SEMrush S-1
sec.gov
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how unusual is it for companies to ipo without profit or even a clear path there?
Spending money isn't rocket science. Spending it wisely may be.
The results would be crazy otherwise. Tech makes near 100% margins, grocery about 2%. But both industries would pay the same level of tax on 100% of revenue if it wasn’t profit based.
If you instead invest that $100k into growth (eg. ads, sales people, marketers, engineers), you pay $0 of taxes, and can ideally generate an additional $200-300k revenue next year because of the investment.
Would you rather have $79k now, or $200-300k next year?
If you always invest, you'll grow faster and never pay taxes. With this in mind, why would these companies want to be profitable?
The major assumption here is that you have a way to invest $x now into $x+ in the future. A lot of SaaS companies have this down to a science via metrics like CAC, payback period, etc.
> We do not know if we will be able to achieve or sustain profitability in the future.
This is a little different than Amazon running at a deficit to avoid taxes while they're consistently growing YoY.
Taken at face value, this is them admitting they haven't been profitable for years and don't know if they ever can be profitable.
> Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period. [1]
[1] https://www.sec.gov/Archives/edgar/data/1679788/000162828021...
You will also find "risks" such as "if we fail to add new customers, our business will fail."
It depends heavily on industry dynamics; in biotech it's not a problem since "product-market fit" is essentially predetermined and there are very few "customers", which are limited to private/public insurers representing patients and pharma companies looking to grow their stock value. In software there is a lot of capital sloshing around because the vast majority of it goes towards payroll which can be scaled up or down on a whim and many times the return on an investment depends not on dividends from profits but acquisitions by other companies looking to move their own stock price (the public version of an acquihire). There's the additional factor that many tech companies have network effects that form semi-monopolies which can be an order or two of magnitude more profitable than competitive industries.
You won't find the same level of unprofitable IPOs in resource extraction, for example, which is subject to the whims of governments, fluctuating prices, and requires massive up front investments. Most of the excess capital goes towards hedging the aforementioned risks so dividends from profit is how money makes its way back to investors. Unprofitable IPOs only really happens when some company signs a big deal for mineral/resource rights with a government and spins off a separate company to raise money to exploit that deal without diluting the main company. If the government is considered reliable to investors, its perfectly normal to throw money in.
I sometimes can't tell if this is just the bright spot right before total collapse, or if we've just entered a completely new business paradigm.
SemRush CEO said that Google would rather sponsor them than shut down.
That kind of analytics increases Google's sales, but Google cannot run such a product without conflicts of interest (providing one ad-buyers information on what doing their competitors).
How so?
Content Marketing companies and Content Farms use SEMRush to figure out which topics are covered by competition of their clients and which topics would attract visitors, and then pay pennies to a non-expert freelancer to produce a very shallow text with content probably copied from the same competitor, and littered with keywords recommended by SEMRush. Then, this text rises to the top of Google while non-SEO optimized quality content lingers in obscurity.
How Google doesn't go after those shady practices is beyond me. They're probably just afraid of killing a whole industry and having an antitrust target on their backs.
Google has gotten better at discerning between crap and quality content, but they still have a long way to go, and I'm unsure if it can be fully fixed the way search engines currently work.
Even their search results have gotten worse and worse.
SEMRush can tell you how many people search a variety of terms, and what websites they're visiting after those searches. You can then use this to change the language (key phrases and the like) on your website, and write content (blog posts or landing pages) that fits with existing search user preferences.
You can also pop a competitor, client, or supplier's website into SEMRush, and see how much they spend on ads, as well as how many people are finding their website via search. This can help you figure out what they're doing well, and where they do poorly. You might be able to rank for similar keywords, or go for keywords they aren't targeting.
It's useful for people doing SEO, not much else.
As for JPM and GSCO it's good business.
But don't worry, the media is working around the clock to convince the general public that owning a detached house, starting a family, eating meat and going on a vacation is evil, so we must welcome the declining affordability of these things and be grateful for a unique chance to put custom pronouns in our bio. /s
[0] https://tradingeconomics.com/united-states/money-supply-m0
We were also able to gain insights into competitors, what keywords they were targeting, where there were opportunities to hit keywords they were not, etc. It also gives estimates as to how much they are spending on advertising, which can be useful.
While I’m sure other factors have contributed, our sales of IT services has tripled and verticals we were receiving no leads in are getting a significant amount. All organically.
I will also say we were able to reduce our advertising spend from $1,500 to $0.00 per month.
I can’t recommend using SEMRush highly enough, especially for small businesses.
https://www.semrush.com/news/semrush-acquires-fast-growing-s...