SEMrush Holdings, Inc.SEMR
SEMrush Holdings, Inc. Stock Compensation Disclosure
Stock-Based Compensation
The 2021 Plan allows the compensation committee of the Board to make equity-based and cash-based incentive awards to the Company’s officers, employees, directors and other key persons (including consultants). The number of shares reserved and available for issuance under the plan will automatically increase each January 1 by the lesser of 5% of the outstanding number of shares of Class A and Class B common stock on the immediately preceding December 31, or such lesser number of shares as determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. In December 2025, the compensation committee of our board of directors approved no increase in the number of shares of Class A common stock reserved for issuance under the 2021 Plan on January 1, 2026.
The Company accounts for stock-based compensation in accordance with the provisions of ASC 718 Compensation - Stock Compensation, which requires the recognition of expense related to the fair value of stock-based compensation awards in the statements of operations. For stock option awards issued under the Company’s stock-based compensation plans to employees and members of the Board for their services on the Board, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model as discussed further below. For restricted stock units (“RSUs”) granted subject to service-based vesting conditions, and performance-based stock units (“PSUs”) with both service and performance conditions, the fair value is determined based on the closing price of the Company’s Class A common stock, as reported on the New York Stock Exchange. For PSUs with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition. If the Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of PSUs with both service and market conditions is calculated using a model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied.
Awards granted prior to January 1, 2024 subject to service-based vesting conditions generally vest over a four-year requisite service period. Awards granted after January 1, 2024 subject to service-based vesting conditions generally vest over a three-year requisite service period. For all other service-based awards, the Company recognizes compensation expense on a straight-line basis over the requisite service period of the award with actual forfeitures recognized as they occur.
The fair value of each option award was estimated on the date of grant using the Black-Scholes option-pricing model. The Company determined the expected volatility for options granted using an average of the historical volatility measures of a peer group of companies that issued options with substantially similar terms. The expected life of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the share option. The Company has not paid, nor anticipates paying, cash dividends on its ordinary shares; therefore, the expected dividend yield is assumed to be zero.
The weighted-average assumptions utilized to determine the fair value of options granted to employees are presented in the following table:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Expected volatility | 61.8 | % | 63.1 | % | |||||||
| Weighted-average risk-free interest rate | 4.28 | % | 3.75 | % | |||||||
| Expected dividend yield | — | — | |||||||||
| Expected life – in years | 6 | 6 | |||||||||
The Company did not grant options during the year ended December 31, 2025.
A summary of the Company’s option activity as of December 31, 2025, and changes during the year then ended are as follows:
| Number of Options | Weighted-Average Exercise Price (per share) | Weighted-Average Remaining Contractual Term (in years) | |||||||||||||||
Outstanding at December 31, 2024 | 5,266,163 | $ | 8.14 | 7.08 | |||||||||||||
| Granted | — | — | |||||||||||||||
| Exercised | (1,203,565) | 3.22 | |||||||||||||||
| Forfeited | (172,016) | 10.96 | |||||||||||||||
Outstanding at December 31, 2025 | 3,890,582 | 9.54 | 6.26 | ||||||||||||||
Options exercisable at December 31, 2025 | 3,041,602 | 9.49 | 6.46 | ||||||||||||||
The weighted-average grant-date fair value of options granted during the years ended December 31, 2024 and December 31, 2023 was $7.71 and $5.58 per share, respectively. Tax benefits of $2,914, $815, and $1,301 were realized from options during the years ended December 31, 2025, 2024, and 2023, respectively. The aggregate intrinsic value of options outstanding as of December 31, 2025 and 2024 was $9,152 and $21,689, respectively. The aggregate intrinsic value for options exercised during the years ended December 31, 2025, 2024, and 2023 was $9,664, $17,474, and $15,279, respectively. The aggregate intrinsic value for options exercisable as of December 31, 2025 was $7,287.
The aggregate intrinsic value was calculated based on the positive difference, if any, between the estimated fair value of the Company’s common stock on December 31, 2025 and 2024, respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.
During the years ended December 31, 2025, 2024, and 2023, the Company granted to employees RSU awards for 7,756,009, 3,474,700, and 1,984,086 shares of Class A common stock under the 2021 Plan, respectively.
A summary of RSU activity under the Company’s 2021 Plan for the year ended December 31, 2025 is as follows:
| Number of Shares | Weighted-Average Grant Date Fair Value | Aggregate Fair Value | ||||||||||||||||||
| Unvested balance at January 1, 2025 | 4,523,499 | $ | 12.02 | $ | 54,372 | |||||||||||||||
| Granted | 7,052,742 | 8.10 | 57,127 | |||||||||||||||||
| Vested | (3,388,791) | 11.57 | 39,208 | |||||||||||||||||
| Forfeited | (583,729) | 8.77 | 5,119 | |||||||||||||||||
| Unvested balance as of December 31, 2025 | 7,603,721 | $ | 7.39 | $ | 56,191 | |||||||||||||||
During the year ended December 31, 2025, the Company granted to employees RSAs for 927,487 shares of Class A common stock under the 2021 Plan. The weighted average grant date fair value of the RSAs granted was $11.86. The aggregate fair value of the RSAs granted was $11,000. No RSAs were granted during the years ended December 31, 2024 and 2023.
During the years ended December 31, 2025 and 2024, the Company granted PSU awards for 1,819,122 and 1,173,681 shares of Class A common stock under the 2021 Plan.
The Company records stock-based compensation expense related to PSU grants when it is probable that the underlying performance conditions will be recognized. During the years ended December 31, 2025 and 2024, the Company granted PSUs to executives and in relation to certain acquisitions. The
executive PSUs and a portion of the acquisition-related awards contained a market component. The Company did not grant PSU awards during the year ended December 31, 2023.
A summary of PSU activity under the Company’s 2021 Plan for the year ended December 31, 2025 is as follows:
| Number of Shares | Weighted-Average Grant Date Fair Value | Aggregate Fair Value | ||||||||||||||||||
| Unvested balance at January 1, 2025 | 2,151,933 | $ | 12.21 | $ | 26,275 | |||||||||||||||
| Granted | 1,819,122 | 10.03 | 18,246 | |||||||||||||||||
| Vested | — | — | — | |||||||||||||||||
| Forfeited | (838,012) | 11.57 | 9,696 | |||||||||||||||||
| Unvested balance at December 31, 2025 | 3,133,043 | $ | 11.11 | $ | 34,808 | |||||||||||||||
The Company has recorded stock-based compensation expense of $52,625, $27,999, and $15,337 during the years ended December 31, 2025, 2024, and 2023, respectively. The following table shows stock-based compensation expense by where the stock-based compensation expense is recorded by line item in the Company’s consolidated statements of operations:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | 406 | $ | 239 | $ | 130 | |||||||||||
| Sales and marketing | 7,425 | 4,742 | 3,077 | ||||||||||||||
| Research and development | 14,764 | 5,906 | 2,213 | ||||||||||||||
| General and administrative | 30,030 | 17,112 | 9,917 | ||||||||||||||
| Total stock-based compensation | $ | 52,625 | $ | 27,999 | $ | 15,337 | |||||||||||
As of December 31, 2025, there was $4,442 of unrecognized compensation cost related to unvested stock option arrangements, which is expected to be recognized over a weighted-average period of 1.16 years. As of December 31, 2025, there was $10,828 of unrecognized compensation cost related to unvested RSAs, which is expected to be recognized over a weighted-average period of 2.96 years. As of December 31, 2025, there was $72,971 of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of 2.21 years. As of December 31, 2025, there was $24,671 of unrecognized compensation cost related to unvested PSUs, which is expected to be recognized over a weighted-average period of 1.95 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.