Similarweb (SMWB) Initiating Coverage

Similarweb is a high-quality asset trading at “non-SaaS” multiples

This post was published prior to this platform’s re-branding as Sophon Microcap Atlas (with an exclusive focus on sub-$500M market cap companies). Coverage of SMWB is moving to our sister publication - AlphaArk

Disclaimer: This is not investment advice

Investment Thesis

Similarweb (SMWB) is a misunderstood asset in the early stages of a reacceleration. With high recurring revenue, expanding multi-year contracts, and a path to 25% EBIT margins, we believe the stock is fundamentally mispriced as the market extrapolates a trend of decelerating growth.

SMWB is functionally a software business - specifically, a high-GM Data-as-a-Service (DaaS) platform delivering real-time web and app traffic intelligence to enterprises.

While SMWB is not GAAP-profitable yet, the company is operating near breakeven with mid-teens top-line growth. This profile would typically command a 5–7x EV/Sales multiple in today’s market. Instead, SMWB trades at ~2.5x NTM revenue, a ~82% discount to its post-IPO high of 14.2x and well below peers.

The dislocation in SMWB’s valuation reflects backwards-looking and bearish sentiment (revenue growth has decelerated substantially, from ~76% in Q3 FY21 to ~15% in Q1 FY25). YoY growth has however stabilized and we believe SMWB’s current valuation fails to capture an imminent inflection in topline growth and profitability.