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SMWB - 100% subscription revenues (half are Multi year), 80% gross margins and mid teens growth. They are a Key Data business that helps large global corporations understand their competitive position, and what their toughest competitors are doing. Their data is Unique as they collect Real Time every minute of every day the activity across global websites, browsers, mobile apps, search engines, and now generative AI driven traffic. These data are hugely valuable to enterprises from JNJ to Coke to JPM to S&P Global to Bloomberg to Google to Samsung to Apple to Disney to Eli Lilly … And the AI platforms also license SMWB data to perform their analytics. Operating margins are scaling Up as they grow their recurring revenues — with 25% EBIT (that’s right EBIT, not EBITDA) visible in the 4 year time frame. SMWB is not well covered (no one has estimates past 2027) — but with their unique data subscriptions growth and profit drop down they’ll be earning over $1 of Cash EPS in a 4 year time frame. They are not capital expenditures dependent. AI is actually helping them spend less on SG&A on the opex side. With their high margins, light capital requirements, and growing Recurring revenues — they should get at least a 20 multiple (many such businesses get 30X). So the stock should be $25-30 in a few years versus $7.45 now. Also, Adobe acquired SemRush (an SEO only company with less analytics than SMWB) for $1.9 billion in cash !! SMWB provides more value to clients, and is currently only a $618 million market cap - so an acquisition is a possibility. I am not pitching that as a preferred outcome but it sure does provide downside protection.
SMWB also may be acquired as well. They have an impressive list of large enterprise clients that have signed up for Multiple year locked in contracts - at 80% gross margins to SimilarWeb including : Google, JP Morgan, Coke, DHL, Hershey, P&G, T-Mobile, Adyen, UPS, Rakuten, Mayo Clinic, GM, Samsung, L’Oréal, Nike…
SemRush delivers SEO or search engine optimization services. Their clients mostly small businesses. SemRush saw that traffic & customer acquisition is moving from traditional search to AI - so they sold ! Yes they will try to deliver generative AI search optimization But Adobe has a set of services they also are trying to sell, so there’s a conflict that clients won’t like. A better play is SimilarWeb SMWB that is neutral so trusted, and far broader and more global in analytics and is already chosen by the AI platforms for their data.
I believe SMWB is an outstanding under covered stock. 100% recurring revenues from subscription data services that are growing 15-17% new subscriptions every year. 45% of the subscriptions are multiple year. 80% gross margins and only trading at 2X their revenue They are cash flow positive and expect at $400mm revenue margins will be 25%. Their data is used by global enterprises to do competitive analysis and adjust go to market strategies between web, mobile, Gen AI They serve clients in all industries from Google to JNJ to Coke to DHL to GM to JP Morgan etc. Their data is constantly updated with their feeds from global internet locations - and the AI Models Pay SMWB to feed their analyses - they need the constantly updated data. It’s an $8 stock that will earn at least $1 in a few years - and likely will get a 25-30X multiple for a high margin, growing, capital light, global data recurring subscription standard.
I believe SMWB is an outstanding under covered stock. 100% recurring revenues from subscription data services that are growing 15-17% new subscriptions every year. 45% of the subscriptions are multiple year. 80% gross margins and only trading at 2X their revenue They are cash flow positive and expect at $400mm revenue margins will be 25%. Their data is used by global enterprises to do competitive analysis and adjust go to market strategies between web, mobile, Gen AI They serve clients in all industries from Google to JNJ to Coke to DHL to GM to JP Morgan etc. Their data is constantly updated with their feeds from global internet locations - and the AI Models Pay SMWB to feed their analyses - they need the constantly updated data. It’s an $8 stock that will earn at least $1 in a few years - and likely will get a 25-30X multiple for a high margin, growing, capital light, global data recurring subscription standard.
Loaded SMWB for recovery and AIOT (potential squeeze)
SMWB up +18% after hours, still a lot of room imo 🚀
My spec plays are GENI, LUNR, SMWB
SMWB $7.50 Call 12/16. ComCast going to acquire them. SMWB becomes immediately profitable with their Xfinity data. Timing uncertain. Just keep rolling it.