SimilarWeb - SMWB - SaaS Digital intelligence Platform

We look at Similarweb, a differentiated digital intelligence platform with hyper-growth, a long runway for growth

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In this deep dive on SimilarWeb I will cover:

  1. What is Similarweb’s Mission?
  2. Why do we need digital intelligence?
  3. Why is getting digital intelligence difficult?
  4. What does Similarweb do?
  5. What are Similarweb’s Products?
  6. How do SimilarWeb’s Products work?
  7. How does Similarwebmake money?
  8. How did Similarweb evolve its platform and products in its current state?
  9. What is Similarweb’s Market Opportunity?
  10. What is Similarweb’s Growth Strategy to capture this market opportunity?
  11. What is Similarweb’s Competitive Advantage and why is it a durable long-term investment?
  12. Who are Similarweb’s Customers?
  13. What are some successful Customer Case Studies?
  14. What does Similarweb’s Management and Board look like now?
  15. How are the executives being paid currently?
  16. What is Similarweb’s current Insider Ownership for Executives and the Board?
  17. What do Similarweb’s current Financials look like?
  18. What are my final thoughts on Similarweb AKA TL;DR;?
SimilarWeb Logo - their website
SimilarWeb Logo - their website

What is SimilarWeb’s Mission?

Quite simply, to deliver the most trusted, comprehensive, and detailed view of the digital world, so our customers can outperform their competition and win their markets.

SimilarWeb has a pretty bold mission to make data actionable for their customers. They want to empower their customers to increase their market share and stay ahead of their competition. The simplicity of this mission reflects the fact that even if there are any “new sources” of data in the digital world, SimilarWeb would be able to make this data actionable, insightful, and provide a competitive edge for their customers.

Why do we need digital intelligence?

Currently, we are seeing that digital is now the point of engagement. Over the last two decades, industries have been transformed by an accelerating shift to digital. This trend has spurred innovation and disruption across industries, with digital becoming the primary point of engagement between businesses and their customers, employees, and partners worldwide. According to Insider Intelligence, in 2020, U.S. adults spent nearly 8 hours per day consuming digital media across all devices. This daily usage is driven by changes in the way people interact. According to IDC, the number of global daily digital interactions per connected person has increased from 584 in 2015 to 1,426 in 2020. Daily usage is also affected by changes in the way people transact. According to a January 2021 Digital Commerce 360 analysis, U.S. eCommerce penetration has increased from 11% in 2015 to 21% in 2020. Every type of transaction, from the exchange of goods to the exchange of information, is moving online at an accelerated pace.

We are also seeing that digital is the driver of growth and in order to keep pace with the demands of rapidly evolving and growing digital markets, companies have made significant investments in new operational processes and technologies, including a significant reallocation of their investments into data and intelligence to drive informed decision-making. Digital has driven growth in many aspects of businesses, including optimizing go-to-market functions, commerce, communications, and research. This growth has been further amplified by the COVID-19 pandemic, as businesses have fundamentally pivoted their operations to be more digital-driven. According to IDC, an estimated 65% of global GDP will be digitized by 2022, driving accelerated spending on the digital transformation of over $6.8 trillion through 2023. These investments often result in healthier businesses in the long term; according to SAP, over 75% of companies that have undergone digital transformation efforts reported increased profitability.

In the digital world, businesses can enter new markets relatively easily and with low costs. Geography is not a barrier; new entrants do not require storefronts and can easily outsource most corporate functions from human resources to manufacturing. Digital facilitates highly targeted and more cost-effective marketing initiatives, meaning that the investment to reach prospective customers is now lower. The result of these digital changes to the business landscape is that consumers have more choices, as digital expands accessible options beyond convenient physical locations to a universe of online alternatives. According to recent global research conducted by Opinium for Verint Systems, customer loyalty and retention are declining, with two-thirds of consumers more likely to switch to competitors that provide better service and experience. Digital transformation is a way to protect market share, with 48% of customers more likely to be loyal to brands that use the latest technology to engage and connect with them, according to the same Verint Systems study.

Why is getting digital intelligence difficult?

Given the velocity and constantly evolving ways that users interact and transact across a multitude of digital channels, getting accurate and actionable timely digital intelligence is incredibly difficult. To deliver digital intelligence, a vast and ever-growing sea of data must be processed and converted into useful insight. In order for insight to be relevant, the data used to derive it needs to be comprehensive, timely, and granular. Once this data is collected, it must be processed via sophisticated analytics and modeling, powered by complex algorithms and advanced data science, in order to be useful. Processing these billions of digital signals, all flowing from a multitude of separate platforms and channels, requires a purpose-built infrastructure that can scale to the volume of data required. All of these challenges must be solved to deliver an effective digital intelligence solution that is accurate and actionable.

What are the limitations of current Digital Intelligence Solutions?

Current approaches to digital intelligence have specific limitations:

  • Not timely/Real-time - Traditional approaches, such as market research, are typically based on time-consuming data collection methodologies, such as surveys, which tend to deliver data and insight already several months out of date by the time it is published. Alternative digital approaches are faster, but frequently only provide refreshed data on a weekly or monthly cadence. With both approaches, by the time a query is answered, the data provided is often no longer relevant to the business issue at hand. These approaches fail because the pace of change in the digital world means that data and insight often must be available within hours to be useful for critical use cases.
  • Limited in scope - Many approaches provide data gathered from a single source such as focus groups, surveys, website crawling methods, apps, and first-party measurement data or a single channel such as search ads, traffic, or social media. Additionally, data sets are often limited to a specific audience, certain geographies, or points in time and do not give a comprehensive and historically accurate view of the digital world. A lack of comprehensive data impairs the caliber, fidelity, and actionability of insights that can be derived from these data sources.
  • Difficult to use - Existing approaches frequently provide raw data that requires users to perform complex analyses in order to derive insights. These approaches are not user-friendly and have complicated interfaces that require sophisticated technical know-how from PhDs, data scientists, business analysts and developers to be used effectively, resulting in additional expenses, effort, time, and manpower.
  • Rigid - Existing approaches require users to have structured queries that they want to investigate. These approaches produce narrow outputs, addressing only the specific queries, and do not provide insights into potentially important issues of which the user may not be aware. As such, these rigid approaches rely on users to engage in costly and time-intensive discovery, develop questions on narrow hypotheses, and query data to address those narrow points, all without offering broad insights.
  • Siloed - Existing approaches are often designed for specific teams or functions within organizations. This creates a siloed view of digital activity where a privileged few such as senior business leaders have insights from expensive market research or other forms of digital intelligence, while others do not. Without a trusted, holistic, and easily accessible view of digital activity, organizations cannot easily align on a unified strategy or operational approach.
  • Not actionable - Existing approaches often lack sufficient data granularity from which an organization can derive actionable insights. Existing approaches will frequently provide a snapshot of digital activity, without proactively providing insight about that data that recommends a course of action. For many use cases, lack of comprehensive, timely information limits how actionable the insight is because the information is stale before it reaches the user. In each of these cases, the value of digital intelligence is compromised because it cannot be translated into meaningful business activity with impact.

All these limitations have created an environment where customers need solutions to turn the vast amount of data in the digital world into actionable insights they can use to run their businesses.

Customers want to:

  • Get on top of market trends and capitalize on them through their own products and services
  • They want to keep a close eye on their competitors and pursue differentiated opportunities
  • They want to improve themselves by regular benchmarking and acting on the deficiencies of these benchmarks
  • They want to drive higher customer conversion rates and loyalty
  • They want to find new opportunities and be the first mover in them

Customers also need:

  • A unified trusted view of digital activity covering all industries, geographies, platforms, and digital channels.
  • The insights that these solutions providers need to be reliable, timely, granular, and comprehensive in order to be actionable.
  • These insights must be delivered in digestible formats so that users from across an organization can draw clear conclusions to improve business outcomes.

What does Similarweb do?

Similarweb provides a platform for digital intelligence, delivering a trusted, comprehensive and detailed view of the digital world. Similarweb analyzes billions of digital interactions and transactions every day from millions of websites and apps and turns these digital signals into actionable insights. With Similarweb, everyone from business leaders, strategy teams, analysts, marketers, category managers, salespeople, and investors can quickly and efficiently discover the best business opportunities, identify potential competitive threats and make critical decisions to capture market share and grow revenues.

Similarweb collects digital signals in the form of interactions and transactions and transforms them into powerful actionable insights. Similarweb enables businesses to understand market trends, optimize traffic acquisition, understand the customer-buying journey, grow pipeline and make better investment decisions. Similarweb provides critical insights on digital behavior that allows businesses to analyze competition, recognize and defend against emerging threats and monitor competitive strategy and tactics. To win in the digital world, including to defend existing market share and proactively drive future growth, it has become a business imperative to embrace digital intelligence throughout the organization, from senior executives to individual contributors.

Similarweb is comprehensive, reliable and timely. Similarweb’s intuitive, self-service solutions empower people at all levels and functions in an organization, from entry-level employees up to the C-suite, to make critical decisions to run their businesses. Similarweb provides all users with a single unified view of digital activity, allowing everyone to immediately access information, digest insights and make data-driven decisions, without the need for technical specialists such as data scientists, or expensive and time-consuming market research. This ease of use enables the adoption of their platform and various solutions across organizations and accelerates the pace of data-driven decision-making within companies.

Similarweb’s intelligence solutions create a shared understanding of the digital world and are used as fundamental components of the decision-making process for thousands of businesses worldwide. Similarweb’s insights are frequently referenced publicly by chief executive officers, major publications and accredited research firms to describe trends they are seeing.

Similarweb answers relevant and essential questions such as:

  • “Which digital banking platform is gaining the most market share in my core geographic markets?”
  • “Which marketing channels drive the most traffic for travel businesses like mine?”
  • “Which of my competitor’s products are selling the most on Amazon? What other marketplaces is my competitor using to sell their product?”
  • “What is the most important factor in my prospect’s buying decision?”
  • “What does daily digital traffic suggest about the performance of companies in my portfolio against stock market expectations?”

What are SimilarWeb’s Products?

Similarweb’s products are easy to use and integrated into users’ workflows for seamless adoption and maximum business impact. They provide a unified view of the digital world to power data-driven decision-making. Let’s jump into these solutions one by one.

Digital Research Intelligence

Provides web traffic research insights, which help companies research markets, companies, and audiences, as well as benchmark their performance against other companies.

Digital research intelligence allows senior leaders, strategy, business intelligence, and consumer insights teams to efficiently and quickly optimize business performance, capture market share, mitigate overall business risk, and identify opportunities for growth. This solution enables users to benchmark digital performance and conversion rates, evaluate market size and trends, reveal a competitor’s digital strategy, optimize product launch strategies, conduct deeper research into specific companies, and analyze audience behavior across devices, channels, and geographies.

Examples of business objectives and questions that can be addressed by Digital Research Intelligence solution include:

Strategy formation

  • “What is the size and growth rate of the online banking industry in the US?”
  • “Which online marketplace is gaining the most market share?

Revenue maximization

  • “What is a good conversion rate in the apparel industry?”
  • “What news topics are drawing the highest engagement with audiences?

Risk mitigation

  • “In which geographies and marketing channels are my competitors outpacing my online growth?”
  • “To which competitors and topics am I losing audience engagement?”

Digital Marketing Intelligence

Provides competitive analysis, keyword optimization, affiliate optimization, and advertising and media optimization.

Digital Marketing Intelligence allows marketing leaders, SEO and content managers, PPC and performance marketers, affiliate marketers, and media buyers to grow traffic across marketing channels, increase traffic acquisition and optimize funnel conversion. This solution helps users to uncover competitors’ online marketing strategies, benchmark relative marketing spend efficiency against competitors and assess each specific marketing channel to better understand which keywords, partners, affiliates, creatives, ad networks, landing pages, and other channels are performing best.

Examples of business objectives and questions that can be addressed by Digital Marketing Intelligence solution include:

Marketing spend planning

  • “Are my competitors generating more efficient acquisition gains from paid or organic channels?”
  • “From which marketing channel do travel businesses get the most traffic?”

User acquisition optimization

  • “Which keywords drive the most traffic share for shoe companies?”
  • “Which digital ad types perform the best for luxury brands?”

Traffic loss mitigation

  • “Which of my top keywords are competitors stealing traffic share from?”
  • “Which of my affiliate partners are shifting traffic to competitors?”

Shopper Intelligence

Provides insights to analyze and optimize the purchase funnel and acquisition strategy, monitor consumer demand, and leverage on-site search volume and conversion.

Shopper Intelligence allows digital commerce leadership and category and product managers to improve product and brand level conversion, boost customer loyalty and retention and increase search optimization efficiency across marketplaces. This solution helps users to monitor customer demand and purchase behavior across the digital journey, understand competitive demand and sales across various marketplaces and first-party websites and optimize customer selling strategies down to the brand, category, and product level.

Examples of business objectives and questions that can be addressed by Shopper Intelligence solution include:

Strategy formation

  • “How can I get more visibility on Amazon?”
  • “On which marketplaces or first-party websites do personal care products convert better?”

Revenue maximization

  • “How much money are consumers willing to spend on my products?”
  • “What is the average purchase frequency in my category?”

Risk mitigation

  • “Which of my customers are cross-shopping? Which brands are they evaluating?”
  • “Which of my competitor’s products are selling the most on Amazon? What other marketplaces is my competitor using to sell their product?”

Sales Intelligence

Provides insights to drive sales acceleration through lead generation, lead enrichment, sales engagement, and fraud detection.

Sales Intelligence allows sales management and operations, sales representatives, and account management teams to efficiently grow and convert pipeline, increase win rates and improve customer retention. This solution helps users generate new leads based on their ideal customer profile, automate lead qualification, and enhance customer outreach and engagement with relevant buying signals and digital insights about their target customers.

Examples of business objectives and questions that can be addressed by Sales Intelligence solution include:

Pipeline generation

  • “What are the fastest growing eCommerce companies?”
  • “Which companies outside my CRM fit my ideal customer profile?”

Win rate optimization

  • “How can I create the most powerful pitch to win my prospect's business?”
  • “What is the most important factor for my prospect’s buying decision?”

Relationship building & Retention maximization

  • “When should I engage my customers to ensure the best conversion?”
  • “What additional offerings would my customer be interested in?”

Investor Intelligence

Provides data-driven investing insights for hedge funds, asset managers, banks, venture capital, and private equity firms.

Investor Intelligence allows portfolio managers, investment professionals, data scientists, and research analysts to make more informed and ultimately better investment decisions. It provides an end-to-end view of a company’s digital performance from a single platform and highlights a company’s key performance indicators with digital traffic, activity and signals. For example, by providing insights into industry growth dynamics and market share developments as they happen and validates the accuracy of digital key performance indicators.

Examples of business objectives and questions that can be addressed by Investor Intelligence solution include:

Investment ideation

  • “Within the food and grocery sector, which company offers the best opportunity?”
  • “Is the apparel re-sale sector on track to grow this year?”

Investment monitoring & Risk mitigation

  • “In which geographies is this company experiencing the fastest growth?”
  • “How can I improve my portfolio company’s brand health and traffic?”

Hypothesis validation

  • “What does daily digital traffic suggest about company performance against market expectations?”
  • “What does travel website activity predict for hotel occupancy rates next summer?”

How do SimilarWeb’s Products work?

Over the last 10 years, Similarweb has spent substantial resources to establish data sets, methodology, and leading technology. Similarweb believes their robust data repository and their unique prediction models powered by machine learnings represent a significant competitive advantage and is making them the de facto standard of measure for the digital world. Their unique, multi-dimensional approach to measuring the digital world leverages the experience of a team of PhDs and data scientists to cleanse and model vast amounts of data collected into reliable and actionable insights.

Data Collection

Similarweb collects a diversified data universe of digital signals, constructed of statistically representative datasets that accurately draw from sources across countries, industries, user groups, and devices. They have been proactive in diversifying data inputs such that every measure they present in their solutions is derived from multiple sources and is self-adjusting to changes in the market. Similarweb does not acquire a significant portion of their data from a single data partner or group of data partners and routinely enters into agreements with additional data partners. Their sources represent over 3 billion digital interactions and transactions per day and 2 million events per minute.

They classify into four distinct categories:

  • First-party direct measurement data and analytics that millions of websites and mobile app owners choose to share with Similarweb directly, giving them visibility into specific websites and mobile apps. These direct measurement tools feed machine learning algorithms and enrich intelligence solutions. Their solutions provide users with critical insights that empower their respective companies. These insights help those respective users benchmark their performance relative to competitors and the market and leverage advanced analytics to make business decisions.
  • Contributory network of a collection of consumer products that aggregate anonymous device behavioral data. Similarweb aggregates anonymous traffic data from a collection of proprietary and third-party consumer-oriented desktop and mobile apps. These consumer apps are provided in exchange for the ability to gather anonymous user’s digital activity. The data collected is used to understand website and app usage and traffic sources. This data is sourced from diverse audiences to maintain an accurate and consistent view of the digital world over time. The data in this category is collected pursuant to the terms of use of the respective apps, which enable the use of anonymous data subject to the terms of the privacy policies.
  • Public data capture where Similarweb uses advanced algorithmic and proprietary technology that captures and indexes public data from hundreds of millions of websites and apps. Similarweb employs algorithmic and proprietary automated techniques to capture and index publicly available data from billions of web pages and apps every month. These data sources help us to further refine their best-in-class predictive models.
  • Partnerships with a global network of companies that collect digital signals. Similarweb partners with a global network of companies that capture digital signals and provide them with additional data from three data types (first-party direct measurement data, contributory network data, and public data) to supplement their own direct data collection, and to provide them with additional types of data to help them understand behavior across the digital world. These partners include consumer apps, internet operators, measurement companies, and demand-side platforms that aggregate behavioral data across websites and apps.

Data synthesis

Similarweb has built sophisticated machine learning algorithms that synthesize data inputs collected for further modeling. This involves:

  • Cleaning the inputs to remove abnormal data points, behavior anomalies and to confirm the anonymization of any personal data.
  • Matching the data points in a sequential order to identify meaningful behavioral sequences or transactional streams of events.
  • Pre-Processing the billions of data points for estimation with Similarweb’s proprietary URL classification system to measure website traffic by acquisition channel.
  • Blending of multiple sources and historical digital signals to attain a comprehensive learning set of digital signals.

This process aggregates these mixed data sources and types into a single data set at the website or mobile app level, removing irregularities.

Data modeling

After data has been normalized and synthesized it is then run through specialized machine learning training to generate predictive models that provide an accurate and consistent view of the digital world over time. This process includes:

  • Training machine learning models continuously refining for irregularities and estimation of biases in the digital signals.
  • Blending models for refined accuracy and consistency of Similarweb’s industry-leading estimations.
  • Reporting key insights across countries, industries, user groups, and devices for an accurate view of the digital world

Data delivery

Similarweb’s intelligence engine generates powerful, ready-to-use insights delivered through their platform, API, or subscription-based reports to help companies and investors make better decisions and grow intelligently. Similarweb delivers insights across a variety of digital performance indicators, including traffic and engagement, audience, search, display, content, referrals, purchase, and stock datasets.

How does SimilarWeb make money?

SimilarWeb generates revenue from SaaS subscriptions, which is comprised of subscription fees from customers utilizing cloud-based digital intelligence solutions and other subscription-based solutions, such as application programming interface, or API.

Paid subscriptions are available in five categories of solutions:

  • Digital Research Intelligence
  • Digital Marketing Intelligence
  • Shopper Intelligence
  • Sales Intelligence
  • Investor Intelligence

The subscriptions to these solutions have pricing tiers based on feature set, geographic coverage, and the number of users who have access to them. Subscription agreements typically last for a minimum term of one year and are renewable thereafter. Certain customers contract for subscription agreements with multi-year terms.

Similarweb’s sales organization uses both an inbound and outbound sales motion. The inbound sales motion accounts for approximately three-quarters of new sales opportunities, where prospective customers display initial interest in Similarweb by visiting Similarweb’s website. These cost-effective leads are efficiently converted to pipeline opportunities for sales teams to pursue. The outbound motion focuses on developing sales opportunities with larger targeted accounts, where sales representatives engage organizations based on a geographic coverage model. In general, large enterprises are covered by the field sales teams and smaller organizations by their inside sales team.

To drive sales, Similarweb leverages free offerings that attract and engage prospects’ interest and feature their platform capabilities. Through their website, and through a popular browser extension, they provide free access to a wide range of basic services that provide users with a subset of robust insights and analytics as well as the opportunity to explore the value they could achieve from paid offerings. The free offering delivers rankings and ratings of websites and apps as of the recent date and acts as an entry point for many users who often upgrade to paid subscriptions. In 2020, Similarweb attracted nearly 20 million users with these free offerings, resulting in hundreds of thousands of sales leads.

How did SimilarWeb evolve its platform and products in its current state?

SimilarWeb started with a very humble beginning offering a free plan of the application to users. They then slowly expanded to offer a paid offering and subsequently added coverage for the entire world and started covering mobile web and apps along with desktop web offerings. They added more value to their product and added their advertising and audience modules, increased the granularity of the data coverage, added dashboards for quick visualization and insights. By this time they had a run rate of $50 million ARR. Then they decided to use their core product and turn it into a platform offering five different products and have been working on refining and adding value to the platform ever since. As they moved to the platform approach they rapidly scaled and hit $100 million ARR within 2 years.

What is SimilarWeb’s Market Opportunity?

The total market opportunity, for SimilarWeb’s platform, is approximately $34 billion. This was calculated using the total number of global companies with 100 or more employees, which was determined by referencing independent industry data from the S&P Capital IQ database. Those companies were segmented into three cohorts across strategic accounts with 5,000 or more employees, enterprises with 1,000 to 5,000 employees, and small and medium-sized businesses with 100 to 1,000 employees. We then multiply the number of companies within each cohort by the respective average contract value per customer. The average contract value per customer is calculated by leveraging SimilarWeb’s internal company data on the top two quartiles of spend per customer by employee size and customer vertical. Using the top two quartiles of customer spend within each cohort represents the expansion opportunity available within new and existing accounts.

SimilarWeb is in the early stages of capturing this market share and has a long runway ahead. This market opportunity will continue to expand as multiple secular trends shift towards digitization, including the exponential increase in data, shift to digital commerce, and broader acceleration of the digital transformation.

What is SimilarWeb’s Growth Strategy to capture this market opportunity?

Similarweb Growth Strategy - from latest presentation
Similarweb Growth Strategy - from latest presentation

SimilarWeb is planning to drive growth through the following strategies:

  • Acquire new customers - There is a substantial opportunity to continue to grow their customer base. They plan to expand globally leveraging their efficient go-to-market function across all geographies and industries to our platform. As digital intelligence becomes an even greater point of emphasis for companies and investors, SimilarWeb is well-positioned to grow their market share, as well as add new customers who previously had not been in the market for digital intelligence solutions. They generate a lot of conversions from their freemium model.
Similarweb Land and Expand Strategy - from latest presentation
Similarweb Land and Expand Strategy - from latest presentation
  • Expand spend from existing customers - SimilarWeb plans to increase spend from existing customers as they add more solutions to get even more value from their platform. They have dedicated account management teams that deliver a high-value customer experience that results in improving retention and growth. They want to empower their customers to promote their products to increase brand awareness and essentially have customers sell their products.
  • Continue innovation and technology leadership - SimilarWeb plans to add new features and functionality to continue to drive deeper insights for customers. They will continue to invest in expanding products and engineering staff to innovate and develop additional solutions that expand capabilities and facilitate the extension of SimilarWeb to new use cases.
  • Further, democratize access - SimilarWeb wants to expand the functionality and accessibility of their platform, enabling even further adoption among existing and new customers. They plan to continually add new types of insights and features to their platform, expanding potential use cases. They believe that by democratizing access to info and insights even further, their platform will become an even more critical component of the decision-making process for businesses worldwide.
  • Pursue M&A opportunities - SimilarWeb intends to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive solution and market expansion.

What is SimilarWeb’s Competitive Advantage and why is it a durable long-term investment?

SimilarWeb’s competitive advantage is primarily their proprietary technology where they capture digital signals as they occur and provide customers with timely insights into the digital world that allow them to take action. Fresh data enables companies to be flexible and proactive in responding to developing trends and see the impact of their decisions as they occur. These timely insights make SimilarWeb essential in decision-making processes and drive increased usage by customers.

Their insights are powered by a comprehensive set of data that is:

  • Multi-industry - Their data set covers virtually every industry and includes additional granularity on sub-industries and companies, providing customers with a comprehensive understanding of their market and adjacent competitive landscapes.
  • Global - Their data set provides global and country-specific views of digital activity helping customers create strategies across any geography.
  • Multi-platform - SimilarWeb is able to generate a robust data set by aggregating data from all of the various sources that people use to interact and transact digitally. They collect data across desktop, mobile web, iOS, and Android, allowing them to provide customers with a complete picture of digital activity.
  • Multi-channel - SimilarWeb analyzes data across a variety of channels, including direct traffic, organic and paid search, referrals, display banners, video, e-mail, and social media. By measuring engagement across digital channels, SimilarWeb is able to deliver deeper and more valuable insights than point solutions that focus on a single channel or subset of channels.
  • Intuitive - SimilarWeb delivers powerful insights that customers can access through their easy-to-use user interface. SimilarWeb does not require a complex analytical skill set or technical expertise to derive value; rather offer a consumer-oriented user interface that is delightful to use and easy to understand. This ease of use means that anyone in an organization can easily leverage SimilarWeb to power data-driven decision-making.
  • Proactive - SimilarWeb proactively highlights insights and takeaways in a way that any business user can understand. Their dynamic interface provides all relevant information in a digestible manner, allowing users to have all of the information they need to understand performance and make decisions. Through their machine learning capabilities, they proactively anticipate and deliver relevant data, preventing users from needing to run multiple data queries or know all of the potential questions they need to ask ahead of time. For example, SimilarWeb will alert a sales lead to engage with a prospective customer based on observation of the right buying signals.
  • Unified - SimilarWeb provides a unified view of digital intelligence. All members of an organization using SimilarWeb can see the same output from the same data set, allowing decision-making processes to become easier as everyone has access to the same data. The democratization of access to the digital insights that SimilarWeb provides fosters collaboration across hierarchies and teams within an organization and enables SimilarWeb to be the single source of truth.
  • Actionable - SimilarWeb not only collects data but also provides insights that answer relevant questions to help drive critical business decisions. Customers can easily use SimilarWeb’s API to integrate our data and insights into their own bespoke analytical models. SimilarWeb is built to provide granular data including brand, product, or page level engagement critical to the creation of actionable insights. Additionally, SimilarWeb’s up-to-date data enables businesses to take action on information while it is still relevant.
Other than their proprietary technology, I don’t see them having any other competitive advantage(yet). I think in the future as they are able to cross-sell more products they will be able to develop high switching costs.

Who are SimilarWeb’s Customers?

Similarweb Customers - from latest presentation
Similarweb Customers - from latest presentation

SimilarWeb serves a broad range of customers of all sizes across a variety of industries including agencies & consulting, consumer goods, financial services, media, pharmaceuticals, retail, technology, and travel, among others.

As of March 31, 2021, SimilarWeb had 2,874 customers globally, including 9 of the top 10 technology organizations, 7 of the top 10 financial services organizations, 5 of the top 10 retail organizations, 7 of the top 10 household products organizations and 5 of the top 7 apparel organizations in the Fortune 500.

SimilarWeb generated in excess of $100,000 ARR from 16 of these 33 top companies as of March 31, 2021.

As of March 31, 2021, 201 of their customers generated an ARR of $100,000 or more, representing 49% of the total ARR. Most of these larger customers initially began as smaller customers and increased their spending over time as they saw the value of Similarweb.

What are some successful Customer Case Studies?

LendingTree

LendingTree is an online financial marketplace for products like mortgages, personal loans, credit cards, insurance, and more. It matches individuals looking for financial products with the best offer and enables easy comparisons across providers. LendingTree also has a financial wellness product that improves financial habits and drives engagement.

LendingTree's Product Management team studies user behavior in their market so they can offer the most valuable features, tools, and functionality to users. Building the best capabilities and prioritizing them appropriately to meet user needs is critical to LendingTree’s success, but creating this roadmap requires visibility into audience behavior -- seeing how users interact with competitors, what capabilities we’re engaging them, monitoring the flow of traffic to and from financial providers, and much more. Traditionally, it was difficult for LendingTree to obtain these insights. Existing market research techniques were expensive, and what it was able to learn from that research was too high level and not timely enough to be actionable.

How does LendingTree use SimilarWeb?

LendingTree brought in Similarweb to address this challenge. Similarweb enables LendingTree's product management team to see the flow of consumers on competitor websites at a very granular level, and in a timely way. It gives LendingTree the visibility to gauge consumer interest in competitive features and functionality.

Jason Simon, VP of Product Management at LendingTree states, "Similarweb definitely changed the way that LendingTree thinks about prioritization, about product strategy, about understanding our users and how they engage. It added a whole new set of data and a whole new set of insights that just frankly didn't exist before. Or if they existed, those insights existed behind a paywall in some really expensive report or they were only accessible to a small number of people using highly specialized agencies that come at a premium.”

Today, this customer insight is critical in helping LendingTree determine their product strategy. Using Similarweb, LendingTree has a much better understanding of where to invest and how to prioritize those investments.

Rakuten Advertising

Rakuten Advertising is part of Rakuten Group, one of the world’s leading internet service companies. Its mission is to connect leading agencies, brands and publishers to active and engaged consumers around the world. These customers need robust data and insights to stay abreast of digital marketing trends within each vertical they service. Additionally, Rakuten Advertising is constantly broadening its network of affiliates to bring more opportunities to its advertisers. With this expansion comes the need to ensure the network is maintaining the highest quality inventory.

How does Rakuten Advertising use SimilarWeb?

Rakuten Advertising chose Similarweb to accelerate their efforts on multiple fronts, such as using third-party insights to gain a deeper understanding of how publishers interact outside the Rakuten Advertising network with their advertisers and their advertisers’ competitors.

Using Similarweb has provided Rakuten Advertising account managers with a comprehensive and transparent view of the industry and competitive landscape. This enables them to offer insights that improve their customer’s ad performance, resulting in more successful customers and improved relationships.

Nicole Prodoehl, Market Intelligence Manager at Rakuten Advertising, states, “The intuitive interface makes it easy for our sales team and account managers to use when presenting directly to clients.”

Rakuten Advertising also uses Similarweb data to maintain the quality of their constantly expanding publisher network. They leverage Similarweb data to identify new publishers while also using Similarweb data to better match publishers with advertisers already in their network.

DHL

DHL Express is a division of the German logistics company Deutsche Post DHL Group, and is one of the world’s largest providers of international courier, parcel and express delivery services. DHL Express saw an opportunity to expand its business globally by targeting growing e-commerce businesses, but traditionally it has been expensive and resource-intensive for DHL to identify and win these new accounts.

How does DHL use SimilarWeb?

Using Similarweb’s Sales Solution, DHL Express is able to discover and prioritize prospects in a smarter way by using Similarweb to identify e-commerce websites which are receiving significant amounts of web traffic from countries that the e-commerce business currently doesn’t have shipping and delivery options in. Once these accounts are identified, the DHL Express Sales team reaches out to these businesses to propose expanding their logistics capabilities into such countries with their help. Armed with Similarweb insights, individual sales reps are able to clearly demonstrate how DHL’s shipping and logistics services will deliver a strong ROI to the prospect. 1,400 sales reps across 100+ markets of the DHL Express sales teams are armed with the Similarweb insights they need in order to find, qualify, and win new e-commerce customers, making this segment by far the fastest growing area of DHL’s business. Using Similarweb’s Sales Solution, DHL Express has experienced a significant increase in new revenue.

Croud

Founded in 2011, Croud is a global, full-service, digital marketing agency that works with some of the world’s leading brands. Prior to Similarweb, Croud had limited clarity and visibility into how its customers’ digital traffic compared to their competitors’ traffic and the market overall. Whether it was at the brand or category level or even across an entire market, Croud needed better traffic analysis capabilities in order to provide optimal value to its customers.

How does Croud use SimilarWeb?

Similarweb provides Croud with detailed site-level traffic data and insight into digital audience behavior, so they have visibility into the digital performance of their customers and other players in its customers’ markets. The Croud team is able to pull valuable insights for clients -- such as traffic share for a client in a given market or the growth of a sector over time and how a client’s own growth compares to it. The insights Croud gains from Similarweb help its clients improve their marketing strategy and tactics to increase share in existing markets and drive revenue from new markets.

Duncan Nichols, Director of Strategy and Planning at Croud, states, "SimilarWeb has become an important tool for the Croud team. We use SimilarWeb to better understand the categories our clients operate in, their share of those categories, and how it might have changed over time. That benchmarking can help to diagnose issues with brand health, to inform market sizing and ultimately to help us spot opportunities for our clients."

Powered by Similarweb analysis, Croud has helped a leading lingerie client to fine tune their local market strategies using a variety of tactics, including adjusting media mixes in order to reflect category benchmarks, and ad copy in order to unlock new audiences. Similarweb’s competitor app engagement metrics allowed a leading video-on-demand client to understand how new competitors entering its market are able to attract customers. Similarweb’s detailed competitive analysis allowed Croud to assist a leading retail homeware client in understanding their competitors’ advertising strategies. The retailer then used this insight to make adjustments to its own media mix, significantly improving traffic share on an ongoing basis.

LEGO

LEGO is one of the most recognized and innovative toy companies in the world. Its iconic bricks have shaped our imaginations, from the playroom to the movie theater. The LEGO Group’s mission is to inspire and develop the builders of tomorrow, while bringing joy, creativity and happiness to children.

The LEGO Groups e-commerce business represents a major portion of its overall revenue, so it’s essential for LEGO to closely monitor and manage its performance. However, as the vast majority of that online business is done through third party retailers, LEGO has very limited visibility into its customers' online shopping behavior. Understanding the dynamics of competing category products is even more challenging. This opacity prevents LEGO from optimizing its overall strategy and how it communicates and advertises to customers.

How does LEGO use SimilarWeb?

Similarweb helps LEGO understand the behavior of its end customers, as well as their sales performance across all of their large retail partners (Amazon, Walmart, etc.). With Similarweb, LEGO has visibility not only at the LEGO brand level, but at the detailed product page level. It is able to see how its products compare with category competitors in general as well as at specific retailers. This enables LEGO to compare behavior of its customers across different retailers. As a result, LEGO has been able to optimize and improve its customer communication and advertising strategy for each retail partner. In addition, LEGO is also now able to provide these retail partners with the insights to help them maximize their own LEGO businesses. At scale, LEGO has seen an improvement in its return on advertising spend (ROAS), resulting in better exposure and more effective marketing, while paying less for it. The money they save is spent elsewhere to further improve their online sales and effectiveness.

What does SimilarWeb’s Management and Board look like now?

Similarweb Management and Board - from latest prospectus
Similarweb Management and Board - from latest prospectus

SimilarWeb’s leadership and the board come from many smaller lesser-known companies and investment firms. I am not particularly familiar with their backgrounds and cant provide many insights here.

What is SimilarWeb’s current Insider Ownership for Executives and the Board?

Similarweb Insider ownership - from latest prospectus
Similarweb Insider ownership - from latest prospectus

SimilarWeb’s co-founder and CEO Or Offer owns more than 7% of the company after the IPO. This translates to an approximate ownership interest of $115 million in a $1.5 billion company. This amount indicates a significant insider ownership commitment from the founder Or.

Other than this, the entire executive and the board of directors team owns more than 60% of the company after the IPO. This is a big positive for the SimilarWeb that all-important stakeholders are heavily invested in the future of the business.

What do SimilarWeb’s current Financials look like?

Following is the income statement for June 2021.

Similarweb Income statement - from Q2 sec filing
Similarweb Income statement - from Q2 sec filing

Following is the stock-based compensation for June 2021.

Similarweb Stock Based Compensation - from Q2 sec filing
Similarweb Stock Based Compensation - from Q2 sec filing

Following is the balance sheet for June 2021.

Similarweb Balance Sheet - from Q2 sec filing
Similarweb Balance Sheet - from Q2 sec filing

Following is the cash flow statement for June 2021.

Similarweb Cash flow statement - from Q2 sec filing
Similarweb Cash flow statement - from Q2 sec filing
Similarweb Financial overview - from latest investor presentation
Similarweb Financial overview - from latest investor presentation
  • Revenue - $61M Q2 2021 and $129M guidance for full-year 2021
  • Revenue Growth - 49% Q2 2021
  • Gross Margin - 77% Q2 2021
  • Earnings Margin - negative 43% Q2 2021, Losses doubled from negative 23% from 2020, due to increased expenses in sales and marketing(A good sign according to me, investment in sales and marketing to capture market opportunity ASAP[hypergrowth needs this]. I think over time with increasing revenue losses will reduce.)
  • Total Debt/Equity - 0.89 Q2 2021(Okayish balance sheet for a company at this stage)
  • Net Cash - $176M Q2 2021
  • EV - $1.4B (Assuming $1.47B market cap, $0.106B total debt and $0.176B cash)
  • EV/Revenue 2020 - 15x
  • EV/Revenue 2021 from Guidance - 10.7x
  • Dollar Based Net Retention Ratio - 118% for Q2 2021 for customers spending more than $100K
SimilarWeb Margin expansion and increasing operating leverage - from latest investor presentation
SimilarWeb Margin expansion and increasing operating leverage - from latest investor presentation

From the above image you can see that as the SimilarWeb business is scaling, their gross margins are increasing, cash flows are increasing and losses are reducing/stable sequentially.

SimilarWeb Sales efficiency and CAC payback - from latest investor presentation
SimilarWeb Sales efficiency and CAC payback - from latest investor presentation

As compared to other SaaS businesses with recent IPO’s Similarweb has average sales efficiency and CAC payback periods.

SimilarWeb accelerated customer acquisition - from latest investor presentation

From the above image, we can see that SimilarWeb has been successful in accelerating their customer acquisition for all their customers, large customers, and in general, the average spend is also accelerating.

SimilarWeb increased customer retention - from latest investor presentation
SimilarWeb increased customer retention - from latest investor presentation

From the above image, we can see that SimilarWeb has been successful in increasing the retention and expansion of their customers small and large.

SimilarWeb increased expansion - from latest investor presentation
SimilarWeb increased expansion - from latest investor presentation

From the above image, we can see that SimilarWeb has been successful at expanding with their current customers.

SimilarWeb Revenue growth acceleration - from latest investor presentation
SimilarWeb Revenue growth acceleration - from latest investor presentation

From the above image, we can see that SimilarWeb has been successful at accelerating its revenue growth sequentially over the last few quarters. They seem to have figured out how to scale their business from high-growth mode to hyper-growth mode.

What are my final thoughts on SimilarWeb AKA TL;DR;?

Overall SimilarWeb looks like a hyper-growth SaaS platform, with a long runway and accelerating growth, with good retention, paybacks, a founder-led team, high insider ownership, and leading proprietary technology.

Note: A lot of information in this article is compiled from Similarweb’s website, SEC filings, and recent presentations/conferences.


By now you should have a thorough understanding of everything that SimilarWeb is doing to achieve durable long-term growth. Please let me know if you want to see more details to be incorporated into these deep dives.

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Modern Growth Investing
SaaS, Tech Hyper & High Growth Investing in High-Quality Compounding Businesses with a Sustainable Moat.

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