and a member of our team will be happy to help you.

Thank you for watching! ¶¶ ¶¶ ¶¶ Music Music Music Music Music Music Music Music . . . Music Music Music Music Music by Kevin MacLeod Thank you for watching! ¶¶ © transcript Emily Beynon ¦ ¦ ¦ Music Music Music Music Music Music

Hello, and welcome, everyone, joining today's SimilarWeb Q2 Fiscal 2026 Earnings Call. At this time, all participants are in a listen-only mode. Later, you 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 welcome Vice President, Investor Relations. Please go ahead.

Thank you, operator. 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. This morning, we released our results for the second quarter and published an investor presentation with a strategic overview of the business, as well as a summary presentation of second quarter results on our investor relations website at ir.solarweb.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 on Form 20F 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 in 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 sales side analysts. With that, I'll turn the call over to Or. Or, please go ahead.

Thank you, Rami, and welcome everyone today. I'm extremely proud of what the similar web team delivered in the second quarter. Similar web is at inflection point. Our core business is getting stronger while AI is opening a significant new growth opportunity. Larger deal, longer commitments, improving retention, and expanding profitability are validating the strength of our business. At the same time, strong demand from leading AI companies demonstrate that our proprietary Over the last several quarters, we have been very focused on three things, strengthening our data moat, deepening our relationship with the largest enterprise 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 similar web history for Net New ARR. We had one of the strongest quarter ever for Wall Street Tension. We achieved positive gap operating profit for the first time ever. NRR improved to 100% across all customers and 107% for customers above $100,000 of ARR. 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. Revenue grew 9% year-over-year to $77.2 million above the top end of our guidance. We also delivered non-GAAP operating profit above our expectation 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 opportunities where we believe we can generate the highest long-term returns. We generate $8.7 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 200% across all customers and 207 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 growth retention, stronger customer engagement, and increasing demand for additional similar web data and products. And we believe there is more room for improvement from here. But the part of the quarter that I am most excited about is what we are seeing with the largest enterprise. Our strategy to move up market is working. During Q2, we signed three very large multi-year contracts with a cumulative 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 relationship change dramatically. Those contracts require a significant amount of work across sales, R&D, data scientists, finance, and legal. And I want to recognize the entire team because those deals are truly company-wide effort. The strategic ALO 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 clearly 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 to you what I mean. Historically, the value an enterprise could extract from a similar web 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 changed this equation. Now you can take similar-with-digital data and make it available to an AI system that can analyze an enormous amount 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 the leading big tech company for data use to train its large language model. Following this expansion, this customer became our third customer with more than $10 million of ARR engagement. It is remarkable to see how similar web data become a fundamental source of digital intelligence for top large language model 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 similar web 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 transition. SimilarWeb has become 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 fundamental conditions. SimilarWeb has become more deeply integrated in the world's largest and most enduring enterprise organization. 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 into our AI strategy. Over the last several quarters, we have talked about our AI strategy through three pillars. Powering AI system with our data, building an AI native product ourselves, and expanding distribution through the AI ecosystem. We are seeing strong progress across all three. First, we are powering LLM and AI agent. We continue to see strong demand from leading AI companies for digital data for both pre-training and post-training use case. 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 enterprise right now. We're already seeing an early sign we can win here and become a leader at 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 give us a real edge. And earlier this year, The response has been extremely strong. AI Studio changed the way people interact with SimilarWeb. Instead of needing to know exactly which report to open or which dataset to use, users can simply ask a business question in natural language and receive an actionable answer with insight and recommendation. 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 Cloud and SharedGPP. During the quarter, we expanded our relationship with Poplexity to bring SimilarWeb digital data directly into its AI-native workflow. and we expand our partnership with Manos following the successful launch of SimilarWebData on the platform. Those partnerships are more than integration. They are new distribution channels for SimilarWeb. They allow us to reach users who we couldn't not reach through our traditional go-to-market motion. They expand our time 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, NRL is infected, sales productivity is improving, and we are seeing better expansion across enterprise customers. Second, our enterprise strategy is working. We are seeing larger contract, longer commitment, More multi-product relationship and increasing demand from the world's largest companies for our digital data. And third, AI is dramatically expanding the opportunity for our data. It creates new customers, and the 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 I have to say 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, our CFO. Thank you all.

It is a great feeling to deliver a strong set of results and raise guidance for the year. I'll provide highlights of our financial performance and guidance for the third quarter and the full year of 2026. Turning to our quarterly results, we generated $77.2 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 17% 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 the accelerated momentum in our business as all discussed. Non-GAAP operating profit for the quarter was $6.5 million, the second and 8% margin compared to $2.4 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. We continue our efforts to offset the headwinds to profit presented by the strengthening of the Israel shekel versus the US dollar. As a reminder, approximately half of our employees are based in Israel. Non-GAAP finance expenses were $108,000. Non-GAAP tax expense was $1.2 million in the quarter, compared to $86,000 and $1.2 million 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. Non-GAAP diluted earnings per share were $0.06, compared to $0.01 in Q2 2025. ARR contracted under multi-year contracts continues 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 strong balance sheets are critical for a business at any stage. We generated $8.7 million of normal S3 cash flow and 11% free cash flow margin despite the HFICS end wins. We believe we will generate positive normal S3 cash flow on a quarterly basis going forward. We ended the quarter with approximately $73.2 million of cash and cash equivalents and no debt. We also have an available line of credit of $75 million. Our remaining performance obligations, RPO, total $345 million at the end of Q2, up 26% year-over-year.

We expect to recognize approximately 66% of total RPO as revenue over the next 12 months.

The growth in RPO provides us with confidence in our full-year guidance. We are also proud that our deferred revenue increased to a total of $141 million a 21% increase in revenue. In Q2, overall NRR was 100% across all customers and 107% for customers with over $100,000 of ARR. We are proud of the improvement in NRR in the quarter, which came through earlier than expected. We expect further improvement in NRR over 2026. At the end of the second quarter, we had 1,815 customers, where they are above 25,000, compared to 1,809 in 2025. This sequential trend reflects our decision to prioritize go-to-market resources and focus on large-scale opportunities within our existing customer base over smaller inbound SMB deals. Consistent to this focus, the average account value for this cohort grew 19% year-over-year to 149,000. The number of customers to DRR over 100K increased to 473 at the end of Q2, up 9% compared to 2025. Average account value for this customer cohort increased 18% to 438,000 compared to 2025. We believe that asset accounts generating more than 25K and 100K of ARR, that account for 90% and 69% of ARR respectively, demonstrate that SimilarWeb is an enterprise-focused data company. Moving to guidance. For the full year of 2026, we are raising our revenue guidance range and expect total revenue in the range of $340 million to $318 million, representing approximately 12% year-over-year growth at the midpoint of the range. In Q3 2026, we expect total revenue in the range of $80.5 million to $82.5 million, representing 17.5% year-over-year growth at the midpoint Accelerating vs. Q2 2026 For the full year, we are raising our guidance for non-GAAP operating profit to be between $24 million and $26 million. Non-GAAP operating profit for the third quarter of 2026 is expected to be in the range of $7.5 million to $9.5 million. With that, Or and I are ready to answer your questions. Follow the Q&A or we'll share some closing remarks. Operator, please open the line for questions.

Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star 1 on your telephone keypad. To remove yourself from queue, you may press star 2. Again, that is star 1 to ask a question. And we'll take our first question from Ramo Linschow with Barclays. Please go ahead. Your line is open.

Thank you and congratulations. That's an amazing evolution. Or can you talk a little bit more about those customers that you signed and they're kind of showing up in the pipeline. Is this kind of using similar web data in a much broader sense than we've seen classically? And, you know, in theory if that's the case and we open it up for more end users, In a way, the sky is the limit because every single customer could do a lot more with your data. It sounds almost like we're at the beginning of a very great journey here. Can you talk a little bit more on that?

First of all, thank you for the question. And yes, you're right. The most advanced enterprises now realize that with AI, they can first crunch much more data. and they can get much more better insight and recommendation and the ROI dramatically for the same data is now much higher and they can consume much more data. So we're seeing this trend, it's very exciting and we're very happy about it and we think that we'll continue to see this great success with onboarding more enterprise to use our data in that approach.

And then, Ran, if you think about it, where are we sitting on this new approach of getting against the big enterprise? Where are we on sales capacity, et cetera? Can the organization support the growth that potentially is coming your way? Thank you.

Right now, yes, we are set up correctly. We're starting with the engagement we currently have in our book of business. We already work with the biggest and best enterprise in the world. And we start rolling up and start increasing those engagements.

Okay, perfect. Thank you. Congrats.

Thank you. We'll take our next question from Ken Wong with Oppenheimer and Company. Please go ahead. Your line is open.

Fantastic. Thank you for taking my question. I think you guys mentioned that NRR potentially could trend up still. I'm just looking at the levels. This is a big step up. What gives you the confidence there? How much of that is mechanical? I recall you guys already were exiting at a pretty high rate after Q1, and how much of that is

We have a very, very high confidence because the NRR, we report to the market, as we said, is the average of the previous four quarters. And because we know that this quarter NRR was very, very high, we already know that the next quarter NRR will continue to increase.

Got it, understood. And Ken, just to add on that, we see very strong, or mentioned in the prepared remarks, we see very strong GRR trends. And the changes that we did in the beginning of the year, that the account management are more focused on expansion, the CSR focus on GRR, you already see the fruits of this change. So we see very strong GRR trends Thank you for joining us.

Again, fantastic in terms of what you guys saw in Q2. When you look at the quarter, how much of that execution was some of the labor from last year? You guys kind of refreshed the go-to-market. You added capacity. How much of that is, as you said, truly an underlying change in terms of some of the customer actions, like where data is now kind of proliferating across organizations, or is there still more of that to come?

I think, as I said in the earnings, a lot of it came from just focusing the people on doing the right thing that can produce the highest outcome. One of that, that we changed and took some of our best people and just put them on the ALO team, we call it, the strategic sales team to build better, bigger relationship with the top enterprise. and basically unlock this potential. So just moving those priorities, including the account manager, focusing on expansion, all of those decisions of changing strategy really are bearing the fruits. So this is the result of that. Thank you very much.

Thank you. We'll take our next question from Arun Bhatia with William Blair & Company. Please go ahead. Your line is open. Hi team, I'm Lily Wong for Arjun Bhatia. Nice quarter and thank you for taking your question. A couple of quarters ago you saw some variability in I believe two large AI deals. I believe you closed one last quarter, but can we get an update on the second? Is that still in the pipeline and how are you thinking about the timing of closing it?

Yeah, funny enough, this second one is still in the pipeline, and we still think that this is another nice big surprise that can come at the end of the year.

Okay, thank you. Thank you. We'll take our next question from Patrick Walravens with Citizens. Please go ahead.

Oh, great. This is Kincaid Onford. Patrick, thanks so much for taking the question. Super excited to see this narrative playing out for you guys. Is it possible to get a little bit of color when I think about the $60 million as well as just the total spectrum of these new deals? You mentioned it's not just pre-training and post-training, but it also includes, correct me if I'm wrong, agents in production that want to understand how the Internet is structured and where they should go next. Can you give us a sense of that? How that ARR is split? Is it 50% post-training, 25% pre-training, and 25% in production? What's that breakdown?

I cannot go specifically to the full breakdown, but what we said, we had three big deals. Each one of them is about eight-figure engagement. Only one of them is for LLM training pre and post. So only one is pre and post. The other two are just big enterprise leveraging our data in different ways than LLM training. That is much more exciting and very big opportunity.

Yeah, maybe just to add, Maoz, the way we think about it, there are various markets that we're seeing tailwinds and demand in different markets. One is the NLM that we were speaking about. The other one is OEM, so build on top of our data. Then we have the brands, and lastly we have the investors. And we see great demand across the world in all of them for large things to integrate our data at scale because of the ability to digest and ingest more data at scale with AI. So what we've seen in the past, which was deal every now and then, deal every quarter or a pipeline, so now it's becoming much more sustainable and much more robust. It helps us increase our time and increase our average deal value.

Spectacular. And then if you have any update with specifics on your Gen AI intelligence product, I've always found that one fascinating.

Yeah, the demand there is increasing. We do see a nice increase there and I think there is now more strategic to start building up on the Gen-AI data that we have. That's becoming very interesting for brands to connect the full journeys of the users with what people are asking those LLMs and the outcome. So everything around how the interaction with LLMs change the consumer behavior. So this is everything, also a very big success on that.

Thank you so much.

Thank you. Again, as a quick reminder, if you'd like to ask a question, please press star 1 now. We'll take our next question from Scott Berg with Needham. Please go ahead. Your line is open.

Hi, everyone. Really nice quarter here. Or you obviously spoke a lot about the new use cases that you're seeing in some of these large deals. They're not all LOM trainings. As you think about the new use cases, are you changing the pricing of the platform to evolve with some of these new use cases, or are the pricing mechanisms the same?

The pricing is the same because most of those big deals are around data, so it's more about consumption and data access. It's less about the software. And so the price didn't change and we're just selling much more data and many more different data sets because, as I said, the AI is changing the equation. Now companies can consume much more data and get much more ROI with that.

Very helpful there. Ron, as we think about a couple of these deals here, these large deals, are there any one-time revenues to be cognizant of from these? I believe that maybe one of them has some one-time revenues. And if there is, what does the timing of those revenues look like for modeling purposes?

Hey, Scott. Thanks for the question. Those deals are ARR deals. And if there is a one-time element, it's really quite negligent and immaterial. And usually it's recognized on the initiation of the deal or a couple of months later at max. But those deals are pure ARR deals with, again, a small and immaterial amount of one-time, if at all.

Excellent. It's a quarter again. Thanks for taking my questions.

Thank you. We'll take our next question from Luke Horton with Northland Securities. Please go ahead. Your line is open.

Yeah, hey guys, congrats again on the great quarter here. Obviously the momentum is really building on the enterprise side. Just curious if there's anything to call out on the kind of SMB or smaller customer cohort. Are they seeing any sort of macro pressures or I guess how is growth looking on the smaller customer cohort side?

Nothing special there. I think overall, you know, the traffic was going down, you know, the digital traffic to the website, you know, the world changed and there is less traffic coming from search. This is like all like market broader. But overall, AOV is the same, Winnet is the same. I think a lot of more commercial people are moving now to drive more expansion as we can see this opportunity.

Okay, great. And then just wondering about as far as adding net new customers, are you seeing any trends with initial customer contracts coming in at higher price points now and kind of How much of the focus is on the cross-sell and up-sell with existing customers versus kind of outbound at new customers?

So I think that most of our 10-year senior commercial people that we're doing outbound and enterprise new-sell, we move them more to focus on expansion. As I said before, we have an amazing book of business and we already engage with most of the best and biggest companies in the world. And now we just come and have a huge opportunity on cross-sell and up-sell with this new change that's happening with AI.

Okay, great. Well, thanks for taking the questions.

Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Or Offer for closing remarks.

Thank you for all the questions today. So now let me recap what we discussed today at the call. When we entered to 2026, we said this was going to be a transformation year for SimilarWeb. We said we were moving from building to scaling. We said our priorities were to strengthen our data moat, deepen our enterprise relationship, and scale our AI-first solutions. Six months into this year, we are seeing tangible evidence that this strategy is working. We delivered the strongest net new ARR quarter in our history, we achieved positive gap operating profit for the first time ever, we improved the NRR 200%, we signed multiple transformational enterprise contracts, and we continue to see expanding demand for our data from AI companies and large enterprises. There is still a lot of work ahead of us. We need to continue improving execution. We need to continue to expand our enterprise relationship. And we need to continue building the best digital data infrastructure for the AI era. Thank you everyone on the call for your continued support. We're looking forward to speaking to you again over the coming weeks. Thank you all.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation.