The piece of news that particularly caught my attention was the IPO of SEMrush, given our exposure to it during the course. I had a great experience working with the tool for our project, which made me wonder if it would be a good idea to invest.
The customer growth has been phenomenal. In 2010, the
company was serving around 1000 customers. By 2016 the company started
launching their content marketing and digital PR tools and broke the 1 million
user mark.
Further, the SEMrush product has a proven track record as a
leader in SEO and digital marketing analytics.
SEMrush has an array of over 50 products, tools, and add-ons in their
arsenal to address SEO and digital marketing and carries a robust, proprietary
technology platform.
Looking at the business fundamentals, About 94.9% of SEMrush’s
customers are from the small and medium sized business category where they see
an ARR per paying customer of $2,000; and their large enterprise customers have
an ARR per paying customer of $4,200. This is combined with a positive net
dollar retention, decreasing net losses and a growing market.
While the above-mentioned factors definitely captured my
interest, on the flip-side, my biggest concern was the intensely competitive
nature of the SEO market. This would require them to constantly invest in
R&D and sales to maintain up-to-date tools. This is something SEMrush has
lagged in, according to their financial statements. In addition, this tends to
a price sensitive market which increases the competition intensity.
My assessment of the SEO market was that it is an intensely
competitive and rapidly changing industry. It makes sense to be bullish on the
SEO market overall, as digital marketing, SEO, and brand building are critical
and growing parts of today’s business environment. However, what I remain
unsure of is SEMrush’s ability to dominate the market in the coming times.
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