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美国
证券交易委员会
华盛顿特区20549
表格 10-Q
            
☒根据1934年证券交易法第13或15(d)条，季度报告
截至季度结束日期的财务报告2024年9月30日
或者
☐根据1934年证券交易法第13或15(d)条的过渡报告。
第过渡期
委托文件号码：001-40276
Semrush控股有限公司。
密歇根州
特拉华84-4053265
（注册或组织的）提起诉讼的州或其他司法管辖区（如适用）
组建国的驻地
（IRS雇主
（标识号码）
800 Boylston Street, Suite 2475
波士顿, 万事达 02199
(主要执行办公室地址，包括邮政编码)

(800) 851-9959
（注册人的电话号码，包括区号）
根据法案12(b)规定注册的证券:
每一类的名称交易标的在其上注册的交易所的名称
普通股，每股面值0.00001美元SEMR纽约证券交易所
请勾选此项，以指示注册人是否在过去12个月（或者对于注册人需要提交此类文件的期间更短）提交了每个互动数据文件的电子提交文件，该文件根据Regulation S-T的规则405（本章节的§232.405）（或者相当的市场季报表单规则）提交。 ☒ Yes或 ☐ 否
请在以下空格内打勾表示注册人是否已按照规则405条的规定在过去12个月内(或在注册人需要提交这些文件的较短时期内)在每个交互式数据文件上报：☒Yes或 ☐ 否
在登记表上打勾，表示登记者是大型加速报告者、加速报告者、非加速报告者、较小的报告公司或新兴增长公司。请参阅交易所法规规则12亿.2关于“大型加速报告者”，“加速报告者”，“较小报告公司”和“新兴增长公司”的定义。
大型加速报告人☐加速文件提交人☒
非加速文件提交人☐较小的报告公司☐
新兴成长公司☒
                                    
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。 ☐
请使用核对标记来指示是否注册申请公司是壳公司（如《交易所法》第120亿.2条定义）。☐ 是 ☒ 否
截至2024年10月31日， 123,629,504 注册人的A类普通股股份数量及 23,072,256 注册人的B类普通股股份数量，每股面值$0.00001，尚未偿还。



目录

页
第一部分财务信息
项目 1。
项目2。
条目 3。
条款4。
第二部分其他信息
项目 1。
项目1A。
项目2。
项目5。
项目6。







有关前瞻性声明的特别说明
本季度10-Q表格中包含关于我们和我们所在行业的前瞻性声明，涉及重大风险和不确定性。本季度10-Q表格中除了历史事实声明外的所有声明，包括关于我们未来经营业绩、财务状况、业务策略、管理层未来经营计划和目标、我们的市场机遇及市场潜力增长、我们的流动性和资本需求等类似事项的声明，都属于前瞻性声明。在某些情况下，您可以通过这类前瞻性声明中使用诸如“预测”、“相信”、“考虑”、“继续”、“可能”、“估计”、“期望”、“打算”、“可能”、“计划”、“潜在”、“预测”、“项目”、“应该”、“目标”、“将”或“会”等词汇，或这些词汇的否定形式或其他类似术语或表达方式来识别。这些前瞻性声明基于管理层对未来事件的当前预期和假设，这些事件固有地受到难以预测的不确定性、风险和环境变化的影响。本季度10-Q表格中包含的前瞻性声明包括但不限于以下声明：
• 我们未来的财务表现，包括我们的营业收入、年度重复收入（“ARR”）、以美元计算的净收入留存率、营业成本、毛利润或毛利率和营业费用;
• 现金及现金等价物是否足以满足我们的流动性需求;
• 预期我们业务和所处市场的趋势和增长率；
•　　维护我们内部网络和平台的安防-半导体及可用性能力;
• 我们吸引新付费客户并将免费客户转化为付费客户的能力;
• 我们保留和扩大现有付费客户的能力，包括升级到高级订阅和购买附加产品；
• 我们能够访问、收集和分析数据;
• 我们成功扩张到现有市场和新市场的能力;
• 我们有效管理增长和未来支出的能力；
• 我们有能力继续创新和开发新产品和功能，改善我们的数据资产，增强我们的技术能力；
• 我们能够维护、保护和增强我们的知识产权能力;
• 我们建立、维护和增强品牌的能力，包括信息资源、广告和推荐。
• 我们有能力遵守适用于我们业务的修改或新法律法规，包括我们运营的任何新司法管辖区。
• 吸引和留住合格员工和关键人员;
•我们预期在销售和营销以及研发方面的投资;



• 我们成功抵御针对我们提起的诉讼的能力;
• 我们对于识别、评估、执行和整合战略收购以及相关财务考虑的期望，如购买价格分配；和
•    全球金融、经济和政治事件对我们的业务、行业板块和供应链的影响，包括健康流行病、通货膨胀、利率期货波动，市场不确定性和波动。
您不应依赖前瞻性声明作为对未来事件的预测。我们在此季度报告(Form 10-Q)中所包含的前瞻性声明主要基于我们对未来事件和趋势的当前预期和预测，我们认为这些事件和趋势可能会影响我们的业务、财务控制项、业务运营结果和前景。这些前瞻性声明中所描述事件的结果受到风险、不确定性和其他因素的影响，这些因素在我们截至2023年12月31日的年度报告(Form 10-K)中的「风险因素」部分以及此季度报告(Form 10-Q)的其他地方已被描述。此外，我们在一个竞争激烈和快速变化的环境中运营。新的风险和不确定性不时出现，我们无法预测所有可能影响此季度报告(Form 10-Q)中前瞻性声明的风险和不确定性。前瞻性声明中所反映的结果、事件和情况可能无法实现或发生，实际结果、事件或情况可能会与前瞻性声明中所描述的有所重大差异。
本季度报告表格10-Q中所做的展望性陈述仅涉及陈述所做之日期的事件。我们不承担更新本季度报告表格10-Q中所做的任何展望性陈述以反映本季度报告表格10-Q日期后的事件或情况，或以反映新讯息或突发事件的发生的义务，除非法律要求。我们可能无法实际实现在我们的展望性陈述中披露的计划、意图或期望，您不应过度依赖我们的展望性陈述。我们的展望性陈述不反映我们未来任何收购、合并、处分、合资企业或投资可能产生的潜在影响。
此外，表示“我们相信”及类似的陈述反映了我们对相关主题的信念和意见。除非另有声明，这些陈述基于本报告表格10-Q刊登之日可用的资讯。尽管我们认为此类资讯为这些陈述提供了合理依据，但这些资讯可能有限或不完整。我们的陈述不应被解读为表明我们对所有潜在可用的相关信息进行了透彻调查或审查。这些陈述具有固有的不确定性，请慎重依赖。



第1部分 - 财务资讯
项目1. 基本报表
SEMRUSH HOLDINGS, INC.
未经审计的简明综合账目表
（单位：千，每股资料除外）
截至
2024年9月30日2023年12月31日
资产
流动资产合计
现金及现金等价物$45,083 $58,848 
短期投资187,796 179,721 
应收帐款9,344 7,897 
递延合同成本，流动部分9,755 9,074 
预付费用及其他流动资产20,429 10,014 
全部流动资产272,407 265,554 
物业及设备，扣除折旧后净值7,220 6,686 
营业租赁使用权资产11,048 14,069 
无形资产，扣除累计摊销30,746 16,083 
商誉54,299 24,879 
递延合同成本净额，当前部分除外2,722 3,586 
其他长期资产5,355 633 
资产总额$383,797 $331,490 
负债、非控股权益及股东权益
流动负债
应付帐款$11,541 $9,187 
应计费用20,284 19,891 
递延收入68,996 58,310 
营运租赁负债的流动部分4,768 4,274 
其他流动负债7,462 2,817 
流动负债合计113,051 94,479 
透过分期收入取得的未来收入，减去当前部分210 331 
递延所得税负债1,965 839 
扣除当期偿还后之经营租赁负债净额7,315 10,331 
其他长期负债2,261 1,195 
总负债124,802 107,175 
承诺和条件（附注15）
股东权益
A类普通股，$0.00001 面值 - 1,000,000 授权股份数目，以及 123,500 截至2024年9月30日发行并持有的股份； 120,629 已发行流通股本为
1 1 
B类普通股，$0.00001 面值 - 160,000 授权股份数目，以及 23,072 截至2024年9月30日发行并持有的股份； 23,482 已发行流通股本为
— — 
资本公积额额外增资313,924 291,898 
其他综合损益（损失）累积额1,700 (752)
累积亏损(67,107)(71,998)
归属于Semrush Holdings, Inc.的总股东权益。248,518 219,149 
共营子公司中的非控制权益10,477 5,166 
股东权益总额258,995 224,315 
总负债、非控股权益及股东权益$383,797 $331,490 
附注是这些未经审计的简明综合财务报表的一个组成部分。
1

SEMRUSH控股有限公司。
未经审核的综合损益简明综合收支表
（单位：千，每股资料除外）
结束的三个月份：
九月三十日，		九个月结束
九月三十日，
2024202320242023
营收$97,410 $78,718 $274,173 $224,281 
营业成本17,063 13,032 46,665 38,643 
毛利80,347 65,686 227,508 185,638 
营业费用
销售和行销35,689 30,094 104,610 95,827 
研发22,183 14,075 58,775 42,071 
一般和行政20,770 18,769 57,556 56,797 
退出成本— — — 1,292 
总营业费用78,642 62,938 220,941 195,987 
营业收入（亏损）1,705 2,748 6,567 (10,349)
其他收入，净额2,912 2,104 9,167 6,728 
所得（亏损）税前收入4,617 4,852 15,734 (3,621)
所得税费用3,899 637 11,652 2,303 
净利润（亏损）718 4,215 4,082 (5,924)
净损失归属于子公司非控股权益(376)— (809)— 
净利润（亏损）归属于Semrush Holdings, Inc.$1,094 $4,215 $4,891 $(5,924)
每股净利（损）归属于普通股股东—基本：$0.01 $0.03 $0.03 $(0.04)
每股净利（损）归属于普通股股东—稀释：$0.01 $0.03 $0.03 $(0.04)
用于计算每股净利（损）归属于普通股股东—基本的普通股加权平均数目：146,436 142,837 145,563 142,247 
用于计算每股净利（损）归属于普通股股东—稀释的普通股加权平均数目：149,427 146,271 148,653 142,247 
净利润（亏损）$718 $4,215 $4,082 $(5,924)
其他综合损益：
外汇转换调整1,358 (51)754 193 
投资未实现收益（损失）2,626 64 1,698 (1,179)
综合收益（损失）$4,702 $4,228 $6,534 $(6,910)
综合损失归属于合并子公司非控股权益(376)— (809)— 
综合收益（损失）归属于Semrush Holdings, Inc.$5,078 $4,228 $7,343 $(6,910)
    
附注是这些未经审计的简明综合财务报表的一个组成部分。
2

SEMRUSH控股有限公司。
未经审计的可赎回非控制权益及股东权益简明综合财务报表
(以千为单位，除每股数据外)
A类普通股B类普通股
额外
实收
资本
累积其他综合损失
累计
赤字
总计
股东权益
权益
股份金额股份金额
2022年12月31日结余43,743,174 $— 97,843,570 $1 $274,057 $(1,206)$(72,948)$199,904 
将B类普通股转换为A类普通股74,239,844 1 (74,239,844)(1)— — — — 
行使股票期权获发的普通股份88,957 — — — 67 — — 67 
在员工股票购买计划中发行普通股38,879 — — — 264 — — 264 
根据限制性股票单位授予发行普通股71,557 — — — — — — — 
股票基础补偿费用— — — — 2,796 — — 2,796 
累积外汇兑换调整— — — — — 365 — 365 
投资未实现亏损— — — — — (83)— (83)
净损失— — — — — — (9,860)(9,860)
2023年3月31日结余118,182,411 1 23,603,726 — 277,184 (924)(82,808)193,453 
行使股票期权获发的普通股份583,137 — — — 235 — — 235 
根据限制性股票单位授予发行普通股264,920 — — — — — — — 
股票基础补偿费用— — — — 3,765 — — 3,765 
累积外汇兑换调整— — — — — (120)— (120)
投资未实现亏损— — — — — (1,160)— (1,160)
净损失— — — — — — (279)(279)
2023年6月30日的余额119,030,468 $1 23,603,726 $— $281,184 $(2,204)$(83,087)$195,894 
将B类普通股转换为A类普通股175,000 — (175,000)— — — — — 
行使股票期权获发的普通股份325,870 — — — 444 — — 444 
根据限制性股票单位授予发行普通股79,395 — 53,331 — — — — — 
股票基础补偿费用— — — — 4,203 — — 4,203 
累积外汇兑换调整— — — — — (51)— (51)
投资未实现收益— — — — — 64 — 64 
净利润— — — — — — 4,215 4,215 
2023年9月30日的余额119,610,733 $1 23,482,057 $— $285,831 $(2,191)$(78,872)$204,769 



附带附注是这些未经审核的简明合并财务报表中不可或缺的一部分。
3


SEMRUSH控股有限公司。
未经审计的可赎回非控制权益及股东权益简明综合财务报表
(以千为单位，除每股数据外)
可赎回的非控制权益A类普通股B类普通股
额外
实收
资本
累积其他全面收益（损失）
累计
赤字
归属于Semrush Holdings, Inc.的股东权益总额。非控股权益股东权益总计
股份金额股份金额
2023年12月31日余额$— 120,629,147 $1 23,482,057 $— $291,898 $(752)$(71,998)$219,149 $5,166 $224,315 
行使股票期权获发的普通股份— 469,879 — — — 844 — — 844 — 844 
受限股票单位解锁后发行普通股— 145,844 — — — — — — — — — 
股票基础补偿费用— — — — — 5,115 — — 5,115 — 5,115 
累积外汇兑换调整— — — — — — (485)— (485)— (485)
投资未实现亏损— — — — — — (744)— (744)— (744)
净利润— — — — — — — 2,138 2,138 — 2,138 
归属于非控制权益的净亏损— — — — — — — — — (135)(135)
2024年3月31日的余额$— 121,244,870 $1 23,482,057 $— $297,857 $(1,981)$(69,860)$226,017 $5,031 $231,048 
将B类普通股转换为A类普通股— 409,801 — (409,801)— — — — — — — 
行使期权后发行普通股— 720,880 — — — 2,209 — — 2,209 — 2,209 
根据受限股票单位累积普通股— 685,891 — — — — — — — — — 
以股份为基础的薪酬支出— — — — — 7,015 — — 7,015 — 7,015 
累积翻译调整— — — — — — (119)— (119)— (119)
投资未实现亏损— — — — — — (184)— (184)— (184)
净利润— — — — — — — 1,659 1,659 — 1,659 
归属于非控制权益的净亏损— — — — — — — — — (228)(228)
收购可赎回非控制权益（见第9项注记）9,846 — — — — — — — — — — 
归属于可赎回非控股权益的净损失(70)— — — — — — — — — — 
调整为投标要约负债（见第9项注记）(2,021)— — — — — — — — — — 
按赎回价值记录可赎回非控制权益（见第9项注记）978 — — — — (978)— — (978)— (978)
2024年6月30日的结余$8,733 123,061,442 $1 23,072,256 $— $306,103 $(2,284)$(68,201)$235,619 $4,803 $240,422 
根据期权行使发行普通股— 273,882 — — — 647 — — 647 — 647 
根据受限股票单位限制发行普通股— 165,102 — — — — — — — — — 
股票报酬支出— — — — — 7,174 — — 7,174 — 7,174 
累积换算调整— — — — — — 1,358 — 1,358 — 1,358 
投资未实现收益— — — — — — 2,626 — 2,626 — 2,626 
净损失— — — — — — — 1,094 1,094 — 1,094 
归属于非控制权益的净损失— — — — — — — — — (376)(376)
为收购要约义务（请参见注9）进行重分类(1,615)— — — — — — — — — — 
可赎回非控制权益重分类为非控制权益(7,118)— — — — — — — — 7,118 7,118 
收购额外非控制股份— — — — — — — — — (1,068)(1,068)
2024年9月30日的结余$— 123,500,426 $1 23,072,256 $— $313,924 $1,700 $(67,107)$248,518 $10,477 $258,995 
附注是这些未经审计的简明综合财务报表的一个组成部分。
4

SEMRUSH控股有限公司。
未经查核简明财务报表现金流量表
（以千为单位）
九个月结束
九月三十日，
营运活动20242023
净利润（亏损）$4,082 $(5,924)
调整为将净利润（亏损）转换为经营活动提供的现金流量
折旧和摊销费用 7,094 4,807 
延迟合约成本摊提9,163 7,510 
投资的溢价和折扣的摊销（增加）(2,551)(4,667)
非现金租赁费用3,431 2,828 
股票基础补偿费用19,856 10,764 
非现金利息费用— 158 
其他收入中包含的公允价值变动，净额(633)(335)
递延税款(286)12 
其他非现金项目1,457 771 
营运资产和负债的变动
应收帐款(301)(2,261)
延滞合同成本(8,980)(9,835)
预付费用及其他流动资产(3,495)(5,411)
应付帐款1,939 (5,570)
应计费用1,296 174 
其他流动负债(527)— 
递延收入6,852 6,198 
其他长期负债84 — 
营运租赁负债变动(3,418)(2,786)
净现金提供（使用于）营运活动35,063 (3,567)
投资活动
购买不动产和设备(3,411)(1,065)
资本化内部使用软体成本(5,842)(3,913)
购买短期投资(136,768)(182,381)
短期投资出售及到期收回之收益132,500 154,741 
可转换债务证券的购买(3,650)(319)
投资贷款应收款的资金(7,757)— 
收购企业支付的现金，扣除取得的现金净额(21,082)(1,232)
购买非控制性权益(4,870)— 
购买其他投资(196)(150)
投资活动中使用的净现金(51,076)(34,319)
融资活动
行使股票期权所得3,700 746 
与员工股票购买计划相关的股份发行所得— 264 
偿还所获得的债务(1,114)— 
支付融资租赁(577)(1,938)
融资活动所提供（使用）的净现金2,009 (928)
汇率变动对现金及现金等价物的影响424 238 
现金、现金等值物和受限制现金增加（减少）(13,580)(38,576)
本期期初现金、现金及受限制的现金余额为58,848 79,765 
本期期末现金、现金及受限制的现金余额为$45,268 $41,189 
补充现金流量披露
支付利息的现金$— $154 
支付所得税现金$11,383 $1,896 
未支付的资产和设备采购$48 $3 
以新的经营租赁负债交换取得之租赁资产$924 $— 
应计采购对价$5,101 $— 
短期投资的未实现收益（损失）$1,698 $(1,179)
附注是这些未经审计的简明综合财务报表的一个组成部分。
5

SEMRUSH HOLDINGS, INC.
未经审核简明合并财务报表附注
截至2024年与2023年9月30日的三个月和九个月
(以千为单位，除非另有说明，否则均为每股及每股资料)
1.概述和介绍基础
业务描述
Semrush Holdings, Inc.(“Semrush Holdings”)及其子公司（统称“公司”或“Semrush”）提供一个线上可见性管理软体-云计算（saas-云计算）平台。该公司的平台使订阅用户能够提高其在线可见性并增加流量，包括在其网站和社交媒体页面上，以及有针对性地跨各种渠道向客户分发高度相关的内容，以驱动高质量流量并衡量其数位行销活动的效果。该公司总部位于马萨诸塞州波士顿，截至2024年9月30日，在美国、西班牙、捷克共和国、荷兰、塞浦路斯、塞尔维亚、波兰、德国、亚美尼亚、加拿大、法国和越南均拥有全资附属公司。
本公司面临许多与类似行业和发展阶段的公司共通的风险和不确定性，这些风险可能影响未来的营运和财务表现。这些风险包括但不限于快速的科技变革、来自替代产品或大型公司的竞争压力、对专有技术的保护、国际业务的管理，以及对第三方和关键人员的依赖。
报告基础
本附注之未经审计的简明综合基本报表依据美国普遍接受的会计原则（“GAAP”）及证券交易委员会（“SEC”）关于中期财务报告的适用规定编制。因此，根据上述规则和法规，根据GAAP编制的财务报表中通常包含的某些信息和附注披露已被压缩或省略。这些注释中任何提及的相关指南是指会计标准编码（“ASC”）和财务会计标准委员会（“FASB”）的会计准则更新（“ASU”）中的美国通常接受的会计原则。
未经审核的简明综合中期基本报表已根据截至2023年12月31日之既审核之年度综合财务报表相同的基础进行准备，并依据管理层的意见，反映了截至2024年9月30日及截至2024年和2023年9月30日之三个月及九个月的公司财务状况的公允呈现所需的所有调整，其中包括正常循环调整。包含在此的截至2023年12月31日之综合资产负债表源自该日期的审核综合财务报表。
截至2024年9月30日止三个月及九个月的业绩不一定代表截至2024年12月31日止整年、其他任何中间期，或未来任何年度或期间。
未经审核的简明综合基本报表应与公司截至2023年12月31日的年度报告中的经审核综合基本报表及附注一起阅读，该年度报告已于2024年3月7日提交给证券交易委员会。
6

随附的未经查核之简明综合财务报表反映了下文和其他部分所述的某些重要会计政策之应用，截至2024年9月30日，公司重要会计政策与年度10-k表格中披露的相比并无重大变化，除下文所述外。
2.重要会计政策摘要
合并原则
未经审核的简明合并基本报表包括公司的账户、其全资子公司以及公司持有控股权的子公司。所有的内部交易和余额已在合并中消除。未能控制实体的其他方所代表的子公司的拥有权益在合并基本报表中作为归属于非控股权益的活动和余额呈现。
估计的使用
根据一般公认会计原则(GAAP)编制基本报表需要管理层做出估算和假设，这些会影响资产和负债的报告金额、未经审核的简明合并基本报表日期的或有资产和负债的披露，以及报告期间的营业收入和费用的报告金额。在编制这些未经审核的简明合并基本报表时，所依赖的重大估算包括但不限于：营业收入确认、用以评估长期资产可回收性的预期未来现金流、或有负债、内部使用软体的研究和开发成本的费用化和资本化、获得营业合同的成本资本化所关联的平均收益期、发放的基于股份的奖励的公允价值的确定、基于股份的薪酬费用、公司持有的贷款应收款和可转换票据的预估公允价值的确定、通过并购获得的无形资产的估值、公司的增量借款利率的估计，以及公司的冻结递延税资产和相关评价准备金的可回收性。
尽管公司定期评估这些估计，但实际结果可能与这些估计差异很大。 估计的变化将记录在变得已知的期间。 公司根据历史经验和其他各种假设进行估计，认为这些假设在当时情况下是合理的。 如果实际结果与管理层的估计不符，即使当时进行这些假设时是合理的，这些结果与历史经验或其他假设不太准确也可能有所不同。
后续事项考量
本公司认为在资产负债表日期之后，但在未经审计的简明合并基本报表发布之前发生的事件或交易，提供了对某些估计的额外证据，或识别需要额外披露的事项。后续事件已按要求进行评估。详细资讯请参见第18号附注有关本公司的后续事件。
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新兴成长企业地位
本公司是一家"新兴增长型企业"（“EGC”），根据《初创企业启动法》（JOBS法案）的定义。根据截至2024年6月28日（我们最近完成的第二财政季度的最后一个业务日）由非关联人持有的我们普通股的市值，我们将在2024年12月31日结束的财政年度结束时停止符合新兴增长型企业的资格。因此，从我们截至2024年12月31日结束的年度报告Form 10-K开始，我们将受到适用于其他上市公司但之前因为我们作为新兴增长型企业的地位而不适用于我们的某些要求，包括《萨班斯-豪利法案》第404条的条款，该条款要求我们的独立注册会计师对我们内部财务报告控制的有效性提供证实报告。
收入确认
公司主要营业收入来自公司的saas-云计算服务订阅和相关客户压力位。截至2024年和2023年9月30日止三个和九个月，订阅营收占了公司营业收入的几乎全部。与其他营业收入相关的营业收入在截至2024年和2023年9月30日止三个和九个月的营收中并不重要。
公司主要以月费或年费的方式向其平台提供订阅。公司主要通过自助模式和直接通过其销售团队销售其产品和服务。公司的订阅安排提供客户访问公司托管软体应用程序的权利。在托管安排期间，客户无权拥有公司的软体。在合同订阅期间，订阅通常不可取消；但是，一些订阅合同包含在购买日后7天内要求退款的权利。 购买后7天内 。
本公司根据ASC 606确认营业收入， 来自合约的营业收入 与客户（「ASC 606」）之间的营业收入在向客户转移承诺的产品或服务的控制权时确认，金额反映其预期在交易所获得的对价。自2024年3月7日向SEC提交10-K年报以来，公司没有变更其营业收入确认政策。
已开具发票的金额会记录在应收帐款和迳行收入或营业收入中，取决于是否已达成收入确认标准。公司主要提前一个月或一年向客户开具发票并收取付款。
迳延收入代表已开具帐单但尚未确认为收入的金额。在接下来的12个月内会确认为收入的迳延收入被记录为迳延收入，剩余部分则被记录为迳延收入，扣除当前部分。迳延收入增加了$10,565 截至2024年9月30日，与2023年12月31日相比，迳延收入增加$。在2024年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。在2023年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。33,911 和$的53,716 截至2024年9月30日，与2023年12月31日相比，迳延收入增加$。在2024年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。在2023年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。28,933 和$的45,829 截至2024年9月30日，与2023年12月31日相比，迳延收入增加$。在2024年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。在2023年9月30日结束的三个月和九个月内，已确认了$收入，这些收入包含在每个相应期间开始时的迳延收入中。
The Company has elected to exclude amounts charged to customers for sales tax from the transaction price. Accordingly, revenue is presented net of any sales tax collected from customers.
Transaction Price Allocated to Future Performance Obligations`
ASC 606 requires that the Company disclose the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of the balance sheet dates reported.
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For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of September 30, 2024 was $1,179, of which the Company expects to recognize $969 over the next 12 months.
For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of September 30, 2024. For performance obligations not satisfied as of September 30, 2024, and to which this expedient applies, the nature of the performance obligations is consistent with performance obligations satisfied as of December 31, 2023.
Costs to Obtain a Contract
The incremental direct costs of obtaining a contract, which primarily consist of sales commissions paid for new subscription contracts, are deferred and recorded as deferred contract costs in the unaudited condensed consolidated balance sheets and are amortized over a period of approximately 24 months on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates. The 24-month period represents the estimated benefit period of the customer relationship and has been determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology development life-cycle, and an estimated customer relationship period based on historical experience and future expectations. Deferred contract costs that will be recorded as expense during the succeeding 12-month period are recorded as deferred contract costs, current portion, and the remaining portion is recorded as deferred contract costs, net of current portion. Amortization of deferred contract costs is included in sales and marketing expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss).
Concentrations of Credit Risk and Significant Customers
The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other hedging arrangements. Credit losses historically have not been significant and the Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company's accounts receivable.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers of the Company. The Company routinely assesses the creditworthiness of its customers and generally does not require its customers to provide collateral or other security to support accounts receivable. Credit losses historically have not been significant and the Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company's accounts receivable.
As of September 30, 2024 and December 31, 2023, no individual customer represented more than 10% of the Company’s accounts receivable. During the three and nine months ended September 30, 2024 and 2023, no individual customer represented more than 10% of the Company’s revenue.
Disclosure of Fair Value of Financial Instruments
The Company’s financial instruments include cash, cash equivalents, investments, accounts receivable, loan receivables, convertible notes, accounts payable, and accrued expenses. The Company’s investments are classified as available-for-sale and reported at fair value in accordance with the market approach utilizing quoted prices that were directly or indirectly observable. The Company has elected the fair value option in respect to the accounting for its loan receivable investment, resulting in increases and decreases in the fair value of such investments being recorded to other income, net for
9

each reporting period. The carrying amount of the remainder of the Company’s financial instruments approximated their fair values as of September 30, 2024 and December 31, 2023, due to the short-term nature of these instruments.
The Company has evaluated the estimated fair value of financial instruments using available market information. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See below for further discussion.
Foreign Currency Translation
The Company operates in a multi-currency environment having transactions in such currencies as the U.S. dollar, zloty, Czech koruna, euro, and others. The reporting currency of the Company is the U.S. dollar.
The foreign currency exchange gain (loss) included in other income, net for the three months ended September 30, 2024 and 2023 was $(236) and $(291), respectively. The foreign currency exchange gain (loss) included in other income, net for the nine months ended September 30, 2024 and 2023 was $337 and $(929), respectively.
Comprehensive income (loss)
Comprehensive income (loss) is comprised of two components: net income (loss) and other comprehensive income (loss), which includes other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For the three and nine months ended September 30, 2024 and 2023, comprehensive income (loss) consists of net income (loss), the change in the cumulative foreign currency translation adjustment, and unrealized gain (loss) on investments. The tax effect of the cumulative foreign currency translation adjustment and unrealized gain (loss) on investments was not significant for the three and nine months ended September 30, 2024 and 2023.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2023-07 on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, ASU 2023-09 requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in ASU 2023-09 are required to be adopted for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements and disclosures.
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3.    Cash, Cash Equivalents, Restricted Cash, and Investments
The Company considers all highly liquid instruments purchased with an original maturity date of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and amounts held in interest-bearing money market funds. Cash equivalents are carried at cost, which approximates their fair market value. Short‑term investments consist of investments with original maturities greater than 90 days, as of the date of purchase. The Company considers its investment portfolio available-for-sale. The Company adjusts the cost of investments for amortization of premiums and accretion of discounts to maturity. The Company includes such amortization and accretion in interest income in the unaudited condensed consolidated statements of operations.
When the Company holds debt investments classified as available-for-sale pursuant to ASC 320, Investments — Debt Securities, it records available-for-sale securities at fair value, with unrealized gains and losses included in accumulated other comprehensive loss in stockholders’ equity. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company includes interest and dividends on securities classified as available-for-sale in interest income in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Realized gains and losses are recorded in the unaudited condensed consolidated statements of operations and comprehensive income (loss) based on the specific-identification method. There was no material realized gains or losses on investments for the three and nine months ended September 30, 2024 or 2023. The Company did not hold any investments in an unrealized loss position for less than twelve months as of September 30, 2024. As of December 31, 2023, the aggregate fair value of investments held by the Company in an unrealized loss position for less than twelve months was $89,381. As of September 30, 2024, the aggregate fair value of investments held by the Company in a continuous unrealized loss position for greater than twelve months was $9,920. The Company did not hold any investments in an unrealized loss position for greater than twelve months as of December 31, 2023.
On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) and ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815 Derivatives and Hedging and Topic 825, Financial Instruments. Under these standards, the Company reviews available-for-sale securities for impairment whenever the fair value of the security is less than its amortized cost. If impairment exists and the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, the Company will write down the amortized cost basis to its fair value at the reporting date, recognizing the difference as a loss within other income, net in the unaudited condensed consolidated statements of operations. If the Company does not intend to sell the security nor is it more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, the Company will determine if any portion of the unrealized loss on the security is due to credit loss. If the impairment is entirely or partially due to credit loss, the Company will measure the credit loss up to the amount of the difference between fair value and amortized cost, and recognize an allowance for credit losses along with the related charge against earnings as a loss within other income, net in the unaudited condensed consolidated statements of operations. The remaining impairment amount due to all other factors is recognized in accumulated other comprehensive income (loss) in the unaudited condensed consolidated balance sheets. Subsequent changes to the Company’s estimate of credit losses will be recorded as adjustments to the allowance for credit losses and other income, net. For the three and nine months ended September 30, 2024, the Company determined that no impairments were required to be recognized in the unaudited condensed consolidated statements of operations.
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The following is a summary of cash, cash equivalents, and investments as of September 30, 2024 and December 31, 2023:
Amortized
 Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair Value
September 30, 2024
Cash and cash equivalents$45,087 $— $(4)$45,083 
Investments:
     U.S. treasury securities186,214 1,585 (3)187,796 
           Total investments186,214 1,585 (3)187,796 
                Total cash, cash equivalents, and investments$231,301 $1,585 $(7)$232,879 
Amortized
 Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair Value
December 31, 2023
Cash and cash equivalents$58,848 $— $— $58,848 
Investments:
     U.S. treasury securities due in one year or less179,843 265 (387)179,721 
           Total investments179,843 265 (387)179,721 
                Total cash, cash equivalents and investments$238,691 $265 $(387)$238,569 
The Company considered the extent to which any unrealized losses on its marketable securities were driven by credit risk and other factors, including market risk, and if it is more-likely-than-not that the Company would have to sell the security before the recovery of the amortized cost basis. As of September 30, 2024 and December 31, 2023, the unrealized losses related to its marketable securities were due to rising market interest rates compared to when the investments were initiated. The Company does not believe the unrealized losses represent credit risk, and the Company does not intend to sell any of the securities in an unrealized loss position and it is not likely that the Company would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity. Thus, no credit loss was recognized for the Company's marketable securities for the three and nine months ended September 30, 2024 and 2023.
As of September 30, 2024, the Company held $45,621 in U.S. treasury securities with maturities within one year and held $142,175 in U.S. treasury securities with maturities after one year and within three years.
Restricted Cash
As of September 30, 2024, restricted cash totaled $185 related to cash held as collateral for a letter of credit related to the contractual provisions for one of the Company’s office leases.
The following table is a reconciliation of cash, cash equivalents, and restricted cash included in the accompanying unaudited condensed consolidated balance sheets that sum to the total cash, cash equivalents, and restricted cash included in the accompanying unaudited condensed consolidated statements of cash flows:
As of September 30,
20242023
Cash and cash equivalents$45,083 $41,189 
Restricted cash included in "other long-term assets"185 — 
Cash, cash equivalents, and restricted cash$45,268 $41,189 
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4.    Leases
The components of lease expense were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
20242024
Operating lease cost$1,415 $4,061 
Short-term lease cost218 629 
Variable lease cost1,120 3,485 
Total lease cost$2,753 $8,175 
Three Months Ended
September 30,		Nine Months Ended
September 30,
20242024
Amortization of lease assets$82 $734 
Interest on lease liabilities5 20 
Total finance lease cost$87 $754 
Weighted-average remaining lease term and discount rate were as follows:
As of September 30,
2024
Weighted-average remaining lease term (in years)
     Operating leases2.9
     Finance leases1.2
Weighted-average discount rate
     Operating leases5.7 %
     Finance leases6.8 %
Future minimum amounts payable as of September 30, 2024 were as follows:
As of September 30, 2024
Operating LeasesFinance
Leases
Remainder of 2024$1,280 $89 
20254,638 194 
20263,797 — 
20272,154 — 
2028884 — 
Thereafter— — 
Total lease payments12,753 283 
Less: imputed interest(670)(53)
Total lease liabilities$12,083 $230 
As of September 30, 2024, the Company had no finance or operating leases that had not yet commenced.
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Rent expense related to the Company’s office facilities was $1,634 and $4,690 for the three and nine months ended September 30, 2024, respectively. Rent expense related to the Company’s office facilities was $1,293 and $3,762 for the three and nine months ended September 30, 2023, respectively.

5.    Fair Value Measurement
The following tables summarize financial assets and liabilities measured and recorded at fair value on a recurring basis in the accompanying consolidated balance sheets as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
September 30, 2024
Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)Significant Other Observable Inputs (Level 2 Inputs)Significant Unobservable Inputs
(Level 3 Inputs)		Total
Assets:
     Money market funds$1,509 $— $— $1,509 
     U.S. treasury securities— 187,796 — 187,796 
     Commercial paper— 9,920 — 9,920 
     Convertible debt securities (See Note 7)— — 3,112 3,112 
     Investment loan receivable (See Note 7)— — 7,676 7,676 
Total assets$1,509 $197,716 $10,788 $210,013 
Liabilities:
Contingent consideration$— $— $— $— 
Total liabilities$— $— $— $— 
December 31, 2023
Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)Significant Other Observable Inputs (Level 2 Inputs)Significant Unobservable Inputs
(Level 3 Inputs)		Total
Assets:
     Money market funds$54,269 $— $— $54,269 
     U.S. treasury securities— 179,721 — 179,721 
Total assets$54,269 $179,721 $— $233,990 
Liabilities:
     Contingent consideration$— $— $597 $597 
Total liabilities$— $— $597 $597 

Cash equivalents include money market funds with original maturities of 90 days or less from the date of purchase. The fair value measurement of these assets is based on quoted market prices in active markets for identical assets and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 1 in the fair value hierarchy. The Company’s investments primarily consist of U.S. treasury securities. The fair value measurement of these assets is based on significant other observable inputs and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 2 in the fair value hierarchy.
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As of September 30, 2024, the Company measured its investment loan receivables (see Note 7), its convertible debt securities (See Note 7) and its contingent consideration associated with the acquisition of Datos Inc. on a recurring basis using significant unobservable inputs (Level 3). As of December 31, 2023, the Company measured its contingent consideration associated with the acquisition of Datos Inc. on a recurring basis using significant unobservable inputs (Level 3).
Convertible Debt Securities
The Company records its convertible debt securities at fair value on the purchase date. The Company determines the fair value of these investments using the Black-Scholes Merton model. Each reporting period thereafter, these investments are revalued and increases or decreases in their fair values are recorded as adjustments to other income, net within the consolidated statements of operations and comprehensive income (loss) to reflect the gains and losses. Changes in the fair value of these investments can result from changes in the estimated enterprise value of the issuers, the likelihoods and methods of such conversions, and other market factors. Significant judgment is employed in determining the appropriateness of these assumptions as of the purchase date and for each subsequent period. Accordingly, changes in any of the assumptions described above can materially impact the amount of gain or loss the Company records in any given period.
A rollforward of the fair value measurements of the convertible debt securities for the three months ended September 30, 2024 is as follows:
Balance as of June 30, 2024$— 
Investment in convertible debt security3,000 
Change in fair value included in other income, net112 
Balance as of September 30, 2024$3,112 
Investment Loan Receivables
The Company elected to account for this investment by utilizing the fair value option. The Company records investment loan receivables at their fair value on the agreement date. Each reporting period thereafter, these receivables are revalued and increases or decreases in their fair values are recorded as an adjustment to other income, net within the unaudited condensed consolidated statements of operations and comprehensive income (loss). The Company generally determines the fair value using the discounted cash flow method. The significant assumptions used to estimate the fair value include the interest rate, risk-free rate, expected repayment date, equity value, equity volatility, expected timing of exercise, and the credit spread assumption specific to the investment loan. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.
A rollforward of the fair value measurements of the investment loan receivable for the nine months ended September 30, 2024 is as follows:
Balance as of December 31, 2023$— 
Initial funding of investment loan receivable7,000 
Balance as of March 31, 20247,000 
Change in fair value included in other income, net83 
Balance as of June 30, 20247,083 
Additional funding of investment loan receivable757 
Change in fair value included in other income, net(164)
Balance as of September 30, 2024$7,676 
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Contingent consideration
The Company records contingent consideration resulting from a business combination at its fair value on the acquisition date. The Company generally determines the fair value of the contingent consideration using the Monte Carlo simulation model. Each reporting period thereafter, these obligations are revalued and increases or decreases in their fair values are recorded as an adjustment to other income, net within the unaudited condensed consolidated statements of operations and comprehensive income (loss). Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the estimated or actual achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense the Company records in any given period.
The total estimated fair value of the contingent consideration payable was $0 and $597 as of September 30, 2024 and December 31, 2023, respectively. As of December 31, 2023, the primary inputs to the fair value of the contingent consideration were the risk free rate, the discount rate, and the revenue volatility. As of September 30, 2024, it was not probable that the payment would be earned.
Changes in the estimated fair value of the Datos contingent consideration payable will be recognized in other income, net. A rollforward of the fair value measurements of the contingent consideration liability for the nine months ended September 30, 2024 is as follows:
Balance as of December 31, 2023$597 
Change in fair value included in other income, net21 
Balance as of March 31, 2024618 
Change in fair value included in other income, net133 
Balance as of June 30, 2024751 
Change in fair value included in other income, net(751)
Balance as of September 30, 2024$— 

6.    Property and Equipment, Net
Property and equipment consists of the following:
As of
September 30,
2024		December 31,
2023
Computer equipment$13,583 $11,084 
Furniture and office equipment2,018 1,965 
Leasehold improvements2,906 2,469 
Total property and equipment18,507 15,518 
Less: accumulated depreciation and amortization(11,287)(8,832)
Property and equipment, net$7,220 $6,686 
Depreciation and amortization expense related to property and equipment was $858 and $2,641 for the three and nine months ended September 30, 2024, respectively. Depreciation and amortization expense related to property and equipment was $961 and $2,755 for the three and nine months ended September 30, 2023, respectively.
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7.    Other Assets
Investment Loan Receivable
In March 2024, the Company entered into a loan agreement in which it loaned $7,000 to the borrower with a repayment date in March 2025. During September 2024, the Company entered into an amended and restated loan agreement in which it loaned an additional $757 to the borrower with a repayment date in March 2025. In addition to the loan facility, the Company entered into an option agreement with the borrower in which the Company had the right, but not the obligation, to acquire a majority of the outstanding common stock of the borrower during the period beginning July 1, 2024 and ending August 31, 2024. The Company accounts for the loan agreement and option agreement as a single financial instrument (together, the “Investment Loan Receivable”). The Company recorded the Investment Loan Receivable at its fair value of $7,000 on the agreement date. The Company did not exercise the option agreement. As of September 30, 2024, the fair value of the Investment Loan Receivable was $7,676 and was included in prepaid expenses and other current assets in the unaudited condensed consolidated balance sheet.
With respect to the Investment Loan Receivable, the Company held a variable interest in the borrower, which is a variable interest entity. After evaluation of the relationship between the Company and this variable interest entity, the Company determined not to consolidate this variable interest entity’s results of operations for the three and nine months ended September 30, 2024. Significant judgments included the determination that the Company was not the primary beneficiary of the variable interest entity given the Company’s variable interests did not constitute a controlling financial interest.
Investments in Convertible Debt
In July 2024, the Company purchased a convertible debt security for a total aggregate investment of $3,000 with a maturity date of July 22, 2027 and annual interest rate of 10%. Interest accrues on the note and becomes payable upon conversion or maturity of the note. This convertible debt security is classified as an available-for-sale security. As of September 30, 2024, the note was included in other long-term assets in the unaudited condensed consolidated balance sheet. The Company accounts for the investment by utilizing the fair value option within ASC 825, Financial Instruments (“ASC 825”), and accounting for the entire hybrid instrument at fair value through other income (expense). The Company recorded an increase in the fair value of the convertible note of $112 for the three and nine months ended September 30, 2024.
8.    Net Income (Loss) Per Share
For the three months ended September 30, 2024, the net loss attributable to Semrush Holdings, Inc. is divided by the weighted-average number of shares of common stock outstanding during the period to calculate both basic and diluted earnings per share. The dilutive effect of common stock equivalents has been excluded from the calculation of diluted net loss per share for this period as its effect would have been anti-dilutive due to the net loss incurred for the period. For the nine months ended September 30, 2024, diluted net income per share was calculated by dividing net income attributable to Semrush Holdings, Inc. by the weighted-average number of shares of common stock outstanding during the period, including the dilutive impact of stock options and shares of common stock issuable upon the vesting of Restricted Stock Units (“RSUs”).
For the three and nine months ended September 30, 2023, the net loss attributable to common stockholders is divided by the weighted-average number of shares of common stock outstanding during the period to calculate both basic and diluted earnings per share. The dilutive effect of common stock equivalents has been excluded from the calculation of diluted net loss per share for these periods as its effect would have been anti-dilutive due to the net losses incurred for the periods.
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The following table presents a reconciliation of weighted-average shares outstanding used in the calculation of basic and diluted net income (loss) per share:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Weighted-average shares outstanding:
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders—basic146,436,167 142,837,120 145,563,220 142,246,586 
Dilutive effect of share equivalents resulting from stock options1,641,946 3,207,854 1,925,296 — 
Dilutive effect of share equivalents resulting from restricted stock units1,348,552 225,654 1,164,507 — 
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders—diluted149,426,665 146,270,628 148,653,023 142,246,586 
The following potentially dilutive common stock equivalents, including stock options and restricted stock units, have been excluded from the calculation of diluted weighted-average shares outstanding for the three and nine months ended September 30, 2024 and 2023 because to do so would have been anti-dilutive for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Stock options outstanding1,535,122 4,452,615 2,457,405 8,175,646 
Unvested RSUs and PSUs28,094 1,779,298 606,029 2,635,840 
1,563,216 6,231,913 3,063,434 10,811,486 
For the three and nine months ended September 30, 2024, 1,128,021 and 1,128,021 shares of Class A common stock potentially issuable under Performance Stock Units (“PSUs”) were excluded from the table above, respectively. For the three and nine months ended September 30, 2023, 1,076,538 and 1,077,726 shares of Class A common stock potentially issuable under PSUs were excluded from the table above, respectively. The performance-based conditions had not been met and were deemed improbable of achievement as of the reporting period end date. See Note 14 for additional information regarding the Company’s PSUs.
9.    Acquisitions, Intangible Assets, and Goodwill
Acquisitions
Exploding Topics
On August 15, 2024, the Company completed an asset purchase agreement with Backlinko, LLC, doing business as Exploding Topics, to acquire substantially all of the assets of Exploding Topics. The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of this asset acquisition was to acquire the traffic generating content of Exploding Topics. The acquisition date fair value of the consideration transferred totaled $2,950 which includes a holdback
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of $531 to be paid on August 15, 2025. This holdback amount is included in other current liabilities within the unaudited condensed consolidated balance sheet as of September 30, 2024.
The Company assigned a value of $1,062 to the acquired identifiable intangible assets consisted of content, customer relationships, and developed technology, which are amortized over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to the acquired content, customer relationships, and developed technology, of four years, three years, and three years, respectively. The Company used the guideline public company method to value the identifiable intangible assets. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price of $1,888 was allocated to goodwill, which primarily relates to expected future site traffic generation and is deductible for tax purposes. The allocation of the purchase price is preliminary as of September 30, 2024 as the Company continues to gather information supporting the acquired assets and liabilities to finalize the purchase price allocation.
The Company recorded $119 and $128 in transaction costs related to the transaction during the three and nine months ended September 30, 2024, respectively, which are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in its income from continuing operations under the line item, General and administrative.
As of August 15, 2024, the results of Exploding Topics’ operations are included within the Company’s consolidated financial statements. This business combination did not have a material impact on the Company’s consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.
Ryte
On July 11, 2024, the Company acquired 100% of the outstanding shares of Ryte GmbH ("Ryte"). The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of this business combination was to expand the Company’s enterprise offerings by adding enterprise site audit and website performance monitoring. The acquisition date fair value of the consideration transferred consisted of the following:
Acquisition Date
Consideration transferredFair Value
Cash paid at close$8,910 
Fair value of deferred purchase payments1,572 
Total purchase consideration$10,482 
The Company determined that the fair value of the assets acquired and liabilities assumed was $10,482, including the cash paid at close and the fair value of the deferred purchase payments as of September 30, 2024. The fair value of deferred purchase payments represents the fair value of two payments of $786 each, the first of which will be paid July 11, 2025 and is included within other current liabilities within the unaudited condensed consolidated balance sheet as of September 30, 2024. The second payment is due January 11, 2026 and is included in other long term liabilities within the unaudited condensed consolidated balance sheet as of September 30, 2024.
The table below summarizes the Company’s preliminary purchase price allocation. The allocation of the purchase price is preliminary as of September 30, 2024 as the Company continues to gather information supporting the acquired assets and liabilities to finalize the purchase price allocation.
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Purchase Price
Assets acquiredAllocation
Fair value of tangible assets:
Cash and cash equivalents$1,550 
Accounts Receivable742 
Prepaid Expenses463 
Other current assets676 
Other assets100 
Identifiable intangible assets2,630 
Goodwill10,489 
Total assets acquired$16,650 
Liabilities assumed
Accounts payable$194 
Short-term debt2,529 
Accrued liabilities457 
Deferred revenue2,708 
Other liabilities280 
Total Liabilities Assumed$6,168 
Fair value of assets acquired and liabilities assumed, net$10,482 
The Company allocated $2,630 of the purchase price to identifiable intangible assets consisting of developed technology, customer relationships, and trade names, which it amortizes over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to acquired developed technology, customer relationships, and trade names, of five years, six years, and five years, respectively. The Company used the multi-period excess earnings method to value the developed technology. The Company used the distributor method, a variation of the multi-period excess earnings method to value the customer relationships. The Company used the relief from royalty method to value the trade names. Trade names primarily relate to the Ryte brand. The significant assumptions used to estimate the value of the intangible assets included the discount rate, revenue growth rates, adjusted operating margin, and obsolescence. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price was allocated to goodwill, which primarily relates to expected synergies with our existing product offerings and is not deductible for tax purposes.
The Company recorded $494 and $721 in transaction costs related to the transaction during the three and nine months ended September 30, 2024, respectively, which are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in its income from continuing operations under the line item, General and administrative.
As of July 11, 2024, the results of Ryte’s operations are included within the Company’s consolidated financial statements. This business combination did not have a material impact on the Company’s consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.
Brand 24
On April 29, 2024, the Company completed a stock purchase agreement to acquire approximately 58% of the voting equity interests in Brand 24 S.A. (“Brand 24”). The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of the business
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combination was to expand our public relations business and customer base. The acquisition date fair value of the consideration transferred consisted of the following:
Acquisition Date
Consideration transferredFair Value
Cash paid at close$10,650 
Fair value of deferred purchase payments2,878 
Consideration transferred$13,528 
The Company determined that the fair value of the assets acquired and liabilities assumed was $23,374, including the fair value of the noncontrolling interest in Brand 24 of $9,846, which is reflected in the stockholders’ equity section of the unaudited condensed consolidated balance sheet as of September 30, 2024. The fair value of the noncontrolling interest on the closing date was estimated considering the implied enterprise value and the acquired percentage of Brand 24. The fair value of deferred purchase payments represents the fair value of two payments of $1,500 each, the first of which will be paid December 31, 2024 and is included within other current liabilities within the unaudited condensed consolidated balance sheet as of September 30, 2024. The second payment is due November 12, 2025 and is included in other long term liabilities within the unaudited condensed consolidated balance sheet as of September 30, 2024. The deferred purchase payments will accrue interest of 2.5% per year.
The table below summarizes the Company’s preliminary purchase price allocation. The allocation of the purchase price is preliminary as of September 30, 2024 as the Company continues to gather information supporting the acquired assets and liabilities to finalize the purchase price allocation.
Purchase Price
Assets acquiredAllocation
Fair value of tangible assets:
Cash and cash equivalents$1,502 
Accounts Receivable139 
Other assets686 
Identifiable intangible assets9,350 
Goodwill15,846 
Total assets acquired$27,523 
Liabilities assumed
Deferred revenue, current847 
Deferred tax liabilities1,411 
Other liabilities1,891 
Total Liabilities Assumed$4,149 
Fair value of assets acquired and liabilities assumed, net$23,374 
Fair value of noncontrolling interest$9,846 
Fair value of controlling interest acquired$13,528 
The Company allocated $9,350 of the purchase price to identifiable intangible assets consisting of customer relationships, developed technology, and trade names, which it amortizes over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to acquired customer relationships, developed technology, and trade names, of six years, five years, and five years, respectively. The Company used the multi-period excess earnings method to value the customer relationships. Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold. To value the developed technology and trade names assets, the Company utilized the relief from royalty method. Trade names primarily relate to the Brand 24 brand. The significant assumptions used to estimate the value of the intangible assets included the discount rate,
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revenue growth rates, and customer attrition rates. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price was allocated to goodwill, which primarily relates to expected synergies from combining operations and is not deductible for tax purposes.
The Company recorded $215 and $605 in transaction costs related to the transaction during the three and nine months ended September 30, 2024, respectively, which are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in its income from continuing operations under the line item, General and administrative.
As of April 29, 2024, the results of Brand 24’s operations are included within the Company’s consolidated financial statements. This business combination did not have a material impact on the Company’s consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.
In April 2024 the Company entered into award agreements with certain members of Brand 24 Management. These awards are accounted for as liability-classified awards under ASC 718, Compensation - Stock Compensation. The fair value of the awards were estimated using a Monte Carlo Simulation. The Company recorded $227 and $377 in post-acquisition compensation expense related to these awards during the three and nine months ended September 30, 2024, respectively.
In May 2024, the Company announced a tender offer to purchase up to 944,616 shares of Brand 24 (the “Tender Offer”) at a price equal to PLN47.0 per share with an opening date for subscriptions of May 31, 2024 and a closing date for subscriptions of July 2, 2024. In July 2024, the Company completed the Tender Offer for outstanding shares of Brand 24 and purchased 135,500 incremental shares for an aggregate cost of $3,684 paid during the three months ended September 30, 2024 using cash on hand. The Tender Offer increased the Company’s ownership to 312,974 shares representing approximately 72% of the shares of Brand 24.
Datos
On December 1, 2023, the Company completed a stock purchase agreement to acquire approximately 60% of the voting equity interests in Datos Inc. (“Datos”). The Company has accounted for this transaction as a business combination under the acquisition method. The primary purpose of this business combination is to acquire Datos’ valuable clickstream data software. The Company performed acquisition accounting as of December 1, 2023. The acquisition date fair value of the consideration transferred consisted of the following:
Acquisition Date
Consideration transferredFair Value
Fair value of the January 2021 and February 2022 Convertible Notes$7,530 
Cash paid at close4,255 
Other consideration2,070 
Total purchase consideration$13,855 

The Company determined that the fair value of the assets acquired and liabilities assumed was $19,021, including the fair value of the noncontrolling interest in Datos of $5,166. The fair value of the noncontrolling interest is inclusive of the fair value of the acquired call option, which gives the Company the right, but not the obligation, to purchase the remaining shares in Datos during the period beginning January 1, 2026 and ending on January 1, 2027 (the “Call Option”). The Company estimated the fair value of the noncontrolling interest, inclusive of the Call Option, using an option pricing method (a special case of the income approach), considering the initial transaction price and based on Level 3 significant unobservable inputs such as the total equity value of Datos, forecasted revenues, volatility, and risk-adjusted discount rates. Other consideration includes the deferred purchase payments, the contingent
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payment, and additional consideration due to the seller. A payment of $501 was made during March 2024 related to other consideration. The remaining fair value of other consideration has been recorded to other current liabilities in the unaudited condensed consolidated balance sheet as of September 30, 2024.

The table below summarizes the Company’s purchase price allocation. The allocation of the purchase price is final as of September 30, 2024.
Purchase Price
Assets acquiredAllocation
Fair value of tangible assets:
Cash and cash equivalents$549 
Accounts receivable518 
Prepaid expenses and other current assets320 
Property and equipment, net8 
Other long-term assets3 
Identifiable intangible assets2,780 
Goodwill16,791 
Total assets acquired$20,969 
Liabilities assumed
Accounts payable342 
Deferred revenue367 
Accrued expenses213 
Other current liabilities609 
Other long-term liabilities417 
Total Liabilities Assumed$1,948 
Fair value of assets acquired and liabilities assumed, net$19,021 
Fair value of noncontrolling interest, including call option$5,166 
Fair value of controlling interest acquired$13,855 
The Company did not record any transaction costs related to the transaction during the three months ended September 30, 2024. The Company recorded $100 in transaction costs related to the transaction during the nine months ended September 30, 2024, which are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in its income from continuing operations under the line item, General and administrative.
As of December 1, 2023, the results of Datos’ operations are included within the Company’s consolidated financial statements. This business combination did not have a material impact on the Company’s consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.
Traffic Think Tank
On February 23, 2023, the Company completed a purchase agreement with Rank, LLC (“Traffic Think Tank”), acquiring certain intangible assets of Traffic Think Tank for total cash consideration of $1,800, of which $360 was paid during February 2024 (the “12-month holdback amount”) and $360 was paid during August 2024 (the “18-month holdback amount”). The remaining consideration was paid upon closing. The primary purpose of the acquisition was to acquire valuable brand and content related to Traffic Think Tank’s SEO community and courses.
This business combination did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.

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Intangible Assets
Intangible assets consist of intangible assets resulting from the Company’s acquisitions and its capitalized internal-use software development costs. Intangible assets consist of the following:

As of September 30, 2024
Weighted Average Remaining Useful Life (years)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology4.1$8,799 $(2,447)$6,352 
Trade name3.55,176 (2,069)3,107 
Content2.73,142 (1,497)1,645 
Customer relationships5.410,814 (1,300)9,514 
Capitalized internal-use software2.713,784 (3,656)10,128 
Total as of September 30, 2024
$41,715 $(10,969)$30,746 

As of December 31, 2023
Weighted Average Remaining Useful Life (years)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology4.1$5,604 $(1,518)$4,086 
Trade name3.74,451 (1,404)3,047 
Content2.32,387 (1,021)1,366 
Customer relationships4.41,694 (396)1,298 
Capitalized internal-use software2.88,460 (2,174)6,286 
Total as of December 31, 2023
$22,596 $(6,513)$16,083 

During the three and nine months ended September 30, 2024, the Company capitalized $1,474 and $5,842, respectively, of software development costs, which are classified as intangible assets on the accompanying unaudited condensed consolidated balance sheets, and recorded amortization expense associated with its capitalized software development costs of $588 and $1,491, respectively. During the three and nine months ended September 30, 2023, the Company capitalized $1,283 and $3,913, respectively, of software development costs, and recorded amortization expense associated with its capitalized software development costs of $151 and $421, respectively.
Amortization expense for acquired intangible assets was $1,380 and $2,962 for the three and nine months ended September 30, 2024, respectively. Amortization expense for acquired intangible assets was $557 and $1,631 for the three and nine months ended September 30, 2023, respectively.
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As of September 30, 2024, future amortization expense is expected to be as follows:
Amount
Remainder of 2024$2,015 
20257,808 
20266,869 
20274,599 
20283,037 
Thereafter6,418 
Total$30,746 

Goodwill
The changes in the carrying value of goodwill during the nine months ended September 30, 2024 were as follows:
Amount
Balance as of January 1, 2024$24,879 
Datos purchase price allocation adjustment(104)
Brand 24 acquisition15,846 
Ryte acquisition10,489 
Exploding Topics acquisition1,888 
Foreign currency translation adjustment1,301 
Balance as of September 30, 2024
$54,299 
10.    Exit Costs
Commencing in March 2022, the Company began to exit its operations in Russia and relocate employees. As of June 30, 2023, the Company had substantially completed its relocation efforts. All costs associated with the Company’s exit activities are included in the unaudited condensed consolidated statements of operations in its income from continuing operations under the line item, Exit Costs.
During the three and nine months ended September 30, 2024, the Company did not incur exit costs. During the three and nine months ended September 30, 2023, the Company incurred exit costs of $0 and $1,292, respectively, related to relocation efforts.
11.    Accrued expenses
Accrued expenses consist of the following:
As of
September 30,
2024		December 31,
2023
Employee compensation$7,664 $7,742 
Income taxes payable2,436 1,810 
Other taxes payable9,230 9,695 
Vacation reserves871 549 
Other83 95 
Total accrued expenses$20,284 $19,891 
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12.    Income Taxes
The Company is subject to income taxes in U.S. federal, state, and foreign jurisdictions. For the three and nine months ended September 30, 2024, the Company recorded provisions for income taxes of $3,899 and $11,652, respectively. For the three and nine months ended September 30, 2023, the Company recorded provisions for income taxes of $637 and $2,303, respectively. The Company’s effective tax rate for the nine months ended September 30, 2024 differs from the U.S. statutory rate due primarily to the impact of earnings in foreign jurisdictions and the impact of the requirement to capitalize and amortize certain research and development costs which results in a current U.S. tax provision but no deferred tax benefit as a result of the valuation allowance maintained against our net deferred tax assets. The Company’s income tax expense for the three and nine months ended September 30, 2023, respectively, primarily relates to income earned in certain foreign jurisdictions.
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse. On a periodic basis, the Company reassesses any valuation allowances it maintains on its deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. The Company maintains a valuation allowance on its net deferred tax assets.
13.    Stockholders’ Equity
Common Stock Reserved for Future Issuance
As of September 30, 2024, the Company had reserved the following shares of common stock for future issuance:
Options outstanding5,371,516 
Common stock reserved for future issuance12,233,256 
Restricted stock units and performance stock units outstanding5,802,292 
Total authorized shares of common stock reserved for future issuance23,407,064 
The Company has two classes of authorized common stock: Class A common stock and Class B common stock. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time and upon certain other events. During the three and nine months ended September 30, 2024, a total of 409,801 shares of Class B Common Stock were converted to Class A Common Stock.
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14.    Stock-Based Compensation
The Company recorded stock-based compensation expense of $7,575 and $19,856 during the three and nine months ended September 30, 2024, respectively, and recorded $4,203 and $10,764 during the three and nine months ended September 30, 2023, respectively. The following table shows stock-based compensation expense by where the stock-based compensation expense is recorded in the Company’s unaudited condensed consolidated statement of operations:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Cost of revenue$71 $33 $169 $82 
Sales and marketing1,228 822 3,207 2,190 
Research and development1,707 579 3,714 1,464 
General and administrative4,569 2,769 12,766 7,028 
Total stock-based compensation$7,575 $4,203 $19,856 $10,764 
As of September 30, 2024, there was $12,119 of unrecognized compensation cost related to unvested common stock option arrangements, which is expected to be recognized over a weighted-average period of 2.21 years. As of September 30, 2024, there was $41,236 of unrecognized compensation cost related to unvested restricted stock unit awards, which is expected to be recognized over a weighted-average period of 2.34 years. As of September 30, 2024, there was $10,014 of unrecognized compensation cost related to unvested performance stock unit awards, which is expected to be recognized over a weighted-average period of 2.32 years.
The fair value of each option award was estimated on the date of grant using the Black-Scholes option-pricing model. As there was no public market for its common stock prior to March 25, 2021, which was the first day of trading, and as the trading history of the Company’s common stock is limited, the Company determined the expected volatility for options granted based on an analysis of reported data for a peer group of companies that issued options with substantially similar terms. The expected volatility of options granted has been determined using an average of the historical volatility measures of this peer group of companies. The expected life of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the share option. The Company has not paid, nor anticipates paying, cash dividends on its ordinary shares; therefore, the expected dividend yield is assumed to be zero.
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The weighted-average assumptions utilized to determine the fair value of options granted to employees are presented in the following table:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Expected volatilityN/A62.6 %61.8 %63.2 %
Weighted-average risk-free interest rateN/A4.03 %4.28 %3.71 %
Expected dividend yieldN/A— — — 
Expected life – in yearsN/A666
A summary of the Company’s option activity as of September 30, 2024, and changes during the nine months then ended are as follows:
Number of OptionsWeighted-Average Exercise Price (per share)Weighted-Average Remaining Contractual Term (in years)
Outstanding at January 1, 20247,175,494 $7.02 7.78
Granted15,888 12.62 
Exercised(1,464,641)2.53 
Forfeited(355,225)8.94 
Outstanding at September 30, 2024
5,371,516 8.14 7.34
Options exercisable at September 30, 2024
3,220,402 6.766.71
The Company did not grant option awards during the three months ended September 30, 2024. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2024 was $7.71 per share. The weighted-average grant-date fair value of options granted during the three and nine months ended September 30, 2023 was $6.15 and $5.58 per share, respectively. Tax benefits of $13 and $712 were realized from options during the three and nine months ended September 30, 2024, respectively. Tax benefits of $653 and $696 were realized from options during the three and nine months ended September 30, 2023, respectively.
The aggregate intrinsic value of options outstanding as of September 30, 2024 and December 31, 2023 was $41,886 and $49,221, respectively.
The aggregate intrinsic value for options exercised during the three and nine months ended September 30, 2024 was $3,249 and $16,913, respectively. The aggregate intrinsic value for options exercised during the three and nine months ended September 30, 2023 was $2,521 and $7,923, respectively.
The aggregate intrinsic value for options exercisable as of September 30, 2024 and December 31, 2023 was $29,705 and $34,471, respectively.
The aggregate intrinsic value was calculated based on the positive difference, if any, between the estimated fair value of the Company’s common stock on September 30, 2024 and December 31, 2023, respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.
During the three and nine months ended September 30, 2024, the Company granted to employees RSUs for 66,720 and 2,857,598 shares of Class A common stock, respectively. During the three and nine months ended September 30, 2023, the Company granted to employees RSUs for 68,463 and 1,908,880 shares of Class A common stock, respectively. During the three and nine months ended September 30, 2024, the Company recorded stock-based compensation expense related to the RSUs of $4,802 and
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$12,234, respectively. During the three and nine months ended September 30, 2023, the Company recorded stock-based compensation expense related to the RSUs of $2,461 and $5,702, respectively.
A summary of RSU activity for the nine months ended September 30, 2024 is as follows:
Number of SharesWeighted-Average Grant Date Fair ValueAggregate Fair Value
Unvested balance at January 1, 20242,571,318$9.88 $25,405 
Granted2,857,59812.6036,006
Vested(996,837)9.739,699 
Forfeited(280,756)9.772,743 
Unvested balance as of September 30, 2024
4,151,323$11.79 $48,944 
The Company did not grant PSU awards during the three months ended September 30, 2024. During the nine months ended September 30, 2024, the Company granted to employees PSU awards for 1,146,491 shares of Class A common stock. During the three and nine months ended September 30, 2024, $1,187 and $2,753 of stock-based compensation expense has been recognized in connection with PSU awards, respectively. The Company did not grant PSU awards during the three and nine months ended September 30, 2023. During the three and nine months ended September 30, 2023, an insignificant amount of stock-based compensation expense has been recognized in connection with PSU awards, respectively.
A summary of PSU activity for the nine months ended September 30, 2024 is as follows:
Number of SharesWeighted-Average Grant Date Fair ValueAggregate Fair Value
Unvested balance at January 1, 20241,077,726$11.61 $12,512 
Granted1,146,49112.5614,400
Vested— —— 
Forfeited— —— 
Unvested balance at September 30, 2024
2,224,217$12.10 $26,913 
15.    Commitments and Contingencies
Data Providers
The Company has multi-year commitments with certain data providers through March 31, 2026. As of September 30, 2024, future commitments for data services are as follows:
As of September 30, 2024
Remainder of 20243,039 
202514,388 
20263,233 
2027 and thereafter— 
      Total$20,660 
Litigation
From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course
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matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
Indemnification
The Company typically enters into indemnification agreements with customers in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses suffered or incurred as a result of claims of intellectual property infringement. These indemnification agreements are provisions of the applicable customer agreement. Based on when clients first sign an agreement for the Company’s service, the maximum potential amount of future payments the Company could be required to make under certain of these indemnification agreements is unlimited. Based on historical experience and information known as of September 30, 2024, the Company has not incurred any costs for the above guarantees and indemnities.
In certain circumstances, the Company warrants that its services will perform in all material respects in accordance with its standard published specification documentation in effect at the time of delivery of the services to the customer for the term of the agreement. To date, the Company has not incurred significant expense under its warranties and, as a result, the Company believes the estimated fair value of these agreements is immaterial.
16.    Components of Other Income, Net
The components of other income, net, for the three months ended three and nine months ended September 30, 2024 and 2023 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Foreign currency exchange gain (loss)$(236)$(291)337 (929)
Interest income, net2,419 2,449 7,705 6,881 
Other income, net729 (54)1,125 776 
Total other income, net$2,912 $2,104 $9,167 $6,728 
17.    Segment and Geographic Information
Disclosure requirements about segments of an enterprise and related information establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in interim financial reports issued to shareholders. Operating segments are defined as components of an enterprise about which separate discrete financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company and the chief executive officer view the Company’s operations and manage its business as one operating segment.
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Geographic Data
The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of the customer. Total revenue by geographic area was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Revenue:
United States$44,525 $37,557 $127,867 $107,101 
United Kingdom9,003 7,687 25,901 21,972 
Other43,882 33,474 120,405 95,208 
Total revenue$97,410 $78,718 $274,173 $224,281 
Property and equipment, net by geographic location consists of the following:
As of
September 30,
2024		December 31,
2023
Property and equipment, net:
United States$3,279 $3,231 
Netherlands2,008 1,781 
Spain888 807 
Czech Republic203 278 
Other842 589 
Total assets$7,220 $6,686 

18.     Subsequent Events
In October 2024, the Company acquired all of the outstanding shares of Third Door Media (“TDM”), a marketing and leads generation company located and based in the United States. The purchase price for the TDM acquisition totaled $6.1 million. The acquisition will be accounted for as a business combination under ASC 805, Business Combinations. The Company is in the process of finalizing the accounting for this transaction and will complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the fourth quarter of 2024.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements, and related notes that are included elsewhere in this Quarterly Report on Form 10-Q, along with the financial information included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2024. Some of the information contained in this discussion and analysis, including information with respect to our planned investments in our research and development, sales and marketing, and general and administrative functions, contains forward-looking statements based upon current plans, beliefs, and expectations that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Special Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Company Overview
We are a leading online visibility management SaaS platform, enabling companies globally to identify and reach the right audience in the right context and through the right channels. Online visibility represents how effectively companies connect with consumers across a variety of digital channels, including search, social and digital media, digital public relations, and review websites. Our proprietary SaaS platform enables us to aggregate and enrich trillions of data points collected from hundreds of millions of unique domains, social media platforms, online ads, and web traffic. This allows our customers to understand trends, derive unique and actionable insights to improve their websites and social media pages, and distribute highly relevant content to their targeted customers across channels to drive high quality traffic.
We generate substantially all of our revenue from monthly and annual subscriptions to our online visibility management platform under a SaaS model. Subscription revenue is recognized ratably over the contract term beginning on the date the product is made available to customers.
We currently operate subsidiaries in the United States, Spain, the Czech Republic, the Netherlands, Cyprus, Serbia, Poland, Germany, Armenia, Canada, Vietnam, and France.
Our revenue is primarily generated through sales of our products around the globe. The largest portion of our revenue continues to be driven by customers based in the U.S. and UK, generating combined revenues of $53.5 million and $153.8 million for the three and nine months ended September 30, 2024, respectively, and $45.2 million and $129.1 million for the three and nine months ended September 30, 2023, respectively.
We have one reportable segment. See Note 17 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
Key Factors Affecting Our Performance
We regularly review a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth. These factors include:
Acquiring New Paying Customers
We expect increasing demand for third-party online visibility software to accelerate adoption of our platform. Our recurring subscription model provides significant visibility into our future results and we
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believe Annual Recurring Revenue (“ARR”) is the best indicator of the scale of our platform, while mitigating fluctuations due to seasonality and contract term. We define ARR as of a given date as the monthly recurring revenue that we expect to contractually receive from all paid subscription agreements that are actively generating revenue as of that date multiplied by 12. We include both monthly recurring paid subscriptions, which renew automatically unless canceled, as well as annual recurring paid subscriptions so long as we do not have any indication that a customer has canceled or intends to cancel its subscription and we continue to generate revenue from them. As of September 30, 2024, we had over 117,000 paying customers, accounting for $400.7 million in ARR, an increase from more than 106,000 paying customers accounting for $322.8 million in ARR as of September 30, 2023.
Retaining and Expanding Sales to Our Existing Customers
We serve a diverse customer base across a variety of sizes and industries that is focused on maximizing their online visibility. We believe there is significant opportunity to expand within our existing customer base as customers often initially purchase our entry-level subscription, which offers lower usage limits and limited user licenses, as well as fewer features. We have demonstrated the ability to expand contract values with our existing customers as they use our products and recognize the critical nature of our platform and often seek premium offerings through incremental usage, features, add-ons, and additional user licenses.
Our dollar-based net revenue retention rate enables us to evaluate our ability to retain and expand subscription revenue generated from our existing customers. Our dollar-based net revenue retention rate as of September 30, 2024 and December 31, 2023 was approximately 107%.
We calculate our dollar-based net revenue retention rate as of the end of a period by using (a) the revenue from our customers during the twelve month period ending one year prior to such period as the denominator and (b) the revenue from those same customers during the twelve months ending as of the end of such period as the numerator. This calculation excludes revenue from new customers and any non-recurring revenue.
We have successfully increased ARR per paying customer over time and believe this metric is an indicator of our ability to grow the long-term value of our platform. We expect ARR per paying customer to continue to increase as customers adopt our premium offerings and we continue to introduce new products and functionality. Our ARR per paying customer as of September 30, 2024 and September 30, 2023 was $3,414 and $3,022, respectively, in absolute unrounded amounts. We define ARR per paying customer as of a given date as ARR from our paying customers as of that date divided by the number of paying customers as of that date. We define the number of paying customers as the number of unique business and individual customers as of a given date. We define a business customer as all accounts that contain a common non-individual business email domain (e.g., all subscriptions with an email domain of @XYZ.com will be considered to be one customer), and an individual customer as an account that uses an individual non-business email domain.
Sustaining Product and Technology Innovation
We have a strong track record of developing new products that have high adoption rates among our paying customers. Our product development organization plays a critical role in continuing to enhance the effectiveness and differentiation of our technology in an evolving landscape and maximizing retention of our existing customers. We intend to continue investing in product development to improve our data assets, expand our products and enhance our technological capabilities.
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Non-GAAP Financial Measures
In addition to our financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that non-GAAP income (loss) from operations, non-GAAP income (loss) from operations margin, free cash flow and free cash flow margin, each a non-GAAP financial measure, are useful in evaluating the performance of our business.
Non-GAAP income (loss) from operations, non-GAAP income (loss) from operations margin, free cash flow and free cash flow margin
We define non-GAAP income (loss) from operations as GAAP income (loss) from operations, excluding stock-based compensation, amortization of acquired intangible assets, acquisition related costs, restructuring costs and other one-time expenses outside the ordinary course of business (for example, our Exit Costs incurred primarily in 2022). We define non-GAAP operating margin as non-GAAP income (loss) from operations divided by GAAP revenue. We believe investors may want to consider our results with and without the effects of these items in order to compare our financial performance with that of other companies that exclude such items and to compare our results to prior periods. We monitor non-GAAP income (loss) from operations and non-GAAP income (loss) from operations margin as two measures of our overall business performance, which enables us to analyze our future performance and allows us to better understand the operating results of our business. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software development costs. We define free cash flow margin as free cash flow divided by GAAP revenue. We monitor free cash flow and free cash flow margin as two measures of our overall business performance, which enables us to analyze our future performance without the effects of non-cash items and allows us to better understand the cash needs of our business. While we believe that non-GAAP income (loss) from operations, non-GAAP income (loss) from operations margin, free cash flow and free cash flow margin are useful in evaluating our business, non-GAAP income (loss) from operations and non-GAAP income (loss) from operations margin, free cash flow and free cash flow margin are each non-GAAP financial measures that have limitations as an analytical tool, and non-GAAP income (loss) from operations and non-GAAP income (loss) from operations margin should not be considered as an alternative to, or substitute for, income (loss) from operations in accordance with GAAP and free cash flow and free cash flow margin should not be considered as an alternative to, or substitute for, net cash provided by (used in) operating activities in accordance with GAAP. The utility of free cash flow and free cash flow margin as a measure of our liquidity is further limited as each measure does not represent the total increase or decrease in our cash balance for any given period. In addition, other companies, including companies in our industry, may calculate free cash flow and free cash flow margin differently or not at all, which reduces the usefulness of free cash flow and free cash flow margin as a tool for comparison. A summary of our cash flows from operating, investing, and financing activities is provided below. We recommend that you review the reconciliation of GAAP income (loss) from operations to non-GAAP income (loss) from operations, the reconciliation of GAAP income (loss) from operations margin to non-GAAP income (loss) from operations margin, the most directly comparable GAAP financial measure, provided below, the reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure, and the reconciliation of free cash flow margin to net cash provided by (used in) operating activities (as a percentage of revenue), the most directly comparable GAAP financial measure, and that you not rely on non-GAAP income (loss) from
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operations, non-GAAP income (loss) from operations margin, free cash flow, free cash flow margin or any single financial measure to evaluate our business.
Nine Months Ended September 30,
(in thousands)
2024
2023
Income (loss) from operations$6,567 $(10,349)
Stock-based compensation expense19,856 10,764 
Amortization of acquired intangibles2,962 1,631 
Restructuring and other costs2,331 1,292 
Acquisition-related costs, net2,265 — 
Non-GAAP income from operations
$33,981 $3,338 
Nine Months Ended September 30,
2024
2023
Income (loss) from operations (as a percentage of revenue)2.4 %(4.6)%
Stock-based compensation expense (as a percentage of revenue)7.2 %4.8 %
Amortization of acquired intangibles (as a percentage of revenue)1.1 %0.7 %
Restructuring and other costs (as a percentage of revenue)0.9 %0.6 %
Acquisition-related costs, net (as a percentage of revenue)0.8 %— %
Non-GAAP income from operations margin
12.4 %1.5 %
Nine Months Ended September 30,
(in thousands)
20242023
Net cash provided by (used in) operating activities$35,063 $(3,567)
Net cash used in investing activities(51,076)(34,319)
Net cash provided by (used in) financing activities2,009 (928)
Effect of exchange rate changes on cash and cash equivalents424 238 
Net decrease in cash, cash equivalents and restricted cash$(13,580)$(38,576)
Nine Months Ended September 30,
(in thousands)
20242023
Net cash provided by (used in) operating activities$35,063 $(3,567)
Purchases of property and equipment(3,411)(1,065)
Capitalization of internal-use software costs(5,842)(3,913)
Free cash flow$25,810 $(8,545)
Nine Months Ended September 30,
20242023
Net cash provided by (used in) operating activities (as a percentage of revenue)12.8 %(1.6)%
Purchases of property and equipment (as a percentage of revenue)(1.2)%(0.5)%
Capitalization of internal-use software costs (as a percentage of revenue)(2.1)%(1.7)%
Free cash flow margin9.5 %(3.8)%
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Components of our Results of Operations
Revenue
We generate nearly all of our revenue from subscriptions to our online visibility management platform under a SaaS model. Subscription revenue is recognized ratably over the contract term beginning on the date on which we provide the customer access to our platform. Our customers do not have the right to take possession of our software. Our subscriptions are generally non-cancellable during the contractual subscription term, however our subscription contracts contain a right to a refund if requested within seven days of purchase.
We offer our paid products to customers via monthly or annual subscription plans, as well as one-time and ongoing add-ons. Our subscription-based model enables customers to select a plan based on their needs and license our platform on a per user per month basis.
As of September 30, 2024, we served over 117,000 paying customers in various industries, and our revenue is not concentrated with any single customer or industry. For the three and nine months ended September 30, 2024, no single customer accounted for more than 10% of our revenue.
Cost of Revenue
Cost of revenue primarily consists of expenses related to hosting our platform, acquiring data, merchant account fees, and providing support to our customers. These expenses are comprised of personnel and related costs, including salaries, benefits, incentive compensation, and stock-based compensation expenses related to the management of our data centers, our customer support team, and our customer success team. In addition to these expenses, we incur third-party service provider costs, such as data center and networking expenses, data acquisition costs, allocated overhead costs, depreciation and amortization expense associated with our property and equipment, and amortization of capitalized software development costs and intangible assets acquired through business combinations and asset acquisitions. We allocate overhead costs, such as rent and facility costs, certain information technology and data analytics costs, and employee benefit costs to all departments based primarily on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.
We expect our cost of revenue to increase in absolute dollars due to expenditures related to the purchase of hardware, data, expansion, and support of our data center operations and customer support/success teams. We have seen improvement in our cost of revenue as a percentage of revenue, and expect it to remain near current levels. It may fluctuate from period to period depending on the timing of significant expenditures. To the extent that our customer base grows, we intend to continue to invest additional resources in expanding the delivery capability of our products and other services. The timing of these additional expenses could affect our cost of revenue, both in terms of absolute dollars and as a percentage of revenue in any particular quarterly or annual period.
Operating Expenses
Sales and Marketing
Sales and marketing expenses primarily consist of personnel and related costs directly associated with our sales and marketing department, including salaries, benefits, incentive compensation, and stock-based compensation, online advertising expenses, and marketing and promotional expenses, as well as allocated overhead costs. We expense all costs as they are incurred, excluding sales commissions identified as incremental costs to obtain a contract, which are capitalized and amortized on a straight-line basis over the average period of benefit, which we estimate to be two years. We expect that our sales and marketing expenses will fluctuate as a percentage of revenue based on the timing of related costs.
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New sales personnel require training and may take several months or more to achieve productivity; as such, the costs we incur in connection with the hiring of new sales personnel in a given period are not typically offset by increased revenue in that period and may not result in new revenue if these sales personnel fail to become productive.
Research and Development
Research and development expenses primarily consist of personnel and related costs, including salaries, benefits, incentive compensation, stock-based compensation, and allocated overhead costs. Research and development expenses also include depreciation expense and other expenses associated with product development. Other than internal-use software costs that qualify for capitalization, research and development costs are expensed as incurred. We plan to increase the dollar amount of our investment in research and development for the foreseeable future as we focus on developing new products, features, and enhancements to our platform. We believe that investing in the development of new products, features, and enhancements improves customer experience, makes our platform more attractive to new paying customers, and provides us with opportunities to expand sales to existing paying customers and convert free customers to paying customers.
General and Administrative
General and administrative expenses primarily consist of personnel and related expenses, including salaries, benefits, incentive compensation, and stock-based compensation, associated with our finance, legal, human resources, IT, and other administrative employees. Our general and administrative expenses also include professional fees for external legal, accounting, and other consulting services, insurance, depreciation and amortization expense, as well as allocated overhead. We expect to increase the size of our general and administrative functions to support the growth of our business. We expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with rules and regulations applicable to companies listed on a U.S. securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, increases in insurance premiums, investor relations and professional services. We expect our general and administrative expenses to decrease as a percentage of revenue over time.
Exit Costs
All costs associated with our relocation efforts are included in the unaudited condensed consolidated statement of operations in our income from continuing operations under the line item, Exit Costs. Exit costs in connection with our relocation efforts include employee severance and fringe benefit costs and other associated relocation costs. We do not expect to incur exit costs associated with relocation efforts in future periods.
Other Income, Net
Included in other income, net are foreign currency transaction gains and losses. In accordance with ASC 830, Foreign Currency Matters, we redetermined our functional currencies of our international locations as of January 1, 2022, when it was determined the local currencies for these regions were most appropriate. For the three and nine months ended September 30, 2024, the functional currencies of our international locations were the local currencies for these regions. Any differences resulting from the re-measurement of assets and liabilities denominated in a currency other than the functional currency are recorded within other income, net. We expect our foreign currency exchange gains and losses to continue to fluctuate in the future as foreign currency exchange rates change.
Other income, net also includes amounts for interest income and expense, other miscellaneous income and expense, and gains and losses unrelated to our core operations. We have elected the fair value option in respect to the accounting for our convertible note investments, allowing for increases and
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decreases in the fair value of such investments to be recorded to other income, net for each reporting period. Interest expense is related to our finance leases.
Income Tax Provision
We operate in several tax jurisdictions and are subject to taxes in each country or jurisdiction in which we conduct business. We account for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. In addition, this method requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. To date, we have incurred cumulative net losses and maintain a full valuation allowance on our net deferred tax assets. Our tax expense for the three and nine months ended September 30, 2024 primarily relates to the tax provision recorded on the earnings of our profitable foreign subsidiaries and the requirement to capitalize and amortize certain research and development costs which results in a current U.S. tax provision but no deferred tax benefit as a result of the valuation allowance maintained against our net deferred tax assets. Our tax expense for the three and nine months ended September 30, 2023 primarily relates to income earned in certain foreign jurisdictions.
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Results of Operations
The following tables set forth information comparing our results of operations in dollars and as a percentage of total revenue for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands)(in thousands)
Revenue$97,410 $78,718 $274,173 $224,281 
Cost of revenue (1)17,063 13,032 46,665 38,643 
Gross profit80,347 65,686 227,508 185,638 
Operating expenses
Sales and marketing (1)35,689 30,094 104,610 95,827 
Research and development (1)22,183 14,075 58,775 42,071 
General and administrative (1)20,770 18,769 57,556 56,797 
Exit costs— — — 1,292 
Total operating expenses78,642 62,938 220,941 195,987 
Income (loss) from operations1,705 2,748 6,567 (10,349)
Other income, net2,912 2,104 9,167 6,728 
Income (loss) before income taxes4,617 4,852 15,734 (3,621)
Provision for income taxes3,899 637 11,652 2,303 
Net income (loss)718 4,215 4,082 (5,924)
Net loss attributable to noncontrolling interest in consolidated subsidiaries(376)— (809)— 
Net income (loss) attributable to Semrush Holdings, Inc.$1,094 $4,215 $4,891 $(5,924)
__________________
(1)Includes stock-based compensation expense as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands)(in thousands)
Cost of revenue$71 $33 $169 $82 
Sales and marketing1,228 822 3,207 2,190 
Research and development1,707 579 3,714 1,464 
General and administrative4,569 2,769 12,766 7,028 
Total stock-based compensation$7,575 $4,203 $19,856 $10,764 

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The following table sets forth our unaudited condensed consolidated statements of operations data expressed as a percentage of revenue for the periods indicated (amounts may not sum due to rounding):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(as a percentage of total revenue)
Revenue100 %100 %100 %100 %
Cost of revenue18 %17 %17 %17 %
Gross profit82 %83 %83 %83 %
Operating expenses
Sales and marketing37 %38 %38 %43 %
Research and development23 %18 %21 %19 %
General and administrative21 %24 %21 %25 %
Exit costs— %— %— %1 %
Total operating expenses81 %80 %80 %87 %
Income (loss) from operations2 %3 %2 %(5)%
Other income, net3 %3 %3 %3 %
Income (loss) before income taxes5 %6 %6 %(2)%
Provision for income taxes4 %1 %4 %1 %
Net income (loss)1 %5 %1 %(3)%

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Revenue
Our revenue during the three and nine months ended September 30, 2024 and 2023 was as follows:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Revenue$97,410 $78,718 $18,692 24 %$274,173 $224,281 $49,892 22 %

Revenue increased in all regions. The majority of this increase was driven by an increase in the number of paying customers from over 106,000 as of September 30, 2023 to over 117,000 as of September 30, 2024. The increases in revenue for the three and nine months ended September 30, 2024 were also driven by growth in user licenses per customer, attach rates, and increased revenue per customer related to larger customers. We define attach rates as the ratio of the number of paying customers who purchase specific add-ons to the number of total paying customers.
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Revenue based upon the locations of our paying customers during the three and nine months ended September 30, 2024 and 2023 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands)(in thousands)
Revenue:
United States$44,525 $37,557 $127,867 $107,101 
United Kingdom9,003 7,687 25,901 21,972 
Other43,882 33,474 120,405 95,208 
Total revenue$97,410 $78,718 $274,173 $224,281 

Cost of Revenue, Gross Profit and Gross Margin
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Revenue$97,410 $78,718 $18,692 24 %$274,173 $224,281 $49,892 22 %
Cost of revenue$17,063 $13,032 $4,031 31 %$46,665 $38,643 $8,022 21 %
Gross profit$80,347 $65,686 $14,661 22 %$227,508 $185,638 $41,870 23 %
Gross margin82 %83 %83 %83 %

For the three months ended September 30, 2024, cost of revenue increased by $4.0 million compared to the corresponding period of the prior year. This increase is primarily driven by a $1.2 million increase in depreciation and amortization costs related to increased capitalized software and intangible asset amortization, a $0.8 million increase in integration and data costs, a $0.8 million increase in personnel costs, a $0.5 million increase from the allocation of IT and other costs, and a $0.4 million increase in merchant fees.
For the nine months ended September 30, 2024, cost of revenue increased by $8.0 million compared to the corresponding period of the prior year. This increase is primarily driven by a $2.4 million increase in depreciation and amortization costs related to increased capitalized software and intangible asset amortization, a $2.0 million increase in integration and data costs, a $1.5 million increase from the allocation of IT and other costs, a $1.1 million increase in merchant fees, and a $0.9 million increase in personnel costs.
Operating Expenses
Sales and Marketing
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Sales and marketing$35,689 $30,094 $5,595 19 %$104,610 $95,827 $8,783 9 %
Percentage of total revenue37 %38 %38 %43 %
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For the three months ended September 30, 2024, sales and marketing expense increased by $5.6 million compared to the corresponding period of the prior year. This increase was primarily driven by a $4.2 million increase in personnel costs as a result of higher wage and contractor costs, a $0.6 million increase in marketing and advertising expense due to increased online advertising, a $0.4 million increase from the allocation of other costs, and a $0.3 million increase from the allocation of IT costs.
For the nine months ended September 30, 2024, sales and marketing expense increased by $8.8 million compared to the corresponding period of the prior year. This increase was primarily driven by a $10.4 million increase in personnel costs primarily driven by increased contractor, stock-based compensation, and commission costs, a $2.1 million increase from the allocation of IT costs, and a $1.4 million increase from the allocation of other costs. These increases were partially offset by a $5.0 million decrease in marketing and advertising expense primarily due to lower paid search costs.
Research and Development
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Research and development$22,183 $14,075 $8,108 58 %$58,775 $42,071 $16,704 40 %
Percentage of total revenue23 %18 %21 %19 %

For the three months ended September 30, 2024, research and development costs increased by $8.1 million compared to the corresponding period of the prior year, primarily as a result of a $4.7 million increase in personnel costs driven by a 12% increase in headcount compared to the corresponding period of the prior year and increased stock-based compensation costs, a $1.5 million increase related to IT and other allocations, a $0.7 million increase to other costs, a $0.5 million increase to professional service costs, and a $0.4 million increase from the allocation of rent and office costs.
For the nine months ended September 30, 2024, research and development costs increased by $16.7 million compared to the corresponding period of the prior year, primarily as a result of a $8.3 million increase in personnel costs driven by a 10% increase in headcount compared to the corresponding period of the prior year, a $3.1 million increase related to IT and other allocations, a $2.2 million increase to other costs, primarily related to an increase in costs allocated to research and development, a $1.5 million increase to professional service costs, and a $1.2 million increase from the allocation of rent and office costs.
General and Administrative
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
General and administrative$20,770 $18,769 $2,001 11 %$57,556 $56,797 $759 1 %
Percentage of total revenue21 %24 %21 %25 %

For the three months ended September 30, 2024, general and administrative expense increased by $2.0 million compared to the corresponding period of the prior year. This increase was primarily driven by a $3.8 million increase in personnel costs, which includes a $1.8 million increase in stock-based
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compensation and a $1.5 million increase to professional services primarily related to acquisition costs. These increases were partially offset by a decrease of $2.4 million decrease from the allocation of IT costs and a $0.9 million decrease driven by the allocation of other costs.
For the nine months ended September 30, 2024, general and administrative expense increased by $0.8 million compared to the corresponding period of the prior year. This increase was primarily driven by a $9.3 million increase in personnel costs, which includes a $5.7 million increase in stock-based compensation and a $0.7 million increase to professional services primarily related to acquisition costs. This increase was partially offset by a decrease of $6.6 million from the allocation of IT costs and a $2.6 million from the allocation of other costs.
Exit Costs
All costs associated with our relocation efforts are included in the unaudited condensed consolidated statement of operations in our income from continuing operations under the line item, Exit Costs. Exit costs in connection with our relocation efforts include employee severance and fringe benefit costs, and other associated relocation costs.
During the three and nine months ended September 30, 2024, respectively, exit costs were not incurred. During the three and nine months ended September 30, 2023 exit costs totaled $0.0 million and $1.3 million, respectively, related to our relocation efforts.

Other Income, Net
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Other income, net$2,912 $2,104 $808 38%$9,167 $6,728 $2,439 36%
Percentage of total revenue3 %3 %3 %3 %

The increase in other income for the three months ended September 30, 2024 compared to the corresponding period of the prior year was primarily due to an increase in fair value adjustments relating to contingent consideration (See Note 5). The increase in other income for the nine months ended September 30, 2024 compared to the corresponding period of the prior year was primarily due to an increase in foreign currency exchange gain (loss) and an increase in interest income as compared to the prior year period.
Provision for Income Taxes
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Amount%20242023Amount%
(dollars in thousands)(dollars in thousands)
Provision for income taxes$3,899 $637 $3,262 512 %$11,652 $2,303 $9,349 406 %
Percentage of total revenue4 %1 %4 %1 %
The increase in the provision for income taxes for the three and nine months ended September 30, 2024 compared to the corresponding periods of the prior year was primarily due to the effects of changes in the tax provision recorded on the earnings of our profitable foreign subsidiaries and the impact of the requirement to capitalize and amortize certain research and development costs which results in a current
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provision for U.S. taxes but no deferred tax benefit as a result of the valuation allowance maintained against our net deferred tax assets.
Liquidity and Capital Resources
Our principal sources of liquidity have been the net proceeds of our initial public offering in March 2021 and our follow-on offering in November 2021, which totaled $213.8 million, after deducting underwriting discounts and offering expenses paid or payable by us, and the net proceeds we received through private sales of equity securities, as well as sales of premium subscriptions to our platform.
As of September 30, 2024, we had cash and cash equivalents of $45.1 million, short-term investments of $187.8 million, and accounts receivable of $9.3 million.
Our principal uses of cash in recent periods have been to fund operations, invest in capital expenditures and short-term investments, and strategically acquire new businesses. This cash is held in deposits and money market funds.
We believe our existing cash, cash equivalents, and short-term investments will be sufficient to meet our operating and capital needs for at least the next 12 months. Our future capital requirements will depend on many factors, including those set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023.
In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations, our business, results of operations, and financial condition could be adversely affected.
Operating Activities
Our largest source of operating cash is cash collections from our customers for subscription services. Our primary uses of cash from operating activities are for online advertising, personnel costs across the sales and marketing, product and development, and general and administrative departments, and hosting costs.
Net cash provided by operating activities during the nine months ended September 30, 2024 was $35.1 million. The activity resulted from a net income of $4.1 million adjusted for non-cash add backs of $37.5 million and a net cash outflow of $6.6 million from changes in operating assets and liabilities during the nine months ended September 30, 2024. Non-cash charges primarily consisted of $19.9 million of stock-based compensation expense, $9.2 million for amortization of deferred contract acquisition costs related to capitalized commissions, and $7.1 million for depreciation and amortization expense. The changes in operating assets and liabilities were primarily the result of a $9.0 million increase in deferred contract costs, a $3.5 million increase in prepaid expenses and other current assets, and a $3.4 million decrease in operating lease liability. These outflows were partially offset by a $6.9 million increase in deferred revenue, a $1.9 million increase in accounts payable, and a $1.3 million increase in accrued expenses.
Net cash used in operating activities during the nine months ended September 30, 2023 was $3.6 million. The activity resulted from a net loss of $5.9 million adjusted for non-cash add backs of $21.8 million and a net cash outflow of $19.5 million from changes in operating assets and liabilities during the nine months ended September 30, 2023. Non-cash charges primarily consisted of $10.8 million of stock-based compensation expense and $7.5 million for amortization of deferred contract acquisition costs related to capitalized commissions. The changes in operating assets and liabilities were primarily the result of a $9.8 million increase in deferred contract costs, a $5.6 million decrease in accounts payable, a $5.4 million increase in prepaid expenses and other current assets, a $2.8 million decrease in operating
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lease liability, and a $2.3 million increase in accounts receivable. These outflows were partially offset by a $6.2 million increase in deferred revenue due to the addition of new customers and expansion of the business.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2024 was $51.1 million and primarily consisted of $136.8 million in purchases of short-term investments, $21.1 million in cash paid for businesses, net of cash acquired, $7.8 million in funding of the investment loan receivables, $5.8 million in capitalization of internal-use software costs, $4.9 million related to the purchase of noncontrolling interest, $3.7 million in purchases of convertible debt securities, and $3.4 million in purchases of property and equipment. This activity was partially offset by $132.5 million in proceeds from sales and maturities of short-term investments.
Net cash used in investing activities for the nine months ended September 30, 2023 was $34.3 million and primarily consisted of $182.4 million in purchases of short-term investments. This activity was partially offset by $154.7 million in proceeds from sales and maturities of short-term investments.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2024 was $2.0 million and consisted of $3.7 million relating to the exercise of stock options partially offset by $1.1 million in payment of acquired debt, and $0.6 million of cash outflows related to the payment of finance leases.
Net cash used in financing activities for the nine months ended September 30, 2023 was $0.9 million and consisted of $1.9 million of cash outflows related to the payment of finance leases partially offset by inflows of $0.7 million relating to the exercise of stock options as well as $0.3 million related to proceeds from shares issued in connection with the Employee Stock Purchase Plan.
Contractual Obligations and Commitments
Our principal commitments consist of obligations under leases for office space and leases for data center facilities. For more information regarding our lease obligations, see Note 4 to the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q. In addition to our leases, we also have multi-year commitments with certain data providers expiring at various dates through 2026. For more information regarding our commitments with data providers, see Note 15 to the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q. We expect to fund these obligations with cash flows from operations and cash on our balance sheet.
Recent Accounting Pronouncements
See the section titled “Recent Accounting Pronouncements Not Yet Adopted” in Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. On an
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ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates.
Our critical accounting policies and estimates are described under the heading Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2023 and in Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates, interest rates, and inflation. We do not hold or issue financial instruments for trading purposes.
Interest Rate Risk
We are exposed to market risk related to changes in interest rates. Our investments primarily consist of short-term investments and money market funds. As of September 30, 2024 we had cash, cash equivalents, and short-term investments of $232.9 million. The carrying amount of our cash and cash equivalents reasonably approximates fair value, due to the short maturities of these investments. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs and the fiduciary control of cash and investments. We are obligated by our investment policy to invest the majority of our portfolio into U.S. government securities. We do not enter into investments for trading or speculative purposes. Our short-term investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio, we believe only dramatic fluctuations in interest rates would have a material effect on our investments. We do not believe that an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio. As such we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

Foreign Currency Exchange Risk
We are not currently subject to significant foreign currency exchange risk with respect to revenue as our U.S. and international sales are predominantly denominated in U.S. dollars. However, we have some foreign currency risk related to a small amount of sales denominated in euros, and expenses denominated in euros and other currencies. Sales denominated in euros reflect the prevailing U.S. dollar exchange rate on the date of invoice for such sales. Increases in the relative value of the U.S. dollar to the euro may negatively affect revenue and other operating results as expressed in U.S. dollars. We incur significant expenses outside the United States denominated in foreign currencies, primarily the euro. In connection with our operations in Europe with expenses in euros and other currencies, we are exposed to some increased foreign currency exchange risk related to additional expenses denominated in euros. If the average exchange rates of any of these foreign currencies strengthen against the dollar, the dollar value of our expenses outside the United States will increase. For example, an immediate 10% decrease or increase in the relative value of the U.S. dollar to the euro would result in a $7.7 million gain or loss on our unaudited condensed consolidated statements of operations and cash flows.
We have not engaged in the hedging of foreign currency transactions to date. However, as our international operations expand, our foreign currency exchange risk may increase. If our foreign currency exchange risk increases in the future, we may evaluate the costs and benefits of initiating a foreign currency hedge program in connection with non-U.S. dollar denominated transactions.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on management’s evaluation as of the quarter ended September 30, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024.
Our management believes the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the ultimate costs to resolve any pending matter will not have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
We have included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, a description of certain risks and uncertainties associated with our business (the “Risk Factors”). You should carefully consider the Risk Factors before making a decision to invest in our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
None.
Use of Proceeds From the IPO
On March 24, 2021, our Registration Statement on Form S-1 (File No. 333-253730) was declared effective by the SEC for our IPO. There has been no material change in the use of proceeds from our IPO as described in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 7, 2024.
Issuer Purchases of Equity Securities
None.
Item 5. Other Information
(c) Securities Trading Plans of Directors and Executive Officers

On August 8, 2024, Eugene Levin, our President, adopted a trading arrangement for the sale of our Class A common stock that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) (a “Rule 10b5-1 Trading Plan”). Mr. Levin’s Rule 10b5-1 Trading Plan, which commences on December 2, 2024 and ends on December 22, 2025, provides for the sale of up to 1,080,000 shares of our Class A common stock pursuant to the terms of the plan.

On September 9, 2024, the Vranesh Family Trust U/A DTD 03/26/2007, a trust for the benefit of Mark Vranesh, a member of our Board of Directors, and his spouse, and of which Mr. Vranesh and his spouse are trustees, adopted a Rule 10b5-1 Trading Plan. Mr. Vranesh’s Rule 10b5-1 Trading Plan, which commences on January 2, 2025 and ends on December 31, 2026, provides for the sale of up to 80,000 shares of our Class A common stock pursuant to the terms of the plan.

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Item 6. Exhibits
The exhibits listed below are filed or incorporated by reference in this Quarterly Report on Form 10-Q.
Exhibit NumberExhibit Title
3.1(1)
Amended and Restated Certificate of Incorporation of the Registrant
3.2(2)
Third Amended and Restated Bylaws of the Registrant
3.3 (3)
Amendment of the Amended and Restated Certificate of Incorporation of the Registrant
4.1(4)
Form of Class A common stock certificate of the Registrant
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS*XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page with Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibit 101)
(1) Filed as Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on March 16, 2021, and incorporated herein by reference.

(2) Filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2024, and incorporated herein by reference.

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(3) Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 10, 2024, and incorporated herein by reference.

(4) Filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on March 16, 2021, and incorporated herein by reference.

* Filed herewith.
# Indicates management contract or compensatory plan, contract, or agreement.
+ The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SEMRUSH HOLDINGS, INC.
November 12, 2024By:/s/ Oleg Shchegolev
Oleg Shchegolev
Chief Executive Officer
(Principal Executive Officer)
November 12, 2024By:/s/ Brian Mulroy
Brian Mulroy
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

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