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(Exact Name of Registrant as Specified in Its Charter)

(Address of principal executive offices including zip code)

(Registrant’s telephone number, including area code)

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

                                    

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements concerning the following:

•    our future financial performance, including our revenue, annual recurring revenue (“ARR”), dollar-based net revenue retention rate, non-GAAP income from operations, non-GAAP income from operations margin, free cash flow, free cash flow margin, costs of revenue, gross profit or gross margin and operating expenses;

•    the sufficiency of our cash and cash equivalents to meet our liquidity needs;

•    anticipated trends and growth rates in our business and in the markets in which we operate;

•    our ability to maintain the security and availability of our internal networks and platform;

•    our ability to attract new paying customers and convert free customers into paying customers;

•    our ability to retain and expand sales to our existing paying customers, including upgrades to premium subscriptions and purchases of add-on offerings;

•    our ability to access, collect, and analyze data;

•    our ability to successfully expand in our existing markets and into new markets, including executing on anticipated market opportunities and growth strategies;

•    our ability to effectively manage our growth and future expenses;

•    our ability to continue to innovate and develop new products and features, improve our data assets, and adopt and enhance our technological capabilities, including the use of artificial intelligence and other new and evolving technologies;

•our expectations regarding user behavior online, including use of traditional search engines and newer AI-driven search technologies;

•    our ability to maintain, protect, and enhance our intellectual property;

•    our ability to build, maintain, and enhance our brand, including through informational resources, advertisements, and referrals;

•    our ability to comply with modified or new laws and regulations applying to our business, including in any new jurisdictions in which we operate;

•    the attraction and retention of qualified employees and key personnel;

•related impacts from recent changes to our executive management team;

•    our anticipated investments in sales and marketing, and research and development;

•    our ability to successfully defend litigation brought against us;

•    our expectations regarding identifying, evaluating, executing, and integrating strategic acquisitions and related financial considerations such as purchase price allocation;

•    our plans, expectations and statements regarding our share repurchase program; and

•    the impact of global financial, economic, and political events on our business, industry and supply chain, including changes to trade laws and policies, rising inflation, fluctuating interest rates and currency exchange rates, and market uncertainty and volatility.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. Unless stated otherwise, these statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such information provides a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Revenue			$	108,892					$	90,951					$	213,910					$	176,763
Cost of revenue			21,110						14,957						40,981						29,602
Gross profit			87,782						75,994						172,929						147,161
Operating expenses
Sales and marketing			45,011						35,000						86,318						68,921
Research and development			23,801						19,288						45,713						36,592
General and administrative			23,315						18,312						45,317						36,786
Total operating expenses			92,127						72,600						177,348						142,299
(Loss) income from operations			(4,345)						3,394						(4,419)						4,862
Other income, net			2,287						2,616						6,459						6,255
(Loss) income before income taxes			(2,058)						6,010						2,040						11,117
Provision for income taxes			4,719						4,649						8,162						7,753
Net (loss) income			(6,777)						1,361						(6,122)						3,364
Net loss attributable to noncontrolling interest in consolidated subsidiaries			(210)						(298)						(404)						(433)
Net (loss) income attributable to Semrush Holdings, Inc.			$	(6,567)					$	1,659					$	(5,718)					$	3,797
Net (loss) income attributable to Semrush Holdings, Inc. per share attributable to common stockholders—basic:			$	(0.04)					$	0.01					$	(0.04)					$	0.03
Net (loss) income attributable to Semrush Holdings, Inc. per share attributable to common stockholders—diluted:			$	(0.04)					$	0.01					$	(0.04)					$	0.03
Weighted-average number of shares of common stock used in computing net (loss) income per share attributable to common stockholders—basic:			148,311						145,678						147,765						145,122
Weighted-average number of shares of common stock used in computing net (loss) income per share attributable to common stockholders—diluted:			148,311						148,825						147,765						148,261
Net (loss) income			$	(6,777)					$	1,361					$	(6,122)					$	3,364
Other comprehensive (loss) income:
Foreign currency translation adjustments			3,050						(119)						4,370						(604)
Unrealized gain (loss) on investments			123						(184)						713						(928)
Comprehensive (loss) income			$	(3,604)					$	1,058					$	(1,039)					$	1,832
Comprehensive loss attributable to noncontrolling interest in consolidated subsidiaries			(210)						(298)						(404)						(433)
Comprehensive (loss) income attributable to Semrush Holdings, Inc.			$	(3,394)					$	1,356					$	(635)					$	2,265

    

1.Overview and Basis of Presentation

Semrush Holdings, Inc. (“Semrush Holdings”) and its subsidiaries (together the “Company”, or “Semrush”) provide an online visibility management software-as-a-service (“SaaS”) platform. The Company’s platform enables its subscribers to improve their online visibility and drive traffic, including on their websites and social media pages, and distribute highly relevant content to their customers on a targeted basis across various channels to drive high-quality traffic and measure the effectiveness of their digital marketing campaigns. The Company is headquartered in Boston, Massachusetts, and as of June 30, 2025 has wholly owned subsidiaries in the United States, Spain, the Czech Republic, the Netherlands, Cyprus, Serbia, Poland, Germany, Armenia, Canada, France, the United Kingdom, and Vietnam.

The Company is subject to a number of risks and uncertainties common to companies in similar industries and stages of development that could affect future operations and financial performance. These risks include, but are not limited to, rapid technological change, competitive pressure from substitute products or larger companies, protection of proprietary technology, management of international activities, and dependence on third parties and key individuals.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2024, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2025, and for the three and six months ended June 30, 2025 and 2024. The consolidated balance sheet as of December 31, 2024 included herein was derived from the audited consolidated financial statements as of that date.

The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025.

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited condensed consolidated financial statements. As of June 30, 2025, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Annual Report on Form 10-K, except as discussed below.

2.Summary of Significant Accounting Policies

The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and subsidiaries in which it holds a controlling interest. All intercompany transactions and balances have been eliminated in consolidation. Ownership interests in subsidiaries represented by other parties that do not control the entity are presented in the consolidated financial statements as activities and balances attributable to noncontrolling interests.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these unaudited condensed consolidated financial statements include, but are not limited to, revenue recognition, expected future cash flows used to evaluate the recoverability of long-lived assets, contingent liabilities, expensing and capitalization of research and development costs for internal-use software, the average period of benefit associated with costs capitalized to obtain revenue contracts, the determination of the fair value of stock-based awards issued, stock-based compensation expense, the determination of the estimated fair value of loan receivables and convertible debt securities held by the Company, the valuations of the intangible assets acquired through acquisitions, the estimation of the Company’s incremental borrowing rate, and the recoverability of the Company’s net deferred tax assets and related valuation allowance.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the unaudited condensed consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has evaluated subsequent events as required and the Company determined that there are no material recognized or unrecognized subsequent events requiring disclosure.

The Company primarily derives revenue from subscriptions to the Company’s SaaS services and related customer support. For the three and six months ended June 30, 2025 and 2024, subscription revenue accounted for nearly all of the Company’s revenue. Revenue related to other revenue was not material for the three and six months ended June 30, 2025 and 2024.

The Company offers subscriptions to its platform primarily on a monthly or annual basis. The Company sells its products and services primarily through a self-service model and also directly through its sales force. The Company’s subscription arrangements provide customers the right to access the Company’s hosted software applications. Customers do not have the right to take possession of the Company’s software during the hosting arrangement. Subscriptions are generally non-cancellable during the contractual subscription term; however, some subscription contracts contain a right to a refund if requested within seven days of purchase.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration it expects to receive in exchange for those products or services. There were no changes to the Company’s revenue recognition policies since the filing of its Annual Report on Form 10-K with the SEC on March 3, 2025.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company primarily invoices and collects payments from customers for its services in advance on a monthly or annual basis.

Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as deferred revenue, and the remaining portion is recorded as deferred revenue, net of current portion. Deferred revenue increased by $9,903 as of June 30, 2025 compared to December 31, 2024. During the three and six months ended June 30, 2025, $40,173 and $55,628 of revenue was recognized that was included in deferred revenue at the beginning of each respective period. During the three and six months ended June 30, 2024, $32,354 and $39,426 of revenue was recognized that was included in deferred revenue at the beginning of each respective period.

The Company has elected to exclude amounts charged to customers for sales tax from the transaction price. Accordingly, revenue is presented net of any sales tax collected from customers.

ASC 606 requires that the Company disclose the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of the balance sheet dates reported.

For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of June 30, 2025 was $3,009, of which the Company expects to recognize $2,774 over the next 12 months.

For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of June 30, 2025. For performance obligations not satisfied as of June 30, 2025, and to which this expedient applies, the nature of the performance obligations is consistent with performance obligations satisfied as of December 31, 2024. The remaining durations are less than one year.

The incremental direct costs of obtaining a contract, which primarily consist of sales commissions paid for new subscription contracts, are deferred and recorded as deferred contract costs in the unaudited condensed consolidated balance sheets and are amortized over a period of approximately 24 months on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates. The 24-month period represents the estimated benefit period of the customer relationship and has been determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology development life-cycle, and an estimated customer relationship period based on historical experience and future expectations.

Deferred contract costs that will be recorded as expense during the succeeding 12-month period are recorded as deferred contract costs, current portion, and the remaining portion is recorded as deferred contract costs, net of current portion. Amortization of deferred contract costs is included in sales and marketing expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive (loss) income.

The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other hedging arrangements. Credit losses historically have not been significant and the Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company's accounts receivable.

Credit risk with respect to accounts receivable is dispersed due to the large number of customers of the Company. The Company routinely assesses the creditworthiness of its customers and generally does not require its customers to provide collateral or other security to support accounts receivable.

As of June 30, 2025 and December 31, 2024, no individual customer represented more than 10% of the Company’s accounts receivable. During the three and six months ended June 30, 2025 and 2024, no individual customer represented more than 10% of the Company’s revenue.

The Company’s financial instruments include cash, cash equivalents, investments, accounts receivable, loan receivables, convertible debt securities, accounts payable, and accrued expenses. The Company’s investments are classified as available-for-sale and reported at fair value in accordance with the market approach utilizing quoted prices that were directly or indirectly observable. The Company has elected the fair value option in respect to the accounting for its loan receivable investments and convertible debt securities, resulting in increases and decreases in the fair value of such investments being recorded to other income, net for each reporting period. The carrying amount of the remainder of the Company’s financial instruments approximated their fair values as of June 30, 2025 and December 31, 2024, due to the short-term nature of these instruments.

The Company has evaluated the estimated fair value of financial instruments using available market information. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See below for further discussion.

The Company operates in a multi-currency environment having transactions in such currencies as the U.S. dollar, Polish zloty, Czech koruna, euro, and others. The reporting currency of the Company is the U.S. dollar.

The foreign currency exchange (loss) gain included in other income, net for the three months ended June 30, 2025 and 2024 was $(328) and $128, respectively. The foreign currency exchange gain included in other income, net for the six months ended June 30, 2025 and 2024 was $108 and $573, respectively.

Comprehensive (loss) income is comprised of two components: net (loss) income and other comprehensive (loss) income, which includes other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. Such changes include the cumulative foreign currency translation adjustment and unrealized gain (loss) on investments. The tax effect of the cumulative foreign currency translation adjustment and unrealized gain (loss) on investments was not significant for the three and six months ended June 30, 2025 and 2024.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which requires additional disclosure of certain costs and expenses within the notes to the financial statements. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, ASU 2023-09 requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in ASU 2023-09 are required to be adopted for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is evaluating the impact that the updated standard will have on our financial statement disclosures.

3.Cash, Cash Equivalents, Restricted Cash, and Investments

The Company considers all highly liquid instruments purchased with an original maturity date of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks, amounts held in interest-bearing money market funds, and commercial paper with original maturities of 90 days or less. Cash equivalents are carried at cost, which approximates their fair market value. Short‑term investments consist of investments with original maturities greater than 90 days, as of the date of purchase. The Company considers its investment portfolio available-for-sale. The Company adjusts the cost of investments for amortization of premiums and accretion of discounts to maturity. The Company includes such amortization and accretion in interest income in the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

When the Company holds debt investments classified as available-for-sale pursuant to ASC 320, Investments — Debt Securities, it records available-for-sale securities at fair value, with unrealized gains and losses included in accumulated other comprehensive loss in stockholders’ equity. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company includes interest and dividends on securities classified as available-for-sale in interest income in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. Realized gains and losses are recorded in the unaudited condensed consolidated statements of operations and comprehensive (loss) income based on the specific-identification method. There were no material realized gains or losses on investments for the three and six months ended June 30, 2025 or 2024. As of June 30, 2025, the aggregate fair value of investments held by the Company in a continuous unrealized loss position for less than and greater than twelve months was $34,511 and $38,461, respectively. As of December 31, 2024, the aggregate fair value of investments held by the Company in a continuous unrealized loss position for less than and greater than twelve months was $47,597 and $38,348, respectively.

Pursuant to ASC 326, Financial Instruments - Credit Losses, the Company reviews available-for-sale securities for impairment whenever the fair value of the security is less than its amortized cost. For the three and six months ended June 30, 2025, the Company determined that no impairments were required to be recognized in the unaudited condensed consolidated statements of operations.

The following is a summary of cash, cash equivalents, and short-term investments as of June 30, 2025 and December 31, 2024:

			Amortized  Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
June 30, 2025
Cash and cash equivalents			$	54,322					$	—					$	—					$	54,322
Short-term investments:
U.S. treasury securities			188,623						767						(51)						189,339
Commercial paper			14,889						—						(3)						14,886
Total short-term investments			203,512						767						(54)						204,225
Total cash, cash equivalents and short-term investments			$	257,834					$	767					$	(54)					$	258,547

The Company considered the extent to which any unrealized losses on its marketable securities were driven by credit risk and other factors, including market risk, and if it is more-likely-than-not that the Company would have to sell the security before the recovery of the amortized cost basis. As of June 30, 2025 and December 31, 2024, the unrealized losses related to its marketable securities were due to rising market interest rates compared to when the investments were initiated. The Company does not believe the unrealized losses represent credit risk, and the Company does not intend to sell any of the securities in an unrealized loss position and it is not likely that the Company would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity. Thus, no credit loss was recognized for the Company's marketable securities for the three and six months ended June 30, 2025 and 2024.

As of June 30, 2025, the Company held $96,863 in U.S. treasury securities and commercial paper with maturities within one year and held $107,362 in U.S. treasury securities with maturities after one year and within three years.

As of June 30, 2025, restricted cash totaled $185 related to cash held as collateral for a letter of credit related to the contractual provisions for one of the Company’s office leases. As of June 30, 2024, restricted cash totaled $11,903 and included $11,718 related to the Company’s Brand 24 tender offer (See Note 9) and $185 related to cash held as collateral for a letter of credit related to the contractual provisions of one of the Company’s office leases.

The following table is a reconciliation of cash, cash equivalents, and restricted cash included in the accompanying unaudited condensed consolidated balance sheets that sum to the total cash, cash equivalents, and restricted cash included in the accompanying unaudited condensed consolidated statements of cash flows:

			As of June 30,
			2025						2024
Cash and cash equivalents			$	54,322					$	69,626
Restricted cash included in "other long-term assets"			185						185
Restricted cash included in "prepaid expenses and other current assets"			—						11,718
Cash, cash equivalents, and restricted cash			$	54,507					$	81,529

4.Leases

The components of lease expense were as follows:

			Three Months Ended June 30,									Six Months Ended June 30,
			2025						2024			2025						2024
Operating lease cost			$	1,684					$	1,294		$	3,048					$	2,646
Short-term lease cost			234						183			448						411
Variable lease cost			1,086						1,169			2,185						2,365
Total lease cost			$	3,004					$	2,646		$	5,681					$	5,422

Weighted-average remaining lease term and discount rate were as follows:

			As of June 30,
			2025
Weighted-average remaining lease term (in years)
Operating leases			2.9
Weighted-average discount rate
Operating leases			6.0		%

Future minimum amounts payable as of June 30, 2025 were as follows:

As of June 30, 2025, the Company had one additional operating lease with future lease payments of $759 that had not yet commenced in Texas. The lease commenced in July 2025. As of June 30, 2025, the Company had no finance leases that had not yet commenced.

Rent expense related to the Company’s office facilities was $1,918 and $3,497 for the three and six months ended June 30, 2025, respectively. Rent expense related to the Company’s office facilities was $1,477 and $3,056 for the three and six months ended June 30, 2024, respectively.

5.Fair Value Measurement

The following tables summarize financial assets and liabilities measured and recorded at fair value on a recurring basis in the accompanying consolidated balance sheets as of June 30, 2025 and December 31, 2024, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

The fair value measurements of the Company’s money market funds are based on quoted market prices in active markets for identical assets and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 1 in the fair value hierarchy. The fair value measurements of the Company’s U.S. treasury securities and commercial paper are based on significant other observable inputs and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 2 in the fair value hierarchy.

As of June 30, 2025, the Company measured its convertible debt securities (See Note 7 “Other Assets”) on a recurring basis using significant unobservable inputs (Level 3). As of December 31, 2024, the Company measured its investment loan receivables and its convertible debt securities (See Note 7 “Other Assets”) on a recurring basis using significant unobservable inputs (Level 3).

The Company records its convertible debt securities at fair value on the purchase date. The Company determines the fair value of these investments using the Black-Scholes Merton model. For each reporting period thereafter, these investments are revalued and increases or decreases in their fair values are recorded as adjustments to other income, net within the unaudited condensed consolidated statements of operations and comprehensive (loss) income to reflect the gains and losses. Changes in the fair value of these investments can result from changes in the estimated enterprise value of the issuers, the likelihoods and methods of such conversions, and other market factors. Significant judgment is employed in determining the appropriateness of these assumptions as of the purchase date and for each subsequent period. Accordingly, changes in any of the assumptions described above can materially impact the amount of gain or loss the Company records in any given period.

A rollforward of the fair value measurements of the convertible debt securities for the six months ended June 30, 2025 is as follows:

6.Property and Equipment, Net

Property and equipment consists of the following:

Depreciation and amortization expense related to property and equipment was $780 and $1,683 for the three and six months ended June 30, 2025, respectively. Depreciation and amortization expense related to property and equipment was $744 and $1,783 for the three and six months ended June 30, 2024, respectively.

7.Other Assets

In July 2024, the Company purchased a convertible debt security for a total aggregate investment of $3,000 with a maturity date of July 22, 2027 and annual interest rate of 10%. Interest accrues on the note and becomes payable upon conversion or maturity of the note. This convertible debt security is classified as an available-for-sale security. As of June 30, 2025, the note was included in other long-term assets in the unaudited condensed consolidated balance sheet. The Company accounts for the investment by utilizing the fair value option within ASC 825, Financial Instruments (“ASC 825”), and accounting for the entire hybrid instrument at fair value through other income, net.

In March 2024, the Company entered into a loan agreement in which it loaned $7,000 to the borrower with a repayment date in March 2025. In addition to the loan facility, the Company entered into an option agreement with the borrower in which the Company had the right, but not the obligation, to acquire a majority of the outstanding common stock of the borrower during the period beginning July 1, 2024 and ending August 31, 2024. The Company accounted for the loan agreement and option agreement as a single financial instrument (together, the “Investment Loan Receivable”). The Company recorded the Investment Loan Receivable at its fair value of $7,000 on the agreement date. The Company did not exercise the option agreement. During September 2024, the Company entered into an amended and restated loan agreement in which it loaned an additional $757 to the borrower with a repayment date in March 2025. The investment loan receivable was repaid in March 2025.

8.Net (Loss) Income Per Share

For the three and six months ended June 30, 2025, diluted net loss per share was calculated by dividing net loss attributable to Semrush Holdings, Inc. by the weighted-average number of shares of common stock outstanding during the period to calculate both basic and diluted net loss per share. The dilutive effect of common stock equivalents has been excluded from the calculation of diluted net loss per share for this period as its effect would have been anti-dilutive due to the net loss attributable to Semrush Holdings, Inc. incurred for the period.

For the three and six months ended June 30, 2024, diluted net income per share was calculated by dividing net income attributable to Semrush Holdings, Inc. by the weighted-average number of shares of common stock outstanding during the period, including the dilutive impact of stock options and shares of common stock issuable upon the vesting of RSUs. The adjustment to net income attributable to Semrush Holdings, Inc. related to the Company’s redeemable noncontrolling interest was not material and did not impact net income per share for the three and six months ended June 30, 2024.

The following table presents a reconciliation of weighted-average shares outstanding used in the calculation of basic and diluted net (loss) income per share:

The following potentially dilutive common stock equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the three and six months ended June 30, 2025 and 2024:

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Stock options			5,002,159						2,321,962						5,099,137						3,445,481
RSUs and PSUs			8,776,305						930,049						7,233,268						1,442,837
Total			13,778,464						3,252,011						12,332,405						4,888,318

For the three and six months ended June 30, 2025, 910,614 and 910,614 shares of Class A common stock potentially issuable under Performance Stock Units (“PSUs”) were excluded from the table above, respectively. For the three and six months ended June 30, 2024, 1,128,021 and 1,128,021 shares of Class A common stock potentially issuable under PSUs were excluded from the table above, respectively. The performance-based conditions had not been met and were deemed improbable of achievement as of the reporting period end date.

9.Acquisitions, Intangible Assets, and Goodwill

On October 16, 2024, the Company acquired 100% of the outstanding shares of Third Door Media, Inc. ("Third Door Media"). The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of this business combination was to expand the Company’s content and educational offerings. The acquisition date fair value of the consideration transferred consisted of the following:

						Acquisition Date
Consideration transferred						Fair Value
Cash paid at close						$	5,424
Fair value of deferred purchase payments						750
Total purchase consideration						$	6,174

The Company determined that the fair value of the assets acquired and liabilities assumed was $6,174, including the cash paid at close and the fair value of the deferred purchase payments. The fair value of deferred purchase payments represents the fair value of three holdback payments of $250, $200, and $300, respectively, the first of which was paid in the first quarter of 2025.

The second payment is due in the fourth quarter of 2025 and is included within other current liabilities within the unaudited condensed consolidated balance sheet as of June 30, 2025. The third payment is due in the second quarter of 2026 and is included in other long term liabilities within the unaudited condensed consolidated balance sheet as of June 30, 2025.

The table below summarizes the Company’s preliminary purchase price allocation. The allocation of the purchase price is preliminary as of June 30, 2025 as the Company continues to gather information supporting the acquired assets and liabilities to finalize the purchase price allocation.

						Purchase Price
Assets acquired						Allocation
Cash and cash equivalents						$	1,755
Accounts Receivable						721
Prepaid Expenses						49
Identifiable intangible assets						2,350
Goodwill						2,769
Total assets acquired						$	7,644
Liabilities assumed
Other current liabilities						$	59
Accrued liabilities						254
Deferred revenue						593
Deferred tax liabilities						564
Total Liabilities Assumed						$	1,470
Fair value of assets acquired and liabilities assumed, net						$	6,174

The Company allocated $2,350 of the purchase price to identifiable intangible assets, of which $1,830 related to customer relationships and the remainder related to developed technology and trade names. The Company amortizes the acquired intangible assets over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to acquired customer relationships, developed technology, and trade names, of six years, three years, and five years, respectively. The Company used the multi-period excess earnings method to value the customer relationships. The Company used the replacement cost method to value the developed technology. The Company used the relief from royalty method to value the trade names. The significant assumptions used to estimate the value of the intangible assets included the discount rate, revenue growth rates, and adjusted operating margin. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price was allocated to goodwill, which primarily relates to expected synergies with our existing product offerings and is not deductible for tax purposes.

On August 15, 2024, the Company completed an asset purchase agreement with Backlinko, LLC, doing business as Exploding Topics, to acquire substantially all of the assets of Exploding Topics. The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of this asset acquisition was to acquire the traffic generating content of Exploding Topics. The acquisition date fair value of the consideration transferred totaled $2,950 which includes a holdback of $531 to be paid on August 15, 2025. This holdback amount is included in other current liabilities within the unaudited condensed consolidated balance sheet as of June 30, 2025.

The Company assigned a value of $1,062 to the acquired identifiable intangible assets consisting of content, customer relationships, and developed technology, which are amortized over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to the acquired content, customer relationships, and developed technology, of four years, three years, and three years, respectively. The Company used the guideline public company method to value the identifiable intangible assets. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price of $2,464 was allocated to goodwill, which primarily relates to expected future site traffic generation and is deductible for tax purposes. The allocation of the purchase price was final as of June 30, 2025.

On July 11, 2024, the Company acquired 100% of the outstanding shares of Ryte GmbH ("Ryte"). The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of this business combination was to expand the Company’s Enterprise SEO solution by adding enterprise site audit and website performance monitoring. The acquisition date fair value of the consideration transferred consisted of the following:

						Acquisition Date
Consideration transferred						Fair Value
Cash paid at close						$	8,910
Fair value of deferred purchase payments						1,572
Total purchase consideration						$	10,482

The Company determined that the fair value of the assets acquired and liabilities assumed was $10,482, including the cash paid at close and the fair value of the deferred purchase payments. The fair value of deferred purchase payments represents the fair value of two payments of $786 each, which will be paid July 11, 2025 and January 11, 2026, respectively. These amounts are included within other current liabilities within the unaudited condensed consolidated balance sheet as of June 30, 2025.

The table below summarizes the Company’s preliminary purchase price allocation. The allocation of the purchase price is preliminary as of June 30, 2025 as the Company continues to gather information supporting the acquired assets and liabilities to finalize the purchase price allocation.

The Company allocated $2,630 of the purchase price to identifiable intangible assets, of which $2,140 related to developed technology and the remainder related to customer relationships and trade names. The Company amortizes the acquired intangible assets over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to acquired developed technology, customer relationships, and trade names, of five years, six years, and five years, respectively. The Company used the multi-period excess earnings method to value the developed technology. The Company used the distributor method, a variation of the multi-period excess earnings method to value the customer relationships. The Company used the relief from royalty method to value the trade names. Trade names primarily relate to the Ryte brand. The significant assumptions used to estimate the value of the intangible assets included the discount rate, revenue growth rates, adjusted operating margin, and obsolescence. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price was allocated to goodwill, which primarily relates to expected synergies with our existing product offerings and is not deductible for tax purposes.

On April 29, 2024, the Company completed a stock purchase agreement to acquire approximately 58% of the voting equity interests in Brand 24 S.A. (“Brand 24”). The Company has accounted for this transaction as a business combination under the acquisition method. The purpose of the business combination was to expand our public relations business and customer base.

The acquisition date fair value of the consideration transferred consisted of the following: Acquisition Date Consideration transferred Fair Value Cash paid at close $ 10,650 Fair value of deferred purchase payments 2,878 Consideration transferred $ 13,528

The Company determined that the fair value of the assets acquired and liabilities assumed was $23,374, including the fair value of the noncontrolling interest in Brand 24 of $9,846, which is reflected in the stockholders’ equity section of the unaudited condensed consolidated balance sheet as of June 30, 2025. The fair value of the noncontrolling interest on the closing date was estimated considering the implied enterprise value and the acquired percentage of Brand 24. The fair value of deferred purchase payments represents the fair value of two payments of $1,500 each, the first of which was paid in December 2024. The second payment is due November 12, 2025 and is included in other current liabilities within the unaudited condensed consolidated balance sheet as of June 30, 2025. The deferred purchase payments accrue interest of 2.5% per year.

The table below summarizes the Company’s purchase price allocation. The allocation of the purchase price was final as of April 29, 2025.

The Company allocated $9,170 of the purchase price to identifiable intangible assets, of which $8,040 related to customer relationships and the remainder related to developed technology and trade names. The Company amortizes the acquired intangible assets over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to acquired customer relationships, developed technology, and trade names, of six years, five years, and five years, respectively. The Company used the multi-period excess earnings method to value the customer relationships. Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold. To value the developed technology and trade names assets, the Company utilized the relief from royalty method. Trade names primarily relate to the Brand 24 brand. The significant assumptions used to estimate the value of the intangible assets included the discount rate, revenue growth rates, and customer attrition rates. After allocating the purchase price to identifiable assets acquired and liabilities assumed, the remaining purchase price was allocated to goodwill, which primarily relates to expected synergies from combining operations and is not deductible for tax purposes.

Intangible assets consist of intangible assets resulting from the Company’s acquisitions and its capitalized internal-use software development costs. Intangible assets consist of the following:

During the three and six months ended June 30, 2025, the Company capitalized $3,653 and $6,532 of internal-use software development costs, respectively, which are classified as intangible assets on the accompanying unaudited condensed consolidated balance sheets and recorded amortization expense associated with its capitalized software development costs of $677 and $1,819, respectively. During the three and six months ended June 30, 2024, the Company capitalized $2,354 and $4,369 of internal-use software development costs, respectively, which are classified as intangible assets on the accompanying unaudited condensed consolidated balance sheets and recorded amortization expense associated with its capitalized software development costs of $458 and $904, respectively.

Amortization expense for acquired intangible assets was $1,432 and $2,811 for the three and six months ended June 30, 2025, respectively. Amortization expense for acquired intangible assets was $890 and $1,582 for the three and six months ended June 30, 2024, respectively.

As of June 30, 2025, future amortization expense is expected to be as follows: