Similarweb Reports Q2 2026 Results: Full Earnings Call Transcript

On Wednesday, Similarweb (NYSE: SMWB ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 2 million, surpassing expectations and resulting in positive GAAP operating profit for the first time.

Strategically, the company is capitalizing on AI opportunities by signing three multi-year enterprise contracts worth over $60 million and expanding AI-related revenue to 13% of total revenue. Future outlook is positive with raised full-year guidance, driven by strong ARR growth and a shift towards enterprise-focused expansion, leveraging AI to increase data consumption and business opportunities. Full Transcript OPERATOR Hello, and welcome, everyone, to Similarweb's Q2 fiscal 2026 earnings call. At this time, all participants are in a listen-only mode.

Later, you will have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded. We are standing by should you need any assistance.

It is now my pleasure to turn the meeting over to Rami Meyerson, Vice President, Investor Relations. Please go ahead. Rami Meyerson, Vice President, Investor Relations Thank you, operator, and welcome, everyone, to our second quarter 2026 earnings conference call. Joining me today are our CEO and Co-Founder, Or Offer; our Chief Financial Officer, Ran Vered; and Maoz Lakovski, our Chief Business Officer.

com. Certain statements made on the call today constitute forward-looking statements, which reflect management's best judgment based on 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 on Form 20-F filed with the SEC on March 2, 2026, 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 to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation. We will begin with Or and Ran's highlights of the quarter, and then we will open up the call to questions from sell-side analysts. With that, I'll turn the call over to Or.

Or, please go ahead. Or Offer, CEO & Founder Thank you, Rami, and welcome everyone. Today I'm extremely proud of what the Similarweb team delivered in the second quarter. Similarweb is at an inflection point.

Our core business is getting stronger while AI is opening a significant new growth opportunity. Larger deals, longer commitments, improving retention, and expanding profitability are validating the strength of our business. At the same time, strong demand from leading AI companies demonstrates that our proprietary digital data has become critical infrastructure for the AI ecosystem. Over the last several quarters we have been very focused on three things: strengthening our data moat, deepening our relationships with the largest enterprises in the world, and positioning Similarweb to capture the enormous opportunity created by AI.

In Q2 we started to see those pieces come together. We delivered the strongest quarter in Similarweb history for net new ARR. We had one of the strongest quarters ever for gross retention. We achieved positive GAAP operating profit for the first time ever.

NRR improved to 100% across all customers and 107% for customers above $100,000 of ARR. We exceeded our expectations for both revenue and operating profit and are raising our full year guidance for the second time this year. AI-related revenue reached 13% of revenue in the second quarter, up from 11% at the end of the fourth quarter of 2025, and we will continue to expand it moving forward. And perhaps most importantly, we signed three very large multi-year enterprise contracts representing more than $60 million of accumulated contract value.

So when I look at this quarter I see more than just a strong set of numbers. I see evidence that the strategy we've been executing is working. Let me walk you through why I believe this is so important, and let's start with the financial performance. 2 million, above the top end of our guidance.

We also delivered non-GAAP operating profit above our expectations and, for the first time in our history, positive GAAP operating profit. This is a direct result of the operational disciplines we have been implementing across the company. We have been very focused on improving sales productivity, sharpening our go-to-market execution, and becoming more efficient across the organization. At the same time, we continue to invest in the opportunities where we believe we can generate the highest long-term returns.

7 million of normalized free cash flow in the quarter, representing an 11% free cash flow margin. Moving into the second half of 2026 and beyond, we remain committed to expanding our margin and leveraging the operational efficiencies that come with our increased scale. So we are seeing the combination we have been working on: growth, improving retention, profitability, and strong cash generation. Our customer metrics also continue to improve.

NRR increased to 100% across all customers and 107% for customers above $100,000 of ARR. This is particularly encouraging because, as we discussed in the last several quarters, we have been focused on improving the expansion motion with our existing enterprise customers. We are seeing better gross retention, stronger customer engagement, and increasing demand for additional Similarweb data and products. And we believe there is more room for improvement from here.

But the part of the quarter that I'm most excited about is what we're seeing with the largest enterprises. Our strategy to move up-market is working. During Q2 we signed three very large multi-year contracts with a contract value of more than $60 million. Those are strategically important contracts.

They are also very different from the way Similarweb historically sold. For many years our model was primarily a land-and-expand model. We would land the customer with a relatively small initial contract and then expand over time across additional products, teams, and geographies. That model remains important.

But something new is happening. The largest companies in the world are increasingly looking at Similarweb not simply as a software application, but as a strategic source of digital data. And when they do that, the size and scope of the relationship change dramatically. Those contracts require a significant amount of work across Sales, R&D, data science, Finance, and Legal.

And I want to recognize the entire team because those deals are truly company-wide efforts. The strategic go-to-market team that we created at the end of 2025, specifically focused on AI, LLM, and OEM opportunities, has been instrumental in this success. The team is building relationships with some of the most sophisticated companies in the world and is creating a pipeline that is materially larger than what we have historically seen. In fact, in July we signed a fourth large contract, and we continue to see a very strong pipeline of additional opportunities like never before.

And let me explain to you why this is different. Historically, large seven-figure contracts were relatively rare for Similarweb. As recently as 2025, we were still seeing large seven-figure opportunities infrequently, a handful of times a year at most. That has changed.

The number and size of opportunities we're seeing from large enterprises has increased significantly. And I believe there is a very important reason for that: AI is changing the economics of data. Let me explain what I mean. Historically, the value an enterprise could extract from Similarweb was limited in part by the number of people who could actually work with the data.

You had an analyst. That analyst needed to understand our data. They needed to know how to query it, they needed to analyze it, they needed to connect different data sets, and then they needed to turn those insights into recommendations for the business. That is powerful, but it's still constrained by human capacity.

AI fundamentally changes this equation. Now you can take Similarweb digital data and make it available to AI systems that can analyze enormous amounts of information across thousands of questions and use cases at a speed and scale that humans simply cannot match. The result is that the ROI from the same underlying data can increase dramatically. And this is the part of the story that I think is still underappreciated.

AI doesn't make our data less valuable; it makes our data much more valuable. Because the better the AI becomes at reasoning, the more valuable high-quality, comprehensive, and trusted data becomes. This is why I believe the opportunity for Similarweb goes far beyond simply selling data for LLM training. But still, the LLM opportunity is big and growing.

One of the largest contracts we signed this quarter is with a leading big tech company for data used to train its large language model. Following this expansion, this customer becomes our third customer with more than $10 million of ARR. It is remarkable to see how Similarweb data has become a fundamental source of digital intelligence for top large language models in the world. But what excites me even more is that the other large contracts are not only about LLM training.

They demonstrate that enterprises can use Similarweb data at scale for many different AI-driven use cases and applications. And that is a much bigger opportunity. Because if our data can be used across multiple AI use cases and applications inside a large enterprise, the potential consumption of our data increases dramatically. One customer can have multiple teams, multiple teams can have multiple use cases, and each use case can consume more data.

This creates powerful expansion opportunities. The more use cases we unlock, the more valuable our data becomes. And the more valuable the data becomes, the more Similarweb can expand within the organization. This is a very different model from selling seats of software.

We are increasingly monetizing access to data and the consumption of the data. And we believe AI will accelerate this TAM vision. Similarweb is becoming an enterprise data company. You can already see this transformation in our business.

The portion of our business driven by customers generating over $100,000 in ARR has reached almost 70%, a significant rise from 63% a year ago. Furthermore, the share of our revenue tied to a multi-year commitment expanded to 66%, up from 57% a year ago. And we see this momentum continue. Those metrics underscore a fundamental transition.

Similarweb is becoming more deeply integrated in the world's largest and most enduring enterprise organizations. We are increasingly an enterprise-focused business providing digital data to some of the largest, most sophisticated companies in the world. And our goal is to become even more deeply embedded in those organizations — not just with one product, not just with one team, but across multiple teams, multiple products, and multiple use cases. This is the expansion opportunity in front of us.

Let me now turn to our AI strategy. Over the last several quarters we've talked about our AI strategy through three pillars: powering AI systems with our data, building AI-native products ourselves, and expanding distribution throughout the AI ecosystem. We are seeing strong progress across all three. First, we are powering LLMs and AI agents.

We continue to see strong demand from leading AI companies for digital data for both pre-training and post-training use cases. But we are also seeing increased demand from AI agents. Agents need trusted, structured, and comprehensive information about the digital world in order to perform their tasks efficiently. Our data is good for both humans and agents, and that is becoming increasingly important.

Second, we are building our own AI-native products. GenAI intelligence is shaping up as a huge opportunity. It's a lucrative, fast-growing market that is top of mind for every CMO and executive at large enterprises. Right now we're already seeing early signs we can win here and become a leader in this category.

Our solution helps brands understand how they can show up across generative AI platforms. We think it's an entirely new category, and our data gives us a real edge. Earlier this year we launched Similarweb AI Studio. The response has been extremely strong.

AI Studio changes the way people interact with Similarweb. Instead of needing to know exactly which report to open or which data set to use, users can simply ask a business question in natural language and receive an actionable answer with insights and recommendations. This dramatically expands who can use Similarweb and, importantly, it creates a new consumption-based monetization model. We believe this is the direction the industry is moving.

Third, we are expanding distribution. Increasingly, research and decision making are happening inside AI platforms, so we want Similarweb to be there. Our data is available through MCP on Claude and ChatGPT. During the quarter we expanded our relationship with Perplexity to bring Similarweb digital data directly into its AI-native workflow.

And we expanded our partnership with Manos following the successful launch of Similarweb data on the platform. Those partnerships are more than integrations. They are new distribution channels for Similarweb. They allow us to reach users who we could not reach through our traditional go-to-market motion.

They expand our TAM and they reinforce our position as a critical data layer for AI-driven research and decision making. So now let me walk you through what I believe is happening. First, our core business is getting healthier: growth, retention is improving, NRR is inflecting, sales productivity is improving, and we are seeing better expansion across enterprise customers. Second, our enterprise strategy is working.

We are seeing larger contracts, longer commitments, more multi-product relationships, and increasing demand from the world's largest companies for digital data. And third, AI is dramatically expanding the opportunity for our data. It creates new customers, new use cases, new distribution channels, and new ways to monetize consumption. Those three things reinforce each other, and this is why I believe Q2 represents an important inflection point for Similarweb.

And as I have said before, AI is the engine, but data is the fuel. Regarding the CEO search, we are making good progress and we are interviewing very strong candidates. And with that I will hand it over to Ran Vered, our CFO. Ran Vered, CFO Thank you all.

It is a great feeling to deliver a strong set of results and great guidance for the year. I will provide highlights of our financial performance and guidance for the third quarter and the full year of 2026. 2 million of revenue in Q2, a 9% increase year over year and above the guidance range we provided. Revenue growth was driven by good performance across the book of business including new sales and upsells, as well as growth in AI-related revenues that reached 13% of revenues in the second quarter, up from 11% at the end of the fourth quarter of 2025.

I would like to remind you that the second quarter of 2025 provided a tough comparison for this quarter. We expect revenue growth to accelerate in the second half of 2026 supported by the growth in ARR in the second quarter and accelerated momentum in our business. 4 million in the second quarter of 2025. Non-GAAP operating profit was also above our guidance range thanks to top-end growth and disciplined cost control that more than mitigated FX headwinds.

S. dollar. As a reminder, approximately half of our employees are based in Israel. Non-GAAP finance expense was $108,000.

2 million in the quarter, compared to $86,000 in the second quarter of 2025. To help with your modeling, we expect these items to remain approximately at these levels on a quarterly basis for the rest of the year. 01 in Q2 2025. ARR contracted under multi-year contracts continued to expand to 66% of ARR from 57% last year.

We believe that this metric is very important and demonstrates the durability of our revenues and the importance of our data to our customers. Good cash generation and a strong balance sheet are critical for our business at any stage. 7 million of normalized free cash flow and an 11% free cash flow margin. Despite the FX headwinds, we believe we will generate positive normalized free cash flow on a quarterly basis going forward.

We ended the quarter with approximately $73 million of cash and cash equivalents and no debt. We also have an available line of credit of $75 million.