Thread by @ModernGrowthIn1

$SEMR - Semrush is a highly differentiated SaaS platform for online marketing, managing online brands, and actively innovate by spotting new trends and keeping ahead of the competition.

Long thread, buckle up!

What is Semrush’s Mission?

Semrush's mission is to make online marketing better.

I got this from glassdoor.

I like the simple and powerful mission they have to help people succeed in online marketing.

It provides lots of room to develop a lot of products and services.

What is happening in the Online Marketing industry?

Based on a survey by McKinsey & Company, globally, the percentage of consumer interactions that are digital increased to 58% in July 2020, up from 36% in December 2019.

The significant increase in the availability of digital content, including social media, blogs, and videos, accelerated by social media and organic search, has further driven increased competition for consumers’ attention.

What are the limitations of current online marketing solutions?

Current solutions are:

Lack the technology to aggregate and process broad and deep data sets

Lack of comprehensive analytics and insights

Do not provide unbiased, comprehensive insights

Limited Integrations

Current solutions are:

Not designed for a comprehensive view of online visibility

Inefficient in targeting audience

What does Semrush do?

Semrush enables companies globally to identify and reach the right audience for their content, in the right context, and through the right channels.

Semrush enables its customers to understand trends and act upon unique insights.

They improve online visibility, drive high-quality traffic to customers' websites and social media pages, as well as online listings, distribute highly targeted content to their customers and measure the effectiveness of their digital marketing campaigns.

What are Semrush’s Products?

Semrush's core set of features includes SEO, content, advertising research, social media, competitive research, local marketing, and reporting, in addition to Semrush's Prowly and Sellerly offerings.

They have more than 40 products, too many to list here, I encourage you to check them out at moderngrowthinvesting.substack.com/p/semrush-semr…

How does Semrush make money?

Semrush offers its paid products and tools to customers via monthly or annual subscription plans, as well as one-time and ongoing add-ons.

Semrush's subscription-based model enables customers to select a plan based on their needs and license Semrush on a per month basis.

Semrush currently has three paid subscription tiers for Semrush's core product, Pro, Guru, and Business, and add-ons for an incremental cost.

Semrush offers time-limited free trials, which allow prospective customers to test the functionality of Semrush's Pro/Guru plans for a limited period of time.

At the end of the trial period, prospective customers either become paying customers or are switched to free customers

What is Semrush’s customer value proposition?

The key benefits of Semrush’s include:

Robust, proprietary technology platform

All-in-one SaaS solution to provide comprehensive online visibility

End-to-end workflows with third-party integrations

Intuitive, easy-to-use platform

Who are Semrush’s Customers?

Semrush serves a range of customers from SMBs to enterprises and marketing agencies, across a wide variety of verticals, including consumer internet, digital media, education, financial services, healthcare, retail, software, and telecommunications.

As of December 31, 2020, they had over 67,000 paying customers and over 404,312 active free customers on their platform across over 142 countries.

What is Semrush’s Market Opportunity?

Based on Semrush’s current average customer spending levels, the annual global potential market opportunity for online visibility management SaaS platform is currently $13 billion.

What is Semrush’s Growth Strategy to capture this market opportunity?

Acquire new paying customers

Expand the use of Semrush by Semrush's existing paying customer base

Continue to innovate and develop new products and features

Pursue opportunistic M&A

What is Semrush’s Competitive Advantage and why is it a durable long-term investment?

Semrush has built a differentiated easy to use platform that provides awesome insights to their customers.

They provide a high ROI and save a lot of time for content creation and marketing.

They are starting to build their marketplace(developer platform) and have a full suite of integrations.

Their main competitive advantage currently is proprietary technology and their deeply entrenched founders who have figured out hard problems by working on them for decades.

In the future, they will be able to develop high switching costs and economies of scale as they increase their revenue per customer by cross-selling and adding more customers to their platform.

What are Semrush’s People and Culture like?

From glassdoor I can see that Oleg is running Semrush in a way that his employees love working there and are highly supportive, referring people to Semrush as a workplace.

What does Semrush Management and Board look like now?

Oleg Shchegolev and Dmitry Melnikov are the co-founders of Semrush.

What is Semrush’s current Insider Ownership for Executives and the Board?

Semrush has insider ownership of 70% of which the founder Oleg owns 40%.

Talking about skin in the game, I feel like Oleg will be extremely aligned with the shareholders.

57 million shares at a price of 24$ per share put him at $1.3B.

What do Semrush’s current Financials look like?

Revenue - $345M Q2 2021

Revenue Growth - 60% Q2 2021

ARR - $188M Q2 2021 at 57% growth

Gross Margin - 77% Q2 2021

Earnings Margin - nearly 0% Q2 2021, breaking even, nice to see.

Total Debt/Equity - 0.41 Q2 2021, really awesome balance sheet

Net Cash - $180M Q2 2021

EV - $2.97B (Assuming $3.09B market cap, $0.062B total debt and $0.18B cash)

EV/ARR - 15.8x for Q2 2021

Dollar Based Net Retention Ratio - 114% for 2020

The below image is very important, only a few businesses share this and I love it when they share it.

This gives us an insight into how the management wants to structure their business for the long term.

Their long-term target for 80% gross margins makes sense for SaaS businesses, pretty common IMHO.

What I like is that they are targeting 20% operating income, which means that 20% of the revenues will be plowed back into the business for long-term sustainability and growth.

If you like this thread, give this tweet a like/retweet

https://twitter.com/ModernGrowthIn1/status/1457811848204480514

If you likes my summary about $SEMR check out my deep dive at moderngrowthinvesting.substack.com/p/semrush-semr…

If you liked this thread and want to keep up with my insights and deep dives into businesses, please subscribe to my blog at
moderngrowthinvesting.substack.com/subscribe

Tagging and sharing with few folks on fintwit who might be interested
@AlphaBetaAnil
@ParrotStock
@jiggycapital
@SixSigmaCapital
@PelotonHolder
@InvestiAnalyst
@Invesquotes
@Investing_Lion
@TSOH_Investing
@StockMarketNerd
@wolfofharcourt
@dhaval_kotecha
@Mayhem4Markets

Tagging and sharing with few folks on fintwit who might be interested
@MazwoodCap
@StockNovice
@rhemrajani9
@borrowed_ideas
@StratusYoung
@10kdiver
@DominicRinaldi9
@mukund
@JonahLupton
@masterly_in
@Brian_Stoffel_
@BrianFeroldi
@Innovestor_
@BuyandHoldd

Tagging and sharing with few folks on fintwit who might be interested
@buccocapital
@borrowed_ideas
@buddhist_invest
@LiviamCapital
@SubstackLinda
@hhhypergrowth
@BlaineCapital
@BahamaBen9
@InvestmentTalkk
@FromValue
@EconomyApp
@SagaPartners
@Crussian17
@jablamsky

Tagging and sharing with few folks on fintwit who might be interested
@richard_chu97
@MarceloPLima
@MT_Capital1
@RamBhupatiraju
@clueless_1337
@Mayhem4Markets
@GauchoRico
@investing_bear

@threaderapp unroll

@threaderapp compile