Similarweb Ltd. — FY2022 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022, prepared under U.S. GAAP. This is an annual filing, not a standalone fourth-quarter report; Q4 results are not separately presented in the supplied filing text.
Business context
Similarweb provides digital data and analytics through subscription software (SaaS), data feeds and APIs (DaaS), and advisory services. Revenue is primarily subscription-based. The company reported 4,049 paying customers at year-end, up from 3,487 in 2021. No single customer generated more than 5% of revenue.
Key financial results
| Metric (US$ millions, except per-share data) | FY2021 | FY2022 | Change |
|---|---|---|---|
| Revenue | 137.7 | 193.2 | +40.4% |
| Gross profit | 105.9 | 140.0 | +32.1% |
| Gross margin | 76.9% | 72.4% | -4.5 percentage points |
| Operating expenses | 172.0 | 227.8 | +32.4% |
| Operating loss | (66.1) | (87.9) | Loss widened |
| Net loss | (69.0) | (83.7) | Loss widened |
| Net loss per share, basic and diluted | (1.30) | (1.10) | Loss per share narrowed |
| Cash used in operating activities | (27.6) | (46.1) | Use increased |
| Free cash flow (non-GAAP) | (30.4) | (77.2) | Use increased |
FY2022 finance income was $4.4 million, versus finance expense of $1.9 million in FY2021; the company attributed much of the change to foreign-exchange movements, including revaluation of the Israeli lease liability. Income-tax provision was $0.5 million.
Cash and cash equivalents were $77.8 million at year-end, with restricted deposits of $9.8 million, for combined cash, cash equivalents and restricted deposits of $87.6 million, down from $140.4 million in 2021. Total assets were $246.0 million and total liabilities $224.1 million; shareholders’ equity was $22.0 million. Borrowings under the SVB facility were $25.0 million. The filing states the company was in compliance with its financial covenants at year-end.
Material changes and operating metrics
- Revenue increased $55.6 million, mainly from subscription growth. U.S. revenue rose from $61.1 million to $90.9 million; Europe and U.K. revenue together rose from $44.4 million to $57.4 million.
- Cost of revenue grew 67.8% to $53.3 million, faster than revenue. The company cited higher employee costs, third-party data and hosting costs, and acquired-intangible amortization; it attributed gross-margin compression primarily to business combinations and partnerships.
- Operating expenses rose $55.8 million. Higher headcount and compensation were key factors; lower paid-acquisition marketing costs partly offset sales and marketing growth.
- Capital expenditure, net of purchases of property and equipment, was $28.3 million in FY2022, primarily related to the new Israel headquarters. Investing cash outflow was $33.0 million, compared with $7.4 million of investing cash inflow in 2021.
- ARR from customers with contracts of at least $100,000 represented 55% of total ARR, versus 37% in 2018. Multi-year contracts represented 39% of ARR, up from 33% in 2021. The filing describes NRR but the supplied text does not provide a clear numerical FY2022 NRR value.
- The company acquired Internet Marketing Center and Rank Ranger-related assets in 2022 for cash consideration of approximately $4.0 million, subject to adjustments. Remaining contingent consideration related to acquisitions was $3.9 million at year-end.
Outlook, commentary and risks
- Management described its strategy as pursuing growth and profitability together, with plans to continue investing in product development, data, sales, marketing and international expansion while seeking operating leverage and sustained free cash flow. The filing does not provide a clear numerical revenue or earnings guidance target.
- Remaining performance obligations were $171.0 million at year-end; the company expected to recognize 80% as revenue during 2023. This is contracted revenue not yet delivered, not a forecast of total 2023 revenue.
- Management expected operating expenses to increase in absolute dollars in some areas, while research and development, sales and marketing, and general and administrative expenses were expected to decline as a percentage of revenue over time. These statements are forward-looking and subject to risks.
- Cash used in operations and free cash flow worsened as losses and investment increased. The company cited hiring and growth investment; it also reduced its workforce by approximately 10% during the final quarter of 2022 and said further reductions could occur.
- SVB was closed in March 2023, after the reporting date. The company said its facility had been assumed by Silicon Valley Bridge Bank and that it did not then believe the closure materially affected deposits, facility access or operations. It noted that loss of the facility could require alternative financing or use of cash balances. The credit facility is secured by substantially all assets and requires at least $35 million of defined liquidity.
- Key disclosed risks include continued losses and cash consumption; competition and retention; reliance on third-party data and cloud infrastructure; privacy laws and restrictions on automated data collection; possible classification of investor insights as material non-public information; currency exposure; and geopolitical disruption in Israel and Ukraine. A cybersecurity assessment identified material aspects of the company’s security program as risky and not mature; remediation was in progress but incomplete.
- The company reported no current litigation that it believed would have a material adverse effect. It does not expect to pay dividends in the foreseeable future. Management concluded disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Review audited statements and cash-flow trends, particularly the rise in FY2022 free-cash-flow use and the company’s cash runway under different growth and spending scenarios.
- Confirm current cash availability, restricted deposits, SVB/Bridge Bank facility status, borrowing-base availability and compliance with the $35 million liquidity covenant.
- Check subsequent NRR, customer renewals and expansion, ARR growth, and whether the large-customer mix continues to strengthen.
- Assess gross-margin drivers, including data-provider, hosting, acquisition-related and partnership costs, and the effect of headquarters investment.
- Track cybersecurity remediation and data privacy or data-collection developments, including any consequences for data quality, customer demand or legal exposure.
- Review acquisition integration, contingent consideration and any changes to the expected benefits or costs of acquired businesses.
- Do not treat the 2023 remaining-performance-obligation estimate as full-year revenue guidance; the filing provides no clear numerical earnings or revenue guidance.