TipRanks Smart Growth Newsletter #13: Data Dividend
1
Dear Investors,
Welcome to the 13th edition of the TipRanks Smart Growth Newsletter.
Through the Smart Growth Newsletter, we aim to provide you with high-potential investment insights to support your growth strategy. Each week, our analysts will identify cutting-edge companies positioned to capture market share and deliver exceptional growth, giving you unique insights for a dynamic investing landscape.
Stocks we recommend have been carefully analyzed and vetted using TipRanks data, ensuring you receive well-researched, high-potential opportunities aimed at delivering substantial, long-term growth. We will present you with a comprehensive analysis that outlines our selection process, giving you clear insights into why each stock stands out as a top growth opportunity.
With that in mind, let’s dive into this week’s top pick and explore why it could be a valuable addition to your Growth portfolio.
1
1
1
This Week’s Top Growth Pick: Similarweb Ltd. (SMWB)
Similarweb Ltd. provides digital intelligence solutions that help businesses analyze web and app traffic, competitive performance, and market trends. Its platform aggregates and interprets vast amounts of online data, offering insights into customer behavior, industry benchmarks, and digital marketing effectiveness. Similarweb serves enterprises, marketers, and analysts, enabling data-driven decision-making across sectors such as e-commerce, media, and finance. Leveraging AI and proprietary analytics, the company delivers real-time visibility into digital market dynamics, helping organizations optimize strategies for customer acquisition, engagement, and growth. Operating on a subscription-based model, Similarweb’s solutions cater to businesses seeking to enhance their online presence and competitive positioning in a rapidly evolving digital landscape.
1
Here’s Why SMWB’s Stock Is Likely to Grow:
❖ Expanding Market Opportunity: Demand for digital intelligence is accelerating as businesses increasingly rely on real-time data for competitive positioning, customer acquisition, and decision-making.
❖ AI-Driven Growth: Similarweb is strengthening its AI capabilities, with growing adoption of its data for training LLMs, reinforcing its role in the AI and analytics ecosystem.
❖ Enterprise Expansion: The company continues to secure high-value enterprise contracts, enhancing revenue visibility and retention.
❖ Solid Financial Foundation: Debt-free with a strong liquidity position, Similarweb has turned profitable on a non-GAAP basis while maintaining steady revenue growth and improving free cash flow.
❖ Undervalued Compared to Peers: A recent stock decline has made SMWB’s valuation more attractive, with its price-to-sales ratio sitting well below comparable firms, signaling potential upside.
❖ Bullish Analyst Sentiment: Wall Street analysts overwhelmingly rate the stock a “Strong Buy,” with price targets projecting significant gains over the next 12 months.
1
Scaling the Data Stack
Similarweb Ltd. was founded in 2009 to provide businesses with actionable digital intelligence, leveraging web and app traffic data to analyze market trends and competitive positioning. Over the years, the company has expanded its capabilities through strategic investments, product innovation, and acquisitions, strengthening its position as a leading provider of digital insights.
In 2021, Similarweb completed its IPO on the NYSE under the ticker SMWB, raising approximately $180 million to support its growth initiatives. The capital infusion enabled the company to accelerate R&D, expand its AI-driven analytics platform, and pursue strategic acquisitions. Notably, the company acquired Embee Mobile (2021) to enhance mobile data tracking and Rank Ranger (2022) to strengthen its SEO and digital marketing analytics suite.
Strategic partnerships further expand Similarweb’s platform reach and market penetration. The company collaborates with Salesforce, integrating its insights into CRM workflows, while major investment banks like JPMorgan Chase and Citigroup use its analytics to track digital performance. Additionally, SMWB partners with AWS and Google Cloud, embedding its intelligence into enterprise ecosystems for seamless integration. Through these strategic alliances, Similarweb enhances its platform’s capabilities and broadens its market presence across various industries.
With a strong emphasis on R&D, particularly AI and machine learning (ML), Similarweb continues to refine its predictive analytics and automation tools. As businesses increasingly rely on digital intelligence for strategic decision-making, the company remains focused on scaling its platform, expanding its dataset, and integrating advanced machine learning techniques to drive long-term growth.
Source: Similarweb Investor Presentation Q4 2024
1
Decoded Intelligence
Similarweb provides real-time digital intelligence across e-commerce, finance, and digital marketing. Its AI-driven platform processes 30 petabytes of data monthly, covering 99.9% of global Internet traffic, offering granular insights into market trends, competitive dynamics, and consumer behavior. By offering an enterprise-grade benchmarking solution, Similarweb enables businesses to optimize their digital strategies and customer acquisition efforts.
Source: Similarweb Investor Presentation Q4 2024
A key innovation is SimilarAsk™, an AI-powered assistant launched in 2024, which integrates Large Language Models (LLMs) with Similarweb’s proprietary dataset, enabling users to extract insights through natural language queries.
SMWB develops AI and predictive analytics in-house, employing 250+ data scientists and engineers. In 2024, Similarweb invested $55.6 million in R&D – 20% of total revenue – to advance automated data collection, ML models, and AI-enhanced analytics. Looking ahead, the company plans to expand R&D investment in 2025 to deepen AI capabilities. Customers are also leveraging Similarweb’s datasets to train LLMs, reinforcing its role in AI-driven market intelligence.
Differentiation is key in the competitive landscape of digital analytics, and Similarweb sets itself apart through:
- Unmatched Data Coverage: Tracks global web and app performance at scale, surpassing niche analytics providers.
- AI-Powered Insights: Proprietary models enhance accuracy and predictive capabilities beyond traditional traffic analysis tools.
- Enterprise Integration: Partnerships with Salesforce, AWS, and major financial institutions embed Similarweb’s data and insights into critical business workflows.
With continuous investment in AI, automation, and strategic integrations, Similarweb is strengthening its position as a leader in digital intelligence, helping businesses navigate an increasingly competitive, data-driven economy.
Source: Similarweb Investor Presentation Q4 2024
1
Monetizing Data
Similarweb operates on a subscription-based SaaS model, generating revenue primarily from recurring annual contracts. Customers subscribe to its digital intelligence platform, gaining access to data-driven insights on market trends, competitive performance, and consumer behavior. The company’s Annual Recurring Revenue (ARR) model provides revenue stability and visibility, enabling long-term customer relationships. High switching costs and deep enterprise integrations make Similarweb’s platform a sticky solution for businesses seeking continuous competitive intelligence.
The company’s TAM (Total Addressable Market) spans multiple industries, including e-commerce, digital marketing, finance, and media. As businesses increasingly rely on real-time digital data to drive strategic decisions, demand for Similarweb’s insights continues to expand. In 2024, SMWB’s customer base grew by 17% year-over-year, reaching 5,534 clients. Of these, 405 large enterprise customers – each generating at least $100,000 in ARR – accounted for 61% of total ARR. The remaining 39% came from mid-market businesses, smaller companies, and self-service customers with lower-tier subscriptions.
Source: Similarweb Investor Presentation Q4 2024
Similarweb has positioned itself as a critical data provider in the AI revolution. In 2024, the company observed that customers began training LLMs with its proprietary data, reinforcing its role in AI-driven market intelligence. As the adoption of AI and machine learning accelerates, Similarweb’s dataset is becoming increasingly valuable for businesses optimizing digital strategies, predictive analytics, and automated decision-making.
Additionally, Similarweb continues expanding its enterprise integrations with Salesforce, AWS, and Google Cloud, embedding its insights within broader business intelligence ecosystems. Financial institutions like JPMorgan Chase and Citigroup leverage Similarweb’s analytics to assess companies’ digital performance, influencing investment decisions.
With the digital intelligence market rapidly growing, fueled by AI adoption and data-driven decision-making, Similarweb is well-positioned to capitalize on expanding market demand, ARR growth, and increased R&D investment in 2025.
Source: Similarweb Investor Presentation Q4 2024
1
Crunching the Future
SMWB has demonstrated consistent revenue growth while achieving key profitability milestones. In 2024, revenue increased 15% year-over-year to $249.9 million, driven by a 17% expansion in its customer base. Additionally, 49% of ARR was contracted under multiyear agreements, up from 42% in 2023, reflecting strong customer retention and long-term commitments. The company also secured its first two eight-figure ARR contracts in 2024, marking a significant step in scaling high-value enterprise deals.
The company achieved its first full year of positive non-GAAP operating profit and free cash flow, with non-GAAP operating profit reaching $15 million (vs. a $4.8 million loss in 2023) and free cash flow improving to $27.4 million from negative $5.4 million the prior year.
Despite this progress, profitability remains a work in progress. In Q4 2024, Similarweb reported a GAAP operating loss of $3.6 million (vs. $1.1 million in Q4 2023), with non-GAAP operating profit margin declining from 8% to 4%. This reflects ongoing investments in AI and product development, which are expected to fuel long-term growth but may pressure margins in the near term.
Unlike many high-growth tech firms, Similarweb is debt-free, having fully repaid its $25 million credit facility in 2024. This clean balance sheet provides financial flexibility to fund expansion without relying on leverage. The company ended the year with $63.9 million in cash and cash equivalents, ensuring a strong liquidity position.
For 2025, Similarweb projects another 15% revenue increase, reaching $285-288 million. Investments in R&D and go-to-market initiatives are expected to drive long-term opportunities, with accelerated growth projected in the latter half of 2025, particularly in Q3 and Q4.
The expansion of LLM training partnerships underscores growing demand for Similarweb’s data, positioning it as a key player in AI-driven market intelligence. Notable 2024 customer wins include a multiyear agreement with Bloomberg Professional Services to integrate Similarweb’s digital data into Bloomberg Terminal and a partnership with S&P Global for credit risk analysis.
With a scalable SaaS model, strong ARR growth, and a debt-free position, Similarweb is balancing expansion and profitability, reinforcing its competitive edge in the evolving digital intelligence landscape.
Source: Similarweb Investor Presentation Q4 2024
1
The Price of Growth
Similarweb’s stock plunged by over 30% following its latest earnings announcement, which included an EPS miss and conservative Q1 guidance. The sharp decline was driven not only by the earnings report but also by broader investor anxiety, which has led to aggressive sell offs on even mildly negative news. Additionally, in the 12 months leading up to the earnings release, SMWB surged over 120%, leaving investors cautious amid the stock’s elevated valuation. Despite the post-earnings drop, Similarweb remains up over 40% year-over-year, outperforming all its peers and competitors.
The sell-off has significantly compressed Similarweb’s valuation, which had previously been considered stretched. While SMWB continues to trade at a premium relative to the broader IT sector, this is typical for growth companies. Notably, Similarweb trades well below its closest public competitor, Semrush, and its Price-to-Sales (P/S) ratio is among the lowest in its peer group, sitting well below the average for U.S. software firms. Moreover, discounted cash flow (DCF) analyses suggest SMWB may be undervalued by nearly 60%, indicating potential long-term upside.
Top Wall Street analysts overwhelmingly rate Similarweb as a “Strong Buy,” with an average price target implying a ~76% upside over the next 12 months. The most bullish projections come from Jefferies and Citi, which forecast potential gains of approximately 118% and 108%, respectively.
1
To Sum It All Up
Similarweb is a leader in digital intelligence, providing AI-driven insights that help businesses analyze web traffic, market trends, and competitive positioning. Operating on a subscription-based model, the company benefits from high client retention, strong enterprise adoption, and deep integrations with major cloud and financial platforms. Its ongoing investments in AI and machine learning enhance its data analytics capabilities, reinforcing its competitive edge. Similarweb has demonstrated consistent revenue expansion and improving finances, supported by a debt-free balance sheet and growing enterprise contracts. Thanks to the recent stock decline, its valuation has become attractive relative to peers, with strong long-term growth potential. Positioned at the intersection of AI adoption and data-driven decision-making, Similarweb presents a compelling opportunity for investors seeking exposure to high-growth SaaS and digital analytics markets.
1
Click here for more stock analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
