About Semrush
Getting noticed on the internet, whether you’re an individual influencer or a Fortune 500 company or practically anywhere in between, has become increasingly important in terms of furthering one’s business and growing their brand, whatever it may be.
For those who are intent on achieving these goals in both the short and long-term, they might want to call on Semrush for some help with beefing up their online presence and visibility to the spectators of the World Wide Web.
Given this, we guess it isn’t really much of a leap to make in understanding that Semrush is a major player in the search engine optimization (SEO) and (online) visibility spaces, of course, operating a software as a service (SaaS) model, allowing its subscribers to gain as much information about their audiences as possible so as to inevitably better its offerings, services and overall reputation on the internet and the world in general.
Data, as we all know, is becoming more and more important to individuals and businesses across the board.
Individuals, businesses and other organizations, in this day and age, to a large degree, live or die from their online ranking and presence overall.
Semrush just happens to be following the trend and helping its clients in these capacities.
After all, given that the company, Boston, Massachusetts-based Semrush, according to the company’s website, has helped major companies and brands such as Tesla, Walmart, Procter & Gamble, International Business Machines (IBM), Amazon, Vodafone, Forbes and many others with gaining more insight on their current and prospective customers and general online viewership.
All of that being said, let’s dig into this company’s stock and underlying financials, especially since its share price (NYSE: SEMR) has fallen around 30% over the last five years.
Semrush’s stock financials
First of all, Semrush is a $1.06 billion company.
Secondly, Semrush’s stock (NYSE: SEMR) is trading at $7.45 per share with no presently listed price-to-earnings (P/E) ratio and no annually issued dividend offered to its shareholder base at the time of this writing.
None of this surprises us nor scares us in the slightest as this is a somewhat young company (founded in 2008) tied with the fact that, as outlined in previously written stock analysis articles, SaaS platforms, especially younger ones, don’t often have P/E ratios listed since all of its earnings are likely being reinvested back into the company’s core businesses and perhaps new initiatives.
Regarding the dividend or really, the lack thereof, the company’s executives likely, like most other young, growth-oriented SaaS companies, opted to not burn through any additional cash and instead hold onto as much cash as it can so as to sharpen its core product offerings and simultaneously fund other growth levers instead of losing large amounts of cash unnecessarily each quarter.
Moving onto the company’s balance sheet, Semrush’s executive team is in charge of approximately $299 million in terms of total assets as well as around $99 million in total liabilities, which, from our vantage point, is a great place to be.
Namely, this company doesn’t appear to be on a spiraling downward trajectory towards impending bankruptcy doom, and in fact seems to be well equipped to trudge through the current recession and also continue funding its current and near future growth opportunities.
As it relates to this company’s income statement and more specifically, its recent total annual revenue figures, Semrush’s total annual revenue since 2019 have struck a strong balance of sustainable and growthy.
For instance, it stood at $92.1 million in 2019 and has since risen each year to its latest reported figure (listed on TD Ameritrade’s platform at the time of this writing) of $254.3 million (in 2022).
As more and more entities realize the importance of gathering digestible data and ultimately, information about their viewers through various online mediums, Semrush will undoubtedly stand to benefit and from our perspective, continue to grow its revenues year-over-year (YOY) within this current decade and beyond.
Onto the state of the company’s cash flow statement, Semrush’s net income has been red each year since 2019, however, during each of those years (excluding 2022), with some years worse off than others.
For instance, according to the figures presented on TD Ameritrade’s platform, Semrush’s lowest amount of net income during this time range was -$33.8 million, approximately, as reported in 2022 and its highest, least negative year of net income being 2021, where it stood at around -$3.3 million.
Thankfully, as of right now it seems as though this company has enough cash and other assets to adequately support this cash burn, however, we hope that this changes by 2030 and is viewed as a more temporary measure in order to further capture market share in the crowded SEO and digital observability spaces and outpace the competition when it’s all said and done.
Candidly, we think this will be the case, although it may take some patience.
Semrush’s stock fundamentals
When it comes to the company’s trailing twelve month (TTM) net profit margin, according to the outlined figures displayed on TD Ameritrade’s platform, Semrush has some work to do on this front, however, it is far from uncommon for rapidly growing and expanding SaaS companies to bag a strong TTM net profit margin within its first decade of business, let alone its second.
All we ask for is tangible, visible, sustainable progress.
Nevertheless, the company’s TTM net profit margin isn’t ridiculously far off from that of the industry’s average, but definitely far enough, as it sits at -15.35% to the industry’s listed average of 17.36%
Over time, as the company continues to steadily grow, we hope margin expansion is near the top of its executive’s list in terms of priorities in the short, intermediate and long-term.
Nevertheless, it isn’t really that surprising or worrisome but if its TTM net profit margin doesn’t make much (if any) meaningful progress in the next few years (say, between now and 2027), our interest will essentially be shot.
With respect to the company’s TTM returns on both assets and investments, TD Ameritrade’s platform also has them listed as both lower (oddly enough, with a similar difference as its TTM net profit margin) than that of the industry’s averages as well, which again, isn’t all that surprising given that it is still growing and burning through some cash and also needs some time to digest some of its recent investments.
Should you buy Semrush stock?
If you think data will continue growing in importance and continue to be implemented by businesses, individuals and other entities across the globe indefinitely, Semrush doesn’t appear to be a bad horse to put some money behind.
Even though we think this is the case given the aforementioned financials, this company will require some patience from its investors and as long as progress is being made organically and inorganically, as it operates in a very crowded, investment intensive industry that itself is going to more than likely continue expanding at a rapid rate.
As the company’s stock continues to sit near all-time lows, we think holding off and waiting for the current recession to subside is a good best practice to consider, as this company’s revenues are likely to soften as a result of marketing budget cuts which are usually among the first to be made by companies, small and large, during times of economic slowdown.
However, when the dust settles and the economy picks itself back up, we think Semrush is worthy of a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.