Similarweb Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023, compared primarily with FY2022. This is an annual report, not a standalone Q4 2023 filing. Financial statements are prepared under U.S. GAAP and presented in U.S. dollars.
Business context
Similarweb provides digital data and analytics through SaaS subscriptions, data feeds/API access and advisory services. Revenue is primarily subscription-based, with subscription revenue recognized over contract terms. The company reported 4,712 paying customers at year-end 2023, up from 4,049 a year earlier; no customer generated more than 5% of revenue.
Key financial metrics
| Metric | FY2022 | FY2023 |
|---|---|---|
| Revenue | $193.2 million | $218.0 million |
| Revenue growth | 40% year over year | 12.8% year over year |
| Gross profit / gross margin | $140.0 million / 72.4% | $170.9 million / 78.4% |
| Operating expenses | $227.8 million | $199.7 million |
| Loss from operations | $(87.9) million | $(28.8) million |
| Net loss | $(83.7) million | $(29.4) million |
| Net loss per share, basic and diluted | $(1.10) | $(0.38) |
| Cash used in operating activities | $(46.1) million | $(3.0) million |
| Free cash flow, non-GAAP | $(77.2) million | $(5.4) million |
At December 31, 2023, cash and cash equivalents were $71.7 million and restricted deposits were $10.0 million, totaling $81.8 million. Borrowings under the secured credit facility were $25.0 million. Total assets were $239.0 million, total liabilities $223.5 million and shareholders’ equity $15.5 million. The facility requires at least $35 million of defined liquidity; the company said it was compliant with its financial covenants at year-end.
Material changes versus FY2022
- Revenue increased 12.8%, but growth slowed from 40% in FY2022. U.S. revenue rose from $90.9 million to $103.5 million; Europe and U.K. revenue rose from $57.4 million to $63.5 million.
- Gross margin expanded 6.0 percentage points to 78.4%, reflecting cost optimization and lower cost of revenue. Cost of revenue fell 11.6% to $47.1 million.
- Operating expenses declined $28.1 million, with the largest reduction in sales and marketing, down 17.5% to $101.2 million. The filing attributes reductions mainly to lower headcount and, for marketing, lower paid-acquisition spending.
- Net loss narrowed by $54.3 million. Operating cash outflow improved to $3.0 million, though free cash flow remained negative at $5.4 million.
- Year-end customer count increased 16.4%. Customers with at least $100,000 in ARR rose to 365 from 337 and represented 57% of total ARR. Multi-year contracts represented 42% of ARR, versus 39% in FY2022.
Outlook, risks and unusual items
- Management described a strategy of pursuing growth alongside profitability, with plans to acquire customers, expand existing accounts, invest in product and data capabilities, and evaluate acquisitions. It expects R&D expense to increase in absolute dollars but anticipates operating expenses as a percentage of revenue declining over time. The filing does not provide specific FY2024 revenue or earnings guidance.
- Remaining performance obligations were $195.2 million at year-end; the company expected to recognize 80% as revenue during 2024. This is contracted future revenue, not a guarantee of collection or new bookings.
- The credit facility was scheduled to expire December 31, 2024. It is secured by substantially all assets and includes restrictive covenants; renewal or replacement terms were not assured. The filing discusses SVB’s 2023 failure and states the successor bridge bank honored existing commitments.
- Key business risks include reliance on third-party and publicly collected data, data privacy and automated collection restrictions, competition, customer renewal and sales-cycle uncertainty, dependence on AWS, foreign-exchange exposure and evolving AI regulation. A 10% foreign-exchange move was estimated to affect net loss by $10.0 million in FY2023.
- The company highlighted Israel’s war and regional security conditions as potential operational, staffing, commercial and macroeconomic risks. It also reported approximately 53 Ukraine-based personnel and identified continuing conflict-related disruption risk.
- The risk disclosure cites an independent cybersecurity maturity assessment that found material areas of risk and said remediation was underway. Separately, management stated that no known cybersecurity threat had materially affected or was reasonably likely to materially affect the company. No current legal proceedings were identified as likely to have a material adverse effect.
- There were no goodwill or intangible-asset impairment charges in FY2023. The company paid $3.9 million of contingent consideration during the year and reported no remaining contingent consideration obligation at year-end. Share-based compensation expense was $18.1 million, and 11.4 million options and RSUs were excluded from diluted EPS as anti-dilutive.
Most important facts for investors to verify
- Confirm FY2024 revenue growth, customer retention/expansion and bookings relative to the slowdown to 12.8% growth; the filing text does not provide a clear FY2023 NRR value.
- Track whether operating cash flow and free cash flow become positive, and distinguish underlying cash generation from changes in deferred revenue and other working-capital balances.
- Verify the credit facility’s renewal or replacement, borrowing availability, interest terms and compliance with the $35 million liquidity covenant.
- Assess whether the $195.2 million performance-obligation balance converts to revenue as expected and how much depends on renewals or customer concentration.
- Monitor progress on cybersecurity remediation and data/privacy compliance, along with the effects of Israel-related disruption and foreign-exchange movements.
- Evaluate dilution from outstanding equity awards and the plan’s share reserve; the filing reports 11.4 million outstanding options and RSUs at year-end.