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Investing.com - Needham has lowered its price target on SEMrush Holdings, Inc (NYSE:SEMR) to $12.00 from $18.00 while maintaining a Buy rating on Tuesday. The stock, currently trading near its 52-week low at $7.29, appears undervalued according to InvestingPro analysis.
The price target reduction follows SEMrush’s second-quarter results, which showed the company trimming its full-year revenue guidance by $6 million at the midpoint. Despite reporting satisfactory quarterly numbers, including impressive revenue growth of 22.75% and strong gross profit margins of 82.15%, SEMrush experienced weakness in its smallest segment and faced increased costs for paid search clicks. InvestingPro subscribers can access 13 additional key insights about SEMR’s financial health and valuation metrics.
SEMrush saw a decline in net revenue retention (NRR) and overall customer count, though the company highlighted artificial intelligence and Enterprise segments as its most significant growth drivers. Management expressed optimism about these areas, estimating that annual recurring revenue (ARR) from these segments could exceed $50 million by year-end.
The company is reallocating marketing and investment dollars toward Enterprise and AI initiatives, shifting focus away from the lower end of the market where customer acquisition costs are higher and retention metrics are less favorable.
SEMrush also announced a $150 million share repurchase program, which Needham described as "a reasonable use of capital" given the company’s cash balance, though the firm questioned how this might impact investment priorities for growth and stock liquidity.
In other recent news, Semrush Holdings Inc. reported its second-quarter 2025 earnings, which showed a notable shortfall in earnings per share (EPS). The company posted an EPS of -$0.04, significantly missing the forecasted $0.08. Despite this, Semrush’s revenue reached $108.9 million, marking a 20% year-over-year increase, slightly surpassing expectations. Additionally, KeyBanc has lowered its price target for Semrush to $12.00 from $16.00 while maintaining an Overweight rating. This adjustment follows Semrush’s quarterly results, where annual recurring revenue (ARR) fell short of KeyBanc’s estimates, alongside a decline in paying customers for the first time. The company continues to focus on its strategic shift towards enterprise and AI segments. These developments highlight the challenges and strategic directions Semrush is navigating.
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