CEO Search Update: Management reports good progress, and is currently interviewing strong candidates for the permanent CEO role.

Guidance

- Full-year 2026 guidance is raised for the second time in 2026: total revenue is guided to a range of $318 million to $340 million, representing ~12% year-over-year growth at the midpoint. - Full-year 2026 non-GAAP operating profit guidance is raised to a range of $24 million to $26 million. - Q3 2026 revenue is expected to be between $80.5 million and $82.5 million, representing 17.5% year-over-year growth at the midpoint, an acceleration from Q2 2026's 9% year-over-year growth. - Q3 2026 non-GAAP operating profit is expected to be between $7.5 million and $9.5 million. - Management expects revenue growth to accelerate in the second half of 2026, supported by strong Q2 ARR growth and accelerating business momentum. - Management expects NRR to continue improving through the remainder of 2026. - Management expects to generate positive normalized free cash flow on a quarterly basis going forward.

Segment performance

The transcript does not break out financial performance for distinct product segments. It only notes that AI-related revenue accounted for 17% of total Q2 2026 revenue, up from 11% at the end of Q4 2025. 66% of total ARR is contracted under multi-year agreements, up from 57% year-over-year. Customers with over $100,000 ARR account for 69% of total ARR, while customers with over $25,000 ARR account for 90% of total ARR. Total Q2 2026 revenue was $77.2 million, growing 9% year-over-year. Non-GAAP operating profit was $6.5 million (8% margin), up from $2.4 million in Q2 2025. Normalized free cash flow was $8.7 million, for an 11% free cash flow margin. Remaining performance obligations (RPO) totaled $345 million at quarter-end, up 26% year-over-year, with 66% expected to be recognized as revenue over the next 12 months. Deferred revenue reached $141 million, a 21% increase year-over-year.

Risks & headwinds

- The strengthening of the Israel shekel versus the U.S. dollar creates FX headwinds for profitability, as approximately half of the company's employees are based in Israel, though disciplined cost control has mitigated these headwinds to date. - Forward-looking statements carry inherent risks and uncertainties that could cause actual results to differ from management's expectations, with additional detail on risk factors available in the company's most recent Form 20F filed with the SEC on March 2, 2026.

Analyst Q&A

• Q: Barclays analyst asks if new large enterprise customers are using SimilarWeb data much more broadly than historical use cases, and whether the organization has sufficient sales capacity to support potential incoming growth. /

  A: CEO Or Offer confirms that AI allows enterprises to process far more data, driving dramatically higher ROI for the same data and much higher consumption levels, a trend the company expects to continue. He states the company is currently properly structured to support this growth, starting by scaling existing engagements with the large enterprises already in its customer book.

• Q: Oppenheimer analyst asks what gives management confidence that NRR will continue to rise, and how much of the recent NRR improvement comes from underlying customer behavior versus operational changes. /

  A: Management explains that reported NRR is a four-quarter trailing average, and the very strong Q2 NRR reading guarantees continued NRR increases in upcoming quarters. The improvement is a result of operational changes made earlier in the year, including refocusing account management on customer expansion, which is already delivering strong results, paired with broader enterprise demand for wider data consumption driven by AI.

• Q: Citizens analyst asks for a breakdown of use cases for the three large Q2 deals, and for an update on the Gen AI Intelligence product. /

  A: Or Offer confirms only one of the three eight-figure deals is for LLM pre- and post-training; the other two are large enterprises using SimilarWeb data for other AI-enabled use cases, a larger and more exciting long-term opportunity. CBO Maoz Lakovski adds that the company sees strong demand across four segments: LLMs, OEM partnerships, brands, and investors, with large-scale data integration demand becoming a more sustainable, robust trend. SimilarWeb notes that Gen AI Intelligence demand is growing, and it is becoming an increasingly strategic product helping brands understand how LLM interactions change consumer behavior.

• Q: Needham analyst asks if pricing is changing for new AI use cases, and whether any of the large Q2 deals include material one-time revenue for modeling. /

  A: Pricing for large data deals, which are structured around data access and consumption rather than software seats, has not changed; the growth opportunity comes from customers purchasing more data and more diverse datasets due to AI-driven increases in ROI. CFO Ran Vered confirms that any one-time revenue elements in the large deals are negligible and immaterial, and that the deals are structured almost entirely as recurring ARR.