Similarweb stock plunges after weak earnings report
The company reported an unexpected loss and warned of rising expenses, despite recent improvements in profitability.
Digital intelligence company Similarweb published disappointing financial reports on Tuesday that sent its stock plummeting on Wall Street on Wednesday. The company's shares were down almost 30% at the time of writing.
Investors were expecting a profit of 3 cents per share, but Similarweb actually lost 3 cents per share in the last three months of 2024.
Over the past few quarters, the company has actually shown an improvement in profitability, which has contributed to a jump of about 100% in its stock before Wednesday.
Since the end of 2023, it has reported a gross profit rate of more than 80%, while in the last quarter it fell below this threshold again to 78% of revenue. Furthermore, Similarweb also announced in its forecast that it expects an increase in expenses that will again hurt profitability.
The company explained this by the expected increase in personnel following a decision to invest more in growth and take advantage of market opportunities.
“The AI revolution presents a significant opportunity for Similarweb as a leading global provider of digital data. In 2024, customers began to train LLMs with our data and we are engaging extensively with brands that are keen to leverage our unique data to understand the evolving digital world,” said CEO Or Offer. “To capitalize on the opportunity, we have decided to increase our investment in sales and R&D for 2025. We believe we are just beginning to tap into the vast potential of our data and the addressable markets we serve.”
In the current quarter, it expects a loss of $1.5-1 million before one-time and accounting items, but in the annual summary it is expected to reach an operating profit of $1-4 million, a range that is too wide for Wall Street analysts.
This is a significant deterioration compared to the last quarter of 2024, when it ended with an operating profit of $2.6 million, which in turn was worse than an operating profit of $4.7 million in the same period in 2023.
As for revenue, Similarweb expects a continuation of a moderate double-digit growth rate, as was also recorded in 2024. It expects to end 2025 with revenue of $285-288 million, an increase of 15% compared to 2024.
In the first quarter, it expects to record revenue of $66 million, growth of 12% compared to the corresponding period and similar to the last quarter of 2024. Similarweb ended the entire year with revenue of $249.9 million, an increase of 15% compared to 2023.
