Similarweb (SWMB) - Keeping A Pulse on the Internet

A misunderstood SaaS name poised for reacceleration

Disclaimer: Not financial advice

Similarweb (SMWB) is a misunderstood asset in the early stages of a reacceleration. With high recurring revenue, a rising share of multi-year contracts, and a pathway to 25% EBIT margins, we believe the stock is materially undervalued as the market extrapolates a past trend of decelerating growth.

SMWB is a high-GM Data-as-a-Service (DaaS) platform delivering real-time web and app traffic intelligence to enterprises. While not GAAP-profitable yet, the company is operating near breakeven with high-teens top-line growth—a profile that would typically command a 5–7x EV/Sales multiple in today’s market. Instead, SMWB trades at roughly 2.5x NTM revenue, an ~82% discount to its post-IPO high of 14.2x and well below peers.

The valuation gap reflects backward-looking and bearish sentiment. Revenue growth has decelerated from ~76% in Q3 FY21 to ~17% in Q2 FY25, but YoY growth has stabilized. Management has clearly articulated its long-term operating model: 85% gross margins and 25% non-GAAP EBIT margins, achievable at $400–450M in sales. With LTM revenue of $268M, SMWB is at the cusp of scaling, but the market seems overly focused on historical deceleration rather than the inflection underway in revenue, margins, and profitability.

We will be providing a financial model to our subscribers in a subsequent post, but we include valuation math at the end of this post to validate that Similarweb today represents a potential 3.0x+ bagger (without giving credit for increasing cash balance due to positive FCF generation)