KeyBanc Capital Markets has adjusted its outlook on SEMrush Holdings, Inc (NYSE: SEMR), a global company known for its online visibility management and content marketing SaaS platform.
The firm increased its price target to $19.00, up from the previous $17.00, while maintaining an Overweight rating on the stock.
KeyBanc's decision follows SEMrush's recent quarterly results, which surpassed expectations. The company's annual recurring revenue (ARR) growth saw a significant reacceleration, nearing a 25% increase year-over-year.
This was supported by a notable rise in average revenue per customer, which climbed 12.0% compared to the same period last year, marking the highest increase since 2022. Additionally, the average revenue per customer saw an approximate $100 sequential uptick.
The positive developments also include SEMrush's forward-looking guidance, which has been raised to approximately four times the top-line beat of the recent quarter. The upward revision in guidance suggests a 200 basis point increase in revenue growth and anticipates the third quarter to continue the trend of revenue acceleration.
The analyst highlighted that the enterprise product launch by SEMrush seems to be gaining early success. During a roadshow with SEMrush's CFO Brian Mulroy in the second quarter, there was already a sense of optimism about the newly introduced Enterprise product. That optimism now appears to be justified, as it is driving the upward revision in revenue growth guidance.
SEMrush recently reported a robust first quarter for 2024, with a notable 21% year-over-year increase in revenue, reaching $85.8 million. It also saw a significant rise in annual recurring revenue (ARR), with a 21% increase from the previous year. This strong performance led to an upward revision of their full-year 2024 revenue guidance to between $366 million and $369 million.
The company also announced its acquisition of Ryte, a German SaaS platform specializing in optimizing website user experience. The acquisition is expected to complement SEMrush's existing offerings and provide new cross-selling prospects. Further details on the acquisition and its implications for SEMrush's strategy and operations are likely to be shared in the upcoming second-quarter earnings call.
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