Is Now the Time to Buy Semrush (SEMR)? Analyzing the Post-Earnings Dip and Long-Term Potential

jessevisionfactory
Aug 13
3 min read

Author: Lorenzo Filotei

Semrush is a leading company that provides other companies with a service platform to identify and reach the right audience through the right channels. It allows customers to utilize insights and trends for improving online visibility.

How did SEMR go over this last quarter?

The last quarter earnings release has been pretty disappointing, both in terms of expectations and in terms of actual book values. During the second quarter, the company increased its revenues by 20% year-over-year but eventually reached a loss from operations of $4.3M compared to the income achieved in the previous year’s quarter of $3.4M. There has been a deep reduction in operating margin (4.0%) compared to the positive previous year’s quarter operating margin that was about 3.7%.

Eventually, the net loss was $6.8M compared to the net income reached in the 2024 Q2 of $1.4M. Among these numbers and data, a drop in the EPS (Earnings per Share) has been the straw that broke the camel’s back. Indeed, given the net loss, the EPS turned negative, and compared to 2024 (it was $0.01), it was received very badly by investors who let the stock drop by 20.74% after the release on the 5^th of August.

Stock chart for SEMrush Holdings Inc. on NYSE. Trend shows a sharp decline from Mar 2025. Red and green candlesticks graph movement.

This chart shows how the stock has been going since the beginning of the new fiscal year 2025. After the release of the 2024 Q4 and the fiscal year 2024 earnings release by the end of February, the stock steadily dropped over the next months. In February, the steep slope was attributed to revenues falling short of expectations, and the number of achieved customers was deemed insufficient to sustain growth. In addition, they nominated a new CEO, Bill Wagner.

Over the last three months, the company has deployed new AI-based services to customers to increase the accuracy of the insights. However, the 2025 Q2 release disappointed the investors who kept selling the stocks. On the 12^th of August, the NYSE closed the stock price at $7.12/share, showing that in 5 months the company's stock price lost 62.01% of its value from the ATH reached on the 11^th of February. During the press conference, Bill Wagner expressed himself saying: “We posted strong revenue growth in the second quarter and were especially pleased by the accelerated adoption of our AI and Enterprise products. We are very excited about our leadership position in the market and our long-term growth opportunities. To underscore this conviction, we are announcing a $150 million share repurchase program.”

What can we expect from this company?

To sum up, the latest financial releases were good, but not good enough for investors who, as you know, look very carefully at expectations posed by analysts. For Q3, SEMR expects a 15% year-over-year increase in revenues compared to the 2024 Q3, but eventually, its capability to reach a positive EPS will deeply influence its future stock price.

The offering of services that SEMrush put on the table is broad and AI-driven; therefore, many customers could take a competitive advantage by using them. It seems obvious, but the future of SMER’s stock price will depend on the number of new customers reached by the end of the last quarter.

Conclusions

In conclusion, SEMR is a leading company in providing a service platform for its customers who are looking for the right audience to which to offer their products. Its gross profit is pretty high, characterized by low costs of revenue, but at the same time, the operating costs are too high for a company that provides services and not a physical product. This brought the company to a net loss at the end of the last quarter, and therefore, there were no earnings to share for its stockholders.

Over this year, SEMR has kept steadily going down; unless the company doesn’t reach a broader amount of new clients by the end of the next quarter, and simultaneously increases its profitability (positive EPS), I don’t see a positive outcome for a company that makes higher revenues but doesn’t pay dividends or retain earnings. It’s a company that can build strong bases on AI products and services; therefore, I’m optimistic about the fact that operating costs will be reduced and, as SEMR said in the last press conference, revenues for this fiscal year are expected to grow by approximately 18% year-over-year.