Good day, ladies and gentlemen, and welcome to the Similarweb Q3 fiscal 2021 earnings conference call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Annie Rosenberg. Ma'am, the floor is yours.
Thank you, operator. During this call, we will make forward-looking statements related to our business, including statements related to the expected performance of our business, future financial results, strategy, the potential impact of the COVID-19 pandemic and associated global economic uncertainty, long-term growth and overall future prospects. These statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected or implied during the call.
Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please review our filings with the SEC, including our final prospectus and section entitled Risk Factors therein, filed with the SEC on May 12, 2021 for a discussion of the factors that could cause our results to differ.
Note that the forward-looking statements on this call are based on information available as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. As a reminder, certain financial measures we use in this presentation and on our call today are expressed on a non-GAAP basis. We use these non-GAAP financial measures internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes.
We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business results of operations or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental informational purposes only.
They should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at ir.similarweb.com. With that, I will turn the call over to Or Offer, CEO of Similarweb.
Thank you, Annie. Thank you all for joining us here today for our Q3 2021 earnings call. It's great to be here with all of you this morning. Our team is executing at a very high level, and we delivered a very strong result for the quarter. As a result, we are pleased to raise our revenue guidance for the full year of 2021 to $135 million, representing 45% growth year-over-year. Q3 was a strong quarter in which we achieved a number of new milestones. First and foremost, I'm proud and excited to report that in Q3 we saw our ARR exceeded $150 million just one year after we reached a $100 million ARR back in Q3 2020.
In the quarter, our GAAP revenue increased 46% year-over-year to $35.6 million. This result, exceeding our guidance. Q3 was a record quarter for us for both new customer acquisition and retention. Our customer base grew by 174 accounts, including the addition of amazing new logos across a diversity of industries, including Volkswagen Group, Toshiba Electronics, the London School of Economics, Royal Caribbean, Quest Diagnostics, and News Corp Australia. Our most significant growth come in our largest and most strategic customer segments, those companies who generate more than $100,000 in ARR. In Q3, we set a new record, adding 25 additional $100,000 customers, an increase of 48% year-over-year. This critical segment now represent over 50% of our total ARR for the first time.
We're seeing strong momentum as our expanding product portfolio is contributing to greater velocity in our land and expand direct sales motion. In Q3, we set a new record for NRR, improving from the previous high of 106% in the end of Q2 to 110% in Q3. In that critical customer segment of accounts with over $100,000 in ARR, we improved the NRR to 122%, up from 118% in Q2, also a new record high. Those improvements are driven by expanding usage of our products as well as by our customers who purchase more than one of our digital intelligence solutions.
As you know, we offer a complete suite of digital intelligence solutions, supporting a wide variety of use cases for digital marketing, sales, market research, e-commerce strategy, and alternative data for investors. Today, more than 2/3 of all of our customers are purchasing more than one solution. As an example of how our portfolio strategy is helping to drive deeper customer penetration, in Q3, we completed one of the largest deals in Similarweb history, a combination of upsell and cross-sell with a major multinational internet technology company. This was a seven-figure addition to our existing relationship, making this the second consecutive quarter we have been able to announce an ARR contract of this size.
This customer will be using four of our five digital intelligence solutions, representing a total of $6.5 million ARR contract. I want to focus for one minute on one of our five solutions, our new Shopper Intelligence offering. It is exciting and differentiated solution, and we are seeing some amazing early success with it. Shopper Intelligence delivers powerful insights into e-commerce activity, online marketplaces, enabling our customers to optimize their performance by revealing browsing and buying behaviors across online marketplaces.
Our insights help them to shape their online sales strategy by optimizing product portfolios, benchmarking the competition, and improving search and advertising performance. When we launched our digital marketing and digital research solution, it took us four years to get to our first seven-figure deal. With Shopper Intelligence, it took us just three months, and in Q3, we signed our first seven-figure ARR deal for the Shopper Intelligence. Here are a few examples of how our customers use Shopper Intelligence.
A large North American retailer reported that Shopper Intelligence helped them rename a product to better align with search behavior, resulting in 20% increase in sales. In Q3, we completed a two-year deal of $600,000 with this customer. Also in Q3, Shopper Intelligence helped us win with a consultative sale specialized in CPG. The deal expand our business with this customer by 6x to $360,000 ARR contract. This customer use Similarweb in a sales process to target and pitch new customer, as well as in advising its CPG customer to optimize their partnership with big box retailers. The customer has also agreed to be a referral partner for us and is now recommending Similarweb to his own direct customer.
One more solution that is growing nicely is our Sales Intelligence solution that helps B2B companies that sell to digital players like e-commerce, digital publisher, and digital advertisers. For example, Postscript is a leading SMS platform that enables e-commerce to communicate and engage with customers through text messages marketing. Postscript needed to improve and automate its account targeting and lead generation, which was labor and time intensive.
By implementing Similarweb Sales Intelligence solution, the company now have access to Similarweb e-commerce database in every region and automatically can segment and prioritize e-commerce lead and integrate them directly into Salesforce. The result was increase in target account pipeline of 27% within just the first month. In Q3, we continue to make smart product investment to enhance our solution portfolio and make it stickier.
Year-over-year, we've doubled the size of our engineering team, and in Q3 we delivered hundreds of improvements across our portfolio of digital intelligence solutions that include major functional advancements in our competitive insight, PO strategy and advertising intelligence features, to name a few. These improvements are driving more customer value and increasing our product stickiness, which reflecting in our consistently improving NRR numbers.
It also reflect in the way our customers use our solutions, incorporating them directly into their business workflows. Indirect channels, referrals, partners, affiliates, resellers, and OEM are a new area expansion for our business. For example, in September, we announced that we had been selected by Google to power its new Market Finder service. Market Finder helps small and medium-sized businesses target and grow into new global markets.
The service leverage Similarweb data to analyze the company export potential, delivering automated score along with customized and actionable recommendation to kickstart an international expansion plan. Google has told us that it was the unique accuracy of our digital data and insights in our data edge that sealed their decision to integrate with us. The win with Google reflects our growing relationship and also representative of the increased potential we see to build the OEM relationship, where partners include our data and insight in their own product offering.
We also saw channel growth outside of OEM. In fact, Q3 was the first quarter in which our reseller outside of Japan contributed more than $1 million in new business. Overall, we have a strong opportunity for our indirect business and we plan to increase our investment in this area. Our data and insight are recognized by our customers. Companies like Google and Postscript were referred today as well as by the industry more broadly. In fact, last month we were recognized by the Hedgeweek as the best alternative data provider in the 2021 Americas Award.
For over 10 years, we have been working on solving the incredibly challenging problem of measuring digital behavior. We invest significant resources in our data assets and acquisition, and we build an amazing R&D team of top-notch data scientists, engineers. Those investments and technologies are very difficult to replicate. We are proud of and confident in our data edge, and we differentiate ourselves on the reliability and comprehensiveness of our data. We are always looking to innovate and improve on our measurement and insight creation.
That's why today, as you may have seen, we announced the acquisition of Embee Mobile, a San Francisco-based mobile insights provider and market leader in mobile audience analytics, consumer panels and mobile sampling. We've been partner of Embee for over a year, so we know them very well, and we have been very impressed with the quality and depth of their data. Embee measurement approach is backed by a large-scale meter panel of highly engaged opt-in users.
This approach complements our existing measurement strategies and will enable us to enhance our mobile intelligence offering with more granular data and more powerful use case. Beyond this, we believe that Embee will position us to introduce exciting new market research capabilities in the future. We welcome the Embee team to the Similarweb family, and we are looking forward to working together with them to advance the state of the art in the digital measurement.
In general, we continue to benefit from the strong secular trend for digitization in our markets. Digital has become a preferred way to interact, transact, and deliver products and services. It is an important growth driver and strategic focus for most businesses today. Digital markets are highly competitive and almost every player is looking for advantage.
Our digital intelligence solution give our customers an edge, data and insight that enables them to understand their market better than their competitors, take action faster and win. The more the company shifts their business and become dependent on digital, the more mission-critical our offering become. Those trends are driving our strong growth and reinforcing our confidence in our opportunity, our strategy, and the investment we are making in our future. We have massive market opportunity, which we believe today is approximately $34 billion.
Our solution targets the most essential revenue-driven operations of our customers, sales, marketing, e-commerce, and C-suites. We sell across a wide variety of industries, ranging from financial services to retail, travel, CPGs to media and many more. To summarize, we continue to execute successfully on our strategy. Since our IPO, we reached the $150 million ARR milestone nearly three months ahead of our plan, and we have delivered two consistent quarters of strong revenue growth, both north of 45%. We have grown our indirect channels, and we expand our data edge both organically and through acquisition in Q2 and Q3.
We introduced a new product and feature that expand our team and proven our ability to monetize those with significant new and upsell deals. Our combination of strong revenue growth and outstanding growth margin put us among a small group of best-in-class SaaS companies in the world, and we are very proud of this achievement. Finally, our execution and growth would not be possible without every member of our global team, each of whom works hard to achieve those results. We build a top-class recruiting machine and drive and support our growth.
We are currently signing new hires at the rate of 50 new employees per month. I'm very happy that earlier this week, D&B recognized us as one of the top 30 tech companies to work in Israel. Overall, I'm pleased with the way our team continued to execute and our focus on helping our customers succeed and win in digital world. We are heading into Q4 with tremendous amount of energy and momentum, as you can see by raising our guidance. As I like to say, we are just getting started. With that, I will turn it over to Jason, our CFO, to review the financial. Jason?
Thanks, Or. Good morning, everyone. I will now walk you through our third quarter financial results before moving on to our guidance for the fourth quarter and full year 2021. As Or mentioned, in Q3, we delivered record revenue of $35.6 million, reflecting 46% year-over-year growth. This increase was driven both by an increase in our total number of customers, which rose by 27% to 3,242, as well as an increase of 16% in our average annual revenue per customer to $45,000. In our large customer segment, those who generate $100,000 or more in ARR, we increased the number of customers by 48% year-over-year to 245 customers.
Once again, most of these customers began initially as smaller customers and have expanded through our successful land and expand motion. Today, this customer segment represents 51% of our ARR, while no single customer accounts for more than 5% of our ARR or revenue. Dollar-based net retention rate, or NRR, was 110% overall and 122% for our $100,000 ARR customer segment, as compared to 101% and 114%, respectively, last year.
The success of our land and expand model continues to prove itself, as NRR not only improves substantially year-over-year, but also sequentially as compared to Q2. As you know, substantially all of our revenue is ARR, annual recurring revenue with minimum subscription terms of one year. We continue to increase the number of customers with multi-year subscription terms.
As of the end of Q3, 31% of our ARR is generated from customers with multi-year subscription commitment, compared to just 25% last year. This trend, along with our high NRR, reaffirms the value that our customers are generating from Similarweb and gives us visibility into the health of our ARR. In discussing the remainder of the income statement, please note that unless otherwise stated, all references to our expenses and operating results are on a non-GAAP basis and are reconciled to the GAAP result in the earnings press release that was issued just before this call. Our gross profit totaled $27.9 million in the quarter, representing a gross margin of 78.3% versus 78% in Q3 2020.
Operating expenses grew to $41.7 million in Q3, up from $21.4 million in Q3 2020, largely reflecting the investment in personnel across the business, from product and R&D, sales and marketing, and our G&A team to support our business growth. Employee headcount increased 69% to 864 employees as compared to 511 last year, which has fueled our top line growth.
The specific components of our operating expenses were research and development, $10.4 million versus $5.3 million in Q3 2020. This increase was driven primarily by growth of employee headcount, who are focused on our newer solutions such as Shopper Intelligence, Sales Intelligence, and Investor Intelligence. We're already realizing revenue growth from these new solutions and believe that these investments will prove to be meaningful growth drivers in the future.
Sales and marketing, $23.2 million versus $12.9 million in Q3 2020, driven principally by increased investment in sales and account management headcount and marketing activities. General and administrative was $8.1 million versus $3.2 million in Q3 2020, which includes $1.2 million of additional costs for the quarter that we now incur as a publicly traded company. As a result, our non-GAAP operating loss in the quarter totaled $13.9 million, better than our guidance, increasing from $2.4 million in Q3 2020. Free cash flow for the quarter was $-17.1 million compared to $-2.3 million in Q3 2020, primarily as a result of the investment in employee hiring to drive our growth.
These investments are already showing their value in the acceleration of ARR, customer growth, and higher NRR. Turning to the balance sheet, we ended Q3 with $159.1 million in cash and cash equivalents and no debt. We believe that our cash balance and our $75 million credit facility, totaling $234 million of available funds, provides us with more than enough liquidity to execute on our growth plans. Deferred revenue at the end of the quarter was $66.4 million compared to $43.6 million at the end of Q3 2020. Our remaining performance obligations, or RPO, totaled $114.1 million, up from $85.7 million as of December 31st, 2020. We expect to recognize approximately 87% of total RPO as revenue over the next twelve months.
We believe that the combination of deferred revenue and RPO are a good indicator of the health of our business. During Q3, we exceeded $150 million of ARR, continued to deliver strong and accelerating NRR and customer growth, both overall and from our $100,000 ARR customers. These trends and the continued momentum and demand in our business fuels our confidence to again raise revenue guidance for the year. For Q4 2021, we expect total revenue in the range of $37.5 million-$37.9 million. For the full year, we are raising guidance and expect total revenue in the range of $135 million-$135.4 million, representing 45% growth year-over-year at the midpoint of the range as compared to 32% growth last year.
non-GAAP operating loss for the fourth quarter is expected to be in the range of $18.8 million-$19.2 million and for the full year between $52.1 million and $52.5 million. This includes approximately $3 million of incremental operating costs related to the acquisition of Embee Mobile, which we expect to close this month. In summary, we have executed well since our IPO. Our business is tracking well across all of our major initiatives, and our financial performance and guidance indicates that we will end the year on a high note and head into 2022 with strong momentum. With that, Or and I are happy to take your questions. Operator?
Thank you. The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. If at any time your question has been answered, you can remove yourself from the queue by pressing one. Again, ladies and gentlemen, if you do have a question, please press star one on your telephone keypad at this time. Our first question comes from Bhavan Suri. Please state your question.
Thank you and congratulations. That was a great quarter, and certainly the net dollar retention rate just was phenomenal. I guess let's focus on that acceleration you're seeing with NRR hitting high water marks. I guess both Or, Jason, I'd love to understand what drove the customer expansion. Is it? Are you seeing customer budgets expand? Was it an operational go-to-market change to highlight? Or is it the new products that are just being adopted as those products get rolled out? Help me understand sort of what drove that acceleration in the quarter that we've seen now for a couple of quarters.
Hi, thank you, Or. I think there's many elements who contribute to the growth of the NRR we're seeing over the past quarters. I can assume that majority of the impact come from improvements that we're doing on the products, plus introducing new products to the customers and you know driving upsell and cross-sell, you know, and the customer just buying more of our product portfolios offerings.
Gotcha. Or, maybe a little more technical one here. So you mentioned that Embee collects data through panels. Can you talk a little bit just in more depth about the types of data that can be collected in the solution? How does that data fit in with your existing data modeling process?
Yeah. Embee is really expert in the metered panel world for the mobile and have a great data assets. Their data is a great enrichment for two areas. First, improving our mobile web to improve the estimation on the websites to have better mobile web estimation. The second part is improving our app offering. They also have a great app information like download and usage for that ecosystem. More than that, they have also very deep technology that can see more like ad exposure and etc around the mobile ecosystem. That it's something that is very unique.
Gotcha. It's helpful. Thanks, guys. Congrats on a really nice job there.
Thank you.
Our next question comes from Sterling Auty. Please state your question.
Yeah. Thanks. Hi, guys. Wondering in terms of the increased usage part of the NRR specifically, what programs or things are you doing differently now than maybe a year ago to help motivate that increased usage into your customers?
I don't think we did anything special in our go-to-market. I think it was mostly natural. It was not like anything like aggressive campaign from our side of things, just more improvement on our product, more listening to our customers, what they need, do the right improvement in the product and then introducing new exciting features and solutions is what driving this growth.
If it's kind of just organic adoption on your customers' part, are you finding that the increased usage is spreading across different types of departments within those customers? Is it hitting different budgets than maybe just, you know, a marketing budget where you might land initially?
I think the answer is yes. Yes. When we introduce new solution, it's basically a new department. If we take the CPG as example, they usually land on our research solution that comes sometimes from the data team's budget or the marketing budget. When we come and introduce our new Shopper Intelligence solution, we will be talking with different teams like the commerce team, product buying teams. It's a different budget usually.
Understood. Thank you.
Our next question comes from Brent Thill. Please state your question.
Hi, guys. This is David on for Brent. Thanks for taking the question. I guess the first one, if you could maybe discuss the Embee acquisition, and how it's gonna position you guys in the mobile area and the app data space, you know, especially against competition.
I think it's a great boost to our entire mobile and data infrastructure, and we feel high confidence. We work with Embee for more than a year as partners, so we were very familiar with the offering and data quality, and we were highly impressed. We feel that not only by joining forces with them, we can introduce a much better data mobile data quality.
We can also believe that we can accelerate their business and their operation. They were a small startup, 16, 17 employees who are doing good job, but with the Similarweb resource and infrastructure behind them, we can. I think we can really scale their operation and basically boost them their technology and their metered panel, and this will cause Similarweb to have a really strong mobile offering down the road.
Got it. I'm looking forward to you guys integrating that into the platform and being able to use it. You know, maybe just one more on headcount. I think you guys said headcount was up 69% year-over-year. Could you touch on what areas of the business we're seeing you know, the majority of the headcount growth and maybe going forward where you guys are focusing on hiring?
I think all over the company now seeing a great growth. The growth in the past year was in all departments, you know, from our G&A to be ready for the IPO and a public company to double our R&D organization the past year to support all the success we're seeing with their new solutions. We need to hire more people, you know, to drive the growth we're looking for.
Great. Thanks, guys.
Okay. Our next question comes from Jason Helfstein. Please state your question.
Hey, thanks. Hey, guys. I guess to maybe talk a bit more about kind of the iOS roadmap, you know, how the acquisition is fitting into that and relative to what you were doing organically, and then how you think about that relative to kind of what's going on in the market with like IDFA and how that's either positive or negative for you, and if you even wanna talk about kind of the ultimate removal of cookies and how that ends up kind of playing out for you. Secondly, just how do you think about just the tailwinds around video, you know, for the business? Meaning like obviously we know massive shift to video from a consumer standpoint. How does that impact kind of your clients and how they spend on you and think about your products? Thanks.
Thank you, Jason. Good to hear from you. I will try to answer all of the questions. I think, regarding your first question around iOS and mobile strategy, as you can see, we are being serious here and doing our first acquisition, and this will drive the entire mobile strategy, Android and iOS, and gonna go all in, and we'll accelerate their roadmap now. A lot of new improvements will come in the next few months and you will probably see, and I'm sure you would like them. The second question about the IDFA and how it impacts our market and how we're seeing it.
The IDFA and all the trend of removing cookies on the web and removing the IDFA on the mobile is here to you know make the life of the ad network hard to track users and we target them online. This motion is not impacting our industry. Now we are doing more measurements and statistical market research about the internet so we don't use cookies or IDFA when we're building our measurement. What my thinking around that is what will happen once those things will remove you know the advertisers will like have much more. It will be much more harder for them to measure themselves and understand ROI on their marketing. What's called to the digital worlds may be to feel like more like in TV.
You know, in TV we have a more extreme situation when the advertiser doesn't know anything. In this ecosystem, they need to be 100% dependent on market research company to drive marketing strategy. My belief that once all this trend of IDFA and removal of cookie will go all in, our industry will have an amazing flourish and a nice tailwind because then advertisers in the digital world will need to be much more dependent on companies like us to give you market data.
The last question is about video. We do have a video intelligence offering in our platform that can enable our customer to see what is the video advertising strategy of their competitors. We are touching it lightly, but we don't do video measurement. We do support the marketing acquisition team around the video strategy but not getting into the video measurement ecosystem.
Thank you.
Okay. Our next question comes from Tyler Radke. Please state your question.
Hey, good afternoon, Or, Jason. I wanted to ask you just around the strength that you saw in large deals. I think you talked about a $6.5 million ARR deal. You know, what are you learning from some of these larger contracts just from a you know closing and go-to-market perspective, and just how are you thinking about the large deal pipeline as you head into Q4?
Hi, Tyler. It's Jason. Yeah, we're really excited about those large deals. You know, when we talk about our land and expand strategy, that's really what we do. Our goal is to land with the customer at the right price point for them and over time, upsell and cross-sell them. That's what you saw both last quarter, this quarter, and you're seeing that in the increase of those $100,000 customers. We're seeing more and more of those in our pipeline. In other words, the existing customers that we have who are expanding both in terms of usage and in different departments and expanding in terms of more and more solutions that they're doing with us, and we think that this trend is gonna continue.
Great. Wanted to ask you about the OEM arrangement that you signed with Google, I think their Market Finder service. How is the revenue sharing gonna work on that deal? You know, are you seeing any, you know, just any color you could provide on this kind of early traction and kind of what, you know, what the size is, you know, potential end users using that service?
It wasn't a revenue sharing model. It's basically pay on consumption. They're buying access to our data, and then they can build products on that. They give this product for free, so they don't sell it. This is how it works. We think that there's a lot of opportunity in this entire OEM ecosystem. There is an endless amount of companies that are building products that can gain great value by using Similarweb data in their workflows or offering. We're seeing really great potential, you know, and seeing Google building products that's using our data was a very exciting moment for us.
Got it. Google is licensing the technology from you but the end users aren't paying. Is that right?
Yeah. Market Finder is a free product by Google that helps ease advertisers to find more market opportunity to expand and going into those markets. They give this product for free in order to drive more ad spend from the advertisers.
Got it. Thank you.
Okay. Our next question comes from Ryan MacWilliams. Please state your question.
Thanks for taking the question, and happy to hear about the strength across the business. I'd like to just hear some more on your Shopper Intelligence product. You mentioned already winning a large deal, since the product launch. Now, how do you think about the addressable opportunity for this product, and how can this solution drive larger deal sizes? Thanks.
Yeah. First of all, you know, my personal belief that the TAM for the Shopper Intelligence is massive because this product is telling you what people are buying online. If you compare to the most similar thing out there is the old traditional market research tell you what people are buying offline, the point of sale.
This is a huge market of, I don't know, double-digit billion-dollar in the offline world. As more and more companies moving and depending more on selling online and more consumer are spending online and making the transaction there, the access to this data become much more critical. The budgets will move to this market that will be massive. I think our offering and position there is very, very unique.
Like, you'll see there, and the quality of the data is unparalleled. I think the TAM is massive. I don't want to say any specific number without doing a deep research behind it. You can see that the deals, you know, the average deal in the Shopper Intelligence is six figures. You can see after only three months of, you know, releasing this product out, we are able to close a seven figure deal. It's. I think it's insane. As I said in the earnings call, it took us four years in the Sales Intelligence and the marketing solution to get to a point that we can close a seven figure deal. With this product, it was only after three months, just show the quality and the demand in the market for this very unique data and insights.
I appreciate the color. Seems like a logical upsell for some of your transactional customers. Jason, one for you. I think a lot of the questions have been on the net retention doing very well in the quarter. Should we consider this a new level for net retention as we try to model your growth out? Or, you know, anything maybe to call out here, you know, year-over-year or what went into this metric? Thanks.
I think so. I think that we've gotten to this new level, and I think that's a trend going forward.
Okay.
Okay. Our next question comes from Pat Walravens. Please state your question.
Hi, this is Joe Goodwin on for Pat. Thank you so much for taking our question. Can you please talk about the advisory services that you offer to your larger customers and just maybe, you know, how that's going and how large that is from an ARR perspective today?
Yeah. For sure. Advisory services is something that we introduced this year, a very exciting motion. Basically, it's an add-on usually on top of the customer that's buying our software. Basically a lot of our customers when they start playing and building their, you know, their market share, their dashboard with our data, a lot of the time they want to get more deep and granular data on specific strategic questions. They want to know about the digital world that you cannot carve out from the platform because we didn't release those specific datasets out there.
They usually come to advisory services and we basically build for them a custom data feed or a specific report. The interesting thing about the advisory services that we saw, I think, Jason, correct me if I'm wrong here, that 80% of the builders are recurring because they love the data and the insight they're getting, and they are subscribing into those insights. It's Jason, are we talking about the size of the advisory services?
Yeah. I'd say that it's a few million dollars. But like Or said, I think it's even higher. Substantially all of them are recurring revenue. They're by design, you know, like our other contracts, all ARR based, but they provide that additional insight for things that have not yet been productized in the platform.
Yeah. I would add on that's something nice to know, the value services also is very strategic because usually when we work with our biggest accounts and those data and reports we produce go all the way to the C-level. It's also increasing relationship with the C-level executive answering a lot of strategic questions. It's really been a huge success this year, and we are expecting this offering to drive nice growth for next year.
Great. Thank you for that color. Then just on, you know, have you guys made any pricing changes to your solutions? You know, I understood there's kind of different pricing strategies across use cases and solutions. You know, is there any sort of pricing changes that you made that might be leading to some of this expanded usage of your products that you've seen?
No. Not something that I think of. We didn't do any drastic change. Maybe more crystallized, but I don't think we did any significant change in pricing.
Got it. Thank you.
At this time, there are no further questions. This concludes Similarweb third quarter earnings call. Thank you for your participation. You may disconnect your lines at this time, and have a great day.