Semrush Holdings, Inc. (NYSE:SEMR) Q2 2024 Earnings Call Transcript

Semrush Holdings, Inc. (NYSE:SEMR) Q2 2024 Earnings Call Transcript August 6, 2024

Operator: Hello everyone, and welcome to the Semrush Holdings Second Quarter 2024 Results Conference Call. My name is Chach, and I’ll be the coordinator for your call today. [Operator Instructions] I’d now like to hand over to Brinlea Johnson, Investor Relations to begin. Brinlea, please go ahead.

Brinlea Johnson: Good morning, and welcome to Semrush Holdings second quarter 2024 conference call. We will be discussing the results announced in our press release issued after market close on Monday, August 5. With me on the call is our CEO, Oleg Shchegolev; our President, Eugene Levin; and our CFO, Brian Mulroy. Today’s call will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning our expected future business and financial performance and financial condition, expected growth, adoption and existing and future demand for our existing and any new products and features, our expected growth of our customer base and specific customer segments, the continued development of our products, the expansion of our ContentShake tool, industry and market trends, our competitive position, market opportunities, sales and marketing activities, acquisition activity, integration and results of recent acquisitions, future spending and incremental investments, our guidance for the third quarter of 2024 and the full year 2024, and statements about future pricing and operating results, including margin improvements, revenue growth and profitability, and assumptions regarding foreign exchange rates.

Forward looking statements are statements other than statements of fact and can be identified by words such as expect, can, anticipate, could, plan, believe, seek or will. These statements reflect our views as of today only, and should not be relied upon as representing our views at any subsequent date and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. For a discussion of the risks and important factors that could affect our actual results, please refer to our most recent quarterly report on Form 10-Q and our annual report on Form 10-K, filed with the Securities and Exchange Commission, as well as our other filings with the SEC.

During the course of today’s call, we refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued yesterday after market close, which can be found at investors.semrush.com. Now, let me turn the call over to Oleg.

Oleg Shchegolev: Thank you and good morning to everyone on the call. I am excited about our results. We had a very strong second quarter, delivering revenue of $91 million, up 22% year-over year and ARR growth of 25% year-over-year. We reported income from operations of $3.4million and non-GAAP income from operations of $12.2 million in the second quarter. Non-GAAP operating margin increased to 13.4%, compared to non-GAAP operating margin of 3.1% in the prior year period. We exceeded our prior guidance and I am pleased to say we are raising our full year 2024 revenue guidance. We are expanding our leadership position in online visibility and are succeeding in combining strong durable growth with improving profitability and free cashflow generation.

Our strong financials are the result of the solid foundation we have been building since 2008. Semrush started as a small group of SEO and IT specialists united by one mission, to make online competition fair and transparent, with equal opportunities for everyone. Now, we are well positioned for the next leg of growth with the leading software platform that enables marketing professionals to build, manage, and measure campaigns across all major channels to improve their online visibility. Our edge over the competition comes from our strong culture and history of leveraging our differentiated data to elevate the digital marketing activities of our customers. Semrush’s unique data sets are born from our own intellectual property and historical customer knowledge and the data our customers share with us.

This data generates invaluable predictive insights and opportunities for customers to drive significant ROI. As we enable new ways for customers to use our data, this use itself generates additional data, and as these data sets get larger, they also grow in power, accuracy, and trust. In the early years, we gained a strong reputation offering a single SEO product to SEO specialists and small to medium-sized businesses. Over the years, we have evolved our product suite into a comprehensive Marketing Platform focused on Search Engine Optimization, Search Engine Marketing, Content Marketing, Social Media, Competitive Intelligence, Local Marketing and Digital PR leveraging AI, and advanced analytics. During the course of this evolution, we believe that we have created one of the most comprehensive digital marketing data sets available in the market.

And while we started our journey focused on specialists and small business owners, we now have over 116,000 paying customers, and approximately 1.1 million free active users, over 150 countries, across all industries and all market segments. This shift from a single SEO product tailored to specialists and small business owners to a multi-product platform has been the driving force behind our growth and ability to significantly expand our Average ARR per Paying Customer by over 50% since the beginning of 2021. And we expect to continue to expand average ARR over the long term. We believe our brands, competitive moat, data set, product offering, efficiency and profitability, and customer loyalty are stronger than ever and we continue to make new investments that we expect to further strengthen the business.

This year, we continued on our journey and focused on initiatives we expect to drive the next phase of growth for Semrush. In May, we launched our enterprise SEO product, and we are pleased with the initial traction and demand. Prior to the launch, we already had been successful in acquiring 8,000 enterprise accounts, with over 500 employees. In a few short months, we have closed new deals with Digital Ocean, HSBC, Royal Bank of Canada, and many more. We believe the demand for our innovative Enterprise SEO product is strong, and we are encouraged by our early traction in the market. In addition to expanding our portfolio, we have a disciplined capital allocation approach around M&A and we believe we are well positioned to take advantage of new opportunities given our cash position.

In the second quarter, we made a small acquisition by taking a majority stake in Brand24,which we expect to extend our capabilities in Social Media and Brand Marketing. And most recently, in Q3, we acquired Ryte, which extends our capabilities with Technical SEO, and we believe will significantly increase our average ARR per paying customer potential. With our strong start to 2024, I feel even more confident that we have built the foundation for the future. We plan to leverage our profitability to invest in new products to extend our reach, impact and cross-sell/up-sell capabilities. These moves in concert are designed to solidify Semrush as the Marketing Platform of choice across all industries, segments, geographies and now evolving across all marketing disciplines and leadership levels.

We look forward to showcasing this strategy in more detail at our Analyst Day in New York City on October 1. I am excited to see many of you there. I will now turn the call over to Eugene and Brian to discuss the results of the quarter and our outlook in more detail.

Eugene Levin: Thank you, Oleg. We delivered another solid quarter and continue to scale, innovate and accelerate growth. Our platform is very powerful and helps marketers all over the world grow their online visibility. We are expanding our product portfolio into a comprehensive marketing platform leveraging our innovative internal development teams, partnerships and M&A. In the second quarter, we acquired a majority stake in Brand24, an impressive company with a strong team, and a leading SaaS platform, with a global reach, providing metrics, measuring brand awareness, sentiment analysis, and collecting customer insights. The acquisition strengthens our portfolio of upmarket media monitoring products and enhances our data analytics capabilities and insights into market trends.

In July, we acquired Ryte, which is a SaaS platform that helps businesses optimize their websites to improve user experience and organic search performance. Ryte can scan websites of any size and highlight important technical and performance issues. And these insights are used by both marketing and engineering teams. They have strong traction with large companies, and we believe that virtually any large company that generates customers through their website can benefit. We believe Ryte enables us to expand our Enterprise portfolio footprint beyond SEO and content marketing by engaging website developers within our current and prospective customer base. It is our expectation that over time, these additional features will further increase our average ARR per paying customer.

We talked previously about our Enterprise SEO product increasing our average ARR for enterprise accounts by 10 to 15 times and we estimate Ryte could further extend that increase by 15 to 20 times. We are gaining traction with both our SEO enterprise product and our enterprise go to market strategy. We are increasing the number of dedicated enterprise reps, have signed new deals with some of the largest companies in the world, and we are building out a strong pipeline that gives us confidence that our platform is resonating in the market. In addition to enterprise products initiatives, we continue to leverage AI in our platform. This quarter, we leveraged AI to give our customers truly personalized recommendations. In keyword research, we use AI to calculate personalized metrics such as keyword difficulty.

Our AI engine takes into account characteristics such as relevance, topical authoritativeness, ease of navigation and other relevant factors to create a truly personalized experience. This new feature enables our customers to identify topics that create the best potential for success to enhance their online visibility. In ContentShake AI we can now generate different content based on the location of the business. For example if your business is near Boston you might want to highlight your special offers for Celtics fans. These new features demonstrate how the value of AI can be dramatically increased when itis combined with proprietary Semrush data. And of course as Google added new AI powered search engine page result elements such as AI overview, we were one of the first companies to support this feature.

Now our clients can monitor their presence in AI overview snippets using Semrush tools such as Position Tracking and Semrush Sensor. I am confident in our position in the search market and our extensive portfolio. We are seeing increased adoption of our AI products and continue to innovate and launch new offerings into the market. We are expanding both our revenue and portfolio in the Enterprise segment which helps fuel higher average ARR per customer and strong net retention. I am very excited about our ability to service enterprise customers and continue to expand our portfolio of offerings. I will now turn the call over to Brian who will provide a more detailed discussion of our financial performance and guidance. Go ahead Brian.

Brian Mulroy: Thank you, Eugene. We had a solid second quarter across the Board. Our revenue was $91 million, growing 22% year-over-year. Growth was driven primarily by an expansion of our average revenue per customer as we continue to execute on our cross-sell and up-sell strategy. Annual Recurring Revenue for the quarter grew 25% year-over-year to $377.7 million. The acquisition of Brand24 contributed approximately 2% of our reported ARR. Our calculated ARR per paying customer grew 12% year-over-year and is now up over 50% since the beginning of 2021, with the cross-sell and up-sell benefits that come with our comprehensive Marketing Platform focused on Search Engine Optimization, Search Engine Marketing, Content Marketing, Social Media, Competitive Intelligence, Local Marketing and Digital PR.

During the second quarter, we added approximately 4,100 net new paying customers. Roughly three quarters of those came through our acquisition of Brand24. Our dollar-based net revenue retention for the second quarter remained at 107%. We continue to believe our dollar-based net revenue retention will remain strong and increase as our more sophisticated accounts increase as a percentage of our mix, since these customers have higher net retention than our company average. Moving down the income statement, during the second quarter we had positive non-GAAP operating income of $12.2 million. We reported another significant improvement in our Non-GAAP operating margin of 13.4%, which was up over 1000 basis points year-over-year and surpassed our second quarter guidance.

Cash flow from operations in the second quarter was $12.1 million. Turning to the balance sheet, we ended the quarter with cash and cash equivalents, and short-term investments of $231.5 million, down $11.6 million from the previous quarter as we used approximately $10.7 million of our cash balance to obtain a majority share in Brand24 and reserved another $11.7 as restricted cash to purchase the remaining shares of Brand24 throughout the second half of 2024. We will report approximately $9 million in cash outflows in the third quarter for the Ryte transaction. Turning now to guidance. For the third quarter of 2024, we expect revenue in a range of $96 million to $97 million, which at the mid-point would represent growth of approximately 23% year-over-year.

We expect our third quarter non-GAAP operating margin to be approximately 11%. For the full year 2024, we are raising our guidance and expect revenue in a range of $373 million to$375 million, up from our prior range of $366 million to $369 million, which translates to growth of 21% to 22%. We expect the combination of Brand24 and Ryte will contribute approximately 200 basis points of growth, which would mean our organic growth would be in the vicinity of 20% year-over-year at the midpoint. Moving to our guidance for full-year operating margins. While we are ahead of our full year guidance in the first half, we are maintaining our non-GAAP operating margin guidance for the full year of 10.5% to 11.5% and our free cash flow margin of approximately 8% due to the following reasons: first, because we are off to a very strong start to the year, we expect to make several focused go-to-market investments to help drive future growth in our enterprise business.

Second, although Brand24 and Ryte both have margins that are in line with our corporate average, we plan to accelerate our integration efforts to more rapidly incorporate their products into our portfolio. To do this, we expect to incur some temporary, one-time integration expenses that we have built into our updated operating margin guidance. We expect these expenses to abate as we get into next year, and we also plan to extract some synergies which should help their operating margin improvement as we progress through 2025. We also had some expenses originally planned in the second quarter that pushed into the second half of the year. This, is part of what allowed us to over-achieve our second quarter guidance. And finally, the increase in our stock price combined with changes in our affiliate ownership structure means we will transition to large accelerated filer status under SEC rules.

As a result, we anticipate higher general and administrative expenses as a result of increased compliance costs. Id note that holding our operating margin guidance still implies that our operating profit guidance in dollars will increase, despite these components. To help you with your modeling, I’d make a few additional comments. We expect that the combined total of Brand24 and Ryte will have a revenue growth rate similar to our corporate average over the near term, before our cross-selling efforts kick-in. The difference between our non-GAAP operating margin and our free cash flow margin is the result of interest income offset by capital expenditures, cash taxes and acquisition related expenses for the Brand 24 and Ryte transactions. As a reminder, we enacted a core price increase during Q3 of last year, which we don’t expect to repeat this year.

This could put some pressure on the year-over-year growth rates we’ve been experiencing in our ARR per paying customer. And finally, our guidance assumes a Euro exchange rate of 1.08. Approximately 30% of our expenses are denominated in Euros. In closing, we are very pleased with our performance of our business in the first half. We have executed well to overachieve on our top line growth and profitability, advance forward our strategic priorities and place Semrush in a strong position for our next phase of growth. We continue to remain confident in our ability to grow and scale our business, we are pleased with the traction of our most recent investments and remain committed to efficient and profitable growth that drives long-term value to our shareholders.

With that, we are happy to take any of your questions. Operator please open the line for questions.

Q&A Session

Operator: Thank you, Brian. [Operator Instructions] The first question comes from Scott Berg from Needham. Please go ahead.

Scott Berg: Hi, everyone. Really nice results here this quarter. I just wanted to touch about the, I guess, touch on the demand environment and maybe what you’re seeing with the enterprise solution, early in its stage, I think you talked about still being able to get pricing in the 10x to 15x kind of multiple of the core Semrush product, and that’s excluding what you’ve recently acquired here. But were you able to see pricing kind of in that expected range here early on with this in the market?

Oleg Shchegolev: Hi. Thank you for the question. Yes, absolutely. We actually increased prices a little bit after initial launch in May. We had some feedback from customers who were saying that sometimes we’re a little bit underpriced and we could charge more. So we used this opportunity and now – it’s still in the same range, 10x to 15c, but it’s kind of a little bit closer to the higher end.

Scott Berg: Got it. Very helpful. And then, Brian, one of your last comments there, talking about modeling here going into the next year. Can you remind us what the benefits to growth rates, the pricing increase has been over the last year? And just the way titrate our models effectively to what that headwind could be over the next 12 months? Thank you.

Brian Mulroy: Thanks, Scott. So in the third quarter last year, 2023, we did a price increase across all of our core offerings for all new customers. And then we had a small cohort of existing customers that we rolled out that pricing increase to as well. If you remember from our earnings calls, we mentioned that it was about $4 million of ARR that, we ended up getting the benefit of in the second half of last year. And then continued for our new customers, to get it was roughly 5% to 8% increase on our price for new customers. So all in, it says about $2.5 million to $3 million of impact last year and an incremental $2.5 million to $3 million impact in the first half of this year.

Scott Berg: Excellent. Nice quarter, again. Thanks for taking my questions.

Operator: Thank you. The next question is from Jackson Ader from KeyBanc Capital Markets. Please go ahead.

Jackson Ader: Great. Thanks for taking our questions, guys. The first one is on the enterprise launch in May. Can you just give us maybe a little bit of an early update on what some of the features that you rolled out in that new SKU, people are most attracted to in the early going?

Oleg Shchegolev: Yes, absolutely. So the three key pillars of enterprise product are number one, deep customization. So our SMB product is kind of like one size fits all interface. And of course enterprises, they know really well what they need, and they want dashboards to be exactly what they’re looking for. And they also sometimes want to combine metrics in certain ways that, requires customization. So this is number one thing that they’re really excited about. The second big one, is our automated and AI workflows. So, for example, there are a lot of tasks, you can do manually if you have a very small website. But if you have a big website, you need all this automation and AI. And a couple of good examples would be our forecasting workflow that, a lot of teams use to justify investments in organic search, and show ROI calculations to their finance teams.

We also have really strong traction with our content marketing workflows that, can scan a huge website and make very specific suggestions, about what people need to improve in content, or in internal linking to drive better visibility. And then the third one is, our enterprise product includes services. Of course, Semrush is a software company. We don’t provide services ourselves, but we connect our enterprise clients with leading experts in certain areas. And they can collaborate, through our platform. And that’s the third feature that have been very well received.

Jackson Ader: Okay. All right. Great. And then a follow-up on the financials for you, Brian. I think when you mentioned a little bit of extra color on the acquisitions that on 24 and Ryte would grow roughly in line with the company, the core Semrush growth rate until the cross-sell motion gets underway. So the expectation that you would hope that they would be able to accelerate their revenue growth, as you kind of build out the go-to-market motion, once they’re in the product family?

Brian Mulroy: Hi, Jackson, that’s absolutely right. Semrush has been really successful in building out a strong brand and a loyal group of paying customers. We have 116,000 paying customers today. What’s been driving and fueling our success recently is our ability to cross-sell and up-sell and expand the average ARR per paying customer. We do that by taking our core customers, and continuing to diversify the channels and marketing disciplines that are important to them, and provide technology and data that helps them, to enhance their online visibility. With both Brand24 and Ryte, that extends our capabilities into close adjacencies that, we believe will continue Semrush on that trajectory.

Jackson Ader: Okay. Great. All right. Thank you.

Operator: Thank you. The next question is from Elizabeth Porter from Morgan Stanley. Please go ahead.

Elizabeth Porter: Great. Thank you so much. I have another question on Brand24 and Ryte. What is the opportunity to sell into the customer base? Is this applicable to all customers or should we be focusing more on just the larger customers to up-sell? And then, it sounds like there’s a big opportunity again to increase ARPU per customer. So what are the signs that give you confidence that customers are willing to increase their spend kind of to this degree that we’re talking about, kind of again, another 10% to 15% type levels on ARPU? Thank you.

Oleg Shchegolev: Thank you. Great question. So I’ll start with Brand24. So Brand24, they have two different products in their portfolio. One is focused on SMB. It’s called Brand24. It’s already available for Semrush customers in AppCenter. We’re just expanding capabilities. And now because this company is sort of in the Semrush family, we will, of course, double down on bundling opportunities. We’re having very strong traction, with our own social media tools. And Brand24 as a social media monitoring tool is really great addition to that portfolio and social media bundle. They also have Insights24 product that is less known, but actually very, very good media monitoring product for large companies. And they have customers like, one of the biggest automotive companies, who is managed by a very charismatic leader and so on.

And then, Ryte is a little bit different story. So this is a product that is designed specifically for companies with very big websites. So, there is definitely big bundling opportunity between Ryte and our own enterprise SEO product. There will be, we’ll need a little bit more time here, to fully integrate it into our enterprise SEO product. But overall, in terms of buyer persona, this is exactly the same buyer persona. And we’re very positive about bundling here. And then in terms of average revenue per user, our estimates right now, are based on their current average revenue in this segment. That said, their revenue is a little bit focused on Europe, which is usually a little bit lower check than what you can get in the United States. Does it answer the question?

Elizabeth Porter: Great and then – yes, it does. Thank you very much. And then just as a follow-up, I wanted to ask on monetizing AI. And you guys have a few different ways that you’re monetizing, including one for AI being added to more of just the higher price tiers. And so first question is, are you seeing customers start to upgrade to higher tiers for those AI capabilities today? And then second, how do we think about kind of a broader opportunity around an upgrade cycle, in order for customers to get access to AI? Is there any way to kind of segment the base of who might those more likely candidates be?

Eugene Levin: Yes, so we’re really working on three different strategies to monetize AI. Number one strategy is, to start including it into base product offerings to improve conversion and retention. That’s what we’re doing with our copilot features in core SEO products. Seeing really good adoption. Over time, we will think how to maybe add even more functionality only on premium tiers. But right now, this part is really more about increasing conversion. Now, the second big driver of monetization when it comes to AI is, pushing some features on higher tier plans. For us, a good example is how we monetize our reply to review feature in local products, where you can buy entry level product for $20 per user per month, per location per month.

And then there is a premium product that is $40 per location per month. And premium product includes AI features such as reply to review. And of course, it drives quite a lot of upgrades, because it’s such a helpful feature. And then, the third way to monetize AI features for us is, just to launch standalone products that are, you know, solving particular large problem. And the good example would be our Content Shake AI product that people use to create content and blog posts. And this is where we not just use, AI APIs from companies like OpenAI, but we also combine it with our own proprietary data, to improve quality of the insights and recommendations and write content that really performs well, in search engines and social media. So that’s an example of the third monetization strategy.

Elizabeth Porter: Great. Thank you.

Operator: Thank you. The next question is from Mark Murphy from JPMorgan. Please go ahead.

Mark Murphy: Oh, thank you very much. So I wanted to touch on the net new ARR performance. It’s quite strong in Q2. It’s a bigger number than Q2 of the last couple years. How much of that would you ascribe to any upmarket traction versus any sense of stabilization in the macro demand? And then, should we think about that outperformance affecting how we might have modeled Q3 in terms of any deals that might have pulled forward, and closed earlier than expected? And I have a quick follow-up?

Brian Mulroy: Mark, it’s Brian. Good question. So I’d say a few things. First of all, some of the net new ARR performance, of course, was Brand24. So that’s about a third, a little bit more than a third of the number. Independent of that, we did see a pretty significant increase year-over-year in our net new ARR growth. It is in part driven by enterprise, but we’re still in the very early stages of that. So we just launched enterprise in May. We of course, do have some ARR contribution from that enterprise product. But I’d say the bulk of it is, we have a cohort of larger, sophisticated accounts who continue to adopt a larger and larger portion of our portfolio. We expand beyond SEO into competitive intelligence, local, social media, digital PR, content marketing, and of course, the AI products that Eugene just mentioned.

So, we have a very extensive portfolio, and we’re starting to see really strong traction in our ability to cross-sell and upsell into our install base. What you saw this quarter, we reported in the release that our customers that have more than 10,000 in ARR grew 37%. So that cohort of accounts are becoming an increasingly larger portion of our base, and helping to bolster ARR performance. I would say just in the second half and going into 2025 that, we do expect our enterprise product to start to gain some traction, and contribute to ARR. But it was smaller in the second quarter.

Mark Murphy: Okay. Thank you. And then as a follow-up, maybe for Eugene, with the latest acquisition, it sounded like you’re moving further into the area of performance, and issue monitoring, like what we think of as the infrastructure websites. What is triggering that decision? And do you sense that that market is growing faster than your core markets for online visibility? Or do you think this is just part and parcel of it? I’m wondering maybe how far you think, about extending the product footprint into that area?

Eugene Levin: Yes. We think this is really a must have feature for a large company. When you have a small website, you effectively can just audit the code and test the website yourself. When you have millions and millions of pages, you need a web crawler to go through every page and check if everything is okay. There are definitely ways to expand this opportunity, even beyond this category of products. You can start doing audits of GDPR compliance and so on. For us, we’re really focusing on the buyer persona. So take – technical optimization is a very important part of online visibility. And SEO teams work very, very close with product teams. And often those products, become part of their deployment pipelines and necessary checks that engineering teams, need to perform before they push the code in the production environment.

So that’s kind of why we’re interested in this category. It’s, of course, expands the markets. It’s a must have feature. It’s something that every large company needs. And it helps us to get a foot in the door and have relationships with engineering organizations inside our existing accounts. So that’s kind of why we’re excited about this.

Mark Murphy: Thank you.

Operator: Thank you. Our last question is from Adam Hotchkiss from Goldman Sachs. Please go ahead.

Adam Hotchkiss: Great. Thanks so much for taking the question. I’d be curious for an update on how you think about generative AI, and the impact on search engines more broadly, as it relates to SEO. I’m thinking things like no click searches that generative AI responses have to search queries, and other ways the search engines, search engines are incorporating generative AI. I’d just be curious how you and customers need to adapt, if at all, from an SEO perspective, if that continues to evolve?

Eugene Levin: Yes, great question. By now, we already have some time to monitor how new interface, such as AI overview impacts user behavior. And it’s pretty much in line with, how we were describing this in the past. The way we think about this is that Google have been evolving their interface for many, many years. They’ve been always adding new search elements. And often those new search elements would reduce percentage of customers who click on links and visit another website. At the same time, because of those new search elements, Google became more and more valuable tool for many people. So the total traffic and total amount of time and total number of use cases would increase. And as a result, total number of outgoing clicks would also increase over time.

So that’s kind of a little bit of history of this phenomenon of introduction of new search elements. And we think the new AI overview element fits perfectly based on what we’re seeing right now. It’s really replacing feature snippet in most of cases. And it provides links to original source of content. And a lot of people click on those links. And the rules – that are applied to get featured in this AI overview are very similar to just general recommendations that we usually give people that they need to follow to rank high, or to be featured in a featured snippet. So from that point, it would really just one more step in a very long journey.

Adam Hotchkiss: Okay. Thanks, Eugene. That was really helpful. And then, Brian, you addressed this a little bit in an earlier question. But just given the recent acquisitions, it’d be great to get a refresher around your broader capital allocation strategy. Just how you think about evaluating potential deals, and what you’d say your big gaps in functionality are that you’d look to address?

Brian Mulroy: Yes, it sounds like two questions. One is just on capital allocation. And then one in particular around the products and markets that we’re targeting. So I’d just say in general, we have a very strong balance sheet, $230 million in cash and cash equivalents. As you’ve seen from our recent announcements, we have been active. We feel that the markets are favorable. There’s really good multiples and a lot of good opportunities out there. So, we’ll continue to put our cash to work in both investing in the business and whether that means organically through our sophisticated and talented R&D teams, strong partnerships, or M&A. We’ll assess each equally and make sure we’re focused on the one with the strongest ROI. Eugene can get into just specifics on which technologies and markets we’re focused on today.

Eugene Levin: Yes, I think in general, we’re always looking for opportunities to accelerate our R&D roadmap and get faster from A to B. And sometimes M&A is the best way to get there. We have a very robust product roadmap. We effectively talk to our engineering teams. And if we see something that is a heavy lift and there is an opportunity to get it through acquisition. And the team is great, and there are a lot of synergies and chemistry, and the financial terms are reasonable or, like in recent examples attractive, we pull the trigger. We like to do partnerships and acquisitions when they make sense.

Adam Hotchkiss: Really helpful. Thanks, Brian. Thanks, Eugene.

Operator: This is the end of the Q&A session. So now, I’d like to hand back to the management team for closing remarks.

Oleg Shchegolev: Thanks, everyone, for joining us today. We delivered a strong second quarter, exceeding our guidance and positioning us to raise our full year 2024 guidance. We continue to expand our portfolio of products, and I’m very excited about our ability to move up market, and the direction of our recently – released SEO enterprise products. We continue to expand our leadership position in the online visibility space, and are succeeding in combining strong, durable growth with improving profitability and figure flow generation. We hope to see many of you at our upcoming Analyst Day on October 1, in New York City. Thanks, everyone.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.