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Freshworks reports net loss of $107 million in first earnings after US listing in September

Freshworks’s revenue was $96.6 million for the quarter, up 46 percent year-on-year, from $66.18 million it posted in the same quarter last year. Freshworks expects to close Q4 with $99-104 million in revenue. For the full year 2021 the company expects revenue to be in the range of $364.5 million to $366.5 million.

November 03, 2021 / 11:32 AM IST

Freshworks, which was listed in NASDAQ, reported a loss of $107.4 million for the quarter ending September 2021, its first earnings post the listing in the US stock exchange.

The company posted net profit of $1.3 million in Q3 2020.

The company’s revenue was $96.6 million for the September 2021 quarter, up 46 percent year-on-year, from $66.18 million it posted in the same quarter last year.

Freshworks expects to close Q4 with $99-104 million in revenue. For the full year 2021 the company expects revenue to be in the range of $364.5 million to $366.5 million.

Girish Mathrubootham-led Freshworks became the first Indian SaaS firm to go public on the US stock exchanges in September and was valued at $13 billion. The company competes with players Salesforce, and overtook its  rival Zendesk in terms of market cap. The company has 14,000 paying customers, who pay more than $5000 in annual recurring revenue.

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“Our strong third quarter results reflect the continued adoption of our modern and easy-to-use products by companies of all sizes, We grew 46 percent year over year, and saw healthy expansion activity from our customer base,” Mathrubootham, CEO and founder of Freshworks, said during the earnings call.

While the company’s margins improved owing to efficient spend on certain service provider agreements and ongoing improvements for infrastructure spend, its operating expense saw an increase.

“Our non-GAAP operating expenses increased by $28.5 million mainly driven by increased investments in our teams for R&D, sales marketing and general and administrative over the past 12 months. More specific to marketing, we increased our advertising branding PR and event cost by $5.5 million compared to last year, as we created more awareness for our products in the marketplace,” Mathrubootham said during the earnings call. Non-GAAP is a method of accounting that deviates from Generally Accepted Accounting Principles (GAAP). Many companies use this method in addition to the GAAP earnings.

The company also saw a large impact from stock based compensation and related expenses of $138 million in Q3. This is expected to be at more normalized levels of approximately $45 million per quarter.

"We have had really healthy growth throughout the year and we continue to support that with an efficient financial model. Even with growth investments and increased public company expenses in Q4, we expect to be roughly free cash flow breakeven for the quarter," Mathrubootham said.
Swathi Moorthy
first published: Nov 3, 2021 11:26 am
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