Nasdaq-listed SaaS firm Freshworks reported a 22 percent growth in revenue to $186 million in its third-quarter financials on November 7 on the back of strong sales in the mid-market and enterprise sectors, as well as a rise in demand for its AI-enabled solutions.
"Freshworks delivered a strong third quarter, with revenue growing 22 percent year over year to $186.6 million, net cash provided by operating activities margin improving to 23 percent, and free cash flow margin improving to 21 percent,” said Dennis Woodside, chief executive and president of Freshworks, at the earnings call.
Key Numbers
The firm’s Free Cash Flow (FCF) was $40 million in Q2 of 2024 which has gone up by around 82 percent YoY compared to $22 million in the third quarter of 2023. Freshworks had cash and cash equivalents of around $1 billion as of September 30.
The firm’s GAAP Loss was at $38.9 million in the third quarter as against a loss of $38.7 million in the third quarter of 2023. It has clocked a Non-GAAP income of $24 million in Q3.
The firm’s net loss went down to 25.9 million in Q3 as against 31.03 million during the same quarter last year.
In Q2, the firm clocked a revenue of $174 million in the second quarter of calendar year 2024, up around 20 percent year-on-year (YoY).
Number of customers contributing more than $5,000 in ARR for Freshworks was at 22,359, an increase of 14 percent year-over-year. And, the firm's Net dollar retention rate was 107 percent, compared to 106 percent in the second quarter of 2024 and 108 percent in the third quarter of 2023.
During the quarter, the firm unveiled a couple of AI products which helped in driving sales. It launched Freddy AI Agent for Customer Experience (CX) and Employee Experience (EX), it said in a statement.
Along with the earnings, Freshworks also said that the firm has received board authorisation for a share buyback of $400 million. However the firm has not specified the timeline for execution.
Layoffs at Freshworks
While announcing the earnings, the Freshworks CEO also said that the firm will be laying off around 660 employees or 15 percent of its overall headcount as part of its strategic priorities.
"We’ve made the difficult decision to reduce our global headcount by approximately 13%, impacting about 660 employees. There’s simply no good time to make a decision like this that affects people’s lives and it’s my responsibility to be transparent about how and why this decision was made," Woodside wrote in a letter to the firm's employees.
Freshworks has increased its revenue guidance forecasts to be between $713.6 million and $716.6 million for the full year of 2024, up from its prior expectations of $707 million to $713 million.
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