What Happened?
Shares of marketing analytics software Semrush (NYSE: SEMR) fell 16.8% in the afternoon session after the company reported underwhelming fourth-quarter results: full-year revenue guidance fell short, and customer growth showed signs of deceleration.
The company announced a leadership transition, with William R. Wagner taking over as CEO while Co-Founder Oleg Shchegolev, current CEO, shifts to focus on AI and product development.
On the other hand, revenue slightly surpassed Wall Street estimates, and profit margins exceeded expectations, leading to an operating income beat. Still, this was a weaker quarter.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Semrush? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Semrush’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for Semrush and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 21.1% on the news that the company reported weak fourth-quarter 2023 results with its total number of customers and net revenue retention rate falling short of expectations. Furthermore, its revenue guidance for the next quarter and the full year 2024 missed analysts' forecasts.
On the other hand, revenue exceeded expectations during the quarter. In addition, its projected free cash flow margin for 2024 was better than expected. In the first half of 2024, it expects its new Enterprise Platform to be available to all customers. According to the company, "it has been in a soft launch state since late October 2023 and is currently being used by a select number of large-scale business customers". Overall, this was a mediocre quarter for SEMrush.
Semrush is up 2.3% since the beginning of the year, but at $12.00 per share, it is still trading 34.7% below its 52-week high of $18.37 from February 2025. Investors who bought $1,000 worth of Semrush’s shares at the IPO in March 2021 would now be looking at an investment worth $1,070.
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