Business Context and Reporting Period
Company: Similarweb Ltd. (SMWB)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Similarweb is a leading provider of digital data and analytics, offering SaaS solutions, Data-as-a-Service (DaaS), and integrations that power business decisions. The company operates globally with headquarters in Israel and significant operations in the U.S., Europe, and Asia-Pacific. As of December 31, 2025, the company had 6,128 paying customers.
Key Financial Metrics
| Metric (in millions, except per share) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Revenue | $282.6 | $249.9 | $218.0 |
| Gross Profit | $224.8 | $195.1 | $170.9 |
| Gross Margin | 79.5% | 78.1% | 78.4% |
| Operating Loss | $(23.6) | $(9.7) | $(28.8) |
| Net Loss | $(32.9) | $(11.5) | $(29.4) |
| Net Loss Per Share (Basic & Diluted) | $(0.39) | $(0.14) | $(0.38) |
| Operating Cash Flow | $14.6 | $30.2 | $(3.0) |
| Free Cash Flow | $13.0 | $27.4 | $(5.4) |
| Cash, Cash Equivalents & Restricted Deposits | $78.8 | $74.4 | $77.8 |
| Debt (Outstanding) | $0.0 | $0.0 | $25.0 (Repaid in 2024) |
Note: The company reported a Non-GAAP operating income of $9.1 million for 2025, compared to $15.0 million in 2024.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 13.1% year-over-year to $282.6 million, driven by a 28.1% increase in U.S. revenue and growth in subscription revenue and one-time LLM data evaluation engagements.
- Customer Base: The number of paying customers grew 10.7% to 6,128. Customers generating over $100,000 in Annual Recurring Revenue (ARR) increased by 12%, now representing 63% of total ARR.
- Expense Increases: Total operating expenses rose 21.3% to $248.4 million.
- R&D: Increased 30.6% to $72.6 million, primarily due to headcount growth, expansion of the Prague site, and retention payments from acquisitions.
- Sales & Marketing: Increased 17.2% to $123.7 million, driven by headcount growth and increased paid acquisition campaigns.
- G&A: Increased 19.2% to $52.1 million, largely due to retention payments and headcount increases.
- Foreign Exchange Impact: Net finance expenses of $5.2 million in 2025 (vs. income of $0.1 million in 2024) were primarily due to a $5.7 million loss from the depreciation of the U.S. dollar against the New Israeli Shekel (NIS) and other currencies.
- Acquisitions: The company completed four acquisitions in 2025 (Signal Insights, The Search Monitor, Wincher, and one in Q1 2026), adding to goodwill and intangible assets.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management emphasizes a strategy of "value innovation," balancing growth with profitability and cash generation.
- Focus remains on expanding enterprise customer relationships, with 60% of ARR now derived from multi-year contracts (up from 49% in 2024).
- Significant investment continues in AI capabilities, including "AI Studio" and GenAI visibility modules, to integrate data into AI-driven workflows.
- The company expects operating expenses to increase in absolute dollars but decrease as a percentage of revenue over time as operating leverage is realized.
Key Risks & Contingencies:
- Geopolitical Instability: Ongoing conflicts in Israel (Hamas, Hezbollah, Iran) and the war in Ukraine pose risks to operations, employee availability (reserve duty), and regional economic stability.
- AI & Data Regulation: Evolving regulations regarding AI (EU AI Act), data privacy (GDPR, CCPA), and the potential classification of alternative data as Material Non-Public Information (MNPI) could impact business models and increase compliance costs.
- Competition: Intense competition from large technology platforms (Google, Microsoft, Amazon) and specialized competitors, with risks of feature bundling or AI-driven disruption of traditional search-based data.
- Profitability: While profitable on a Non-GAAP basis, the company reported a GAAP net loss of $32.9 million in 2025. Sustaining GAAP profitability depends on revenue growth outpacing expense increases.
Investor Verification Checklist
- GAAP vs. Non-GAAP Reconciliation: Verify the adjustments made to reach Non-GAAP operating income ($9.1M), specifically the treatment of share-based compensation ($21.2M) and retention payments ($7.9M) related to acquisitions.
- Foreign Exchange Sensitivity: Assess the impact of NIS volatility on future margins, given that ~35% of expenses are denominated in NIS while revenue is primarily in USD.
- Acquisition Integration: Review the performance and integration status of the four 2025 acquisitions (Signal Insights, The Search Monitor, Wincher, Admetricks) to ensure they contribute to revenue growth without excessive amortization drag.
- Deferred Revenue & Remaining Performance Obligations: Analyze the $288.8 million in remaining performance obligations as an indicator of future revenue visibility.
- Geopolitical Exposure: Evaluate the specific operational continuity plans for Israel and Ukraine, including the impact of military reserve call-ups on the engineering and sales workforce.