Similarweb Shares Plunge 17% Despite Strong Q2 Results

Similarweb Ltd. (SMWB), a digital intelligence provider for enterprises and businesses, reported its first public quarterly results post listing on May 12, 2021. The company delivered solid year-over-year revenue growth, driven by an increase in customers, and also provided an upbeat revenue outlook for the full year 2021.

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However, the company’s reported loss was larger than the prior-year period. Following the news, shares plunged 17%, closing at $20.60 on August 11. (See Similarweb stock charts on TipRanks)

The company reported a GAAP loss of $0.33 per share, wider than the year-ago period loss of $0.25 per share.

Revenue for the quarter climbed 49% to $32.51 million, outpacing the Street’s estimate of $30.22 million.

Similarweb’s customer base increased 24% year-over-year to 3,068, including customers with annual recurring revenue (ARR) of more than $100,000 increasing 52% year-over-year.

Or Offer, Founder and CEO of the company, said, “Our growth accelerated in Q2, we added customers across all verticals and markets, expanded our existing customer relationships and continued to invest across the board in order to increase our scale, customer base, and market penetration. We have a massive opportunity ahead of us and we will continue to invest in capturing it.”

Based on the company’s solid first-half performance and continued momentum for its offerings, the company introduced upbeat guidance.

For the third quarter, the company guided for revenue to fall in the range of $32.8 – $33.2 million, higher than the consensus estimates of $31.8 million.

For the full year 2021, Similarweb forecasts revenue to be in the range of $129 – $130 million, better than the consensus estimates of $125.45 million.

In response to the strong results in its first quarter as a public company, William Blair analyst Bhavan Suri reiterated a Buy rating on the stock.

Suri said, “The company pointed to investments in its go-to-market motion, unique product offering, and a strong overall demand environment fueled by digital transformation tailwinds as additional drivers for the outperformance.”

Overall, the analyst remains positive about the company’s future, with solid second-quarter execution and favorable demand and pipeline trends.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 5 Buys and 2 Holds. The average Similarweb price target of $27.67 implies 34.3% upside potential to current levels. Shares have lost 5.8% since their listing.