SEMR Q3 2025: Enterprise ARR Jumps 33% as AI Portfolio Doubles, Shifting Customer Mix Upmarket
SEMrush’s Q3 marked a pivotal shift as enterprise and AI-driven products powered a 33% ARR surge in the enterprise segment and doubled AI-related ARR, driving higher-value customer growth and record net new ARR. The launch of SEMrush One and deep integration of AI with SEO signal a new industry standard, while operational discipline and cash flow strength underpin sustained investment in platform expansion. With enterprise and AI adoption still in early innings, SEMrush is positioned to accelerate upmarket momentum into 2026.
Summary
- Enterprise Surge: AI and enterprise products accelerated customer mix shift, lifting upmarket ARR and retention.
- AI Momentum: AI toolkit and optimization products more than doubled ARR, fueling product expansion and customer stickiness.
- Platform Integration: SEMrush One unifies classic SEO and AI visibility, setting a new benchmark for digital marketing suites.
Performance Analysis
SEMrush delivered a quarter of high-value expansion, with total revenue reaching $112.1 million and a non-GAAP operating margin of 12.6%. Enterprise annual recurring revenue (ARR) grew 33% year-over-year, now representing the company’s fastest-growing segment and the main driver of net new ARR, which reached one of the strongest organic quarters in years. The average ARR per paying customer climbed 17% YoY to $4,000, reflecting the upmarket shift and deeper product adoption.
AI products emerged as a key growth lever, adding $10 million in ARR during the quarter and more than doubling total AI ARR sequentially. The number of customers spending over $50,000 annually increased 72% YoY, while enterprise net revenue retention reached 125%, up nearly 800 basis points. Overall dollar-based net revenue retention held at 105%, but customers adopting AI solutions approached 150% retention, highlighting the incremental expansion AI is driving alongside core SEO.
- Customer Mix Shift: Paying customer count declined sequentially as SEMrush prioritized higher-value, more sophisticated clients, raising average ARR and retention metrics.
- Cash Flow Strength: Operating cash flow reached $21.9 million, supporting a cash and equivalents balance of $275.7 million, up $42.8 million YoY.
- Margin Resilience: Operating and free cash flow margins exceeded guidance despite a $10 million FX headwind, with underlying operating leverage masked by currency swings.
Underlying trends signal a durable shift: AI and enterprise adoption are compounding, driving both top-line growth and margin expansion, while platform integration is deepening customer engagement and stickiness across cohorts.
Executive Commentary
"AI search isn't replacing the SEO opportunity, it's compounding it. We've helped define the SEO playbook, and as our Q3 results highlight, we're doing it again for AI Search. We believe our targeted shift towards enterprise customers and our expanding AI product portfolio will position us well for long-term growth."
Bill Wagner, Chief Executive Officer
"The mix is shifting towards higher value customers, average ARR is accelerating, and net revenue retention is improving across our more sophisticated customer base. Looking ahead, I remain optimistic about our ability to drive durable growth, profitability, and strong cash flow."
Brian Mulroy, Chief Financial Officer
Strategic Positioning
1. Enterprise Upmarket Expansion
SEMrush’s enterprise segment is now the engine of growth, with ARR up 33% YoY and average revenue per enterprise user surpassing $10,000. The number of $50,000-plus customers jumped 72%, and management sees a credible path to $100,000+ average ARR per enterprise client, up from last year’s $60,000 target. Recent product launches—enterprise SEO, AI optimization, and site intelligence—are driving multi-product expansion and larger deal sizes.
2. AI Product Velocity and Integration
AI solutions have moved from experimental to core product suite, with the AI toolkit and optimization products among the fastest-growing in company history. AI ARR more than doubled quarter-over-quarter, now on track to approach $30 million by year-end. Critically, AI adoption is additive to SEO spend, raising average ARR and net retention, and is deeply integrated into SEMrush One, the new platform unifying SEO and AI visibility workflows.
3. Data Moat and Platform Differentiation
SEMrush’s proprietary data set is a strategic moat, comprising 27 billion keywords, 43 trillion backlinks, and 800 million domains, now augmented with one of the world’s largest LLM prompt databases. This foundation powers both classic search and AI-driven discoverability, enabling marketers to optimize across Google, LLMs, and emerging digital channels from a single interface.
4. Go-to-Market Maturation
The company’s sales organization is scaling upmarket, with a framework now in place to address the complex needs of enterprise buyers. Management emphasized that only a fraction of the enterprise installed base has adopted the full suite, indicating significant runway for further penetration and ARPU expansion in 2026 and beyond.
5. Pricing and Capital Allocation Discipline
Pricing for new products is hybrid—combining per-seat, usage, and add-on toolkits— allowing SEMrush to capture value as customers expand use cases. Capital allocation remains focused on organic investment in AI and enterprise, with M&A as a selective lever. No share buybacks occurred in Q3 due to litigation, but management reiterated flexibility and intent to optimize shareholder returns as conditions allow.
Key Considerations
This quarter’s results reflect a decisive pivot from volume to value, as SEMrush leverages its data advantage, integrated platform, and enterprise GTM to capture higher-value, stickier customers while deepening wallet share with AI-driven upsell.
Key Considerations:
- Enterprise Penetration Runway: Only a small portion of enterprise customers have adopted the full suite, providing a multi-year ARPU expansion opportunity.
- AI Adoption Still Early: Just 10% of the customer base uses AI products, signaling significant cross-sell potential as AI becomes a marketing requirement.
- Seasonality Shift: Enterprise momentum is making the back half of the year stronger, reversing historic PLG seasonality patterns and smoothing revenue cadence.
- FX Exposure: With 30% of expenses in euros and nearly all revenue in dollars, margin volatility remains an ongoing watchpoint absent hedging.
- Competitive Moat: SEMrush’s data set and integrated workflows are major barriers to entry for AI-focused startups lacking SEO depth or scale.
Risks
Currency headwinds remain a structural margin risk, with unhedged euro exposure impacting operating leverage. Competitive intensity in AI optimization is rising, with VC-funded entrants targeting visibility solutions, though SEMrush’s data and brand provide insulation. Customer concentration risk is low, but further upmarket expansion will require continued investment in sales capacity and product innovation to maintain momentum and defend share.
Forward Outlook
For Q4 2025, SEMrush guided to:
- Revenue of $117.5 million to $119.5 million (midpoint 15.5% YoY growth)
- Non-GAAP operating margin of approximately 12.5%
For full-year 2025, management maintained guidance:
- Revenue of $443.5 million to $445.5 million (18% growth at midpoint)
- 12% non-GAAP operating and free cash flow margin
Management cited key drivers for 2026 acceleration:
- Full-year impact of new AI and enterprise products launched in 2025
- Expanded enterprise sales capacity and productivity gains
- Increasing AI adoption across the customer base and new logo wins
Takeaways
SEMrush’s Q3 results underscore a structural shift to higher-value customers, with enterprise and AI adoption compounding both top-line growth and retention. The company’s data moat and integrated platform are proving resilient to competitive encroachment, while operational discipline and cash flow strength provide flexibility for continued investment and capital return.
- Enterprise and AI Expansion: Upmarket momentum is driving higher ARR, stickier customer relationships, and stronger long-term economics.
- Platform Integration: SEMrush One’s unified SEO and AI workflows set a new industry bar, deepening customer engagement and cross-sell potential.
- 2026 Watchpoints: Investors should monitor AI adoption pace, enterprise penetration, and management’s ability to balance growth investment with margin expansion in the face of currency and competitive pressures.
Conclusion
SEMrush’s business model is rapidly evolving as enterprise and AI adoption reshape its growth and profitability profile. With a robust data moat, integrated platform, and operational discipline, SEMrush is positioned to capture the next wave of digital marketing spend as AI and SEO converge.
Industry Read-Through
SEMrush’s results highlight two industry-defining trends: the convergence of SEO and AI-driven search visibility, and the migration of SaaS models upmarket toward enterprise contracts and multi-product expansion. Vendors lacking deep data assets or integrated workflows will struggle to compete, as customers demand unified solutions that bridge classic and AI-powered search. For digital marketing and SaaS peers, the quarter signals that platform breadth, data scale, and upmarket focus are now prerequisites for durable growth and margin expansion in an AI-first era.