10-Q 1 semr-20220630.htm 10-Q semr-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
            
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-40276
Semrush Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware84-4053265
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
800 Boylston Street, Suite 2475
Boston, MA 02199
(Address of principal executive offices including zip code)

(800) 851-9959
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:        
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.00001 par value per shareSEMRThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes or ☐ No.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes or ☐ No.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
                                    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes or No
As of August 1, 2022, there were 43,322,717 shares of the registrant’s Class A Common Stock and 97,919,705 shares of the registrant’s Class B Common Stock, $0.00001 par value per share, outstanding.




TABLE OF CONTENTS

Page
Part I. Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.








SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about Semrush Holdings, Inc. (“Semrush Holdings”) and our subsidiaries (collectively, the “Company”, “Semrush”, “we”, “us”, or “our”) and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations, financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our future financial performance, including our revenue, annual recurring revenue (“ARR”), costs of revenue, gross profit or gross margin and operating expenses;
•the sufficiency of our cash and cash equivalents to meet our liquidity needs;
•anticipated trends and growth rates in our business and in the markets in which we operate;
•our ability to maintain the security and availability of our internal networks and platform;
•our ability to attract new paying customers and convert free customers into paying customers;
•our ability to retain and expand sales to our existing paying customers, including upgrades to premium subscriptions, purchases of add-on offerings, and increasing the number of authorized users per paying customer;
•our ability to access, collect, and analyze data;
•our ability to successfully expand in our existing markets and into new markets;
•our ability to effectively manage our growth and future expenses;
•our ability to continue to innovate and develop new products and features, improve our data assets, and enhance our technological capabilities;
•our estimated total addressable market;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to comply with modified or new laws and regulations applying to our business;
•the attraction and retention of qualified employees and key personnel;
•our anticipated investments in sales and marketing, and research and development;
•our ability to successfully defend litigation brought against us;
•our ability to successfully acquire and integrate companies and assets;
•the increased expenses associated with being a public company;




•the impact of the ongoing COVID-19 pandemic, rising inflation and interest rates, market uncertainty and volatility, and other global financial, economic, and political events on our business, industry and supply chain; and
•our ability to successfully relocate employees outside of Russia, including executing our relocation plans on the timeline we expect and at the anticipated cost.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, projections, and assumptions about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information provides a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.





Risk Factors Summary
Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks and uncertainties include, but are not limited to, the following, which are described in further detail in Item 1A:
Our business and operating results will be harmed if our paying customers do not renew and/or upgrade their premium subscriptions or if they fail to purchase additional products.
If we fail to attract new potential customers, register them for trials, and convert them into paying customers, our operating results would be harmed.
The market in which we operate is intensely competitive, and if we do not compete effectively, improve and introduce compelling new products, add-ons, and tools, and offer high-quality customer service, our ability to attract and retain customers could be harmed.
We have incurred losses in the past and may not achieve profitability in the future.
Instability in geographies where we have significant operations and personnel, including in Russia, could have a material adverse effect on our business, customers, and financial results.
Our products depend on third-party data sources and third-party integrations, the loss or impairment of which could cause our business to suffer.
If we are unable to maintain and enhance our brand our ability to maintain and expand our customer base may be impaired, and our business and financial results may be harmed.
The loss of one or more of our executive officers or other key employees, a failure to attract and retain other highly skilled employees, or an inability to maintain our company’s culture could harm our business.
If we fail to maintain and improve our methods and technologies, including anticipating or adapting to new social media platforms, or fail to anticipate new methods or technologies for data collection and analysis, hardware, software, and software related technologies, competing products and services could surpass ours in depth, breadth, or accuracy of our data, the insights that we offer or in other respects.
Failures or loss of, or material changes with respect to, the third-party hardware, software, and infrastructure on which we rely, including third-party data center hosting, could adversely affect our business.
Facilities and third-party distribution channels to support our operations, could adversely affect our business.
Breaches, unauthorized access to or disclosure of, or changes in laws or public perception related to confidential information or personal information of any customers of our platform could cause our reputation to be harmed and we may be exposed to liability.
In recent periods, we have experienced, and expect to continue to experience, rapid growth and organizational change. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high-quality customer service, and customer satisfaction, or attract new employees and customers and our business could suffer.




We are exposed to risks associated with premium subscription and payment processing and any disruption to such processing systems could adversely affect our business and results of operations.
A significant portion of our operations is located outside of the United States, which subjects us to additional risks, including increased complexity, the costs of managing international operations, geopolitical instability, and fluctuations in currency exchange rates.
Adverse or weakened general economic and market conditions may reduce spending on sales and marketing technology and information technology which could harm our revenue, results of operations, and cash flows.
Changes in the sizes or types of paying customers that purchase premium subscriptions to our platform or products could affect our business, and our financial results may fluctuate due to increasing variability in our sales cycles.
Forecasts of our market and market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, there can be no assurance that our business will grow at similar rates, or at all.
We may be subject to litigation for any of a variety of claims, which could harm our reputation and adversely affect our business, results of operations, and financial condition.
Our referral partners and resellers provide revenue to our business, and we benefit from our association with them. Our failure to maintain successful relationships with these partners could adversely affect our business.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who as of June 30, 2022 held in the aggregate 81% of the voting power of our capital stock, which will limit or preclude your ability to influence corporate matters.




PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

As of
June 30, 2022December 31, 2021
Assets
Current assets
Cash and cash equivalents$248,917 $269,665 
Accounts receivable2,346 2,190 
Deferred contract costs, current portion7,276 6,338 
Prepaid expenses and other current assets10,484 5,345 
Total current assets269,023 283,538 
Property and equipment, net8,632 8,270 
Intangible assets, net11,344 2,925 
Goodwill6,740 1,991 
Deferred contract costs, net of current portion2,586 2,254 
Other assets3,921 1,096 
Total assets$302,246 $300,074 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$5,729 $9,942 
Accrued expenses25,309 19,479 
Deferred revenue48,303 40,232 
Other current liabilities2,621 1,896 
Total current liabilities81,962 71,549 
Long-term liabilities
Deferred revenue, net of current portion185 237 
Deferred tax liability24 268 
Other long-term liabilities2,179 2,478 
Total liabilities84,350 74,532 
Commitments and contingencies (Note 15)
Stockholders' equity
Undesignated preferred stock, $0.00001 par value - 100,000,000 shares authorized, and no shares issued or outstanding as of June 30, 2022 or December 31, 2021
  
Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized, and 43,261,183 shares issued and outstanding as of June 30, 2022; 31,841,061 shares issued and outstanding as of December 31, 2021
  
Class B common stock, $0.00001 par value - 160,000,000 shares authorized, and 97,975,754 shares issued and 97,870,664 outstanding as of June 30, 2022; 108,975,216 shares issued and 108,870,126 outstanding as of December 31, 2021
1 1 
Additional paid-in capital 269,201 264,871 
Accumulated other comprehensive deficit(1,351)(230)
Accumulated deficit(49,955)(39,100)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1

PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Total stockholders’ equity217,896 225,542 
Total liabilities and stockholders' equity$302,246 $300,074 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2


SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share data)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue$62,610 $45,005 $119,738 $85,003 
Cost of revenue12,598 10,238 24,185 19,011 
Gross profit50,012 34,767 95,553 65,992 
Operating expenses
Sales and marketing30,894 18,298 56,724 34,755 
Research and development9,671 5,964 17,809 11,322 
General and administrative14,218 10,520 28,381 18,424 
Exit costs3,485  3,485  
Total operating expenses58,268 34,782 106,399 64,501 
(Loss) income from operations(8,256)(15)(10,846)1,491 
Other income (expense), net711 (123)870 (72)
(Loss) income before income taxes(7,545)(138)(9,976)1,419 
Provision for income taxes739 141 879 227 
Net (loss) income$(8,284)$(279)$(10,855)$1,192 
Net (loss) income per share attributable to common stockholders:
Basic$(0.06)$ $(0.08)$0.01 
Diluted$(0.06)$ $(0.08)$0.01 
Weighted-average number of shares of common stock used in computing net (loss) income per share attributable to common stockholders:
Basic141,042 135,312 140,921 115,951 
Diluted141,042 135,312 140,921 137,263 
Net (loss) income$(8,284)$(279)$(10,855)$1,192 
Other comprehensive (loss) income
Foreign currency translation adjustments(857) (1,121) 
Comprehensive (loss) income$(9,141)$(279)$(11,976)$1,192 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share data)
Series ASeries A-1Series BCommon StockClass A Common StockClass B Common Stock
Additional
Paid-in
Capital
Accumulated Other Comprehensive Loss
Accumulated
Deficit
Total
Stockholders’
Equity
(Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balances at December 31, 20203,379,400 $7,789 1,837,600 $10,270 4,681,400 $24,000 95,050,041 $  $  $ $4,975 $ $(35,815)$(6,840)
Conversion of preferred stock(3,379,400)(7,789)(1,837,600)(10,270)(4,681,400)(24,000)29,695,200 — — — — — 42,058 — — 18,058 
Issuance of Class A Common Stock in connection with the initial public offering, net of $13,378 in issuance costs
— — — — — — — — 10,000,000 — — — 126,622 — — 126,622 
Reclassification of Common Stock to Class B Common Stock in connection with the initial public offering— — — — — — (124,745,241)— — — 124,745,241 1 (1)— —  
Exercise of stock options— — — — — — — — — — 3,861 — 7 — — 7 
Stock-based compensation expense— — — — — — — — — — — — 593 — — 593 
Net Income— — — — — — — — — — — — — — 1,471 1,471 
Balances at March 31, 2021 $  $  $  $ 10,000,000 $ 124,749,102 $1 $174,254 $ $(34,344)$139,911 
Issuance of Class A Common Stock in connection with the partial exercise of the overallotment option in connection with the initial public offering, net of $825 in issuance costs
— — — — — — — — 719,266 — — — 9,245 — — 9,245 
Conversion of Class B Common Stock to Class A Common Stock— — — — — — — — 81,102 — (81,102)— — — — — 
Exercise of stock options— — — — — — — — — — 28,442 — 19 — — 19 
Stock-based compensation expense— — — — — — — — — — — — 569 — — 569 
Net loss— — — — — — — — — — — — — — (279)(279)
Balances at June 30, 2021 $  $  $  $ 10,800,368 $ 124,696,442 $1 $184,087 $ $(34,623)$149,465 
Balances at December 31, 2021 $  $  $  $ 31,841,061 $ 108,870,126 $1 $264,871 $(230)$(39,100)$225,542 
Conversion of Class B Common Stock to Class A Common Stock— — — — — — — — 10,842,862 — (10,842,862)— — — — — 
Exercise of stock options— — — — — — — — 197,828 — — — 924 — — 924 
Issuance of shares in connection with Employee Stock Purchase Plan— — — — — — — — 39,516 — — — — — — — 
Vesting of Class A Common Stock in connection with Restricted Stock Units— — — — — — — — 14,625 — — — — — — — 
Stock-based compensation expense— — — — — — — — — — — — 932 — — 932 
Cumulative translation adjustment— — — — — — — — — — — — — (264)— (264)
Net loss— — — — — — — — — — — — — — (2,571)(2,571)
Balances at March 31, 2022 $  $  $  $ 42,935,892 $ 98,027,264 $1 $266,727 $(494)$(41,671)$224,563 
Conversion of Class B Common Stock to Class A Common Stock— — — — — — — — 156,600 — (156,600)— — — — — 
Exercise of stock options— — — — — — — — 143,667 — — — 270 — — 270 
Vesting of Class A Common Stock in connection with Restricted Stock Units— — — — — — — — 25,024 — — — — — — — 
Stock-based compensation expense— — — — — — — — — — — — 2,204 — — 2,204 
Cumulative translation adjustment— — — — — — — — — — — — — (857)— (857)
Net loss— — — — — — — — — — — — — — (8,284)(8,284)
Balances at June 30, 2022 $  $  $  $ 43,261,183 $ 97,870,664 $1 $269,201 $(1,351)$(49,955)$217,896 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


SEMRUSH HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
20222021
Operating Activities
Net (loss) income$(10,855)$1,192 
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization expense4,221 1,447 
Amortization of deferred contract costs4,763 2,950 
Stock-based compensation expense3,136 1,162 
Non-cash interest expense53 104 
Change in fair value of convertible debt securities(1,028) 
Deferred taxes202 (83)
Changes in operating assets and liabilities
Accounts receivable109 (1,324)
Deferred contract costs(6,033)(4,789)
Prepaid expenses and other current assets(4,874)(4,530)
Other current liabilities1,589  
Accounts payable(2,714)720 
Accrued expenses4,818 4,981 
Deferred revenue7,240 8,229 
Other long-term liabilities(38) 
Net cash provided by operating activities589 10,059 
Investing Activities
Purchases of property and equipment(2,798)(750)
Purchases of convertible debt securities(2,000)(500)
Capitalization of internal-use software development costs(782)(271)
Cash paid for acquisition of assets and businesses, net of cash acquired(13,993)(350)
Net cash used in investing activities(19,573)(1,871)
Financing Activities
Proceeds from exercise of stock options1,194 26 
Net proceeds from completing initial public offering 137,467 
Payment of capital leases(1,445)(453)
Net cash (used in) provided by financing activities (251)137,040 
Effect of exchange rate changes on cash and cash equivalents(1,513) 
(Decrease) increase in cash, cash equivalents and restricted cash(20,748)145,228 
Cash, cash equivalents and restricted cash, at beginning of period269,841 35,619 
Cash, cash equivalents and restricted cash, at end of period$249,093 $180,847 
Supplemental cash flow disclosures
Cash paid for interest$169 $112 
Cash paid for income taxes$479 $232 
Acquisition of fixed asset under capital lease$433 $5,750 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


SEMRUSH HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended June 30, 2022 and 2021
(in thousands, except share and per share data, unless otherwise noted)
1.Overview and Basis of Presentation
Description of Business
Semrush Holdings, Inc. (“Semrush Holdings”) and its subsidiaries (together the “Company”, or “Semrush”) provide an online visibility management software-as-a-service (“SaaS”) platform. The Company’s platform enables its subscribers to improve their online visibility and drive traffic, including on their websites and social media pages, and distribute highly relevant content to their customers on a targeted basis across various channels to drive high-quality traffic and measure the effectiveness of their digital marketing campaigns. The Company is headquartered in Boston, Massachusetts, and has wholly owned subsidiaries in Cyprus, Russia, the Czech Republic, Poland, Spain, and the United States.
The Company is subject to a number of risks and uncertainties common to companies in similar industries and stages of development that could affect future operations and financial performance. These risks include, but are not limited to, rapid technological change, competitive pressure from substitute products or larger companies, protection of proprietary technology, management of international activities, the need to obtain additional financing to support growth, and dependence on third parties and key individuals.
Public Offerings
On March 29, 2021, the Company closed its initial public offering (“IPO”) in which it sold 10,000,000 shares of its Class A common stock at a price to the public of $14.00 per share. The Company received $126.6 million in net proceeds after deducting approximately $13.4 million for underwriting discounts, commissions and offering expenses. Immediately prior to the completion of the IPO, all shares of common stock then outstanding were reclassified as Class B common stock, and all shares of redeemable convertible preferred stock and convertible preferred stock then outstanding were converted into shares of common stock on a one-to-one basis and then reclassified into Class B common stock.
On April 20, 2021, the underwriters of the Company’s IPO partially exercised their option to purchase additional shares of Class A common stock. In connection with the closing of the partial exercise on April 23, 2021, the underwriters purchased 719,266 shares of the Company’s Class A common stock for net proceeds to the Company of $9.2 million after deducting approximately $0.8 million for underwriting discounts, commissions, and offering expenses.
On November 23, 2021, the Company closed a follow-on offering (the “Follow-On Offering”) in which it sold 4,000,000 shares of its Class A common stock at a price to the public of $20.50 per share. The Company received $77.9 million in net proceeds after deducting approximately $4.1 million for underwriting discounts, commissions and offering expenses. Selling stockholders sold an aggregate of 1,000,000 shares of Class A common stock in the Follow-On Offering.
Effects of the Russian Military Action in Ukraine
Economic, civil, military, and political uncertainty exists and may increase in many of the regions where the Company operates and derives its revenue. Several countries in which the Company operates are experiencing and may continue to experience military action and civil and political unrest as a result of such action. The Company has significant development operations in the emerging market economies of
6


Eastern Europe and more than half of the Company’s full-time employees have historically been located in Russia. During the three months ended June 30, 2022, the Company began a large-scale relocation effort of its Russia-based workforce to other jurisdictions. See Note 9 (Exit Costs) for additional information on the costs associated with such relocation efforts and Note 19 (Subsequent Events) for more information on the sale of the Company’s Russian subsidiaries.
In late February 2022, Russian military forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is likely. The impact to Ukraine and Russia, as well as actions taken by other countries, including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other countries and organizations against officials, individuals, regions, and industries in Russia, Ukraine and Belarus, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on the Company’s operations. Any such material adverse effect from the conflict, enhanced sanctions activity, and subsequent responses may disrupt the Company’s relationships with its vendors, disrupt its delivery of services, cause the Company to shift all or portions of its work occurring in the region to other countries, and may restrict the Company’s ability to engage in certain projects in the region. For more information on the risks of regional instability to our operations, see Item 1A. Risk Factors under the header "Instability in geographies where we have significant operations and personnel, including in Russia, could have a material adverse effect on our business, customers, and financial results”.
Effects of COVID-19
The Company considered the potential effects of the COVID-19 pandemic on the Company. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and numerous new strains of COVID-19 have subsequently spread throughout the world. COVID-19 has continued to impact market and economic conditions globally. In an attempt to limit the spread of the virus, various governmental restrictions have been implemented, including restrictions with respect to business activities and travel restrictions, and “shelter–at–home” orders, that have had and may continue to have an adverse impact on the Company’s business and operations. In light of the evolving nature of COVID-19 and the uncertainty it has produced around the world, it is not possible to predict the COVID-19 pandemic’s cumulative and ultimate impact on the Company’s future business operations, results of operations, financial position, liquidity, and cash flows. The extent of the impact of the pandemic on the Company’s business and financial results will depend largely on future developments, including the duration of the spread of the outbreak both globally and within the U.S., the impact on capital, foreign currencies exchange and financial markets, and governmental or regulatory orders that impact the Company’s business, all of which are highly uncertain and cannot be predicted.
As of June 30, 2022, the Company has experienced long lead times for hardware affected by a semiconductor shortage attributed to the COVID-19 pandemic which may affect its ability to fully furnish the infrastructure within its data centers. The Company will continue to actively monitor the current international and domestic impacts of and responses to COVID-19 and its related risks.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
7


The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2021, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2022, and the results of its operations and its cash flows for the three and six months ended June 30, 2022 and 2021. The consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date.
The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.
The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 18, 2022.
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited condensed consolidated financial statements. As of June 30, 2022, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Annual Report on Form 10-K, except as discussed below.
2.Summary of Significant Accounting Policies
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these unaudited condensed consolidated financial statements include, but are not limited to, revenue recognition, expected future cash flows used to evaluate the recoverability of long-lived assets, contingent liabilities, expensing and capitalization of research and development costs for internal-use software, the average period of benefit associated with costs capitalized to obtain revenue contracts, the determination of the fair value of stock-based awards issued, stock-based compensation expense, the determination of the estimated fair value of the convertible notes held by the Company, the valuations of the intangible assets acquired through acquisitions, and the recoverability of the Company’s net deferred tax assets and related valuation allowance.
Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made.
Subsequent Events Considerations
8


The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than those disclosed in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies." The Company may take advantage of these exemptions until the Company is no longer an "emerging growth company." Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, its consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company may take advantage of these exemptions up until the last day of the year following the fifth anniversary of an offering or such earlier time that it is no longer an emerging growth company. The Company would cease to be an emerging growth company if it has more than $1.07 billion in annual revenue, has more than $700.0 million in market value of its stock held by non-affiliates (and it has been a public company for at least 12 months, and has filed one annual report on Form 10-K), or it issues more than $1.0 billion of non-convertible debt securities over a three-year period.
Revenue Recognition
The Company derives revenue from two sources: (1) subscription revenues via the Semrush Online Visibility Management Platform and the Prowly Public Relations Platform, which are comprised of subscription fees from customers accessing the Company’s SaaS services and related customer support; and (2) the Semrush Marketplace, which allows customers to pay a set fee for services or products offered through the marketplace.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration it expects to receive in exchange for those products or services. There were no changes to the Company’s revenue recognition policies since the filing of its Annual Report on Form 10-K with the SEC on March 18, 2022.
For the three and six months ended June 30, 2022 and 2021, subscription revenue accounted for nearly all of the Company’s revenue. Revenue related to the Semrush Marketplace was not material for the three and six months ended June 30, 2022 and 2021.
Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company primarily invoices and collects payments from customers for its services in advance on a monthly or annual basis.
Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term deferred revenue. Deferred revenue increased by $8,071 as of June 30, 2022 compared December 31, 2021. During the three months ended June 30, 2022 and 2021, $24,295 and $15,617 of revenue was recognized that was included in deferred revenue at the beginning of each respective period. During the six months ended June 30, 2022 and
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2021, $30,760 and $20,164 of revenue was recognized that was included in deferred revenue at the beginning of each respective period.
The Company has elected to exclude amounts charged to customers for sales tax from the transaction price. Accordingly, revenue is presented net of any sales tax collected from customers.
Transaction Price Allocated to Future Performance Obligations
ASC 606 requires that the Company disclose the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of the balance sheet dates reported.
For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of June 30, 2022 was $721, which the Company expects to recognize over the next 12 months.
For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of June 30, 2022. For performance obligations not satisfied as of June 30, 2022, and to which this expedient applies, the nature of the performance obligations is consistent with performance obligations satisfied as of December 31, 2021. The remaining durations are less than one year.
Costs to Obtain a Contract
The incremental direct costs of obtaining a contract, which primarily consist of sales commissions paid for new subscription contracts, are deferred and recorded as deferred contract costs in the consolidated balance sheet and are amortized over a period of approximately 24 months on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates. The 24-month period represents the estimated benefit period of the customer relationship and has been determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology development life-cycle, and an estimated customer relationship period based on historical experience and future expectations. Sales commissions for renewals and upgrade contracts are deferred and amortized on a straight-line basis over the remaining estimated customer relationship period of the related customer. Deferred contract costs that will be recorded as expense during the succeeding 12-month period are recorded as current deferred contract costs, and the remaining portion is recorded as deferred contract costs, net of current portion. Amortization of deferred contract costs is included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive income (loss).
Concentrations of Credit Risk and Significant Customers
The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other hedging arrangements. Credit losses historically have not been significant and the Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company's accounts receivable.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers of the Company. The Company routinely assesses the creditworthiness of its customers and generally does not require its customers to provide collateral or other security to support accounts receivable. Credit losses historically have not been significant and the Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. Due to these factors, no
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additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company's accounts receivable.
As of June 30, 2022 and December 31, 2021, no individual customer represented more than 10% of the Company’s accounts receivable. During the three and six months ended June 30, 2022 and 2021, no individual customer represented more than 10% of the Company’s revenue.
Disclosure of Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximated their fair values at June 30, 2022 and December 31, 2021, due to the short-term nature of these instruments.
The Company has evaluated the estimated fair value of financial instruments using available market information. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See below for further discussion.
Foreign Currency Translation
The Company operates in a multi-currency environment having transactions in such currencies as the U.S. dollar, Russian ruble, Czech koruna, euro, and others. The reporting currency of the Company is the U.S. dollar.
For all periods up to and including the year ended December 31, 2021, the functional currency of the Company’s foreign subsidiaries was the U.S. dollar, with the exception of Prowly, where the functional currency is the local currency, the Zloty. For all other entities, foreign currency transactions were measured initially in the functional currency of the recording entity by use of the exchange rate in effect at that date. At each subsequent balance sheet date, foreign currency denominated assets and liabilities of these international subsidiaries were remeasured into U.S. dollars using the exchange rates in effect at the balance sheet date or historical rates, as appropriate. Any differences resulting from the remeasurement of foreign denominated assets and liabilities of the international subsidiaries to the U.S. dollar functional currency were recorded within other income (expense) in the consolidated statement of operations and comprehensive loss.
Beginning on January 1, 2022, as a result of changes in the economic facts and circumstances of its business environment, the Company reassessed its functional currency determinations for all foreign subsidiaries and determined that the functional currencies of the Company’s foreign subsidiaries is the local currency at each of its subsidiary locations, with the exception of its Russian subsidiaries where the U.S. dollar remains the functional currency. As of August 10, 2022, we no longer have operating subsidiaries in Russia. See Note 19 (Subsequent Events) for more information on the sale of our Russian subsidiaries. Accordingly, beginning January 1, 2022, assets and liabilities of the Company’s foreign subsidiaries that maintain local currencies as functional currencies are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The Company includes the effects of these foreign currency translation adjustments in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.
The foreign currency exchange (loss) gain included in other income, net for the three months ended June 30, 2022 and 2021 was $(138) and $(53), respectively, and $(616) and $(8) for the six months ended June 30, 2022 and 2021, respectively.
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Comprehensive income (loss)
Comprehensive income (loss) is comprised of two components: net income (loss) and other comprehensive income (loss), which includes other changes in stockholders’ deficit that result from transactions and economic events other than those with stockholders. For the three and six months ended June 30, 2022, comprehensive loss consists of net loss and the change in the cumulative foreign currency translation adjustment. The tax effect of the cumulative foreign currency translation adjustment is not significant for the three and six months ended June 30, 2022. Comprehensive loss equaled total net loss for the three and six months ended June 30, 2021.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires a lessee to recognize most leases on the balance sheet but recognize expenses on the income statement in a manner similar to current practice. The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying assets for the lease term. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement, and presentation of expenses and cash flows arising from a lease. For public entities, ASU 2016-02 is effective for years beginning after December 15, 2019. For non-public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2021 and interim periods in annual periods beginning after December 15, 2022. Early adoption is permitted. The Company plans to adopt this guidance in the year ending December 31, 2022. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires that credit losses be reported as an allowance using an expected losses model, representing the entity's current estimate of credit losses expected to be incurred. The accounting guidance currently in effect is based on an incurred loss model. ASU 2016-13 affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. For non-public companies, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company plans to adopt this guidance in the year ending December 31, 2023. The Company is currently evaluating ASU 2016-13 and the potential impact on its consolidated financial statements and financial statement disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public companies, the ASU is effective for years beginning after December 15, 2020, and interim periods within those years, with early adoption permitted. For non-public companies, the new standard is effective for years beginning after December 15, 2021, with early adoption permitted. The Company plans to adopt this guidance in the year ending December 31, 2022. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.
3.    Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents consist of cash on deposit with banks and amounts held in interest-bearing money market funds. Cash equivalents are carried at cost, which approximates their fair market value. At each of June 30, 2022 and December 31, 2021, restricted cash was $176 and related to cash
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held at a financial institution in an interest-bearing cash account as collateral for a letter of credit related to the contractual provisions for one of the Company’s building leases.
The following table is a reconciliation of cash, cash equivalents and restricted cash included in the accompanying condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash included in the accompanying condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021.
As of
June 30, 2022June 30, 2021
Cash and cash equivalents$248,917 $180,759 
Restricted cash included in “other assets”176 88 
Total cash, cash equivalents and restricted cash, at end of period$249,093 $180,847 

4.    Fair Value Measurements
Cash equivalents include money market funds with original maturities of 90 days or less from the date of purchase. The fair value measurement of these assets is based on quoted market prices in active markets for identical assets and, therefore, these assets are recorded at fair value on a recurring basis and classified as Level 1 in the fair value hierarchy. As of June 30, 2022 and December 31, 2021, cash equivalents held in money market funds totaled $15,531 and $21,366, respectively.
The Company records contingent consideration resulting from a business combination at its fair value on the acquisition date. The Company generally determines the fair value of the contingent consideration using the Monte Carlo simulation model. Each reporting period thereafter, these obligations are revalued and increases or decreases in their fair values are recorded as an adjustment to operating expenses within the consolidated statements of operations and comprehensive loss. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the estimated or actual achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense the Company records in any given period.
The total estimated fair value of the contingent consideration payable was $540 and $824 as of June 30, 2022 and December 31, 2021, respectively. The following table represents the key inputs used in the fair value calculation:
As of
June 30, 2022
December 31, 2021
Risk free interest rate2.19 %0.45 %
Projected year of payment2022 - 2023
2022 – 2023
Revenue volatility7.0 %22.3 %
Discount rate4.48 %5.87 %
The Company records its convertible note investments at fair value on the purchase date. The Company determines the fair value of these investments using the Black-Scholes Merton model. Each reporting period thereafter, these investments are revalued and increases or decreases in their fair values are recorded as adjustments to other income, net within the consolidated statements of operations and comprehensive loss to reflects the gains and losses. Changes in the fair value of these investments can
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result from changes in the estimated enterprise value of the issuers, the likelihoods and methods of such conversions, and other market factors. Significant judgment is employed in determining the appropriateness of these assumptions as of the purchase date and for each subsequent period. Accordingly, changes in any of the assumptions described above can materially impact the amount of gain or loss the Company records in any given period.
As of June 30, 2022 and December 31, 2021, the Company measured its investments in convertible notes (see Note 6 “Other Assets”) and its contingent consideration associated with the acquisition of Prowly.com sp. z o.o (“Prowly”) on a recurring basis using significant unobservable inputs (Level 3) and did not have any assets or liabilities measured at fair value on a recurring basis using significant other observable inputs (Level 2). The changes in fair value of the contingent consideration associated with the Prowly acquisition were insignificant for each of the three and six months ended June 30, 2022 and 2021.
A rollforward of the fair value measurements of the convertible notes for the three months ended June 30, 2022, is as follows:
Balance as of December 31, 2021$500 
Additional investment in convertible notes2,000 
Change in fair value included in other income, net661 
Balance as of March 31, 20223,161 
Change in fair value included in other income, net367 
Balance as of June 30, 2022
$3,528 
The net increase in the fair value of the convertible notes as of June 30, 2022 compared to December 31, 2021 is primarily driven by additional convertible note purchases of $2,000, along with a $1,028 increase in fair value.
Changes in the estimated fair value of the contingent consideration payable are recognized (reversed) over the three-year service period. A rollforward of the fair value measurements of the contingent consideration liability for the three months ended June 30, 2022 is as follows:
Balance as of December 31, 2021$424 
Expense recognized (reversed) related to service period rendered106 
Balance as of March 31, 2022530 
Expense recognized (reversed) related to service period rendered(141)
Balance as of June 30, 2022
$389 

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5.    Property and Equipment, Net
Property and equipment consists of the following (in thousands):
As of
June 30,
2022
December 31,
2021
Computer equipment$11,173 $10,045 
Furniture and office equipment1,372 948 
Leasehold improvements1,783 1,737 
Total property and equipment14,328 12,730 
Less: accumulated depreciation and amortization(5,696)(4,460)
Property and equipment, net$8,632 $8,270 
Depreciation and amortization expense related to property and equipment was $848 and $1,654 for the three and six months ended June 30, 2022, respectively, and was $790 and $1,134 for the three and six months ended June 30, 2021, respectively.
6.    Other Assets
Investments in Convertible Debt
In January 2021, the Company purchased two convertible debt securities (the “January 2021 Notes”) for a total aggregate investment of $500. Both investments mature on January 1, 2023 and receive interest at an annual rate of 6%. In January 2022, the Company purchased an additional convertible debt security (the “January 2022 Note”) in the amount of $2,000 that will mature on January 1, 2024 and receives interest at an annual rate of 6%. Interest accrues on each note and becomes payable upon conversion of each convertible note, or will be paid in connection with the repayment in full of the principal amount of such convertible notes.
These convertible note investments are classified as available-for-sale securities. The January 2021 Notes and January 2022 Note are included in other assets in the accompanying unaudited condensed consolidated balance sheets based on the maturity dates. The Company accounts for these investments, along with the embedded derivatives associated with their conversion features, by utilizing the fair value option within ASC 825, Financial Instruments, and accounting for the entire hybrid instrument at fair value through other income (loss). The Company recorded an increase in the fair value of the convertible notes of $367 and $1,028 for the three and six months ended June 30, 2022, respectively. Changes in the fair value of the convertible notes were not material for the three and six months ended June 30, 2021.
With respect to its investments in these convertible debt securities, the Company has a variable interest in an issuer of these securities, which is a variable interest entity. After evaluation of the relationship between the Company and this variable interest entity, the Company determined not to consolidate this variable interest entity’s results for the three and six months ended June 30, 2022 or 2021. Significant judgments included the determination that this variable interest entity lacked sufficient equity at risk to finance its activities without additional subordinated support, and that the Company was not the primary beneficiary of the variable interest entity given the Company’s variable interests do not constitute a controlling financial interest.

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7.    Net Income (Loss) Per Share
In March 2021, the Company amended its certificate of incorporation to create two classes of common stock outstanding: Class A common stock and Class B common stock. As more fully described in Note 13 “Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)”, the rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one (1) vote per share and each share of Class B common stock is entitled to ten (10) votes per share. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time. Shares of Class B common stock are automatically converted into Class A common stock upon sale or transfer, subject to certain limited exceptions. Shares of Class A common stock are not convertible. See Note 13 “Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)” for additional information regarding the current conversion and transfer terms of the Company’s common stock. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one-to-one basis when computing net income (loss) per share. As a result, basic and diluted net income (loss) per share of Class A common stock and share of Class B common stock are equivalent.
Diluted net income (loss) per share gives effect to all potentially dilutive securities. Potential dilutive securities consist of shares of common stock issuable upon the exercise of stock options, shares of common stock issuable upon the conversion of the outstanding shares of Preferred Stock, and shares of common stock issuable upon the vesting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock unit (“PSUs”).
For the three and six months ended June 30, 2022, and for the three months ended June 30, 2021, the net loss attributable to common stockholders is divided by the weighted-average number of shares of common stock outstanding during the period to calculate diluted earnings per share. The dilutive effect of common stock equivalents has been excluded from the calculation of diluted net loss per share as its effect would have been anti-dilutive due to the net loss incurred for the period.
For the six months ended June 30, 2021, dilutive net income per share was calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period, the dilutive impact of stock options and shares of common stock issuable upon the vesting of RSUs. The following table presents a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted net income (loss) per share:
Three months ended June 30,Six months ended June 30,
2022202120222021
Weighted-average shares outstanding:
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders—basic141,042,000 135,312,000 140,921,000 115,951,000 
Dilutive effect of share equivalents resulting from stock options   6,896,000 
Dilutive effect of share equivalents resulting from RSAs, RSUs, and PSUs   143,000 
Dilutive effect of shares issuable upon conversion of preferred stock   14,273,000 
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders—diluted141,042,000 135,312,000 140,921,000 137,263,000 
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The following potentially dilutive common stock equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the three and six months ended June 30, 2022 and 2021:
Three months ended June 30,Six months ended June 30,
2022202120222021
Stock options outstanding7,089,833 6,998,703 7,089,833 1,978 
Unvested RSAs, RSUs, and PSUs1,444,694 144,791 366,961 101,269 
8,534,527 7,143,494 7,456,794 103,247 

8.    Acquisitions, Acquired Intangible Assets, and Goodwill
Acquisitions
Backlinko
On January 13, 2022, the Company completed an asset purchase agreement with Backlinko, LLC (“Backlinko”), acquiring certain of Backlinko’s assets for cash consideration of $4,000. The purpose of this asset acquisition was to acquire valuable content and to access an existing revenue stream in Backlinko’s SEO courses.
The Company accounted for this transaction as an asset acquisition and allocated the cost of the asset acquisition to the individual assets acquired. The Company allocated $3,915 to the acquired intangible assets and the remaining cost of the acquisition was allocated to the other assets acquired, which were not material. The identifiable intangible assets consisted of trade names and intellectual property, which the Company amortizes over the assets useful lives using a straight-line amortization method. The Company assigned useful lives to the acquired trade name and content of five years and four years, respectively.
Kompyte
On March 14, 2022, the Company completed a purchase agreement with Intellikom, Inc., which does business under the name Kompyte (“Kompyte”) to acquire 100% of Kompyte’s assets for cash consideration of $10,000. The purpose of the acquisition of Kompyte was to acquire Kompyte’s assets, including its competitive intelligence automation platform. Aggregate acquisition-related costs associated with this business combination were not material for the six months ended June 30, 2022, and were included in general and administrative expenses in the consolidated statement of operations and comprehensive loss.
Upon the completion of the acquisition, Kompyte became a wholly owned subsidiary of the Company. The results of operations of Kompyte have been included in the Company’s consolidated financial statements from the date of acquisition.
The Company has accounted for this transaction as a business combination under the acquisition method. The total purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The Company recorded the excess of the purchase price over those fair values as goodwill. The following table presents the purchase price
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allocation recorded in the Company’s consolidated balance sheet as of the acquisition date, which was final as of June 30, 2022:
Purchase Price
Assets acquiredAllocation
Fair value of tangible assets:
Other assets$328 
Goodwill