Similarweb Ltd. (SMWB) Q2 2021 Earnings Call Transcript

Similarweb Ltd. (SMWB 2.92%)
Q2 2021 Earnings Call
Aug 11, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Similarweb second-quarter fiscal 2021 earnings conference call. [Operator instructions] Please note that today's conference is being recorded. With us today are Or Offer, co-founder and CEO; and Jason Schwartz, CFO.

At this time, I'll turn the conference over to Annie Rosenberg with investor relations. Annie, you may now begin.

Annie Rosenberg -- Investor Relations

Thank you, operator. During this call we will make forward-looking statements related to our business, including statements related to the expected performance of our business, future financial results, strategy, the potential impact of the COVID-19 pandemic, and associated global economic uncertainty, long-term growth, and overall future prospects. These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. Actual results and the timing of certain events may differ materially from the results, or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance.

Please review our filings with the SEC, including our final prospectus and the section entitled risk factors therein filed with the SEC on May 12, 2021, for a discussion of the factors that could cause our results to differ. Also, note that the forward-looking statements on this call are based on the information available as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. As a reminder, certain financial measures we use in its presentation and on our call today are expressed on a non-GAAP basis.

We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends, and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only. They should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

A reconciliation between these GAAP and non-GAAP financial measures is included at the conclusion of our earnings press release, which can be found on our investor relations website at ir.similarweb.com. With that, I will turn the call over to Or Offer, CEO of Similarweb.

Or Offer -- Chief Executive Officer

Thank you, Annie, and thank you all for joining us here today for our Q2 earnings call, which is also our first as a public company. It has been a privilege to be here with all of you on the call today. Our recent IPO was an exciting milestone for our employees, customers investors, and partners. And I want to thank them for their confidence in us over the year.

I also like to welcome our new investors for Similarweb family. During today's call, Jason, our CFO, and I will provide details of our Q2 results as well as provide Q3 and full-year guidance for 2021. I will start today by covering highlights of our financial performance. Q2 2021 was a record quarter for us and I'm pleased to report that our revenue increased 49% year over year to $32.5 million.

We are also very happy that we were able to accelerate our growth versus Q2 2020. Continuing our trend of accelerating growth, we also took advantage of strong demand for our solution as companies across the globe focus on digital transformation. In Q2, we also improved our gross margin by more than 250 basis points year over year to 78.5%, highlighting the scalability of our platform. Our free cash flow was negative $3.3 million reflecting the strong fundamentals of our business even as we expanded our operations.

I want to expand further on those results and also touch on a few key trends that we see as existing for our business. But first, since many of you are new to Similarweb, I wanted to spend a few minutes talking about our business and market opportunity and how we believe our offerings are disrupting a traditional markets and helping businesses compete and win in the digital world. Similarweb was born out of my own personal pain. I was trying to do some market research for my offline business many years ago, but no matter what I search for I couldn't find anyone with the insight I needed.

I saw a market opportunity and 14 years later Similarweb is a leader in the market intelligence for the digital world. Today, our customers are some of the largest and best brands leaders like Walmart, Google, Publicis, Merck, DHL and CNN, and many more. A lot has changed since we wrote our first lines of code. Digital has become a threshold way to communicate, transact, and deliver products and services.

It is an important growth driver and strategic focus for most businesses today. At the same time, it's made every market much, much more competitive. In this environment, businesses has no visibility into the online activity of the customer, prospect, partners, and competition. In reality, they are flying blind.

Similarweb cuts through the lack of visibility, delivering a comprehensive view of the digital world to our customers providing them with market data insights to help them win in the digital world. The data and more importantly the actionable insights that we provide empowers our customers to be more competitive in the markets. We call this digital intelligence. Digital intelligence is embedded in critical businesses forces and gives organizations the means to understand and gain insights from all relevant digital activity.

It creates a powerful competitive advantage. It's empowered companies to make a better business decisions increase their confidence and help them win their market. Sometimes it can be mean the difference between business success and failure. To paint a picture of how digital intelligence can make this kind of impact, I want to share a conversation we recently had with one of our customers.

The head of digital marketing at Stay Sure, one of the top travel insurance companies in the U.K. When COVID hit their entire business was at risk of failure. Similarweb helped them to adapt to the new reality. With Similarweb they were able to quickly identify, which market we covered the fastest from initial lockdown and focus on those opportunities.

They also used Similarweb to identify new market segments. For example, younger travelers looking to insure against COVID-19 risks. They were able to create new products designed for this emerging segments and use Similarweb insights to build the strategy to reach the new audience. According to the company and I quote "Similarweb kept us in business." When times are challenging? It's all about understanding.

What the competition is doing? Where we fit in the market and what's going on in the market overall? It's notable that in Q2, we completed an upsell deal with Stay Sure, increasing their ARR value of their contract by over 30%. This example isn't unique. Now more than ever, companies needed visibility into what's happening in the digital ecosystem if they want to survive and win. Digital transformation is accelerating, but all that investment cannot be optimized without comprehensive, accurate, and timely market data that integrate into the corporate workflows.

This makes digital intelligence a mission-critical. We believe this massive opportunity and we estimate that our total addressable market today is over $34 billion. Delivering this kind of impactful digital intelligence isn't an easy task to do. It is extremely difficult to get massive quantities of digital signals accross the internet, each signal providing only a small perspective of what is going on in the digital world.

And it's even harder to use those signals to build a model that is designed to measure and predict how the digital world behave. This is what we do. Just think every day. We need to estimate the traffic for tens of millions of websites and apps in over 190 countries and in over 200 industries.

And we need to do it really well because we know that leading companies and investors around the world will make a critical business decision based on the insights we provide in our platform. We have been working on solving this problem and creating this technology for over 10 years. Over time, we invest significant resource, and funds, our data assets, and acquisition and building a very strong competitive moats around our technology. To achieve that we have built a unique R&D organization that operates and innovated fast paced culture.

Every month these teams deliver hundreds of innovative data and feature enhancements that improve our customer retention and increase average customer spend. We have continued to expand this team, which now includes nearly 250 top-notch developer, PhDs, data scientists, and big data engineers, and we are very proud of the work. We also build a very efficient sales and marketing organization to approach and attract this very large market opportunity. This start by attracting and engaging prospects with a widely used free tools on our website and through a popular browser extension.

We provide free access to a broad range of basic capabilities as well as opportunities to explore paid offering. The cost-effective lives from this premium inbound motion and efficiently converted to pipeline opportunities for our sales team to pursue. We complement this with an outbound sales motion focused on developing new opportunities with larger target accounts. After successfully land a new customer, we also have a team of client success analyst who help our customers realize more value for our platform, resulting in more strategic relationships and expanding revenues.

This land and expand motion is working very successfully for us. I want to turn now and discuss our Q2 performance. I would like to mention a couple of highlights and how they illustrate several of our businesses strategies specifically around the land-and-expand sell motion, creating new channels of indirect growth, and the introduction of new products and datasets. Let's start with our land and expand.

Over the last 12 months, we accelerate new logo acquisition landing although 600 new customer and crossing the 3,000 customer logo threshold in Q2. We are building on these strong new logo acquisitions by refining our motion and on customer retention and growth. As an example of this, in Q2, we completed one of the largest deals in Similarweb history with a major e-commerce company. This customer begin in January with us in 2016 and starting with one use case and around 50k in annual ARR.

Today they use Similarweb accross 25 teams globally with around 1,500 users, representing over $3.5 million in ARR. Our Q2 upsell was a seven figures ARR upsell with a multi-year commitments, included the additional hundreds of new users as well as an upsell of premium product feature and extend datasets. It's also highlighting our land-and-expand motion in operation. When we started small and overtime we're able to expand traditional user, use case department, and geographies within the customer.

This land-and-expand motion is driving significant growth among our largest and most strategic customer segment. Those companies where we are generating more than 100k in ARR. We grew the number of those accounts by 52% year over year and nearly 60% of this growth came from existing customers. Their ARR expanded to more than 100k.

Although all our ability to retain customers and expand their ARR is reflected in the highest level of NRR that we have ever recorded, NRR strongly improved from 101% at the end of 2020 to 106% at the end of Q2. In this critical customer segment of accounts with over 100k in ARR, we improved NRR to 118%, up from 113% at the close of 2020. Beyond our direct sales motion, we continue to develop indirect sources of demand. First, we recently announced the availability of Similarweb digital insights on the AWS data exchange.

With the AWS data exchange, companies ranging from CPGs to hedge funds can manage the big data analysis with digital marketing intelligence, including website traffic, keywords, and retail transactions. While this did not have a material contribution to Q2 results, I believe that this partnership will broaden our customer reach and further help customers integrate Similarweb into their workflow. And in Q2, we also introduced an affiliate marketing program and a partner referral program launching two new indirect channels for lead and opportunity creation. Also in Q2, we launch a new solution our shopper intelligence, which is targeted at the rapidly growing e-commerce segment.

Shopper intelligence analyzed consumer shopping behavior across desktop and mobile, and provide a comprehensive solution for understanding the digital customer journey and what consumers are buying online. Our goal is that shopper intelligence would analyze and deliver insights about digital consumer behavior across both e-commerce marketplaces and first-party shopping websites. We are off to a strong start with this new solution. We have already closed new businesses in a diverse set of industries and not just in primary CPG audience, but also in retail, pharma, technology, and private equity.

I am looking forward to giving you more details on those wins in the future. We believe that shopping intelligence's innovative product with features that are unique in the market and I'm super excited about it and I think we have a huge opportunity in front of us with this new offering. In Q2, we also made significant addition to the scope of data and insights available for similar web platform. We've completed the acquisition of the assets of SimilarTech, which we believe is one of the best provider of demographic data in the market.

The acquisition enables us to more completely integrate SimilarTech data into our solution and the opportunity to leverage their data to build some exciting new features as well. Separately, we recently announced a significant advancement in our capabilities in our keyword generator, which enables sales professionals to find and explore keywords relevant to expanding their business. The keyword generator now includes support for YouTube, the world's second-largest search engine. As well as Amazon, where 60% of the products searches currently originate.

Those enhancements expand our coverage by over 800 million keyword, extend our breadth of coverage, and keyword volume accuracy. Beyond these efforts, we continue to invest in our organizational growth and development. We continued to scale our organization to support our strong growth. Employee headcount in Q2 grow nearly 60% year over the year.

We continue our international expansion, opening up and new direct sales presence and office in Germany. Recently we also announced a new office in Reston, Virginia, where we will focus on hiring sales and marketing roles and where we expect we will be able to tap into strong local talent in the areas of digital measurements and market research. Finally, I am very excited to announce that last week we closed on a new headquarter facility in the Tel Aviv area. This new building will accommodate our rapid growth and we will be able to fully design this space to meet our the needs for our growing team.

Our new Similarweb headquarter located in the center the Tel Aviv metropolis and I expect when its completed it will be a significant attraction that will enable us to continue to recruit top talent here in Israel. Finally, as we said during the IPO, we will leverage our momentum and continue to pursue both organic and inorganic growth strategies. We will invest in our sales and marketing efforts to accelerate customer acquisition because of the high ROI we get on those investments and the big market opportunity we see. We will take advantage of our strong financial position to opportunistically target and acquire companies in order to improve and expand our data, use case, and addressable market.

We are operating in a fragmented market and we believe we have the opportunity to be the consolidator. Wrapping up, I'm very proud of the company we have built. We have followed our 2020 performance with a strong and accelerating growth in the first half of 2021. We have outstanding leadership and our team is team is smart, bold, fast, talented, and experienced.

We have a strong balance sheet. Our solution, our market-leading, and providing timely and comprehensive data and insight that we believe our customers cannot get anywhere else. Every day thousands of businesses rely on Similarweb solutions to make a mission-critical decisions. We believe we are recognized as the standard of the measure of the digital world.

Our insight are frequently referenced publicly by CEO, major publication, and respected research firms. Our platform has become a required experience for job opportunities and notable skill that user highlights on LinkedIn. We are confident in our growth strategy and we have a track record of strong operational execution. It's still early in our journey and we believe we are in a great position to capitalize and capture an increased share of a very large market.

And then, and as I like to say, we are just getting started. With that, I would like to turn the call over to Jason Schwartz, our CFO. Jason?

Jason Schwartz -- Chief Financial Officer

Thank you, Or. I'm going to start with an overview of our financial model and then I will review our financial results for the quarter and wrap up with our guidance for Q3 and full-year 2021. Our financial model is built on the delivery of strong and predictable revenue growth, substantially all of which is generated from SaaS subscriptions. We deliver a high net dollar base retention rate or NRR and also maintain high gross margins and unit economics that drive cash efficiency.

In Q2, we delivered a record revenue of $32.5 million, reflecting 48.5% year-over-year growth. We increased our total number of customers to 3,068, up 24% from 2,479 in Q2 last year. This includes, as Or mentioned, a strong increase in our hundred thousand dollars or more ARR customers, which grew by 52% from 145 in Q2 2020 to 220 in Q2 2021. Most of these customers began initially as small customers and have expanded through our successful land-and-expand motion.

Today these customers comprise 49% of our overall recurring revenue base. Our revenue and customer base is highly diversified and no single customer amounts to more than 5% of revenue. In discussing the remainder of the income statement, please note that unless otherwise stated, all references to our expenses and operating results are on a non-GAAP basis and are reconciled to the GAAP results in the earnings press release that was issued just before this call. Our gross profit totaled $25.6 million in the quarter, representing a gross margin of 78.6% versus 76% in Q2 2020.

This margin improvement reflects the significant operating leverage we've been able to realize in our fixed SaaS infrastructure and data costs. Operating expenses grew to $36.3 million in Q2, up from $19.1 million in Q2 2020, largely reflecting the investment and personnel across the business from product and R&D, sales and marketing, and our G&A team  to support our business growth. We see a large TAM, an opportunity ahead of us and we'll continue to invest in personnel and initiatives that help us capture more market share. The specific components of our operating expenses were research and development $8.3 million versus $4.7 million in Q2 2020.

This excludes $696,000 of retention payments relating to the acquisition of SimilarTech during the quarter. We anticipate an additional $350,000 in Q3. Sales and marketing $21.4 million versus $11.8 million in Q2 2020. General and administrative $6.6 million versus $2.6 million in Q2 2020.

This excludes $1.2 million of non-recurring expenses related to our initial public offering. As a result, our non-GAAP operating loss in the quarter totaled $10.8 million, increasing from $2.5 million in Q2 2020. Free cash flow for the quarter was negative $3.3 million, compared to $1.5 million in Q2 2020. In May, we successfully completed our initial public offering of our ordinary shares, raising net proceeds of $150.7 million after deducting underwriting fees and commissions and related offering costs.

During the quarter, we also repaid all outstanding amounts under our credit facility such that as of the end of the quarter, we have no outstanding debt. As a result, we have a strong cash position that totaled $177 million of unrestricted cash balances as of June 30, 2021. We have additional capacity available to us under our $75 million credit facility with Silicon Valley Bank. As such, we believe that we have sufficient liquidity to successfully execute our business growth plans.

As Or mentioned, last week we signed an office lease agreement for our new Israel headquarters. We anticipate investing $8 million to $10 million in leasehold improvements over the next four quarters in advance of our anticipated moving date in Q2 2022, which will be amortized over the 10-year term of the lease. We are introducing guidance for both Q3 and the full-year 2021. For Q3 2021, revenue is expected to be in the range of $32.8 million to $33.2 million.

Non-GAAP operating loss is expected to be in the range of $14.5 to $14.9 million. Full-year 2021 revenue is expected to be in the range of $129 million to $130 million. Non-GAAP operating loss for the full-year 2021 is expected to be in the range of $49 million to $50 million. I'll now hand the call back over to Or for his closing remarks.

Or Offer -- Chief Executive Officer

Thank you, Jason. I would like to close by thanking my leadership team and our employees around the world for working hard to deliver a very successful first half of the year. Our IPO was a milestone for us as we continue to grow and I am pleased to welcome our many new investors to the Similarweb family. With that, operator, please open the call up for questions.

Thank you.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question is from the line of Sterling Auty with JPMorgan.  Please proceed with your questions.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Yeah, thanks. Hi, guys. So I wanted to start with the question around the AWS marketplace partnership deal. Can you help us understand, does this just make it easier for customers to access the data and monetize? Does it just change where they're getting that data from or does it actually add incremental reach to new customers that perhaps you weren't getting to before?

Or Offer -- Chief Executive Officer

Hi, Sterling. It's Or. I will try to answer this question. So I think then, the quick answer is yes to all of the above.

It will increase us the way to approach to many more customers than before that are operate on the AWS platform and buying data on the data marketplace. So we do expect to get more customers. It will give an easy way for them not only to access the data, but another seller to sell them. So they need to get the API, API key.

It's more easy to get access our data and also chargeable and also trying the data because the data is already there. And if they have AWS account, it's much more easy for them to buy, use, try it. And also charge because they already connect with the Amazon invoice system. And also, Amazon is putting it out of incentivize on their -- for those customers and they give them free credits to try many datasets on the data marketplace.

So we also going to leverage of this momentum of Amazon themselves, pushing their customers to try and buy data assets off them.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Great. And then, one follow-up. With the improvement in the net dollar retention, you talk about the number of different ways that you can expand more users, more data, more geographies. Which one of those really stood out the most in in the quarter in terms of driving that net dollar retention?

Or Offer -- Chief Executive Officer

So I don't have the exact answer, but they tell me what they what I feel that is driving really great expansion. One is that cross-selling of offering, and I talk a little bit about those shops intelligence. So we saw great success there was people buying one more solution for us. So I think buying more solution is a great driver, but I also saw a great deal of people buying more users or other add-ons or integrating APIs.

So I think it's all across. But my feeling is what -- is strong now is this quarter was the most solution we're able to sell and introduced to our customer.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Great. Thanks, guys, and welcome to the public markets.

Or Offer -- Chief Executive Officer

Thank you, Sterling.

Operator

The next question is from the line of Drew Foster with Citigroup. Please proceed with your questions.

Drew Foster -- Citi -- Analyst

Hey, guys. Thanks for taking the question. Jason, for the past six quarters or so your top line has been growing sort of directionally in line with your sales and marketing spend. This quarter it was up another 30 points sequentially relative to Q1.

So you're clearly accelerating that. To the extent that sales and marketing is a leading indicator for your top line, like at a high level, how should we think about the pace and magnitude of investments within that envelope over the next six quarters? And then if you could just remind us of the breakdown of how much of that incremental spend their marketing and advertising, where you might get a quicker return on those dollars and how much is related to adding incremental sales people and sales infrastructure or the return on those investments is a bit more protracted?

Jason Schwartz -- Chief Financial Officer

Hey, Drew. Thanks for the question. So what we see right now is a there is a huge TAM and opportunity ahead of us. And as a result of that, we're continuing to invest to capture a larger share of that market that we see.

And so we have accelerated hiring. I think you may have seen that in the press release that headcount has grown over across the business. But our approach is really to invest in a responsible way balancing back growth and efficiency. And so that's what we're going to continue to do and we do think that that's an indication of further growth down the road.

As far as the split, we don't break down the split between marketing dollars versus headcount dollars, but what we do say is that 60% of our marketing sales spend goes to new customer acquisition and about 40% of it is spent on customer retention and expansion.

Drew Foster -- Citi -- Analyst

It's really helpful. Thanks. And then you had strong gross margin improvement. I think even call it out at the top of your press release.

So could you just maybe unpack what's driving that. And where you think you could drive those two over time? Thank you.

Jason Schwartz -- Chief Financial Officer

Yes. Sure. A lot of our cost of sales is comprised of fixed cost in the infrastructure, the typical kinds of stuff that you have. We are hosting and support.

We actually hosted at AWS as well as the investment that we make both in internal cost and external cost in our in our data assets. And so which is really a fixed cost for us because it's the same amount of data that we need whether we're running or providing a service to 50, 500, or 5,000 customers. And so there's a natural leverage that we get on those fixed costs, and that's the improvement that you've seen not only in this quarter but over the trend overtime over the last two, three years. We think that we're comfortable with the guidance that we've given.  We're saying the same levels of near term and then potentially going forward, we'll -- as we think about the guidance going forward, we'll, of course, update you.

Drew Foster -- Citi -- Analyst

Thanks a lot.

Jason Schwartz -- Chief Financial Officer

Thank you.

Operator

The next question is from the line of Bhavan Suri with William Blair. Please proceed with your questions.

Bhavan Suri -- William Blair & Company -- Analyst

Hey, guys. Congrats and welcome to being a public company. Nice job. I guess I just wanted to touch quickly first on the new customer strength.

I'd love to sort of understand what's driving the momentum. You're obviously increase sales and marketing, you've got partners but I guess as you look at that, are these customers sort of replace another vendor or is this web intelligence programs for the first time?

Or Offer -- Chief Executive Officer

Good question. I think that the majority of the deal that we are at, it's basically it's only us. We are not replacing. It's mostly a greenfield opportunity.

Bhavan Suri -- William Blair & Company -- Analyst

Gotcha, gotcha, gotcha. And then, you relaunch the platform in '19 sort of these five key use cases. Have you seen any change in how customers are adopting solutions? Are they changing where they start? And are they building different sort of data strategies once they've implemented a couple of solutions? How should we think about that progress the customer and sort of their strategy from when they adopt to when they change? Thank you.

Or Offer -- Chief Executive Officer

It's a good question. I do see that the more we develop our offering and bringing new solution into the market, we kind of unlocked and new strategies for our customers. Once we kind of introduced our solution better than I thought also in our CPG customers, now that we introduced shopper solution to them and they get in this all new data and then they understand they can derive new strategy. And one example we're also on investors vertical when we come with more sharp offering and then it's kind of giving them in a whole new perspective about how to think and develop strategy around data and insight like market data insights going forward.

So I do see that. I do see that it will come in and a lot of the things we present early and as a new and innovative even to the customer and they understand the power that they get that digital intelligence has and how they can use it to drive more strategic decisions across the business.

Bhavan Suri -- William Blair & Company -- Analyst

Gotcha, gotcha. Thanks for the color and nice job, guys. Thanks for taking my questions.

Or Offer -- Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your questions.

John Byun -- Jefferies -- Analyst

This is a John Byun for Brent Thill. I had a two questions. One, of the five major solutions you have, any particular strengths to highlight among the five? And maybe if you could shed some light also on the relative contribution? And then second, it's probably for Jason. I just want to see any comments on the linearity during the quarter, the trends by month.

Any particular variations to note anything including a quarter today? Thanks very much.

Or Offer -- Chief Executive Officer

So I will start answering them -- the solution and then Jason can talk about the trend. So all of the solutions are growing very nicely and we're very happy with the overall growth and we saw great success with the new tool offering for investors and the shoppers. So CPGs are accelerating nicely and I think still the majority of our business is for our core solution that we start through our research solution and our marketing solution. Historically, a lot of our customers used to buy together.

And all of them are growing very nicely and we are putting another efforts to develop them and improve their offering. And, Jason, you want to answer the trend?

Jason Schwartz -- Chief Financial Officer

Yeah. Sure. Within the quarter, there's some variability from quarter to quarter. But in general, because we have -- we run on an ARR model, we've got good visibility and predictability into the revenue trends as we start the quarter.

John Byun -- Jefferies -- Analyst

Great. Maybe you just wouldn't on that I mean was there anything that you noticed terms of customer activity as opposed to revenue trend, ups and downs variation. That will be it for me. Thank you.

Jason Schwartz -- Chief Financial Officer

That's not material. I think we see a lot of customer activity and a lot of customer demand throughout the quarter. And we're pleased with that continued motion.

John Byun -- Jefferies -- Analyst

Thanks again.

Operator

The next question is from the line of Raimo Lenschow with Barclays. Please proceed with your questions.

Unknown speaker

Hi. This is Sheldon on for Raimo. Congrats on the IPO and thanks for taking my questions. Interested in the enhancements to the keyword generator tool.

Can you help me understand, how differentiated the new capabilities are compared to competitor solutions and the existing Google suite capabilities? And additionally on the YouTube SEO, it seems like we're still in the early innings there. Can you provide any color on the opportunity? Thank you.

Or Offer -- Chief Executive Officer

Yeah. So thank you for the question and I will answer that. And so I think that this new enhancement that would give to our keyword generator is our -- show that we can bring very unique data and that like most other competitors in the market with our unique approach to provide insights. And we know that today search is evolving.

And YouTube is already the second biggest search engine out there and Amazon is the biggest search engine for e-commerce for shopping activity. And we recognize that our customer is the one to also understand the trend there and to develop their own search strategies. So we realized that we can be innovative and give very high quality results and -- around our keyword generator and we're very happy with the data and the accuracy we put down, and really big coverage with almost 800 million keyword for you to check there. And I don't think this motion will bring a lot of new ideas and strategies to our customers to go after and acquire more traffic

Unknown speaker

Great. Thank you.

Operator

Our next question is from the line of Jason Helfstein with Oppenheimer. Please proceed your questions.

Unknown speaker

Hey, guys. This is Patrick Josephs on for Jason. Thanks for taking our questions and congrats on a strong start out of the gate. I just want to dive a little bit deeper into the record consolidated NRR metrics, specifically were there deals that lead to the second quarter that cannot be closed during the pandemic or is it just broadly the shift in client behavior, which is just driving more spend at Similarweb?  Also I know that you guys are guiding to NRR metrics, but should we expect NRR greater 105% going forward on a consolidated basis? Thanks.

Or Offer -- Chief Executive Officer

So I will try to answer it for my side and Jason can add his opinion. Our NRR growth over the past many quarters is it's a lot of hard work we did historically and now we start to collecting the fruits. A lot of improvement in our data, in our platform, in our sales approach, in pricing and packaging, our relationship build with our customer; introducing of new offering, and adding more ROI and value to our customers. And this is why we see a great result of NRR; keep growing for the many quarters.

And this is why they also spend more money with us. And, Jason, you want add to maybe from your side?

Jason Schwartz -- Chief Financial Officer

I think, Or, I agree with you on that. This is the result of a lot of hard work. And of course, all customer segments that we saw are strengthening both on retention and upsell, which is what's driving that NRR metric

Unknown speaker

OK. Great. Thanks. And just a follow-up question related to the app measurement product.

Could you give us an update on the development of the app measurement product and whether there have been any delays given the IOS update? Thanks.

Or Offer -- Chief Executive Officer

Ad or app?

Unknown speaker

Sorry. The app measurement product.

Or Offer -- Chief Executive Officer

OK. So yeah. So with this deal would you say to double down or on our app offering and provide more market insight around the app ecosystem. And a lot of great development there and they're going to introduce a lot of development to the android data in the coming months.

And hopefully also introduce a lot of improvement to the IOS data by the end of the year. So a lot of great improvements coming in the next few quarters around this area. So we are doubling down and putting more effort to scale and reach our app offering.

Unknown speaker

OK. Great. Thanks for the question.

Operator

Thank you. Your final question comes from Pat Walravens with JMP Group. Please proceed your questions.

Pat Walravens -- JMP Securities -- Analyst

Oh, great. Thank you and congratulations you guys. So my first one is, if you look at this. I mean it's a great win expansion with the e-commerce company, the 3.5 million ARR.

So my first question is, how much more room is there at a company like that? 3.5 million, are you done or can it keep getting bigger?

Or Offer -- Chief Executive Officer

This is a great question because I just have a great talk with my team. I told them that the target that this customer will be our first $10 million customer. This is what I hope and think, so there is much room to go.

Pat Walravens -- JMP Securities -- Analyst

OK. Great. That's what I was hoping. And then, how many other ones are there where and how much you disclose this, but have you told us how many you have that are north of a million in ARR.

And if not that, just what does the pipeline look like for other customers that can be north of a million ARR?

Or Offer -- Chief Executive Officer

So we are not reporting, I'll start, but to answer and then Jason can give. We're not reporting right now, how many -- how much seven figures customers we have but we do see a study to increase this sector of customers. And as I talked and present in the roadshow we have big part of the Fortune 500 already as our customer. And I think most of them need to pay us seven figures down the road and hopefully we will get there.

Jason, you want to add on that?

Jason Schwartz -- Chief Financial Officer

Yeah, I -- as Or said today the -- our focus and the numbers that we talk about are that that strategic customer group that our customers are spend more than $100,000 with us. And what we've seen, we saw that 52% growth year over year this quarter in that cohort of customers. Today that makes up about 49% of our ARR. We see over time that the same motion where we're seeing customers starting as smaller customers and growing into and expanding from in the -- in a single solution Or has talked about the multi-solutions, I'm getting up to multi-hundred thousand dollars and driving that lifetime value.

We think over time we can get a number of customers to be those seven-digit accounts.

Pat Walravens -- JMP Securities -- Analyst

Great. And then last one for me. Obviously, you're not guiding to the out years but just, Jason, how should we think about sort of, what the what you aspire to in terms of longer-term revenue growth? So what's the plan that you're you're building internally in terms of your hiring, your quotas and into your products you're going to bring to market and putting all that together? How fast do you think that this company is growing over the longer term?

Jason Schwartz -- Chief Financial Officer

It's a great question, Pat. And like we said, we see a a huge TAM ahead of us. And we've also looked at the performance and how we've shown that we know how to both grow and do it in a responsible and efficient way. And so to the extent that we can continue to do that, we will continue to invest smartly to balance that growth and efficiency but we really look forward to leaning in and capturing a larger share of that market that we see.

Pat Walravens -- JMP Securities -- Analyst

OK. That's it for me. Thank you.

Operator

Thank you. At this time we've reached the end of the question-and-answer session. I'll now turn the call over to management for closing remarks.

Or Offer -- Chief Executive Officer

Thank you, everyone. Really excited to be here and answering your question. It's our first earning call out of many to come and we hope to continue deliver and make our investors happy. Thank you, and that's all for an amazing good year.

Thank you for your question. Bye.

Operator

[Operator signoff]

Duration: 50 minutes

Call participants:

Annie Rosenberg -- Investor Relations

Or Offer -- Chief Executive Officer

Jason Schwartz -- Chief Financial Officer

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Drew Foster -- Citi -- Analyst

Bhavan Suri -- William Blair & Company -- Analyst

John Byun -- Jefferies -- Analyst

Unknown speaker

Pat Walravens -- JMP Securities -- Analyst

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