Day. Thank you for standing by, and welcome to the Semrush Holdings First Quarter 2021 Results Conference Call. I would now like to hand the conference over to Mr. Bob Gujavarty, Vice President of Investor Relations. Good afternoon. I'm Bob Gujavarty, VP of Investor Relations. Welcome to the Semrush Holdings First Quarter 2021 Results Conference Call. We'll be discussing the results announced in our press release issued after market close today. With me on the call is our CEO, Oleg Shchegolev, our CFO, Evgeny Fetisov, and our CSO, Eugene Levin. Before we begin, I'd like to highlight our participation in several virtual investor conferences to be held during the second quarter. We will attend the Needham Virtual Technology & Media Conference on May 20th, the JPMorgan Technology, Media, Telecom Conference on May 25th, and the Baird Global Consumer Technology and Services Conference on June 10th. Details on our attendance at these conferences can be found on our website, investors.semrush.com. Today's call will contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning our expected future business, future financial performance and financial condition, expected growth, market opportunities, and our guidance for the second quarter and the full year 2021, and can be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "seek," or "will." These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. For a discussion of the risks and important factors that could affect our actual results, please refer to our final prospectus filed with the Securities and Exchange Commission, our quarterly reports on Form 10-Q, as well as our other filings with the SEC. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. There's a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close today and which can be found at our website, investors.semrush.com. With that, let me turn the call over to Oleg. Thank you, and good afternoon to everyone on the call. I believe many of us joining us on the call today may be new to the Semrush story. I would like to take a few minutes to cover our story and our product offerings. Later, I will offer some comments on first quarter and our outlook for the full year. Semrush is a leading platform for online visibility management, which we believe is a new software category, a category with a total addressable market is nearly $13 billion and potentially greater. I believe we are well-positioned to be in charge, and since 2016, we have grown revenue at a compound annual growth rate of over 50% while growing our paid customers count over 30%. Today, an average consumer already spends more than six hours a day online and is overwhelmed by information. Businesses of all sizes struggle to break through this wall of noise to connect with potential customers. Our solutions help businesses break through the noise and become visible to potential customers. We offer a broad range of solutions, and according to data from G2, we ranked a leader across 19 different categories, including SEO, Competitive Intelligence, and social media marketing. I believe the breadth of our platform is a key differentiator in the marketplace, as many of our competitors only offer point solutions today. Semrush was founded by myself and my friend, Dmitry Melnikov, in 2008 in St. Petersburg, Russia, and we opened our first office in the United States in 2012. Today, we are headquartered in Boston, Massachusetts, and we have more than 1,000 employees in our offices in five countries. Working across large distances and various time zones has been part of the Semrush DNA from the very beginning. I believe this helped us acclimate quickly to a post-pandemic work-from-home environment. Our global workforce supports a global operation. As of the end of 2020, we had customers in over 140 countries, and approximately 55% of our revenue was generated from customers outside the United States. We have a very low friction sales strategy with a freem ium pricing model. Users can try our product free of charge, but to access the full capability of the platform requires them to become a paid customer. We have no specific customer or industry concentration, as we have built a business across customers of all types. Our platform is used by very large enterprises who can drive an ACV well into the six figures. As well as small businesses on our entry-level Pro plan at $120 per month. I am very excited about the opportunity ahead of us. We have a large and diverse customer base, rapid growth underpinned by robust margins, and we have barely scratched the surface of what we believe is a very large market opportunity. Looking at the first quarter, revenue of $40 million was up 44% year-over-year, our best year-over-year growth since 2019. The growth pattern in the quarter was consistent with the pattern over the last few years. Our paid users grew 31% year-over-year, while the average check grew by about 17% year-over-year. I want to express my thanks to our employees, our customers, and our partners. All of them were key to delivering the strong results of our first quarter as a publicly traded company. Looking at some of product highlights from the quarter. We have launched App Center with two third-party apps initially and more on the way. We want to unlock the creative potential of our partners, and App Center is a key element of that strategy. We offer API access to our data assets to some customers today. However, App Center will more easily allow third-party developers to innovate on top of our unique data assets. On the topic of our data assets, we passed a milestone in the quarter as our backlinks database now contains more than 41 trillion links, up over 50% from a year ago. We believe our database is larger than many of our competitors in the space. Larger data sets can help drive more value for our customers and further differentiate our offering from those of our competitors. Finally, I want to highlight our ranking in G2's annual list of Best Global Software Sellers for 2021. We were ranked number 26 alongside leading brands like Microsoft, Google, Zoom, Slack, and others. This was a remarkable achievement given our size and our limited brand marketing efforts so far, and I believe our ranking speaks to the strength of our product and our relationship with our customers. The IPO was not the end, but rather the beginning of what I believe will be a very successful journey. Our platform continues to resonate with customers of all sizes, and the category of online visibility management is poised for rapid growth, and so is Semrush. With that, I would like to pass the call to Evgeny for more detailed discussion of our financials. Thank you, Oleg. Q1 revenue of $40 million was up 44% year-over-year and came in above our expectations. Growth was driven by steady increase in paying users and an uptick in the average monthly recurring revenue per paying customer or average check. I attribute the higher-than-expected check growth to a number of factors. Pricing action we took in January, continuous change in the subscription mix with more users moving to Guru and Business, our higher-priced plans, sales of additional user licenses and project limits, and lastly, growing share of competitive intelligence add -on in the company's revenue. As a reminder, the new pricing plans apply only to new paid users and therefore impact only a small portion of our total 73,000 paid users. Pricing could prove to be a tailwind for the balance of 2021 as well as for 2022. I would also like to note that our trailing 12 months revenue retention improved from 114% at the end of December to 116% at the end of March. I believe the decline in this metric from 2019 to 2020 was primarily the result of COVID-19 lockdowns in the first half of 2020, and trends in 2021 so far support this view. Gross margin of 78.2% was up 200 basis points from a year ago as the growth in hosting fees came in well below the pace of revenue growth. Hosting fees represent our largest expense within cost of goods sold, so any savings on those fees translated to a significant improvement in gross margin. Operating expenses of $29.7 million in the quarter were up 29% from a year ago, but only up slightly from the previous quarter. The year-over-year increase was primarily due to an increase in headcount to support growth of the business, as well as our initial public offering as we transition to the public company. I expect the pace of spending to accelerate across all functional areas throughout the remainder of the year as we continue to invest to support our growth and we incur additional costs associated with operating as a public company. The strong revenue growth, combined with slower growth in cost of goods sold and operating expenses, contributed to net income of $1.5 million in the first quarter, up from a net loss of $1.9 million a year ago. I believe the first quarter demonstrates the potential operating leverage of our business model as top-line growth translated into better margins. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $171.9 million, up from $35.5 million a year ago. We generated $9 million of cash flow from operations, and we received approximately $130 million of proceeds from the IPO net of expenses. The company also received approximately $10 million in April from the partial exercise of the over-allotment option granted to the IPO underwriters. The first quarter was exceptionally strong as operating cash flow margin exceeded 20%. For the full year 2021, I expect operating cash flow to be neutral or marginally positive as the pace of spending will grow for the remainder of the year. Looking ahead to guidance, I expect second quarter revenue in the range of $42.2 million-$42.7 million, representing 49% year-over-year growth. For the full year, I expect revenue in the range of $175 million-$177 million, which would represent 40%-42% year-over-year growth. As I mentioned previously, strong revenue growth allows us to make incremental investments in marketing and, to a lesser degree, sales to support revenue growth, and we expect these investments to weigh on operating income margin in the near term. I expect second quarter non-GAAP loss of $4.4 million to $4.1 million, and $7.9 million to $6.3 million for the full year. I am pleased with the company's performance in the first quarter as we delivered revenue acceleration and margin expansion. Looking ahead, I believe we are well-positioned to continue to deliver strong revenue growth in 2021 while making the necessary investments to support our long-term objectives. With that, Oleg, Eugene, and I are happy to take any of your questions. Operator, please open the line for questions. At this time, if you'd like to ask a question, hit star one on your telephone keypad. Star one. Our first question comes from Michael Turits with KeyBanc. Hey, guys. Congratulations on a great first quarter out of the gate. Two questions. One is on branding and the other on pricing. On branding, in terms of customers that we talk to, we always heard fantastic views of you guys and your name and your brand. I'm not sure that investors have appreciated that or that that's completely widespread. Is there something that you can be doing to promote that brand even more so your differentiation stands out? I was wondering if you could quantify the pricing uplift this quarter and to revenue and where that might go over the next year. Thank you. Yes, you're right. We see a great opportunity in front of us to spend more on branding. We see a great opportunity to educate markets around us. Definitely when we think about future spend of our marketing, we have such an opportunity to spend more and more on branding. This is Evgeny. I'll jump in on another front. We'll be spending more time visiting conferences and meeting investors, so I think that'll be our contribution in promoting the company amongst the investor community. We plan to be very active in the coming quarters as well. Great. On pricing, any quantification at all of how much of an uplift you've seen so far or the contribution for the year? This is Evgeny again. We clearly see a positive effect from the repackaging. The average checks comes higher, basically close to what we've changed the notional pricing plans for, I would say, 15%-20%. The results are actually better than we anticipated in terms of the overall customer reception. Okay, great. Congratulations again. Thanks, guys. Thank you. Our next question comes from Brent Bracelin with Piper Sandler. Hi, guys. This is actually Hannah Rudoff on for Brent today. Thanks for taking my questions. First one from me, just wondering if you could talk about what you feel really drove that strong customer adds in the quarter. Thank you. First of all, I want to mention what such high demand we started to feel a few quarters ago. I would say it's the third quarter when we feel such high demand from our customers. I expect that such tailwinds will continue, but at the same time, it's hard to say how long. I think we should be careful with our expectations, and it could be some moderation in growth in next quarters. At the same time, it brings us to previous topic about global digital transformation, and it started a couple of years ago. We expect it will continue next quarters, next few years. I see some potential from this tailwind in future. Okay, great. And- Yep, go ahead. Were you going to say something? No, sorry. I wasn't going to. Please go ahead. Oh, okay. Second question, I guess, how was logo churn in the quarter? Kind of a third question onto that, could you talk about what you were seeing in terms of your freemium motion and the conversion of free to paid customers in the quarter? Yeah. Thank you for your question, Hannah. This is Evgeny again. On the logo churn, we saw that it was slightly better than we had in previous quarters, and you can see this in our trailing 12-month revenue retention, which nudged up to 116%, as we have mentioned in our remarks. So far we see some improvement in how we retain our customers. The second question was on conversion rate. Yeah, I can take this one. In terms of conversion from freemium model, we are very happy with how this model performs. We didn't see any changes in Q1. Still, our freemium product contributes significantly to user acquisition and overall demand generation efforts. I would say no material changes in Q1 comparing to previous year. That's helpful. Thank you. Now our next question comes from Chris Merwin with Goldman Sachs. Thanks so much for taking my question. I wanted to ask about some of those drivers of the increase in check size. I think you mentioned a number of them. There was, of course, the pricing change. There sounded like there were some customers migrating to higher price tiers. As much as you can you break out the magnitude of those drivers for us and how should we be thinking about the sustainability of those drivers as we progress through the year here? Thank you. Chris, thank you for your question. This is Evgeny again. There were a number of drivers as you mentioned. One is, the price increase will probably be less pronounced in Q1 because we just introduced it, and it was clearly applicable to the new customers only. What we see driving the average check, apart from the price repackaging, is migration from lower price plans to the higher price plans, or shift in the share of higher price plans in overall subscription portfolio, sales of additional usage limits, such as keywords or projects, plus successful sales of add-ons. Our add-ons are growing faster, I mean, revenue from add-ons are growing faster than the total company's revenue. That all of that contributes to, I would say, more or less equally important to the growth of the average check. Eugene, you may want to add something? One thing that I think we could also share is that we are also looking at number of customers on more expensive subscriptions that go beyond our three core plans. For example, we look at number of customers who paid us more than $10,000 in the last 12 months. This number, for example, in Q1, grew more than 50% year-over-year. That's also one of the kind of quantitative things that you can take and hope it provides more color behind the growth of the average revenue per user. Okay, great. Thank you. Maybe just one quick follow-up. I think you called out the number of backlinks in the quarter. I know it's in the trillions, and it sounds like it's growing almost 50% year-on-year. Can you talk a bit about, I guess, first of all, why those are growing as fast as they are? I mean, it's well in excess of your customer growth and how we think about a metric like that impacting your ability in a positive way to acquire even more customers, to grow with your customers. Just simply to get some more context around that number, if we could. Thank you. Yeah. This is Eugene, I'll take this one. When we think about importance of number of backlinks and why we are sharing this metric, I think it goes back to our product and how product is very relevant part of our overall customer acquisition strategy. In general, when you have a big database, what it means for end customer that they will have more insights, they will have more ideas about how to build links, and especially if they're really small business, sometimes in checkers with less backlinks, they will not even find anything about their business. In checkers like Semrush with a lot of links, they will be able to find something. What it means is that, A, people will have more complete picture, which just improves the overall quality of the product. At the same time, it opens products like Backlink Analytics for broader set of small businesses, and hopefully helps us to acquire more customers. Yet again, primary goal is just to improve overall quality of product and have more complete sort of map of the internet. Thanks very much. Our next question comes from Tom Roderick with Stifel. Hey, everybody. Thanks for taking my question. Congratulations on the IPO. I wanted to ask you a question, just thinking about the Semrush product portfolio. You have kind of the holistic vision of short-term strategies, digital marketing strategies, long-term strategies. If I think about how your potential clients and existing clients out there are reacting to short-term and long-term, whether it's paid advertising on the short-term payback side or search engine optimization on the long-term side. How are they shifting the demand for either end of that as the economy recovers? Is there more of an emphasis on one or the other? Are you seeing more demand for newer solutions? Would just love to understand how the improving economy is sort of impacting which end of the demand curve in digital marketing. Thanks. Thank you so much. Really good question. I think what we are seeing is going to be indicative only to the segment of the market, right? Not necessarily for the whole market. What we see is that in general, people want to spend more on paid channels, but the problem with paid channels is that they're saturated. In general, we keep seeing transition from short-term marketing activities towards long-term marketing activities across the board. Yet again, if you talk to people who sell AdWords, because they don't see other side of the market, they will probably say that they see huge increase in demand for search ads. Since we see all the sides, we definitely see increase in demand for search ads, but we see even bigger demand towards more organic growth and long-term growth activities in marketing. Yeah. No, that's excellent feedback, and I appreciate the view towards longer term. As you look at some of the newer solutions, whether it's on the conversion or loyalty side, or perhaps it's even just on the core search engine optimization side, can you point to some of the newer solutions, the upsells that Semrush has been offering the market that are starting to impact the deal size of customers and starting to have some real traction? Anything on the newer front that you've rolled out in the last couple of years on the add-on front, would love to hear more about that? Thank you. Yeah, absolutely. I think we did really good job during previous couple of years in building this product portfolio and building those add-ons, some of them that you've mentioned. For example, our.Trends add-on that previously was called Traffic Analytics, is having great traction right now. Listing Management also has really good traction, especially in the United States. We also started cross-selling Prowly, a new product that we acquired in September. We are constantly building new things, but for them, it will be too early to have material impact on our revenue. One of those things, for example, is SplitSignal, a new product that is really in early beta. This product is designed for bigger companies with large websites and also priced differently at a higher end. We are constantly adding new products, but I think if you look at what drives revenue today, those will be things that we already done in the past. Right now we are more of a leverage in all the hard work that our product teams have done previously. Fantastic. Thank you for the detail. I appreciate it. Nice job. Thank you. Now our next question comes from Brent Thill with Jefferies. Rest of world, any trends that you saw during the quarter in terms of the strength? I don't know if you had growth rates as it relates to what happened in those geos. Yeah, Brent, unfortunately, we lost first part of your question. Can you please repeat this one? Yeah, just overall growth in U.S. versus the rest of world. Did you see any material changes or differences in each of those regions? Yeah, this is Evgeny. We actually haven't seen any differences. We have been growing fairly steadily across the globe in most of the, I would say, top markets that we had. The market share for our top countries remained the same throughout the quarter, and actually was fairly consistent throughout the last several quarters. It's a broad consistent growth globally. You highlighted that low-touch sales model. Is there any changes as it relates to the success you've had with this model? Are you continuing with that go-to-market model, or are you contemplating any changes on your go-to-market in terms of adding inside sales reps or outside sales reps to further penetrate this market? We didn't change our go-to-market in first quarter. We have the same sign-up flow. I think all our conversions, all things related to go-to-market and sign-up flow are very consistent. We didn't face any changes here. Okay. Thank you. Now our next question comes from Mark Murphy with JP Morgan. Hi, good afternoon. This is Matt Koss on behalf of Mark Murphy. Congrats on the first quarter as a public company out of the gate. Just a question on retention. It was good to see that uptick. Do you think it gets back to the levels you saw in the prior year, like closer to that 120% range at some point once we've completely lapped the effects of COVID? Matt, thank you for the question. This is Evgeny. Would love to be able to be very precise in terms of the number. I cannot do this, unfortunately. What we expect to happen is that for the retention rate, all things being equal, to continue to go up as these past quarters move from the numerator into the denominator of the calculation. I think for the next two, three quarters, we'll continue to see it going up and then leveling out and maybe moving marginally down. That's the expectation. I hope this is helpful. Yeah, that's helpful. Oleg, I think you said to Brent's question, you saw the same sign-up flow. I just want to make sure, so you haven't seen any change to the number of free users that you're bringing onto the platform. Is that correct? Amount of free users grow very consistent, yeah. Yes, you're right. We didn't change our sign-up flow. Even more, we mentioned already our repackaging. In the beginning of this quarter, we expected some decline in new paying customers because of such repackaging, but we didn't face it. All our metrics, all our conversion from free customers to paid customers are consistent. Thank you very much. As a reminder, if you would like to ask a question, that's star one on your telephone keypad. Star one. There are no further questions at this time. That does conclude today's conference call. Thank you for your participation. You may now disconnect.