SimilarWeb (NYSE: SMWB), the Israeli digital market intelligence company, completed its IPO in May, going public at a $1.6 billion valuation and raising $120 million. Since then, the stock has essentially been flat and traded in a range between $18 and $25.
However, SimilarWeb is a fascinating company that has a devoted user base. Additionally, it has an effective distribution strategy as it offers a free version of its product that allows anyone to see basic information about a website including its traffic, sources of this traffic, and links to similar websites. The premium version of its product contains even more in-depth information and is considered to be invaluable for many marketers and IT departments.
Company Profile
SimilarWeb was founded in 2007 by Or Offer in Israel. The company steadily grew in terms of users and its public profile and raised nearly $250 million in venture capital. It was also able to acquire smaller companies to add more features.
Its core product is to monitor web and mobile app traffic and provides analytics and digital insights. Its platform is used by businesses, enterprises, marketing professionals, and analysts and has nearly 800 employees around the world. In its prospectus, it describes its mission as helping its customers win in the digital market.
Currently, SimilarWeb is the world's largest traffic checker. It has an innovative way of collecting this data by using AI and other proprietary means to collect data from millions of anonymous people. Some of the premium products it offers are digital research, digital marketing, shopper intelligence, sales intelligence, and investor intelligence.
Currently, it has 2,800 customers which is 10% more than last year. Of this, 81 of these are enterprise customers who spend more than a $100,000 on the platform. These companies have an average annual retention of 115% which places it among the top SaaS companies.
Last year, it posted a net loss of $12 million but turned a profit in this quarter. It had revenue of $123 million but estimates its total market as being $34 billion. It also has 79% gross margins and 43% revenue growth.
Outlook
SimilarWeb has many characteristics in common with the best growth stocks of the last decade in terms of high-quality customers, above-average growth, and juicy margins. Further, it also has its incentives completely aligned with customers in that its product should increase its customers revenue, making them happy to pay for the product.
SimilarWeb has a bright outlook, especially as the digital world will only get bigger and more competitive. Companies will have to invest in tools like SimilarWeb in order to compete which means it will likely have more pricing power and increasing revenues. Further, SimilarWeb has shown an ability to consistently deliver new products and features.