SimilarWeb (SMWB) Q2 2025: GenAI Data Hits 8% of Revenue, Powering Multi-Year Contract Upsell
GenAI data solutions fueled a record quarter for SimilarWeb, with AI-driven contracts now representing a material and expanding revenue mix. Large-scale data licensing to big tech and recurring multi-year upsells are redefining the company’s growth profile, while disciplined cost management restored operating profitability. Management’s raised profit outlook and visibility into durable, multi-year AI contracts set the stage for sustained margin expansion and revenue durability into 2026.
Summary
- AI Data Revenue Mix Shift: GenAI and LLM data solutions now anchor a growing share of recurring revenue.
- Multi-Year Contract Expansion: Large tech customers are renewing and upselling into multi-year, multi-million dollar agreements.
- Profitability Discipline Returns: Operational leverage and cash flow discipline support higher margin guidance and future investments.
Performance Analysis
SimilarWeb posted a 17% year-over-year revenue increase, driven by robust demand for GenAI data products and expanding adoption among large enterprise customers. The customer base grew 18% YoY, with nearly 6,000 ARR (annual recurring revenue) customers at quarter end. Big tech clients drove a step-function increase in data licensing activity, as GenAI and LLM (large language model) related solutions contributed 8% of total revenue—a notable inflection in product mix.
Operationally, the company returned to non-GAAP operating profit, reporting a 3% margin, and delivered its seventh consecutive quarter of positive free cash flow. Multi-year contracts now represent 57% of ARR, up sharply from 44% a year ago, boosting revenue durability and backlog visibility. Remaining performance obligations (RPO) climbed 26% YoY to $274 million, with 68% expected to be recognized in the next twelve months. While NRR (net revenue retention) for $100,000+ customers dipped due to lapping large 2024 upsells, the absolute number of large customers grew by 13% YoY and sequential net adds hit a three-year high.
- AI-Driven Deal Flow: GenAI evaluations and data licensing are converting into multi-year, multi-million dollar contracts with big tech.
- Sales Productivity Surge: The number of salespeople booking deals jumped 50% YoY, reflecting early returns from go-to-market investments.
- Revenue Quality Uptrend: Higher renewal rates and a greater share of multi-year contracts signal improved revenue resilience.
One-time evaluation fees from AI data customers provided a short-term boost, but management expects these to convert into durable ARR in the second half, further solidifying the company’s AI-led growth trajectory.
Executive Commentary
"Customer interest in our GenAI data and solution is amazing, and the revenues from our GenAI data and new solution were approximately 8% of second quarter revenues and are growing. Contracts like this one demonstrate the durability of those AI transactions as recurring revenue stream and provide me with the confidence in our ability to convert additional customers and expand our AI revenue streams."
Or Offer, CEO and Co-founder
"Our operational performance in the quarter was better than expected. As a reminder, over the last three years, we have improved operating margins by 4,500 basis points from minus 42% in the second quarter of 2022. This performance and our unit economics provide us with confidence in our ability to achieve our profit and cash flow targets."
Jason Schwartz, Chief Financial Officer
Strategic Positioning
1. GenAI and LLM Data Solutions as Core Growth Engine
GenAI data licensing, which provides large-scale digital data for training and improving AI models, has become a central growth lever for SimilarWeb. The company highlighted a marquee big tech customer that expanded from a seven-figure to an eight-figure ARR contract, renewing and upselling into a multi-year agreement. This validates the stickiness and expansion potential of AI data contracts, with management confident in converting more evaluation deals into recurring revenue.
2. Multi-Year Contracting and Revenue Durability
Multi-year contracts now comprise a majority of ARR (57%), up from 44% last year, providing improved revenue visibility and backlog strength. The RPO surge (+26% YoY) and the high renewal rate (the best in three years) reinforce the company’s ability to lock in large customers for longer terms, reducing churn risk and supporting long-term planning.
3. Go-to-Market Productivity and Salesforce Ramp
The company’s investment in go-to-market resources is yielding tangible results, with a 50% YoY increase in salespeople booking deals and record sequential large customer adds. This operational momentum is expected to accelerate land-and-expand motions, particularly as new AI modules and agentic products are layered into the offering.
4. Expanding Product Suite and Data Depth
Recent launches—including AI traffic analytics, AI brand visibility, and ad intelligence modules—extend SimilarWeb’s value proposition beyond core web analytics into paid marketing, mobile app intelligence, and shopper intelligence. The integration of AI agents into product workflows aims to boost customer stickiness and upsell opportunities, while product expansion supports broader use cases for digital data.
5. Disciplined Profitability and Cash Flow Focus
Operating margin improvement of 4,500 basis points over three years and a seventh consecutive quarter of positive free cash flow underscore management’s commitment to profitable growth. Margin expansion is being achieved alongside top-line acceleration, signaling strong unit economics and operational discipline.
Key Considerations
SimilarWeb’s quarter marks a structural shift in both its product mix and customer engagement model, driven by surging AI data demand and a maturing enterprise sales motion.
Key Considerations:
- AI Pipeline Conversion: The company expects a significant portion of Q2’s one-time evaluation fees to convert into recurring, multi-year ARR in the back half of 2025.
- Large Customer Upsell Dynamics: Big tech clients are demonstrating willingness to expand and deepen contracts, increasing both deal size and term.
- Product Innovation Velocity: Ongoing launches in AI analytics and agentic modules are broadening TAM (total addressable market) and driving cross-sell.
- Margin Expansion Trajectory: Operating leverage from higher revenue per customer and disciplined cost control is supporting a raised profit outlook.
Risks
Concentration risk remains elevated as big tech and AI-driven contracts comprise a growing share of revenue, making execution on multi-year renewals critical. The conversion of one-time evaluation deals to ARR is not guaranteed, and delays or failures would pressure growth. Competitive intensity in digital data and analytics, as well as evolving regulatory scrutiny around data privacy and AI, could also impact future contract flow and pricing power.
Forward Outlook
For Q3 2025, SimilarWeb guided to:
- Total revenue of $71.5 to $72 million
- Non-GAAP operating profit of $1.5 to $2 million
For full-year 2025, management maintained revenue guidance and raised profit expectations:
- Total revenue of $285 to $288 million (15% YoY growth at midpoint)
- Non-GAAP operating profit of $5 to $7 million (raised from prior guidance)
Management highlighted several factors that support visibility:
- Robust GenAI and LLM data pipeline with high conversion potential in H2
- Continued salesforce productivity gains and product innovation driving new customer adds
Takeaways
SimilarWeb’s Q2 results confirm a pivot to AI-powered, multi-year recurring revenue, underpinned by large tech customer expansion and disciplined margin execution.
- AI Data as a Growth Catalyst: The shift to GenAI and LLM data licensing is now a structural growth driver, not a one-off event, with multi-year, multi-million dollar contracts anchoring future ARR.
- Operational Rigor Restores Profitability: Margin expansion and positive cash flow reflect a sustainable cost structure, even as the company invests in growth and innovation.
- Key Watchpoints for Investors: Track conversion of AI evaluation deals to ARR, durability of big tech renewals, and continued expansion of the multi-year contract base as signals of long-term revenue quality.
Conclusion
SimilarWeb’s execution this quarter demonstrates a business model transition toward durable, high-value AI data contracts and recurring multi-year revenue streams. With a strengthened product suite, disciplined operations, and visible pipeline conversion, the company is positioned for sustained profitable growth and expanding market relevance.
Industry Read-Through
SimilarWeb’s accelerating AI data revenue mix and multi-year contract wins signal a broader enterprise shift toward external data licensing for GenAI and LLM training. This trend is likely to benefit digital data providers and analytics platforms with differentiated datasets and established enterprise relationships. Vendors with the ability to convert evaluation pilots into scalable, recurring contracts will be best positioned as AI adoption matures. The results also highlight the rising importance of productizing data with AI-native modules, a playbook other SaaS and analytics firms may seek to emulate as digital transformation and AI investment cycles intensify.