Similarweb posts eighth straight positive cash flow quarter in Q3

Similarweb delivered its third quarter 2025 financial results on November 11, 2025, reporting revenue of $71.8 million and marking the eighth consecutive quarter of positive free cash flow. The digital intelligence company maintained full-year revenue guidance while raising profit forecasts based on operational efficiency gains.

The Tel Aviv-based data analytics platform achieved 11% year-over-year revenue growth, according to the shareholder letter released alongside the earnings announcement. Third quarter results reflected expansion in the customer base to 6,127 annual recurring revenue accounts, representing 15% growth compared to the same period in 2024.

Remaining performance obligations reached $267.6 million at quarter end, increasing 26% year-over-year and outpacing revenue growth. The company expects to recognize 68% of total remaining performance obligations as revenue over the next 12 months, providing visibility into 2026 performance.

Multi-year subscription commitments accounted for 58% of annual recurring revenue as of September 30, 2025, up from 45% one year earlier. This metric demonstrates increasing customer commitment to Similarweb's digital data platform across extended periods.

The enterprise customer segment continued expansion during the quarter. Customers generating over $100,000 in annual recurring revenue grew from 395 to 447 year-over-year, representing 13% growth. This cohort contributed 63% of total annual recurring revenue, reflecting concentration in strategic accounts.

Average annual revenue per $100,000 customer remained relatively stable at approximately $370,000, compared to $371,000 in the third quarter of 2024. Overall average revenue per customer declined to $48,000 from $50,000, driven by new customer acquisition at entry-level pricing tiers.

Dollar-based net retention rate reached 98% across all customers and 105% for the $100,000 cohort during the quarter. The decline from 101% and 111% respectively in the year-ago period reflects strong expansion activity during 2024, particularly from large contracts booked in the second and third quarters of last year.

Similarweb's GenAI Intelligence products have shown rapid adoption since launching in 2025. Annual recurring revenue from these offerings exceeded $1 million since the April introduction, according to the shareholder letter. The company positioned generative AI data and solutions as among its fastest-growing revenue streams during the quarter.

The digital intelligence company supplies proprietary data to companies building large language models and generative AI applications. These engagements typically begin as one-time evaluation projects before converting to recurring revenue arrangements. Similarweb excludes LLM data evaluation contracts from net retention rate calculations until they convert to annual recurring revenue structures.

App Intelligence, launched in March 2025, reached 580 customers by quarter end, up from 484 at the end of the first quarter. Annual recurring revenue from this product approached $10 million. The platform provides insights across 4 million iOS and Android applications in 58 countries, including ranking, downloads, usage, engagement, retention and audience demographics.

Gross retention rate improved sequentially during the third quarter, reaching the highest level in two years. This improvement resulted from investments in account management and customer success teams alongside enhanced product onboarding experiences. These initiatives drive healthier customer engagement and support anticipated net retention rate improvements across both overall and enterprise segments.

The company reported non-GAAP gross margin of 81% during the quarter, consistent with the year-ago period. Non-GAAP operating profit reached $4.6 million, or 6% of revenue, compared to $4.4 million or 7% of revenue in the third quarter of 2024. Results exceeded guidance ranges due to expense phasing between quarters.

Non-GAAP net income totaled $4.4 million, or 6% of revenue, compared to $4.0 million or 6% of revenue in the prior-year quarter. Non-GAAP basic and diluted income per share remained steady at $0.05.

Cash and cash equivalents totaled $65.5 million as of September 30, 2025, with no outstanding debt. Net cash provided by operating activities reached $3.5 million compared to $9.3 million in the third quarter of 2024. Non-GAAP normalized free cash flow came in at $3.0 million, down from $9.0 million in the year-ago period.

Research and development expenses increased to $18.5 million on a GAAP basis and $16.1 million non-GAAP, up from $14.5 million and $13.1 million respectively in the third quarter of 2024. As a percentage of revenue, non-GAAP research and development expenses rose to 22% from 20%, reflecting continued investment in data infrastructure and product innovation.

Sales and marketing expenses reached $29.2 million GAAP and $27.0 million non-GAAP, increasing from $26.8 million and $24.9 million in the year-ago quarter. As a percentage of revenue, non-GAAP sales and marketing remained at 38%, with sequential improvement from 41% in the second quarter of 2025.

The sales organization showed improving productivity metrics during the quarter. Sequential yield increased 28% while deals per representative rose 21% compared to the second quarter. The company completed sales team expansion at the end of the first quarter, resulting in 30% more sellers than the third quarter of 2024.

Customer acquisition cost payback period ranged between 22 and 23 months during the quarter, elevated from historical levels of 15-16 months due to extended sales cycles over the past year. Contribution margin on the existing customer base remained between 58% and 62%, supporting investment in both new customer acquisition and retention activities.

General and administrative costs increased to $12.2 million GAAP and $10.2 million non-GAAP from $11.7 million and $9.5 million in the third quarter of 2024. As a percentage of revenue, non-GAAP general and administrative expenses improved to 14% from 15%.

Similarweb maintained full-year 2025 revenue guidance between $285.0 million and $288.0 million, representing approximately 15% growth at the midpoint. The company raised non-GAAP operating profit guidance to between $8.5 million and $9.5 million, up from previous expectations.

The company appointed Ran Vered as chief financial officer effective December 2025. Vered brings over 20 years of finance experience including CFO roles at three companies, two publicly traded in the United States and one SaaS enterprise data company. Jason Schwartz concluded 10 years of service as CFO.

The company's Model Context Protocol Server launched in September 2025, delivering digital market intelligence directly into AI agents and workflows. The platform integrates with Claude, Copilot, Cursor, Zapier, OpenAI's Agent Builder, n8n and other automation tools, expanding addressable markets to include marketers and SEO practitioners.

AI agent utilization continued growing during the quarter. Among Sales Intelligence customers, 27% use AI Meeting Prep and AI Outreach agents, with sequential growth in adoption rates. These tools reduce time requirements for tasks while accelerating time-to-value for customers.

Web Intelligence 4.0 launched in October 2025, integrating GenAI capabilities directly into the web intelligence solution. The release provides comprehensive visibility across traditional web metrics and AI-driven discovery channels.

The third quarter financial performance demonstrates progress toward long-term profitability targets. The company aims to achieve 25% non-GAAP operating margin and 30% normalized free cash flow margin at scale, with continued focus on efficient growth and operating leverage.

Revenue concentration among enterprise customers reflects the land-and-expand business model. Case studies in the shareholder letter illustrated customers growing from initial $100,000 engagements to over $1 million in annual recurring revenue through multi-year relationships spanning product expansion, geographic coverage and organizational adoption.

Digital intelligence demand continues expanding as companies require comprehensive understanding of digital performance across web, mobile and AI-powered discovery channels. The $55 billion addressable market calculation encompasses B2C companies seeking audience monetization, B2B firms selling to digital businesses, and investors analyzing companies with digital operations.

The third quarter results position Similarweb for sustained profitability and cash generation heading into 2026. Management emphasized disciplined execution and operational efficiency as key drivers of margin expansion alongside revenue growth.

Timeline

• February 2024: Similarweb reports first positive free cash flow quarter as public company with Q4 2023 results
• March 31, 2025: Similarweb acquires The Search Monitor to strengthen paid search and affiliate marketing capabilities
• March 2025: Similarweb launches App Intelligence product
• April 2025: GenAI Intelligence suite launches, reaching $1M ARR by Q3
• June 4, 2025: Bloomberg integrates Similarweb web traffic data into Bloomberg Terminal
• July 1, 2024: Similarweb acquires 42matters, Swiss app intelligence provider
• July 2, 2025: ChatGPT referrals to news sites increase 25x year-over-year, according to Similarweb data
• July 28, 2025: Similarweb unveils GenAI Intelligence Toolkit combining visibility tracking with traffic measurement
• August 2024: Similarweb reports Q2 2024 results, raises full-year guidance
• September 2025: Similarweb launches Model Context Protocol Server
• October 2025: Web Intelligence 4.0 launches with integrated GenAI capabilities
• November 11, 2025: Similarweb reports Q3 2025 results with eighth consecutive quarter of positive free cash flow
• November 12, 2025: Similarweb Director of SEO publishes AI citation analysis framework

Summary

Who: Similarweb Ltd., a digital intelligence company providing data and analytics to over 6,100 customers including Fortune 500 companies, investors, and digital marketers

What: The company reported third quarter 2025 revenue of $71.8 million with 11% year-over-year growth, marking the eighth consecutive quarter of positive free cash flow while expanding its customer base 15% to 6,127 accounts; GenAI Intelligence and App Intelligence products drove new revenue streams

When: Financial results released November 11, 2025, covering the quarter ended September 30, 2025; the company maintained full-year revenue guidance of $285-288 million while raising profit guidance to $8.5-9.5 million

Where: Headquartered in Tel Aviv, Israel, Similarweb serves global customers with digital data covering 100 million websites, 4 million apps, and 190 countries; the company operates across B2C, B2B, and investor market segments

Why: The results matter because they demonstrate sustainable profitability in the digital intelligence sector amid shifting search behaviors toward AI platforms; Similarweb's proprietary data becomes increasingly valuable as marketers require visibility across traditional web, mobile apps, and generative AI discovery channels while the company's multi-year contract growth to 58% of ARR signals long-term customer commitment to digital data infrastructure