In short
Marketing School Episode Notes
Episode Title
Why Semrush’s Numbers Prove That SEO Ain’t Dying
Episode Number
#2554
Hosts
Neil Patel and Eric Siu
Date
[Insert Date Here]
Podcast Description
Neil Patel and Eric Siu share actionable digital marketing lessons from their extensive experience in the industry. This episode focuses on the latest data from Semrush, providing insights into the current state of SEO amidst evolving market dynamics.
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Key Points Discussed
- Introduction
- Topic: Examination of Semrush's latest numbers to argue that SEO is not dying.
- Importance of Semrush's data as an industry barometer, especially in the context of AI advancements.
- Semrush’s Q2 2023 Earnings Report
- Revenue: $75 million, a 19% increase year-over-year.
- Annual Recurring Revenue (ARR): Surpassed $300 million, up 20% year-over-year.
- Customer Growth: 14% increase in paying customers.
- Net Loss: $0.3 million for the quarter.
- Paying Customers: Over 104,000.
- Free Users: 951,000 active users, up 35% year-over-year.
- Analysis of Semrush’s Business Health
- Indicators suggest a healthy business despite some fluctuations in stock performance.
- Upselling Strategy: Net negative churn, meaning upsells offset customer cancellations.
- Notable growth in customers paying over $10,000 annually (34% year-over-year).
- The hosts noted a general market trend where some companies, like Zoom Info, are experiencing declines, hinting at cautious spending among businesses.
- Comparative Analysis with Ahrefs
- Ahrefs remains profitable without heavily publicizing its numbers.
- Estimated to have over $100 million in revenue for the year 2023.
- Investment of $60 million in building a creator-friendly search engine.
- Hosts underscore a contrasting approach between Ahrefs and Semrush in terms of financial strategy and growth.
- Conclusion
- Both hosts reaffirm their belief that SEO is resilient and will continue to thrive.
- There’s a robust foundation for the SEO industry, as illustrated by Semrush and Ahrefs's performance.
- Encouragement for listeners to rate, review, and subscribe to the podcast.
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Key Takeaways
- SEO is Not Dying: The evidence from Semrush’s financials supports the resilience of the SEO sector.
- Growth in Higher-Paying Customers: A shift towards premium services is evident, showcasing a healthy demand for advanced SEO tools.
- Market Trends: Awareness of broader market conditions and competitor performance is crucial for understanding the SEO landscape.
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Additional Resources
- Semrush [Website](https://www.semrush.com)
- Ahrefs [Website](https://www.ahrefs.com)
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Feedback and Engagement
- Comments: Suggestions for future topics are welcomed.
- Reviews: Listeners are encouraged to leave short reviews to support the podcast.
- Connect with Hosts:
- Neil Patel: [Twitter](https://twitter.com/neilpatel)
- Eric Siu: [Twitter](https://twitter.com/ericosiu)
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Note: For a deeper understanding of the episode and to keep up with the latest in marketing, visit [Marketing School](https://www.marketingschool.io).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00So Neil, guess how much revenue SEMrush or SEMrush did in Q2 of 2023? Just throw a number out there. 75 million bucks. Did you read this already? I look at their annual earnings report. Revenue, 75 million bucks, up 19 % year on year. ARR, annual recurring revenue, has surpassed 300 million, up 20 % year on year. Customer growth, up 14 % year on year. Net loss of 0.3 million for the quarter. SEMrush now has over 104 ,000 paying customers. So by the way, I'm reading this and we'll react to this in a second, but this is from Glenn Alsop, ViperChill. He's been known in the SEO space for a while. Also, they have 951 ,000 active free users, which is up 35 % year on year.
0:45So our title here is SEO ain't dying. People like to say it's dying, but I mean, this company looks pretty healthy to me. And they just did a price increase too. I don't know if you saw the announcement on that. At least I got an email on that. No, you read the K1, right? I didn't read all of the K1. It's really long. Okay. What did you find? What are your reactions? Yeah. So when you look at SEM rush, just in general, the business has done really well. Their stock has gone on a rollercoaster, but overall the business seems pretty healthy. I'm not an economist or a financial guy, nor am I giving financial advice or telling you to buy or sell it, but more so the business seems pretty healthy.
1:21The last time I looked, they have net negative churn in which their upsells make up for all the cancellations plus more. They've been moving upstream quite a bit, which is how they make a lot of their money. Yeah. And check this out. Customers who pay more than 10 grand annually grew by 34 % year on year. So they're trying to move a little up market. And so Glenn says, I can tell growth has slowed slightly. I mean, 34 % year on year is good. Also, the other thing too, to keep in mind with these people that are paying more is that when you look at Zoom Info's numbers, you have a lot of people that are kind of culling, right?
1:53I think Zoom Info dropped by, their market cap dropped by 2.5 or $3 billion or so, it's because their numbers, they kind of missed, right? And so I think we're going to see a lot more of that where people are just kind of reducing their costs. And so it's no surprise here. And as someone obsessed with SEO, SEMrush numbers are part of my barometer as to how the industry is going or doing, especially in the age of AI. So it's nice. Well, they're also losing quite a bit more money too. So like, I don't know how closely you follow their stock, but just in general, when you look at their losses, yes, they've been getting growth.
2:23They've also been burning more money to get the growth from what it looks like, unless I'm reading it inaccurately from previous quarters. But all of a sudden, when you look at June 2023, it was really good in which they didn't burn as much. But generally, like their December 2022 was really bad. Their March was pretty bad of 2023. And then they started cutting back on how much they're burning. It went all the way up in net income to almost close to negative 14 million bucks. And now I think they're at negative$200 ,000,$300 ,000. You don't own any SEMRush stock, do you? No. Yeah, me either. But I have the graph pulled up kind of over the years.
3:01Obviously, you can take a look at their earnings if you want. Q2 earnings calls available as well. So that's that. But main thing here is neither of us think SEO is dying. It's here to stay. And the thing is, Ahrefs, they don't talk about their numbers too often, but they're very profitable. I don't think they really raised money for it. And it's interesting, kind of the dichotomy between Ahrefs and SEMrush. Do you remember what the Ahrefs numbers were? I don't remember what the Ahrefs numbers are. I know they supposedly do over$100 million a year in revenue. That's all I know. Yeah, I'm seeing it.
3:31So$100 million in revenue in 2023, revenue run rate. And this is coming from Nathan Latka. And then they also invested last year$60 million into building a creator-friendly search engine. So anyway, stuff isn't going anywhere. And do you have anything else to add? That's it. all right that is it for today please don't forget to rate review subscribe helps us grow and goodbye