Each Tuesday, we reverse-engineer a real SaaS company's revenue, profit, CAC, funnels, and its top growth tactic.
Sign up to access all features
Sign up with GoogleSign up with LinkedInAlready have an account? Log in
GetLatka is trusted by 200k+ founders, researchers, and marketers.
No contracts, cancel at any time
Boston, Massachusetts, United States
SEMrush is a US-based online visibility management and content marketing SaaS platform that provides marketing analytics software solutions for businesses. The platform allows businesses to track their online presence, measure their website's performance, conduct competitor analysis, and monitor social media and advertising campaigns. SEMrush's solution includes features such as keyword research, site audit, backlink analysis, and PPC research. The company's mission is to help businesses grow their online presence and improve their digital marketing efforts through data-driven insights. SEMrush is headquartered in Boston and has offices in St. Petersburg, Prague, and Cyprus.
Last updated
In 2024, SEMrush's revenue reached $330M. The company previously reported $254M in 2022. Since its launch in 2008, SEMrush has shown consistent revenue growth.
SEMrush reached a $200M valuation in 2018, set during its Series A round.
SEMrush has raised $40M in total funding across 1 round, most recently a $40M Series A round in 2018.
| Year | Round | Amount | Valuation | % Sold | Source |
|---|---|---|---|---|---|
| 2018 | Series A | $40M | $200M | 20% |
| Question | Answer |
|---|---|
| What's your age? | 35 |
| Favorite online tool? | - |
| Favorite book? | - |
| Favorite CEO? | - |
| Advice for 20 year old self | - |
SEMrush serves 104K customers.
SEMrush employs approximately 1.4K people as of 2026, down from 1.6K in 2023, including 136 sales reps that carry a quota. It serves 104K customers that rely on its solutions.
SEMrush generates $330M in revenue.
The CEO of SEMrush is Oleg Shchegolev.
SEMrush raised $40M across 1 round.
SEMrush has 1.4K employees.
SEMrush is headquartered in Boston, Massachusetts, United States.
SEMrush operates across multiple industries. Browse revenue, funding, and growth data for SEMrush in each sector below.
quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording what was it like ringing that that Bell in the middle of Co our CEO he was extremely upset this whole chart has kind of my pride and [Music] joy hey folks folks if we haven't met yet my name is Nathan Latka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders total $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview Eugene thanks for being here man all right I'm not lying right you'll share more data since we've got a more curated audience yeah we're we're public so so if I share something I'm not supposed to share you can not trade our stock fair enough fair enough so um I want to first start uh and just jump right into the revenue graph right so you guys see the company really got going what was actually first year was it 2013 when I've met Founders 14 2014 is when you met the founders and what was the size of the Angel check you put into the company uh so actually they didn't take my money they just offered me a job okay I I pursued them for two years but they were so profitable the the margin was like 40% they didn't know what to do with money so I said why why don't we do this way I figure out how to speed up business and use more capital and you give me shares okay got it so can you tell me what they ended up comping you what what percent of the company did you own back then I mean it's all public so I um in total I own uh at at the peak I owned about 2% 2% of the company okay great so you get going uh the company is scaling you see here and I got that right right over 300 million bucks of Revenue today yeah absolutely okay great so not Revenue AR ARR AR over the next 20 minutes uh you know I studied the the public calls we talked obviously before we want to go deep on a couple sections pricing growth and then the IPOs so starting on pricing this was the original pricing page it was before your time slightly I think right well let me go back I want you guys to zoom in if you can read it can you guys read the price in the little yellow box is that big enough it's $49.95 a month that's what that's what these guys launch with and maybe can you describe the makeup of the two co-founders are they Tech or business they're old Tech Engineers by trade uh when uh when they first launched Sam Rush actually they used it for other businesses in traffic Arbitrage space so they needed research tool to figure out where to buy traffic and whom to sell it to um and data was just so good that a lot of people started approaching them and asking an access to this and that's how they've launched Sam rush but they they didn't really know how to properly monetize so I think they were giving away just too much of a value you guys can't read this I'm going to read it to you you'll see Sam Rush was designed by the developers of SEO Digger and SEO Quake for Google organic so they had sort of these micro tools and to make them win they built the side project the side project ends up winning it's why we talk so much today about go build a side project in the zoom Marketplace in the stripe Marketplace in the HubSpot Marketplace because you just don't know where it's going to lead these guys ended up sitting on obviously what we now know now as a gold mine back then 20 million domains uh and you can see 85,000 users uh one of the early go to market motions was this affiliate Playbook so I'll let you guys squint in and read what the affiliate the original affiliate motion was do you guys have an affiliate program today did this work still still have uh it's not as big as it used to be but I think early on that was extremely important uh the way affiliate marketing in in B2B SAS works is not that people will sell your product for you but if they want to write some kind of article having affiliate program gives them extra incentive to write about you so uh for us it really helped to spread the message it would never work if product was not good but because product was so good affiliate network was a huge boost early on now it's of course a smaller part of the so at its peak how much revenue did Affiliates bring the business oh at its peak probably a third a third of and what year was the peak do you remember like that was around 2012 2013 all right so 2012 13 and what was Revenue back then I that green bar is too small ah I mean so couple million was a couple of million three three three four million okay so affiliate sck off now do you still pay today at scale 40% of monthly recuring Revenue back out to Affiliates we had to so that's that's uh actually something that I don't recommend to do so do Perpetual 40% we did it because maybe early on we're a little bit desperate um it was a phenomenal deal for Affiliates it attracted a lot of really great people but Perpetual fees they sort of incentivize people to kind of grab something and do nothing with it because they just uh get paid forever so we had to change this Perpetual fee and now we reward people for bringing new customers but we don't pay pay Perpetual Revenue share so what do they get now uh right now there's just CPA so you you get you get paid for uh registration for trial and for new paid customer and there are diff you know different tiers and also depends on Country so so you know new paying customer in the United States more expensive than in let's say southeast Asia uh but uh if I'm not mistaken it's a couple like for the whole thing you'll get a couple hundred dollars Greg had hosted a great dinner last night a practical founder Jenner and we're always looking for unique ways to bootstrap early on this was would you say a key way you got early Revenue without outside funding absolutely 100% recommend just don't do Perpetual fee do maybe two years 3 years not perpetual there you go have an end date there um you then did raise outside funding right Boston a Boston Business Journal covered this here uh talk to me about what it was like the day you signed this $40 million term sheet so that was a second round we we did a little bit of a smaller deal before that but the second deal with great craftt was $40 million uh was also partially secondary so uh how much was secondary I I don't recall but it's all in public did you take money out on that second not me no did you fire anyone that took money out you said oh you don't believe in the vision no that would be we didn't have to do that yeah that's that's good okay so so you get this done how much of the company did you sell in this round do you remember um yeah the valuation was uh around 200 mil 200 okay great got it so 20 25% of the company is what you're selling there now moving forward I want to talk about this because everyone knows this graph right and it's all about for each cohort of customers you sign up how does revenue expand or contract what does Net dollar retention look like like over time the dark red bar you see here is basically the CT of customers you you guys signed up before 2016 and what we see especially like with the blue bar is um you're signing up more customers faster but you're also getting them to pay more faster how is that happening so th yeah this this whole chart is kind of my pride and joy because um when when I joined it it didn't necessarily look this way so we had to work a lot on monetization uh early on we would sort of get customer through the door very quickly recover customer acquisition cost very fast generate a lot of cash but we didn't Focus that much on expansion so when I joined we changed monetization entirely um to drive more expansion down the line and uh you know at at the peak we got over um over 120% net revenue retention which is like for SMB martech business is is just phenomenal um what's the guidance you've given this year in terms of where you guys think you'll come out in terms of nrr ah we don't guide nrr the last quarter was 107 okay 107 got it interesting so we'll come back to this chart in a second with some more recent cohorts but I want to go back to what you guys were selling in 2020 uh this was the headline uh do you remember this headline you've moved away from this since then a little bit because I I think when you say you do allinone people don't understand what you're really doing so um you want to be a little bit more specific about about the the portfolio of products and also sometimes you know in in a at the top of the landing page you want to be more of a uh call to action um but if you look at what we're selling it's actually in the middle so so different toolkits um you know ASO social media content marketing competitive intelligence so still uh very successfully sell all those products and add in more and more and more and now aging tons of AI features and you know so on and we'll jump more into the AI but having a product Suite obviously product features is great getting customers to actually use all five product features is a different story and a key way to get people to use all five features is to make sure you structure your pricing so this new and updated pricing page looks a lot different from $49.95 back in 2010 how did you go from $49.95 to this uh really first first time we did Big pricing changes we just did it through experimentation so we tried new price we checked if there's a difference in conversion rate how this difference in conversion rate compares to the gain in average revenue per customer how we retain customers down the line experience was extremely successful we just rolled it out M the second time board challenged us a little bit more to to do it in a more scientific way so we worked with guys at a company called profit well MH um and and we did a lot of customer surveys and not just surveying semrush customers existing customers but people who are you know in the market for products like this and and got a lot of price sensitivity and packaging studies and then we made a decision uh you know around around this price can you guys if you look really closely at the descriptions under each price point do you see anything sort of interesting or very non-standard if you look at the descriptions under each pricing plan most most Pages like this they'll you'll see numbers it'll say you know number of contacts one and then 50 and then there's real utility based upselling I imagine it was an intentional choice you avoided that in this screenshot why right our our value metrics um they're let let's put this way for for for someone who is just buying this first time they're not obvious they make sense once you use the product early on if I tell you you can have X keywords or X projects it doesn't really tell you much and then also you know we had uh value metrics like number of reports per page which is again if you haven't seen the the product you don't know what what is the value of report per page so we f fused on functionality you know actual problems that you can solve with the product rather than you know value metrics because product is I think more complex than your average product you talk about startups and Freelancers in that first plan it talks way more to the emot from an emotional perspective to the folks that should be buying each sort of price point but it still worked because we see your average revenue per user especially on obviously the ACV basis growing year after year talk to me about what the team looks like that's in charge of driving this kind of expans mention in firste ACV so on a strategic level it's really me and our coo and we do a lot of kind of high level planning so we designed really uh kind of three axis expansion model so axis number one is we want people to move between core plans and those this is primarily usage based uh and then second uh access is number of users that we buy so we think about viral hooks how to how to sort of convince people to invite their colleagues to work together because we have so much functionality that different teams in the marketing division can use products Al together uh and then the third axis is we're um we have certain products like our local listings product they're not for everyone so it doesn't make sense to put them on uh kind of main plan core plan but it makes sense to sell them as an add-on so we we design portfolio of add-ons and then give this information to our R&D teams and we have a lot of R&D teams and they independently uh kind of Drive strategy in all of those kind of three uh directions what percent of that $2,000 average year price point is our add-on upsells versus the core base pricing do you know actually all those three a is roughly third so a third a third oh wow okay so it's working it's going well 2021 comes around it's in the middle of Co you guys say we hit 67,000 paying customers let's IPO you are if you look at the guy in the purple in the middle you are two to the left what was it like ringing that that Bell in the middle of Co it was uh fantastic once once in the lifetime experience highly recommend to everyone who can do that for me for me it was like thank you for the big takeaway eugi we breaking news on the main stage it's ass open that's great you go public the Market's loving you right the Market's Loving You competitors say amazing things right Rand is running Ms and he's going how the hell do these SCM Rush folks grow so quickly this must have felt nice that felt we we always uh want to have really good relationships with people especially with Rand he's actually a customer so why didn't sem Rush uh bid on the MZ acquisition uh growth was not there so for us it would be have been very dilutive and um you know we went public right but we're not a uh large cap company and uh you know depending on the day we're we're let's say around small cap and maybe sometimes we touch you know midcap um but the problem with um you know small cap is is that if you're a small cap you have to be growth there there are no I haven't met investors who do small cap value so you need to grow and if you buy company like in this case MZ that doesn't grow and give them the numbers really quick Moz is doing about how much revenue how much grow uh so so MZ was around 100 Mil um but when when they were selling now they're smaller so now million of Revenue yeah now they're probably around 70 mhm uh but if we bought them we would combine a fast growing business with with business that is sizable but not growing so your total growth Goes Down And like I said if you're a small cap you you're really price based on growth um rather than anything else so it it just was was a deal where you combine two companies and and some of of the two is less than uh both of them separately so you're growing Revenue 67,000 paying customers you go public it's the middle of Co no one else is going public your competitor saying nice things but the Press then just like shit's all over you stocks crashes 20% on day one what is that like do you have the emotional sort of do you ignore it or how do you get around that listen uh so our CEO he was extremely upset I I I I don't recall be seeing him so upset because for him from this article or from the stock from the stock yeah like we we didn't have time to read anything so just we just saw the the stock price you know investors call you and like what's going on what's going on and um so he was a bit upset um and and I understand why it's kind of like you have a baby and you ba you know bring your your baby like your daughter to the ball and nobody wants to dance with your daughter so it's not it's not nice and um for me I was the happiest man in the world cuz like I I did it for me you know 20% whatever markets go up and down but we did it how many people were you know on your Stock Exchange rang the bell it's it's a very very small CL of of Executives and I was just so privileged to be part of that and I felt phenomenal but I think like I said if if you're a founder and that happens probably not nice but also you know couple month later we were trading way above IPO price everyone forgot about this you get through it nicely and your co-arts continue to expand right 116% net dollar retention you're seeing these bands thicken which is a sign that again that expansion is happening faster um one of the way or maybe can you talk maybe about that 2022 cohort that green one there this is sort of how you placed yourself and how you talk about yourself in the market how were you growing the dollars that each company was paying you so fast in 2020 so in 2020 you kind of sorry 2022 oh yeah 2022 yeah you you kind of have to sort of what people sometimes people says hide inside your existing user base so we kept acquiring a lot of new customers but our focus in 22 was um on kind of especially towards the end of the year um to really start focusing on existing relationships happy customers that we already have and uh offering them additional products in our portfolio that they haven't used before because uh we felt our portfolio matured enough uh and we started pushing uh those kind of attach rates across our loyal customers especially those customers who are both loyal and sizable companies let's say over 50 uh employees many publicly traded SAS companies will quote sort of buy down their Market horizontal vertical integration are the logos on this page also your m&a targets oh no that's just uh ecosystem I think that's that's kind of like complimentary companies unfortunately most of them are much bigger than Sam I would love to buy hopspot but I don't think they would they would consider you didn't did you bid on the optimizely deal uh no no I haven't seen I mean I I knew that was happening but I was not active did you guys seriously analyze the deal or no no not really okay so you don't actively think about hey what's the what's further down the final look that can drive our m&a strategy uh we do but we we we look horizontally so kind of the the the top the top line on this chart uh we don't think uh ver kind of not vertically but this CH down the funnel yeah we do um like I said it's just the problem with those markets that are above and below um oh sorry in this case below so web analytics CRM systems they older markets so leaders in those markets are much bigger and buying not a leader is is challenging MH so MH nailed it I mean look but the numbers speak for themselves this was from a 2023 June slide deck it was the last time that you guys published this kind of data why did you stop publishing this kind of data I I think we'll do it again it's um it's really I I think we've changed our investor relations person and and they they kind of choose what goes on those sides see I see fair enough but we will we'll be sharing way more information soon we we um we want to do a little bit more on the segmentation side so I think a lot of people think about our business as S&B business but we actually sell across the board we have uh more than 30% of Fortune 500 companies um and we uh have uh at least 5,000 existing accounts who are companies with more than 500 employees so those segments this sort 500 plus employee segment behaves totally different compared to the rest of the user base so we we want to start um kind of showing metrics a little bit differently so people can can see how SNB business behaves and and how Enterprise business behaves and in terms of arpo expansion right when you have 100,000 paying customers if you can launch a new product line or acquire another company and upsell and AD C 100 bucks per customer per month that's 10 million bucks of new Mr uh which is obviously you know great playbook for any publicly traded SAS company you also come in in terms of pretty healthy economics in terms of AR per employee right at the average of most publicly traded SAS companies at least on this chart about 170,000 bucks now you're feeling the go forward strategy with this kind of communication right so so talk a little bit about your product strategy moving forward maybe touch on AI a bit so in in terms of messaging um like I said people don't want to buy tools in general people want to buy solutions to their problems so that's why we've changed message a little bit uh we started you know talking less about what we sell and showing more so there are more visual components on this page if you scroll down that that actually provide more of a screenshots of functionality so people get the idea um and then of course everyone is adding a lot of AI features we've been adding a lot of AI features probably before other people we've been using GPT since version two in production environment in in our writing assistant products um but for me it's kind of like a new iteration of technology that is available for people to build things kind of like cloud computing was back in the day and uh for some applications makes perfect sense for some applications it does make sense so what we're telling our R&D teams right now when it comes to AI look at actual customer problems that can be solved better with AI and there are tons of them so for example we've launched reply to review feature in our local listings product so small businesses can put their Communications on autopilot and if they have a bad review someone instantly replies on their behalf and tries to make things right for a customer and sold down by AI um we have improved rights and assistant product where people can create content that ranks really well in search engines in the matter of minutes um and we also automated load of reporting where previously you had to go through 20 pages of different PDF reports or dashboards and now we just give you you know let's say couple paragraph of summary so you know the most important things that have happened during the period as we wrap up uh this is your stock price over the past you know call it X many of years you're despite 100 million bucks of more Revenue the stock price is still the exact same basically as it was when you guys went public an employee I mean you have inside I mean you know you you have inside information you're in leadership for the employee that has options and they're seeing this how do you communicate to them listen stay patient focus on longterm don't get stuck in the day-to-day yeah I I think what we had to do and you know maybe a lot of companies had to do we uh switched a little bit not necessarily switched but we changed the the proportion between uh stock options and rsus so we we told people if you if you want to get little a little bit more now but you know less less upside which which you could kind of get with options we we can do it so you do rsus so we did more rsus during this period so yeah otherwise you have to just reissue options every time price goes down goes up so people to make sure people not get obsessed with with stock chart and you don't want them to monitor your stock price every day so so we've talked about new user expansion new product already the last thing I want to touch on before we wrap is you many in the public and anal say you guys spend a fortune relative to other publicly traded Founders on marketing and sales uh the audience can see the data here on the screen uh how would you respond to that well you you got to eat your own dog food right if we're a marketing technology company we have to show people how to sell you know spend uh money on marketing efficiently um you know that said when when you have um macro environment where money is effectively cheap you can spend a little bit more and you can have certain efficiency targets and then then when capital is scarce then you switch and and you change your efficiency targets and as you switch those efficiency Target you start making a lot of profit so if you if you think about our last couple quarters and and our guidance for this year uh we're going to be very very profitable um or at least we're guiding to be you know um so I'm joking uh but but but honestly the Robin Hood apps are opening up right now now uh congratulations on 2023 for profitable year which is great yeah last couple quarters I think if you look at year-over-year we just showed phenomenal year-over-year Improvement in profitability and that's again because we know how to spend money efficiently so uh earlier in uh 20 uh 2023 and and late 22 we reallocated a lot of capital from Paid marketing to organic marketing and organic marketing Works different with paid you kind of spend money and you get results right away and with Organic um you spend money upo and then you see results a little bit later it's kind of like renting versus building a house uh paid media is like renting you pay you get results you stop paying they kick you out you have nothing and then with building house you it takes time to get a foundation right but once you get it it just yours and and you keep getting the benefit of having the asset um so that's another reason why we were able to improve profitability and marketing efficiency so fast as he wanted to invest back in 2014 the founders said no they hired him instead he owned about 2% of the company at its peak before going up and iping in the middle of Co I mean crazy bravery 2021 IPO Stockton takes a 20% on day one they stable the ship net dollar retention growing nicely as they keep building out their product road map real AI play now real expansion happening from $2,000 acvs to 2500 uh and above now getting more into AI and profitability guys give it up for Eugene from semm Rush Eugene thank you appreciate it man great job after for you
All figures on this page are taken directly from interviews or are estimates from public sources and proprietary models. Not financial advice. Read full disclaimer.
Claim this profile
Web.com has moved to Network Solutions. Looking for customer support? Please visit our website...
ConcertAI is an AI-powered SaaS data company in healthcare that develops medical research tool in...
Platform for the greatest products from the past, present and future.
TransferMate is a leading provider of embedded B2B payments infrastructure-as-a-service, making...
Valuation
$200M
2024 Revenue
$330M
Customers
104K
Funding
$40M
Avg ACV
$3.2K
Team
1.4K
Founded
2008
| Year | Milestone | Source |
|---|---|---|
| 2024 | SEMrush Hit $330m revenue in March 2024 | |
| 2022 | SEMrush Hit $254m revenue in June 2022 | |
| 2020 | SEMrush Hit $124.9m revenue in December 2020 | |
| 2020 | SEMrush Hit $101.5m revenue in April 2020 | |
| 2019 | SEMrush Hit $92.1m revenue in December 2019 | |
| 2018 | SEMrush Hit $64.8m revenue in May 2018 | |
| 2008 | Launched with $0 revenue |
| Year | Milestone | Source |
|---|---|---|
| 2024 | Reached 1.4K employees (December 2024) | |
| 2024 | Reached 1.5K employees (March 2024) | |
| 2023 | Reached 1.6K employees (July 2023) | |
| 2020 | Reached 3 employees (December 2020) | |
| 2020 | Reached 3 employees (June 2020) | |
| 2020 | Reached 800 employees (April 2020) | |
| 2019 | Reached 246 employees (December 2019) | |
| 2018 | Reached 1 employees (December 2018) | |
| 2018 | Reached 500 employees (May 2018) |
you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is eugene levin he's one of the first investors to spot a company called sem rush after joining the company as a chief strategy officer he helped to more than quadruple company revenue and raised over 40 million dollars from tier one investors before that he was a partner at target global a pan-european venture fund that invested in the consumer internet space all right eugene you already take it to the top yeah absolutely happy to do that all right so for folks that have don't know what sem rush does what's the product do we help companies to improve their online visibility from you know search engine optimization where we became household name over the last 10 years to you know things like pay-per-click digital advertising uh social media digital pr and so on so technically we try to help people with everything everything related to our top of the funnel okay and when you came on back in may of 2018 you shared the company was founded in 2008 when did you join i joined in 16. okay 2016. okay got it so you've been there obviously three four years now at this point and uh you also shared at that point that the company had raised about 40 million bucks have you guys been able to grow with just that money or did you raise additional capital uh we we raised some money but frankly speaking we didn't touch you know this this uh this round it's it's pretty much every all on the balance sheet um we have been bootstrapped company from the very beginning uh very healthy economics and um we didn't really need extra capital we used it more as as um you know safety net to allow us uh run more experiments however most of those experiments proved to be successful so we didn't need this safety net at any point i mean more than more than 30 million bucks that 40 million is still sitting in the bank doing nothing i'm not doing nothing i think i think you know in times like this it's actually very uh comforting to have additional 30 40 million but it's sitting there in the bank basically for you to do whatever you want to do with you haven't spent it or you spent it and already returned money uh yes like sometimes you invest and they just get back very fast so so we we had a couple of those experiments when we started investing new products or writing new types of uh marketing campaigns but they paid back very fast so yeah okay so how do you let's go back to kind of like pre-virus right when founders come on the show and say like we raised a bunch of capital we didn't touch it like they say that and i can tell when they say it they're saying it's a sign of strength but in my mind i can't help think well that's pretty stupid you just got diluted for nothing right so like how do you balance the fact that like you don't need money but you still got diluted you're an xvc yeah so so the the method is very simple as company gets bigger uh technically you want to have certain amount of money on the balance sheet comparable to your revenue like monthly revenue or you know better say monthly expenses sure in case things happen you want to be able to to run the business for a while so i think when i joined we were in a situation where we had money in the bank and we were profitable but that was not comparable to our revenue and expenses so that gives you very low room for any sort of errors um so i think when people think about their their cash position um you know in in the world where you're a vc funded company and and the reality is you have like 18 months of runway and you know nothing nothing going to change that um is this reality is very different comparing to bootstrap business where you you put all your life you've built over years and you don't want to take those types of risks so you want to have a little bit more on a balance sheet in case you know hard times come to be prepared so you joined in 2016 you guys raised the 40 million in two years later in 2018. i assume you played a critical role and figure out how much to raise what was the right amount what was that actual runway number for you were you targeting 18 months of runway to cover burn 24 months what was it um no i mean we so we we thought about this in a way that you know we will have a couple months off of our runway on a balance sheet if if we have zero revenue like we can you know if there is no revenue we still can do this for you know a couple months at least okay but without this money it would be less than a month so so we we actually had very very um uh good cash management but uh you know amount of cash that we had on the balance sheet was not comparable to monthly revenue and monthly expenses i'm just trying to i'm digging here to try and understand exactly what you're saying so what i'm hearing you say is you went out and raised 40 million bucks to assume a catastrophe hit you had no new no revenue at all coming in not no new revenue no revenue at all coming in for several months you'd be able to pay all your expenses for five to eight months is that accurate yeah kind of kind of like that yeah okay i mean so 40 million divided by like five or six months that i mean basically what i'm hearing you say is you guys were burning like eight nine million bucks a month with no revenue i i mean no probably less probably less than that but i mean i i don't remember from top of my head back back in the day you know i came in 16 um it took us one one year to close everything we also didn't take all the money in one sort of transfer so um i i would say four or five months yeah that would give us four or five months of runway without any revenue okay i mean so can i take 40 million divided by four or five months i mean that you're basically saying yeah go ahead no no that i mean if you if you think about that um there are also like you see cash where it's not the same way as revenue that comes in right right like um and there are different revenue recognition policies the right expenses that you already paid for there are expenses that you paid over time but yeah i mean um and as i said we didn't raise 14 million from the very beginning so we we announced it later but um it was actually multiple different uh transactions with more or less the same group of investors so okay so well so explain to me how that works so you don't hear about that often so how much was the first tranche and why did you guys decide to go kind of the step approach so so yeah i mean technically we just wanted to be super friendly with with investors because we knew we would not spend money so so they had an obligation to fund a certain point but there was no big difference if money sits on their balance sheet or not not even balance sheet or on our balance sheet or this is with them in this case they can optimize their you know irr which is one of their main metrics and we don't really care so we could negotiate a better valiation because we are you see you see the point like for investors well so how much how much was how much was the first tranche yeah i mean i i think we cannot disclose it publicly okay but but like okay how many tranches were there totaled to get up to the total 40 million um so do do the whole thing probably three or four and what were they tied to revenue targets or just a time time-based approach just just time okay got it okay fair enough so yeah so you gotta just clarify it's it's not conditional it's just it's just we allowed them to to send money later because we we knew we would not need them yeah yeah that's what i was trying to get at okay so 40 million total raised it was in four tranches you didn't need all the capital but you wanted that contractual commitment and you said hey it's totally cool if you you know send us it in four tranches every six months not conditional and revenue targets just time based i see okay very good so talk to me about some of these experiments you guys ran that panned out like super quickly and returned a lot of cash what were some of the first experiments you ran in 2018 when you closed uh we we started experimenting with the new marketing channels we started doing more youtube uh we dramatically expanded our global footprint so we started hiring people to run marketing for um you know european markets such as germany italy spain france and so on so um it's um you know those those were the the first things that we tried but then we started investing more in product uh product takes more time to kind of show result and some of things that we started doing in 16 they actually started paying off only 18 or 19 uh you know things like uh our traffic analytics product we we've been building it for two three years it's extremely complicated technology uh so it took us quite a while to get everything running uh but now it's actually one of the fastest growing product clients that we ever had so yeah i mean that's that's kind of in a nutshell what what we started doing once we had more flexibility and could take more risks and now that some of these product lines have matured it's that they obviously attract new and different sorts of customers how many total customers are you serving now today um yeah yeah i mean i don't think we just closed this number ever but uh we have over five million registered users and then yeah by paying customers would be relatively small percentage of total registered users okay but you know it's you know it's it's obviously you know tens of thousands uh got it so the reason i'm asking last time you came on you said you had about thirty thousand paid customers so how many more than thirty thousand do you know have which you're really more okay like more than double um probably probably not you know probably not okay probably not more than double okay so fair i won't push you harder here but fair to say today somewhere between thirty thousand and sixty thousand paying customers and five million registered users yep okay how do you convert a registered use like what's the critical moment that you know a registered user has to hit to drastically increase the likelihood they can work to paid um it really depends we have multiple different funnels it depends on what problem users are coming with so for things like keyword research we'll give a certain functionality for free certain amount of data for free and then as people hit the limit uh they will you know either upgrade or you know sometimes wait another day we we limit number of searches that you can make on a on a free plan per day or we also limit number of results that we show for example for free we'll show you 10 results if you want to more than 10 you have to upgrade so so that would be sort of final for keyword research but for site audit it will be different facilitate for example we will allow you to crawl 20 pages for free so if your website is less than 20 pages you can use it for free um pretty much forever but if your website is bigger then you'll hit the limit and you know either upgrade or you know don't crawl your whole website and just limit your site audit to some sections um so yeah i mean we have we have more than 15 different different funnels for 15 different products or funnels yeah finals i mean final can include multiple products how many products do you guys have over 40 right now over 40. yeah holy crap so with all these additional products obviously you're launching them to hopefully cross sell and also bring in new customers has the average price that your average customer has paid increased drastically over the past couple years yeah i think i think if you if you look back you know to 2008 i think comparing to the first version of the product that we had uh our better revenue per customer increased uh more than six times probably closer to seven times yeah after i joined you know i i want to say i want to say almost doubled okay yeah back back in may again when you came on you said you put a target said hey you know the average customer pays somewhere around 180 on average per month i'm sure there's some way bigger there's probably some that are smaller but 180 on average has that 180 increased drastically or no so so yeah it depends on cohorts so there are two factors here um so people you know people uh come in and then over time they they upgrade another factor is that your low-paying customers churn faster than your uh you know your best customers who pay more so i think you know every check in general is a combination of those factors if you do nothing if you if you stop acquiring new customers over time your average check goes out but what's the point right so i think it's you know you need to think about this on a cohort basis but yeah i think you know those cohorts that that were you know at let's say for example 180 uh they continued growing so new cohorts they they're probably still climbing to this number well so the reason i'm asking is like one of the things that drives a lot of hubspot's earning calls is there are poo right average revenue per user and they have like way more cohorts than you but they don't obviously go into detail on every single co-worker the quick way to measure that is just arpu across all cohorts so total customers into total revenue is that about 180 today um no probably not hi by the way i i don't know why you have 180 i think i think i i don't think i told this number no you did i have i can pull the quote for you it's no but do you feel like it's higher or lower than that now uh would would depend would depend on a segment but i think overall 180 is um is quite a high number i mean if you look at our price page then we have a plan for hundred dollars plan for two hundred dollars and plan for four hundred dollars uh you can make some assumptions about distribution but you know it's hard to see average being 180 right why is 180 a hard average when your plans go from 100 to 200 to 400 180 seems like it'd be a that makes complete logical sense to me to be 180 yeah okay then why not no i mean i mean you don't usually have everyone on the missile plane right and sorry eugene come on you know you know how these numbers work your xvc rpu's total customer base divided into your total revenue obviously i know there's different cohorts that's like obvious sas 101 stuff it's important you're measuring that i'm just trying to get a general arpu number the reason i'm asking is because some of the firms like you sometimes will intentionally churn lower paying customers and go way enterprise five six thousand dollar a month kind of plans others will go and go way freemium and decrease their price significantly i'm trying to get a general trend yeah listen this i think you know if you're looking for trend this number is absolutely in the range yeah okay that doesn't answer my question so the average cut is you have between 30 000 and 60 000 customers do you feel like because if you take all those customers divided by whatever your revenue is right now it's about 180 per month uh it is it isn't a range yeah okay and are you from a strategic perspective do you feel like sem rush has more growth opportunities serving less customers at a higher price point in the future or more customers at a lower price point so i think um the goal of the business is to help as many marketers as possible in general like that's that's always have been the goal so we even even if we at some point say hey it would make a lot of sense uh to hike prices uh we would not do this because the goal is to have very very broad presence to have as many marketers as possible yes you'd prefer 10 million marketers paying a dollar a month then 10 enterprise clients paying a million a month that's that's in a nutshell yeah the the philosophy okay um but but for for for some of them uh you know they need special features and they're willing to pay for those features um so would we would we build something special for enterprise clients and sell it only to them because only they need this yeah at some point sure uh not necessarily uh our focus right now let's talk more about right now let's talk more about the team so how many folks on the team today um so we have over 800 people okay and are those all full-time yeah and remote right now yes sorry pre-virus do you do are you a remote company no okay got it you have offices all right and break that down for me how many of those folks are engineers yeah so and so we don't call people you know just engineers we we think about this as a product department and then if your role is engineer that's does how many people are writing code so so that's what i'm trying to say code is not the only important thing in the product so in product department overall we have more than 200 people now out of them how many write code probably 75 percent okay so called 170 ish people writing code how many do you have quota carrying reps at this price point or is it too cheap to pay a commission we do no we have as i said some segments of customers pay a lot of money have customers to pay more than a hundred thousand per year yeah you don't have any customers paying more than a million per year though right oh no but close maybe in the next couple years not yet all right so how many quarter carrying reps do you have so we have i think roughly around 60 so let's see okay cool and what's like the minimum acv sizes you want them focused on closing um we we don't have minimals we we had we had previously requirement to close at least annual subscription uh right now we don't have this uh whatever whatever they sell is good one of those sales reps so if they spend three hours selling someone on a 200 a month plan that is not profitable use of their time yeah right so so their incentive plan is focused on things that are more profitable um especially expansion so so we we find that if if customer sells new revenue that's good but new revenue is is subject to higher churn if sales rep sells to existing customer who is loyal very unlikely to churn then you know one dollar of expansion is going to stay with us forever and then what we've noticed is that if people expand it they're more likely to continue expanding so so that's where we now try to focus our sales teams so what is it what on a percentage basis what is expansion revenue annually today um not sure understand like can you can you sure so so so net net revenue retention in any company is made up from two is made from two components gross revenue churn and expansion right so so we we measure kind of one number like net net revenue retention and then the question is what what do you include what you don't include and we have roughly you know six seven different ways to calculate it there are also different definitions of what you call user um you know for example if you have a company like microsoft and they buy six different subscriptions for their six offices is it one customer or no but you're you're talking about logo churn on a customer basis yeah this is why people measure revenue churn it's way simpler you just take total revenue from a co-op last year and that same cohort this year how much turned and how much expanded exactly what i'm trying to say like if it depends on how you define customer because if you say microsoft is one customer no eugene it doesn't matter when you're calculating revenue churn it doesn't matter how many logos are on you're measuring it purely on a revenue basis so it doesn't matter that it's one microsoft logo it means that it's a million dollar year contract so so here we are there is actual difference uh if you let's say someone from microsoft japan let's say signs up and buy subscription they they have separate billing entity so if you combine this into one account you say have expansion for microsoft if you do not combine you say i have new guy in japan who just bought and and his email is microsoft.com but this is new guy because this is new billionaire c so it depends on definitions actually yeah but and as i said we have like six seven but in general we we are above 100 and then we also do segmentation of like uh you know if if if customers um work in a company with more than 50 employees then it will be way way higher than 100 but if they let's say individual uh freelancers with gmail account and so on they will have on average probably lower than 100 so it really depends but on average we we have one hundred percent yeah yep interesting um okay and then so from from the perspective of the virus right obviously everyone wants to be just trying to get to profitability as quickly as possible make sure they can have a long runway here are you guys profitable today uh cash flow positive okay why do you say it so specifically is there some other metric you measure where you're not profitable sure yeah i mean as as many other sas companies if you build people up front uh when you sell annual subscriptions then you get money but you cannot recognize it as revenue as a result your bottom line might be in red but your cash flow might be positive if you have your balance accurately so if you if you take 100 uh if you take a payment today for a thousand dollars for the year which is actually you know 83 per month for a customer you're saying you'll take you'll count the thousand today in this month and when you do that on a cash flow basis you're profitable but if you divide the thousand by 12 months and only recognize it over the next 12 months you might be burning a little capital yep that's that's the difference between you know gap and and uh cash flow yeah right your cash flow your cash flow profitable yep what will you guys grow out this year do you think what what will you guys grow at this year do you think um i had a number before this this crisis so which was which was what you know reasonably reasonably good uh double i would say hi double digit for a company of this size what is that 70 80 no not that high but okay okay so somewhere between 20 percent and 60 right right i mean i mean you see we have 800 people and we have cash flow positive if we grew eighty percent that would be that would be awesome but yeah yeah yeah when do you guys i mean so look i don't know what your actual obviously arr is but i mean can you break a million sorry 100 million dollars in ar this year do you think or you have to wait till next year i mean we talked about this we we did it a long time ago you broke 100 million dollars in arr recognized ar how long ago what year last year okay so that's not a long time ago you haven't been on in over a year and a half so okay so you broke that last year that's on our that's on a record that's on a recognized ar basis not on a cash basis uh yeah yeah okay so how so walk last question before you wrap up yeah i mean the difference is not that huge is maybe one quarter or so maybe a little more than one quarter the last question i want to finish with i think this is valuable you had obviously a growth target pre-virus you have to now re-engineer with your you know team what is the new target how what are those conversations sounded like how are you planning for for the next six months i think you know reality is that if someone tells you they know exactly what's going to happen and how it's going to impact their revenue they're probably not very honest so well no i want you but everyone has to take a guess you can't just say i don't know so we're not going to plan i want to know what you your best your guys's best shot your best estimate yeah so so right now we are looking at a different sound shenzhen and the the big question is like what what's going to happen with a new business and what's going to happen with existing business in terms of churn so in terms of churn we see that certain categories of our customers will be impacted materially and certain categories will not be impacted pretty much at all and uh we look at percentage of customers in those categories uh and uh apply certain uh you know certain multiples like uh you know additional 25 of them will churn versus what we would see uh you know naturally organically and from what we see is that um in some in some categories we will uh have you know 25 percent higher sure in some categories no no changes at all and those categories seem to be relatively small for us so we are talking about you know most vulnerable categories like uh very small agencies freelancers and uh and uh small local businesses so they they we see them being impacted but they're historically not the biggest part of our audience by any means we we usually work more with online businesses yeah yeah very good all right by the way have you been approached have you been approached by any bigger you know maybe public folks like hubspot and said hey we'd love to buy you guys now you we feel like we get you cheaper because everyone's everything's cheap right now so so yeah i think that brings us to the beginning of the conversation we we can you know wait wait wait this one out and we don't have to do any irrational moves um there's there's there's no need for this we uh we're still business that largely owned by founders managed by founders and you know team of uh people who they um assembled over over time uh we don't have to do anything irrational we can wait this one out any plans to raise capital yeah not in this environment probably i don't think it's a good idea all right let's wrap up with the famous five number one favorite business book uh intelligent investor number two is there a ceo you're following or studying um yeah so right now i'm actually looking at sadia nadella yep from microsoft number three what's your favorite online tool besides semrush to build the company um so right now zoom is everyone's favorite yeah right original answer there eugene good stuff number number four how many hours of sleep to eat every night uh so i changed my mind recently now i'm sleeping full eight hours mandatory that's great and what's your situation married single kids still married but you know if if coronavirus continues i i don't know how many kids i'm sure any kids yeah i have one one kiddo and how old are you uh me yeah i'm 32 32. last question what do you wish your 20 year old self knew you know i would i would say you know don't waste your time with stupid things guys there you have it sem rush launched in 2008 now have over 40 products between 30 and 60 000 paying customers over 5 million registered users broke over 100 million dollars in revenue last year hoping to continue to drive solid double-digit growth this year even in the face of the virus they're profitable on a cash basis so i have plenty of runway they can afford to write it out raised 40 million bucks many years ago but didn't need the capital used on some experiments now over 800 people on the team again obviously all remote right now looking to continue to scale eugene thanks for taking us to the top thank you you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now
Finnable is one of the fastest-growing financial technology (Fintech) start-ups providing...
SEMrush Revenue Hits $330M says CEO Oleg Shchegolev
Interview with Oleg Shchegolev, CEO
Recorded Mar 28, 2024
SEMrush Revenue Hits $330M says CEO Oleg Shchegolev
Interview with Oleg Shchegolev, CEO
Recorded May 8, 2018
