You should read the following discussion together with the consolidated financial statements and related notes included elsewhere in this Annual Report. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, planned investments in our expansion into additional geographies, research and development, sales and marketing and general and administrative functions as well as other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Item 3.D entitled “Risk factors” and “Special note regarding forward-looking statements” and should be read in conjunction with our consolidated financial statements and related notes in “Item 18. Financial Statements”, included elsewhere in this Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The following section generally discusses our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Item 5. “Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the year ended December 31, 2024. 83 Overview Similarweb is a leading provider of digital data and analytics that power critical business decisions. We uncover what is happening online and seek to provide businesses with the most comprehensive, actionable and trusted digital data that can be consumed both directly by human decision-makers or by advanced analytical and artificial intelligence systems to build strategy, optimize customer acquisition and enhance monetization. While we are well known for our productized software solutions, as well as for our application programming interface (API), our model context protocol (MCP) and our freemium offerings estimating website and app usage, at our core we are a data business. Similarweb Digital Data is our estimate of all the actions and transactions in the digital world across websites and apps worldwide structured and normalized to support a broad range of downstream use cases, including large-scale analytics, automation and machine learning model development. We deliver our Digital Data in three distinct and impactful ways: (1) Our robust software platform with products including Similarweb Web Intelligence, Similarweb App Intelligence, Similarweb Retail Intelligence, Similarweb Sales Intelligence and Similarweb Stock Intelligence, empowers business teams and leaders to drive better strategic and operational decisions to grow and win their markets, while also serving as a validation and exploration layer for customers developing data-driven and AI-enabled solutions. (2) We enable customers to seamlessly integrate our Digital Data through APIs and MCPs into enterprise workflows, processes and systems to facilitate data powered decisions at scale, including ingestion into machine learning platforms, data warehouses and model orchestration frameworks. (3) As the demand for differentiated digital data increases, more and more of our customers are amplifying the value of their own offerings by embedding our data into their products and services. Businesses utilize our productized SaaS solutions to enhance the capabilities of their professionals at all levels of the organization- from business leaders, strategy teams, analysts, marketers, and category managers to salespeople - to quickly and efficiently discover their best growth opportunities, identify potential competitive threats and make critical decisions to acquire customers and grow revenue. Our Data as a Service (DaaS) solution provides strategic accounts, enterprises and SMBs with data feed APIs and exports, allowing them to integrate Similarweb Digital Data into their own dashboards and internal applications. We also provide advisory services, typically to businesses at the enterprise and strategic account level who require assistance with business challenges for which we have not yet productized a solution or who need extensively customized data and analytics to accomplish their objectives using Similarweb Digital Data. We provide bespoke data integrations and non-processed data feeds to customers who have their own teams of data scientists and their own data integration and analytics infrastructure. Integrations are useful for clients who want to combine our data with their own business intelligence systems. For clients who require customized and streamlined data delivery at scale, we provide bespoke datasets that enhance their data models. We sell subscriptions to these SaaS solutions with pricing tiers based on feature set, geographic coverage and the number of users who have access to them. Our subscription agreements typically last for a minimum term of one year and are renewable thereafter. We typically invoice customers in advance for annual increments. As of December 31, 2025, 60% of our Annual Recurring Revenue, or ARR, is generated from customer contracts with multi-year terms, compared to 49% as of December 31, 2024. We deploy a highly efficient approach to sales and marketing in order to grow our business. Our sales and marketing teams collaborate to create brand awareness and demand, build a robust sales pipeline and ensure customer success, driving revenue growth. We believe that our sales and marketing model provides us with a 84 competitive advantage because we attract and engage new businesses efficiently and at scale, and we have established a successful upsell motion to grow existing customer accounts. Our efficient sales organization includes a global sales force, technical, and data experts, and support staff, operating through both an inbound and outbound sales motion. The inbound sales motion accounts for approximately half of our new sales opportunities, where prospective customers display initial interest in our platform by visiting or contacting us through our website. These cost-effective leads are efficiently converted to pipeline opportunities for our sales teams to pursue. We complement this inbound motion with an outbound motion focused on developing sales opportunities with larger targeted accounts, where our sales representatives engage organizations based on a geographic coverage model. In general, large enterprises are covered by our field sales team, and smaller organizations by our inside sales team. We have a team of account managers focused on expanding and retaining our existing customer relationships by helping our customers optimize the value they derive through their usage of our platform and solutions. We continually engage with our customers through support services and proactive account management team check-ins, and often upsell customers to new solutions as they see the value in the platform and want to add additional feature functionality, geographic coverage, users and digital data and analytics solutions. To drive sales, we leverage free offerings that attract and engage prospects’ interest and feature our platform capabilities. Through our website, and through a popular browser extension which we own, we provide free access to a wide range of basic services that provide users with a subset of our robust insights and analytics as well as the opportunity to explore the value they could achieve from our paid offerings. Our free offerings deliver rankings and ratings of websites and apps as of a recent date and act as an entry point for many users who often upgrade to paid subscriptions. In 2025, We attract millions of users each month with these free offerings, resulting in hundreds of thousands of sales leads. While functional and relevant to a broad swath of businesses, our free offerings offer significantly less functionality than our paid solutions, which address specific use cases with robust insights and time series data, with granular details around web traffic, behavior and user journey that can drive business decisions and success. We believe this tiered approach creates champions within organizations who see the value of our solutions, build trust in and connection with our brand, and spread the word organically. We sell to companies across a wide range of industries such as technology, financial services, retail, household products, apparel and institutional investors. For the years ended December 31, 2024 and 2025, no single customer generated more than 10% of our revenue. As of December 31, 2025 we had 6,128 customers. Once a customer starts to realize the value of our Similarweb Digital Data by deploying one of our solutions in their business, they often significantly increase their usage. Our business has grown rapidly and is transitioning to value innovation, which is the simultaneous pursuit of growth and profitability. For the year ended December 31, 2024, we grew our revenue by 15% compared to the year ended December 31, 2023 and by 13% for the year ended December 31, 2025 compared to the year ended December 31, 2024. Additionally, we have $74.4 million and $78.8 million in cash, cash equivalents and restricted deposits as of December 31, 2024 and 2025, respectively. We generated revenue of $218.0 million, $249.9 million and $282.6 million in the years ended December 31, 2023, 2024 and 2025, respectively. We had operating cash flow of $(3.0) million, $30.2 million and $14.6 million and free cash flow of $(5.4) million, $27.4 million and $13.0 million in years ended December 31, 2023, 2024 and 2025, respectively. See the section titled “—Non-GAAP financial measures—Free cash flow” for additional information regarding free cash flow, a measure that is not calculated under GAAP. For the years ended December 31, 2023, 2024 and 2025, our net loss was $29.4 million, $11.5 million and $32.9 million, respectively. 85 Key Factors Affecting Our Performance Acquire new customers We believe there is substantial opportunity to continue to grow our customer base. We had 6,128 customers as of December 31, 2025, increasing from 5,534 as of December 31, 2024. We plan to continue our investment in sales and marketing in order to drive new customer acquisition. We intend to grow our base of both inside and field sales representatives, which we believe will drive both geographic and vertical expansion. We believe there is a significant opportunity to expand usage of our platform in the geographies in which we operate. We have made and plan to continue to make investments to expand our global operations across North America, Europe and Asia-Pacific, including in the United States, the United Kingdom, France, Germany, Japan, Australia, Singapore, Czech Republic, Chile, Switzerland and Sweden. We are also investing in self-serve offerings and distribution channels. Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our solutions, offerings of our competitors, and the effectiveness of our marketing efforts. We define a customer as a separate legal entity that has an active annual or multi-year subscription with us in the period indicated. A single organization with multiple divisions, segments or subsidiaries is generally counted as a single customer. Users of our free offerings and users who subscribe to our offerings for less than an annual subscription term are not included in our customer count. Expansion from existing customers Our large base of customers represents a significant opportunity for further sales expansion. Once a customer has purchased a subscription from us, we have historically experienced significant expansion with them over time as they add additional features, geographic coverage, users and digital intelligence solutions. We look at the increase in spend from our customers as an indication of the value we provide them over time. As an example, as of December 31, 2025, 454 of our customers generated ARR of $100,000 or more, up from 405 and 365 customers as of December 31, 2024 and 2023, respectively, most of whom began initially as smaller customers. The chart below illustrates the percentage of ARR by customer segments broken out by customers who generated ARR of $100,000 or more, between $25,000 and $100,000 and those who generated under $25,000 in ARR. As of December 31, 2025, customers who generated more than $100,000 in ARR represented 63% of our total ARR, as compared to 49% of our total ARR as of December 31, 2020. We define ARR as the annualized subscription revenue we would contractually expect to receive from customers assuming no increases or reductions in their subscriptions. A contract is included in ARR for a particular period if it is active at the end of the applicable period and is excluded if it is not active at the end of the applicable period. Multi-year contracts are annualized by dividing the total committed contract value by the number of months in the subscription term and then multiplying by 12. ARR excludes non-recurring revenues, non-subscription revenues, revenues that are one-time in nature or revenues from subscriptions to our offerings for a period that is less than an annual subscription term. ARR is an operational measure that management uses to evaluate the scale of our annual subscription contracts. While ARR is useful in assessing the scale of our contracted subscription business, it is not necessarily indicative of future GAAP revenue, which is subject to factors such as customer renewals, expansions, contractions, churn and upsell or cross-sell opportunities. Since ARR is not a defined measure under GAAP, investors should not consider ARR as a substitute for revenue recognized under GAAP or for other GAAP-related measures such as remaining performance obligations or deferred revenue. ARR differs from revenue recognized in accordance with GAAP because GAAP revenue is recognized as performance obligations are satisfied, includes non-recurring revenues, such as revenue that is one-time in nature, subscriptions with less than an annual term, non-subscription revenue and the effects of contract modifications. 86 A further indication of the propensity of our customer relationships to expand over time is our net dollar-based retention rate, or NRR, which compares our ARR from the same set of customers as of a certain point in time, relative to the same point in time in the previous year ago period. We calculate our NRR as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months, but excludes ARR from new customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at the point-in-time NRR. We then calculate the average of the trailing four quarter point-in-time NRR to arrive at the NRR. The charts below illustrate the changes to our NRR over the last nine fiscal quarters. 87 We intend to grow our base of account managers to continue to drive adoption and expansion of additional use cases within our customer base. Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our Similarweb Digital Data, solutions, competition, pricing and overall changes in our customers’ spending levels. 88 Continued innovation and technology leadership Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage. We believe that we have built highly differentiated data and solutions on a platform that will position us to further expand adoption. We intend to continue to invest in expanding our product and engineering staff to innovate and develop additional data and solutions that increase our capabilities and facilitate the extension of our platform to new use cases. Our future success is dependent on our ability to successfully develop, market and sell existing and new Similarweb Digital Data and solutions to both new and existing customers. Continued pursuit of growth and profitability We believe that we have a significant market opportunity ahead of us. We seek to grow revenue by offering a unique value proposition powered by Similarweb Digital Data and to pursue operating profit. We intend to continue to invest to support the organic growth and expansion of our business, to increase revenue, and to scale our operations to support our trajectory. Further, we expect to operate effectively and efficiently and to manage our sales and marketing, research and development, and general and administrative expenses with a view towards achieving profitability and sustained free cash flow generation. We expect that our cost of revenue and operating expenses will fluctuate over time. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive solution and market expansion. Components of Our Results of Operations Revenue We generate revenue primarily from SaaS subscriptions, which is comprised of subscription fees from customers utilizing our cloud-based digital intelligence solutions and other subscription-based solutions, such as API, all of which include routine customer support. Our subscription contracts typically have a term of at least 12 months and are generally non-cancellable. Customers enter into subscription contracts to gain access to one or more of our subscription-based solutions. Subscription revenue is recognized on a ratable basis over the contractual term of the subscription beginning on the date that our services are made available to the customer assuming that all other revenue recognition criteria have been met. Payments received in advance of services being rendered are recorded as deferred revenue in our consolidated balance sheets. We also generate revenue from data contracts, for which data is delivered to customers that do not receive ongoing access to a SaaS subscription platform. Data may be delivered either over time or at a point in time. Cost of revenue Cost of revenue primarily consists of costs related to supporting our cloud-based platform and solutions. These costs include personnel related costs, such as salaries, bonuses and benefits, and share-based compensation, which we collectively refer to as personnel related costs, for employees principally responsible for data acquisition, production engineering, advisory and technical customer support. In addition to these expenses, we incur third-party service provider costs such as payments to our third-party cloud infrastructure provider for hosting our platform, third-party data providers and amortization of internal use software and intangible assets. We allocate overhead costs such as rent, utilities, depreciation and supplies to all departments based on relative headcount. As such, general overhead expenses are reflected in the cost of revenue in addition to each operating expense category. In recent years, we have experienced significant cost of revenue leverage of our data acquisition costs, which has enabled gross margin expansion. We will continue to invest additional resources in our cloud infrastructure and our data acquisition and customer support organizations to expand the capabilities of our solutions. The level and timing of investment in these areas could affect our cost of revenue in the future. 89 Gross profit and gross margin Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by a variety of factors, including the average sales price of our solutions, volume growth and our ability to leverage our investment in data costs to more customers. Operating expenses Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. Personnel-related costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, share-based compensation and sales commissions. Operating expenses also include allocated overhead costs. Research and development Our research and development expenses consist primarily of personnel related costs for our engineering, data science, product and design teams. Additional expenses include consulting and professional fees for third-party development resources and third-party licenses for software development tools. We expect that we will continue to dedicate substantial resources to develop, improve and expand our Similarweb Digital Data and solutions. We anticipate that research and development expenses will increase in absolute dollars, but will decrease as a percentage of revenue over time, as we expect to realize operating leverage in our business. Sales and marketing Our sales and marketing expenses consist primarily of personnel related costs for our marketing, sales, account management. Additional expenses include marketing program costs. We expect we will continue to invest in sales and marketing activities to support our growth such as in our inside and field sales and account management teams. We anticipate that sales and marketing expenses will increase in absolute dollars, but will decrease as a percentage of revenue over time, as we expect to realize operating leverage in our business. General and administrative Our general and administrative expense consists primarily of personnel related costs for our executive, finance, human resources, information technology and legal functions. We anticipate general and administrative expenses as a percentage of revenue to decrease over time, as we expect to realize operating leverage in our business. Finance income (expense) Finance income (expense) consists of interest expense accrued on our indebtedness, net of interest income earned on our cash balances. Finance income (expense) also includes gains and losses incurred from non-designated hedge transactions as well as the impact of currency exchange rate fluctuations resulting from our global operations and the revaluation of our balance sheet assets and liabilities that are denominated in foreign currencies. We expect finance income (expense) to vary each reporting period depending on the amount of outstanding indebtedness, non-designated hedging transactions, currency exchange rate fluctuations and prevailing interest rates. We expect interest income will vary in each reporting period depending on our average cash balances during the period and applicable interest rates. 90 Provision for income taxes We are subject to taxes in Israel, the United States as well as other tax jurisdictions or countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax. We recognize deferred tax assets and liabilities to reflect the net tax effects of temporary differences between the carrying amounts of our assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes in each jurisdiction. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our net deferred tax assets. Realization of our net deferred tax assets depends upon future earnings, the timing and amount of which are uncertain and, as a result, and due to our history of cumulative losses, we maintain a full valuation allowance on our net deferred tax assets in Israel and certain other jurisdictions. Our effective tax rate is affected by tax rates in Israel, the United States and foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes in our valuation allowance. A.Operating Results The following tables summarize key components of our results of operations data and such data as a percentage of total revenue for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. Comparison of the years ended December 31, 2024 and 2025: Year Ended December 31, 2024 2025 (in thousands) Revenue $ 249,913 $ 282,600 Cost of revenue (1) 54,814 57,802 Gross profit 195,099 224,798 Operating expenses: Research and development (1) 55,596 72,602 Sales and marketing (1) 105,476 123,667 General and administrative (1) 43,691 52,093 Total operating expenses 204,763 248,362 Loss from operations (9,664) (23,564) Finance income (expenses), net 134 (5,210) Loss before income taxes (9,530) (28,774) Provision for income taxes 1,927 4,162 Net loss $ (11,457) $ (32,936) 91 (1) Includes share-based compensation expense as follows: Year Ended December 31, 2024 2025 (in thousands) Cost of revenue $ 812 $ 1,024 Research and development 5,511 6,805 Sales and marketing 4,273 5,031 General and administrative 7,019 $ 8,382 Total share-based compensation expense $ 17,615 $ 21,242 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the period indicated: Year Ended December 31, 2024 2025 Revenue 100.0 % 100.0 % Cost of revenue 21.9 20.5 Gross profit 78.1 79.5 Operating expenses: Research and development 22.2 25.7 Sales and marketing 42.2 43.8 General and administrative 17.5 18.4 Total operating expenses 81.9 87.9 Loss from operations (3.9) (8.3) Finance income (expenses), net 0.1 (1.8) Loss before income taxes (3.8) (10.2) Provision for income taxes 0.8 1.5 Net loss (4.6) % (11.7) % Revenue Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Revenue $ 249,913 $ 282,600 $ 32,687 13.1 % Total revenue increased by $32.7 million, or 13.1%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to an increase in our subscription revenue and one-time LLM data evaluation engagements. $33.8 million of that increase was generated from customers in the United States, which increased by 28.1% from $120.5 million in 2024 to $154.4 million in 2025, and an additional $1.4 million of the 92 increase in total revenue was generated from customers in Europe and the United Kingdom, which increased 2.1% from $69.1 million in 2024 to $70.6 million in 2025. We increased the number of paying customers by 10.7% from 5,534 as of December 31, 2024 to 6,128 as of December 31, 2025. The number of customers in the United States increased from 1,570 as of December 31, 2024 to 1,884 as of December 31, 2025. The number of customers in Europe and the United Kingdom increased from 1,607 as of December 31, 2024 to 1,813 as of December 31, 2025. Costs of revenue Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Cost of revenue $ 54,814 $ 57,802 $ 2,988 5.5 % Total cost of revenue increased by $3.0 million, or 5.5%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. Our cost of revenue increased primarily due to an increase of $2.5 million in compensation primarily related to increase in employee headcount, an increase of $3.0 million related to our third-party hosting services and tools, partially offset by a decrease of $0.7 million related to third-party data providers and a decrease of $2.0 million related to amortization of intangible assets acquired in business combinations. Our gross margin increased from 78.1% in the year ended December 31, 2024 to 79.5% in the year ended December 31, 2025. Operating expenses Research and development Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Research and development $ 55,596 $ 72,602 $ 17,006 30.6 % Research and development expenses increased by $17.0 million, or 30.6%, to $72.6 million for the year ended December 31, 2025, from $55.6 million in the year ended December 31, 2024. The increase was primarily due to an increase of $4.2 million driven by establishment and expansion of our Prague site, an increase of $6.9 million in compensation related to growth in employee headcount in all other locations, driven by both organic headcount growth and business combinations, an increase of $2.4 million in retention payments related to business combinations, an increase of $1.3 million in share-based compensation and a reduction of $1.1 million in capitalized internal-use software costs. 93 Sales and marketing Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Sales and marketing $ 105,476 $ 123,667 $ 18,191 17.2 % Sales and marketing expenses increased by $18.2 million, or 17.2%, to $123.7 million for the year ended December 31, 2025, from $105.5 million in the year ended December 31, 2024. The increase was primarily due to an increase of $9.4 million in compensation related to increase in employee headcount driven by both organic headcount growth and business combinations, an increase of $3.8 million in marketing expenditures primarily in paid acquisition campaigns, an increase of $1.1 million related to amortization of intangible assets acquired in business combinations, an increase of $1.1 million in retention payments related to business combinations, and an increase of $0.8 million in share-based compensation. General and administrative Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) General and administrative $ 43,691 $ 52,093 $ 8,402 19.2 % General and administrative expenses increased by $8.4 million, or 19.2%, to $52.1 million for the year ended December 31, 2025, from $43.7 million for the year ended December 31, 2024. The increase was primarily due to an increase of $2.5 million in compensation related to increase in employee headcount and business combinations, an increase of $ $2.6 million in retention payments related to business combinations, an increase of $1.4 million in share-based compensation, and an increase of $ $0.8 million in tools and subscriptions. Finance expenses, net Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Finance income (expenses), net $ 134 $ (5,210) $ (5,344) (3988.1) % Finance income (expenses), net decreased by $5.3 million, or 3988.1%, to $(5.2) million of finance expenses for the year ended December 31, 2025, from $0.1 million of finance income for the year ended December 31, 2024. The change was primarily due to a $5.7 million impact from foreign exchange due to the depreciation of the U.S. dollar against the New Israeli Shekel and other currencies in 2025. 94 Provision for income taxes Year Ended December 31, Period-over-Period Change 2024 2025 $ Change % Change (in thousands) Provision for income taxes $ 1,927 $ 4,162 $ 2,235 116.0 % Provision for income taxes increased to $4.2 million for the year ended December 31, 2025 from $1.9 million for the year ended December 31, 2024, reflecting an effective tax rate of (14)% and (20)% for each of the years, respectively. Non-GAAP financial measures In addition to our results determined in accordance with GAAP, we believe that non-GAAP operating loss and free cash flow, which are non-GAAP financial measures, are useful in evaluating the performance of our business. Non-GAAP operating income Non-GAAP operating income is a supplemental measure of operating performance that is not prepared in accordance with GAAP and that does not represent, and should not be considered as, an alternative to operating loss, as determined in accordance with GAAP. We define non-GAAP operating income as operating income, adjusted for share-based compensation, retention payments related to business combinations, amortization of intangible assets and certain other non-recurring items. We use non-GAAP operating income to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short-term and long-term operating plans. We believe that non-GAAP operating income facilitates comparison of our operating performance on a consistent basis between periods, and when viewed in combination with our results prepared in accordance with GAAP, helps provide a broader picture of factors and trends affecting our results of operations. Non-GAAP operating income has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Our definition of Non-GAAP operating income may differ from the definitions used by other companies and therefore comparability may be limited. Because of these limitations, non-GAAP operating income should not be considered as a replacement for operating loss, as determined by GAAP, or as a measure of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes. 95 A reconciliation of non-GAAP operating income to GAAP operating loss, the most directly comparable GAAP measure, is as follows: Year Ended December 31, 2024 2025 (in thousands) Loss from operations $ (9,664) $ (23,564) Add: Share-based compensation expenses 17,615 21,242 Retention payments related to business combinations 1,886 7,943 Amortization of intangible assets related to business combinations 4,862 3,497 Secondary offering costs 350 — Non-GAAP operating income $ 15,049 $ 9,118 Free cash flow Free cash flow represents net cash used in or provided by operating activities, reduced by capital expenditures and capitalized software development costs, if any. Free cash flow is a measure used by management to understand and evaluate our liquidity and to generate future operating plans. The reduction of capital expenditures and amounts capitalized for software development. facilitates comparisons of our liquidity on a period-to-period basis and includes items that we consider to be indicative of our liquidity on an operating basis. We believe that free cash flow is a measure of liquidity that provides useful information to our management, investors and others in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business in the same manner as our management and board of directors. Nevertheless, our use of free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Further, our definition of free cash flow may differ from the definitions used by other companies and therefore comparability may be limited. You should consider free cash flow alongside our other GAAP-based financial performance measures, such as net cash used in or provided by operating activities, and our other GAAP financial results. The following table presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable financial measure calculated in accordance with GAAP: Year ended December 31, 2024 2025 (in thousands) Net cash provided by operating activities $ 30,174 $ 14,644 Purchases of property and equipment, net (1,430) (1,490) Capitalized internal use software costs (1,304) (163) Free cash flow 27,440 12,991 96 B.Liquidity and Capital Resources Overview Since our inception, we have financed our operations primarily through cash payments from our customers, equity issuances and borrowings under our credit facilities. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes. Our principal sources of liquidity are our cash and borrowings available under the credit facility with Silicon Valley Bank (“SVB”), a division of First Citizens Bank since March 2023, referred to herein as the “SVB LSA” or the “SVB Credit Facility”. We believe that our net cash provided by operating activities, cash on hand and availability under our SVB Credit Facility (as assumed by the Bridge Bank, as defined and discussed below) will be adequate to meet our operating, investing and financing needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth, the timing and extent of investments to support such growth, the expansion of sales and marketing activities, increases in general and administrative costs and many other factors as described under “Risk factors” and “—Key factors affecting our performance.” Credit facilities Credit facility with Silicon Valley Bank On December 30, 2020, we entered into a Loan and Security Agreement, or the SVB LSA, with Silicon Valley Bank, or SVB, which was amended by a Loan Modification Agreement, dated as of November 13, 2022 and further amended by the Second Amendment to the Loan and Security Agreement, dated as of August 6, 2024. The credit facility has an available borrowing capacity of (a) the lesser of (i) $75 million or (ii) the amount available under the borrowing base, minus (b) the outstanding principal balance of any advances made under the credit facility. The borrowing base is the product of (a) monthly recurring revenue, as defined in the LSA, multiplied by (b) an advance rate as set forth in the LSA. Under the SVB LSA, which is currently in effect through December 30, 2026, we paid an initial administrative fee of $262,500 and a one-year anniversary fee of $262,500, and we pay an unused facility fee in an amount equal to 0.3% per annum of the average unused portion of the credit facility (if applicable). However, there are no additional fees or penalties payable by us in the event we elect to repay the principal amount outstanding under the SVB LSA prior to its maturity date. Subject to certain exceptions, borrowings under the SVB LSA accrue interest at a rate equal to the greater of (i) a floating per annum rate equal to 0.25% above the prime rate or (ii) a fixed per annum rate equal to 3.50%, also paid on a monthly basis. The SVB LSA is subject to certain financial covenants, including that we maintain liquidity of at least $35 million. Liquidity for this purpose is the sum of (i) the aggregate amount of our unrestricted and unencumbered cash and cash equivalents and (b) the Availability Amount (as such term is defined in the SVB LSA). The SVB LSA is secured by substantially all of our assets. It also contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. As of December 31, 2025, we were in compliance with all of our financial covenants under the SVB LSA. As of December 31, 2025, we had no outstanding balance under the SVB LSA. 97 Cash flows The following table summarizes our cash flows for the periods presented: Year ended December 31, 2024 2025 Net cash provided by operating activities $ 30,174 $ 14,644 Net cash used in investing activities (18,700) (13,228) Net cash provided by (used in) financing activities (18,837) 6,911 Effect of exchange rates on cash and cash equivalents (500) 225 Net decrease (increase) in cash and cash equivalents (7,863) 8,552 Cash and cash equivalents at beginning of period 71,732 63,869 Cash and cash equivalents at end of period $ 63,869 $ 72,421 Operating activities Our largest source of operating cash is cash collected from sales of subscriptions to our customers. Our primary uses of cash from operating activities are for personnel expenses, marketing expenses, hosting expenses, data acquisition expenses and allocated overhead expenses. In periods in which we generated negative operating cash flows, we have supplemented working capital requirements through net proceeds from the sale of equity securities and borrowings under our credit facilities. Net cash provided by operating activities was $14.6 million for the year ended December 31, 2025, as compared to net cash provided by operating activities of $30.2 million for the year ended December 31, 2024, primarily due to a $21.5 million increase in incremental net loss, offset by the aggregate changes in the balance sheet, particularly in other payables and accrued expenses. Investing activities Net cash used in investing activities was $(13.2) million during the year ended December 31, 2025, as compared to $(18.7) million during the year ended December 31, 2024, primarily due to a decrease of $4.2 million in restricted deposits in 2025. Financing activities Net cash provided by financing activities was to $6.9 million for the year ended December 31, 2025, as compared to net cash used in financing activities of $(18.8) million for the year ended December 31, 2024, primarily due to the repayment of $25.0 million from our credit facility in 2024. 98 Contractual obligations and commitments The following table summarizes our contractual obligations as of December 31, 2025: Payments Due by Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years (in thousands) Purchase obligations 26,591 19,203 7,388 — — Operating lease commitments 48,258 10,212 15,921 13,826 8,299 Total 74,849 29,415 23,309 13,826 8,299 The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty. Purchase obligations We contract with various service providers for systems and services to perform certain day-to-day activities of our business. The use of these service providers allows us to provide consistent services and products across our platform and meet other business objectives. Our contracts with these service providers may be structured in a manner where the services are provided on a continuous basis for a set fee. Other engagements are established with a defined period for the contract. Operating leases We lease offices in various locations in which we conduct our business. These lease agreements are typically for a term of one year or greater. The aggregate future financial obligations under these lease agreements are reflected above as operating lease commitments. Our current principal offices consist of a facility of 141,000 square feet located in Givatayim, Israel. C.Research and Development, Patents and Licenses Our research and development expenses consist primarily of personnel related costs for our engineering, data science, product and design teams. Additional expenses include consulting and professional fees for third-party development resources and third-party licenses for software development tools. We expect our research and development expenses to increase in absolute dollars for the foreseeable future as we continue to dedicate substantial resources to develop, improve and expand our Similarweb Digital Data and solutions. We also anticipate that research and development expenses will decrease as a percentage of revenue over time, as we expect to realize operating leverage in our business. Since our founding, we have invested significantly in building a best-in-class tech platform. Leveraging a team of PhDs, data scientists and big data engineers, we have built a proprietary foundation upon which our platform operates. 99 Our technology platform is predicated on: •Innovation. We foster an innovative, fast-paced engineering culture, since our founding over 10 years ago. We have consistently developed and delivered cutting-edge capabilities for our users. Our team of PhDs, data scientists and big data engineers first focused on disrupting competitive intelligence across desktop, then added cross-platform capabilities across mobile web and apps, and has since evolved the platform so it integrates into user workflows, with use case-specific products. We release products quickly and constantly refine and improve upon our leading platform. •Scalability. Our data is load-balanced across two Amazon Web Services regions, and each instance is able to auto-scale to accommodate the full usage of our platform at any time. This processing power allows us to analyze the billions of digital signals that come through our platform daily and analyze them to provide real-time insights to our users. •Reliability. We fully synchronize data across all regions and employ automatic failover and recovery to ensure that users do not lose their data. •Security. Our Chief Information Security Officer, or CISO, oversees the information security team and drives the implementation of a comprehensive cybersecurity strategy and advanced technologies to safeguard the organization’s operations and digital assets. All data, whether at rest or in transit, is encrypted utilizing commercial-grade tools and industry-standard algorithms. Similarweb employs the Cloud Security Posture Management platform to continuously monitor cloud assets, identify potential vulnerabilities, and deploy emergency patches as required. Furthermore, the platform performs ongoing risk assessments across cloud environments and external-facing assets to ensure robust security measures are maintained. In addition, Similarweb’s API integrates seamlessly and securely with customers' existing workflows, enabling the generation of customized outputs and analyses leveraging our data. D.Trend Information Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2025 to December 31, 2025 that are reasonably likely to have a material adverse effect on our revenue, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E.Critical Accounting Estimates We have provided a summary of our significant accounting policies, estimates and judgments in Note 2 to our consolidated financial statements, which are included elsewhere in this Annual Report. The following critical accounting discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations and cash flows to those of other companies. Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. 100 Revenue recognition We generate revenue primarily from SaaS subscriptions, which is comprised of subscription fees from customers utilizing our cloud based digital intelligence solutions and other subscription based solutions, such as API access, all of which include routine customer support. We sell our products directly to our customers utilizing our website, direct sales force and distribution partners. We also generate revenue from data contracts, for which data is delivered to customers that do not receive ongoing access to a SaaS subscription platform. Data may be delivered either over time or at a point in time. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, or ASC 606, and determine revenue recognition through the following steps: •Identification of the contract, or contracts, with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, the performance obligations are satisfied. Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer, assuming that all other revenue recognition criteria have been met. Payments received in advance of services being rendered are recorded as deferred revenue in our consolidated balance sheets. Revenue for data contracts is recognized upon the delivery of data to the customer, which may be either over time or at a point in time. We typically invoice customers in advance for annual increments. Unbilled accounts receivable represents revenue recognized on contracts for which billings have not yet been presented to customers because the amounts were earned but not contractually billable as of the balance sheet date. The unbilled accounts receivable balance is due within one year. Deferred contract costs We account for costs capitalized to obtain revenue contracts in accordance with ASC Topic 340-40, Other assets and deferred costs, or ASC 340. Sales commissions earned by our sales force and associated payroll taxes are considered incremental and recoverable costs of acquiring customer contracts. For initial contracts acquired with new customers and additional revenue acquired with existing contracts, these costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which is estimated to be three years. We determined the period of benefit by taking into consideration the length of its customer contracts and its technology lifecycle. For renewal of existing contracts, these costs are capitalized and amortized on a straight-line basis over the term of the renewal, since the sales commissions for renewals are not considered commensurate with the sales commissions for initial contracts acquired, given a substantive difference in the commission rates in proportion to their respective contract values. Amounts expected to be recognized in excess of one year of the balance sheet date are recorded as deferred contract costs, non-current, in the consolidated balance sheets. Deferred contract costs are periodically analyzed for impairment. Amortization expense is recorded in sales and marketing expense within the accompanying consolidated statement of operations. We have elected to apply the practical expedient allowed by ASC 606 according to which incremental costs of obtaining a contract are recognized as an expense when incurred if the amortization period of the asset is one year or less. 101 Internal use software development costs We capitalize certain development costs incurred in connection with the development of our platform and software used in operations. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. Maintenance and training costs are expensed as incurred. Capitalized internal-use software is amortized on a straight-line basis over its estimated useful life. The weighted-average useful life of capitalized internal-use software is 3 years as of December 31, 2025. We evaluate the useful lives of these assets and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that we change the manner in which we develop and test new features and functionalities related to our platform, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of internal-use software development costs we capitalize and amortize could change in future periods. We did not recognize any impairments to internal-use software during the years ended December 31, 2023, 2024 and 2025. Goodwill and acquired intangible assets Goodwill represents the excess purchase consideration of an acquired business over the fair value of the net tangible and identifiable intangible assets. Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant decrease in expected cash flows. In accordance with ASC Topic 350, Intangible—Goodwill and other, goodwill is not amortized, but rather is subject to an impairment test. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. We did not recognize any impairment charges to goodwill during the years ended December 31, 2023, 2024 and 2025. Business Combinations When we acquire a business, the purchase consideration is allocated to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated respective fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. This requires us to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. During the measurement period, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments will be recorded to other income, net in the consolidated statement of operations. 102 Recent accounting pronouncements Please see Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report for information regarding recent accounting pronouncements. Quantitative and qualitative disclosures about market risk We are exposed to market risk from changes in exchange rates, interest rates and inflation. All of these market risks arise in the ordinary course of business, as we do not engage in speculative trading activities. The following analysis provides additional information regarding these risks. Foreign currency and exchange risk Our functional currency is the U.S. dollar. Our sales are mainly denominated in U.S. dollars, British Pounds and Euros. A significant portion of our operating costs are in Israel, consisting principally of salaries and related personnel expenses, and facility expenses, which are denominated in NIS. This foreign currency exposure gives rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS and other currencies. Furthermore, we anticipate that a significant portion of our expenses will continue to be denominated in NIS. We hedge against currency risk through the use of forward currency contracts and cylinder contracts. See “Risk factors—Risks relating to our business and industry— Our international sales and operations subject us to additional risks and costs, including the ability to engage with customers in new geographies, exposure to foreign currency exchange rate fluctuations, that can adversely affect our business, financial condition, revenue, results of operations or cash flows.” A hypothetical 10% change in foreign currency exchange rates applicable to our business would have an impact on our net loss of $9.8 million and $11.2 million, for the years ended December 31, 2024 and 2025, respectively. Interest rate risk As of December 31, 2024 and 2025, we had cash and cash equivalents and restricted deposits of $74.4 million and $78.8 million, respectively. Cash and cash equivalents consist of cash in banks, bank deposits, and money market funds. Our cash, cash equivalents are held for working capital purposes. Such interest-earning instruments carry a degree of interest rate risk. Additionally, certain of these cash investments are maintained at balances beyond Federal Deposit Insurance Corporation, or FDIC, coverage limits or are not insured by the FDIC. Accordingly, there may be a risk that we will not recover the full principal of our cash investments. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs and the fiduciary control of cash. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these instruments, a hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical consolidated financial statements. We had no outstanding borrowings under the SVB LSA as of December 31, 2025. The SVB LSA carried a variable interest equal to the greater of (i) a floating per annum rate equal to 0.25% above the prime rate set forth in the SVB LSA or (ii) a fixed per annum rate equal to 3.50%. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements. 103 Impact of inflation While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation has had a material effect on our historical results of operations and financial condition. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, and our inability or failure to do so could adversely affect our business, financial condition and results of operations.