And there’s three fundamental things that we’re focused on. One is there’s systems and infrastructure that we need. So there’s a demand generation engine, a CRM engine that manages the lead to opportunity process and then an ERP system that manage quote-to-cash. So we’ve been investing that and preparing for these types of transactions. From a human resources perspective, we’re investing in a deal desk to help facilitate the transactions and the negotiations with procurements. And of course scaling up the enterprise sellers that have that skill set and experience to be able to develop relationships and strong partnerships with companies to be able to evolve from just a transaction to a value-based sale that will allow us to be successful. So we’re making those investments.
We’re not expecting that this will be disruptive because the SMB dynamics have been things, efficiencies that have been building in the business over time. And we’re able to see the impact and then adjust the investments accordingly. And for enterprise, it’s new for us. So while we do have more than 5,000 enterprise accounts, this upmarket selling motion and the enterprise SEO product is new. And we’re taking into account the risks and the opportunity and setting expectations accordingly.
Surinder Thind: Thank you.
Operator: Our next question today comes from Scott Ader from KeyBanc. Your line is now open. Please proceed.
Jackson Ader: Hi, guys. It’s Jackson Ader from KeyBanc Capital Markets. Hope you’re doing well. So first question is, Brian, I know you guys have talked about the balance of growth and profit, but just given the results of late have shown more upside kind of being heavily skewed toward margin. Is there — could you in fact deliver a little bit faster ARR growth if you were to make some additional investments? And I’m curious if the answer is yes, like where would you make those investments?
Brian Mulroy: Yes, this is a really, really good question. It’s something that we think about every single day. We’re always challenging ourselves and the leaders throughout the organization to make sure they’re focusing on investments that will drive long-term growth and value for us and our shareholders. And our goal here, we’ve talked about this. Our goal at Semrush is to achieve an efficient frontier. So we want to be investing in the business so long as that investment drives incremental results, but we don’t want to be overspending and getting past that efficient frontier where the incremental return doesn’t justify the investment. For Semrush in 2024, we are investing quite a bit. So we’re investing on this enterprise upmarket play as evidenced by the most recent general availability of enterprise SEO.
We’ve been doing a lot of product investments in AI. Eugene talked about one new product, Content Shake AI, and a number of others earlier this morning that we’ve monetized in a few different ways. And we’re constantly focused on what that next close adjacency is for our customers that will allow us to expand our platform beyond our core competency. So we’re continuing to invest. We do believe in 2024 and a foreseeable future that there is a lot of opportunity. We have a strong foundation with 112,000 paying customers, over a million for users, and we have quite a bit of cash on the balance sheet to put to work, and we’ll be doing that over time.
Jackson Ader: Okay. All right. Great. And then just a quick follow-up, kind of a practical question. Those 5,000 enterprise customers that you talked about, what is — can we get a sense for like for what their current ARPU looks like? Do they have — do they have the propensity or the willingness, I guess, to spend 10x to 15x more than your typical customer?
Oleg Shchegolev: Yes. Definitely, they already pay more. And their expansion, their LTV is much higher than average as well. So they’re not just buying more expensive subscriptions. They are more active, they are more likely to have multiple people using the product. So they have all the signs that correlate with — willingness to pay.
Jackson Ader: Got it. All right, great. Thank you.
Operator: Our next question comes from Adam Hotchkiss from Goldman Sachs. Your line is now open. Please proceed.
Adam Hotchkiss: Great. Thanks for taking the questions. I guess to start, I just wanted to touch a little bit more on the enterprise product. When we look at the early access page, we see stats like 10x faster SEO productivity and generating a 360-degree view of customer data, which seems like a pretty ambitious message to send a prospective enterprise is. So could you just take a step back and give us a sense for what enterprise customers are asking for that the tiered offerings aren’t giving them today? And then when you think about how much of that is just a function of customers wanting to run more volume through your system versus actively looking to you to co-innovate on incremental products? How would you describe the balance of that customer relationship?
Eugene Levin: Great question. So yes, I mean, of course, to sell, you have to sell. So of course, 10x is definitely achievable, but people need to put work and fine-tune the product to their needs, which we help them with. But — to give you just a couple of examples of why I think 10x is maybe even conservative. We have, for example, customers who use our internal linking module. And when you do internal linking for a small website, it’s not hard, you can do it using white board, you just put 20 pages and figure out how to connect them. Now our enterprise customers, they have millions of pages. So there is no whiteboard in the world that is big enough to put all those pages and figure out how to connect them. So that’s why we crawl their websites.
We understand what other websites linked to them, so we can figure out external linked profile, internal linked profile, the map of the website and figure out what pages should be connected to other pages and sort of share the authority of the page with other pages using AI and machine learning. And if you think about the incremental value, it’s not just being 10x more productive, it’s actually finally being able to do the work that you would not be able to do without this technology. And the difference between tiered offerings like that we sell to SMB is an enterprise that SMBs don’t have websites with millions of pages, so they don’t need those features, while large enterprises have millions of patients so they need additional products. And that technically a philosophy that we have with enterprise products, things that we build in enterprise platforms, they are purely incremental.
They are not things that are just fancier versions of things you can buy with our SMB offering. They are incremental. They use the same technology and data, but they solve totally different scope of problems that only big companies have.
