Similarweb Ltd. Q4 2025 Earnings Call Summary

Revenue growth of 11% fell below guidance primarily due to the delayed closing of two large, complex LLM data training contracts that remain active in the pipeline.

Management achieved a second consecutive year of positive operating profit and ninth quarter of free cash flow through disciplined cost management despite top-line headwinds.

The company successfully transitioned 60% of ARR to multi-year contracts, up from 49%, indicating deeper enterprise embedding and improved revenue visibility.

AI-related revenue reached 11% of total sales in Q4, driven by the portfolio of AI solutions including Gen AI intelligence, AI agents, and MCP integrations.

Net Revenue Retention (NRR) stabilized at 98%, a level management characterized as unsatisfactory, prompting a shift in go-to-market strategy toward a ‘land and expand’ model.

The proprietary data moat is being repositioned as a critical ‘data layer’ for both human researchers and autonomous AI agents through new ecosystem partnerships.

Operational efficiency was prioritized by reducing management layers and optimizing sales talent after 2025 investments failed to yield expected productivity gains.

The 2026 revenue guidance of $305 million to $315 million assumes a prudent stance on market weakness and the timing of lumpy, seven-figure AI deals.

Management is shifting from a ‘build’ phase to a ‘scaling’ phase, focusing on converting one-time AI data evaluations into recurring revenue streams.

A dedicated go-to-market team has been established to target high-growth segments like LLM companies and big tech players to improve forecasting and execution.

The launch of AI Studio is expected to democratize data access for non-technical users, potentially increasing seat adoption and consumption-based monetization.

R&D investment will remain steady at approximately 20% of revenue to maintain data freshness across web, app, search, and emerging chat-based channels.

The partnership with Manus (recently acquired by Meta) serves as a strategic blueprint for embedding Similarweb data into autonomous agent workflows.

Management noted that search traffic is declining globally, creating a tailwind for Similarweb as brands seek visibility into new AI-driven discovery channels.

The company maintains a strong balance sheet with $72 million in cash and no debt, providing flexibility for bolt-on M&A that meets rigorous return criteria.

Sales cycles for large AI contracts are proving longer and more complex than traditional software seats, leading to increased quarterly revenue volatility.