SimilarWeb Ltd (SMWB) Stock Forecast & Price Target

Similarweb Ltd has demonstrated a robust increase in total revenues, rising 15.6% year-over-year to $65.6 million, primarily due to an expansion in its customer base. The company has also shown improvement in its large customer net revenue retention (NRR), which increased to 112% for those contributing $100,000 or more in annual recurring revenue (ARR), indicating healthy product adoption and budget expansion among larger clients. Additionally, the firm is positioned for enhanced profitability, with profit margins projected to rise significantly from 10% in FY25 to 30% by FY29, alongside an increase in free cash flow margins from 15% to 35% over the same period, highlighting strong cash generation capabilities.

The financial analysis indicates that Similarweb Ltd experienced a decline in both operating cash flow and free cash flow, with the latter dropping to $2.7 million and a margin of 4.1%, down from 6.2% the previous year. There is concern over misaligned profitability expectations compared to market forecasts, as well as expected challenges in top-line growth, leading to cautious outlooks reflected in discounted revenue multiples compared to peers. Additionally, insufficient growth in critical customer retention and productivity outcomes, coupled with the potential underperformance in sales capabilities, may adversely affect the company’s market position and overall financial health.