SimilarWeb Ltd (SMWB) Stock Forecast & Price Target

Similarweb Ltd has demonstrated a solid year-over-year revenue growth of 15.6%, reaching $65.6 million, primarily influenced by an increase in customer numbers, particularly in larger accounts. The company's net revenue retention (NRR) for large customers improved, with the $100k annual recurring revenue (ARR) cohort expanding to 405, reflecting effective product adoption and an increasing willingness to allocate budgets for Similarweb's offerings. Furthermore, substantial improvement in profit margins is projected, with expectations to rise from 10% in FY25 to 30% by FY29, indicating strong profitability and robust cash generation potential.

Similarweb Ltd reported operating cash flow of $3.4 million, which reflects a $300,000 decrease year-over-year alongside margin compression of 140 basis points, indicating potential challenges in cost management. Free cash flow also declined to $2.7 million, marking a decrease from the previous year and contributing to concerns over profitability, particularly given lower interest and financial income that neutralized prior earnings beats. Furthermore, cautious expectations for growth, minimal margin improvement, and ineffective sales capability development could adversely impact market acceptance and ultimately the company's financial condition and stock performance.