Nasdaq-listed software firm Freshworks announced on February 12 that its consolidated revenue in 2024 reached $720 million, marking a nearly 21 percent year-on-year (YoY) growth, driven by a stable customer addition rate and rising demand for its AI-powered solutions.
During the year, the company's operating profit touched $99 million compared to $44.5 million in 2023. To be sure, 2023 was the first year, the firm reported a full year of operating profit since listing on the US stock exchange.
“Freshworks outperformed its previously provided estimates again in Q4 across all our key metrics, delivering another strong quarter with revenue growing 22% year over year to $194.6 million, operating cash flow margin of 21 percent, and an adjusted free cash flow margin of 21 percent,” said Dennis Woodside, Chief Executive Officer & President of Freshworks in an SEC filing.
In Q4 of 2024, Freshworks saw its revenue going up by 22 percent YoY to $194.6 million. The firm's operating profits were around $40.3 million. The SaaS firm reported a 22 percent growth in revenue to $186 million in its third-quarter financials.
“Companies are leaving legacy vendors and coming to Freshworks for our uncomplicated, modern employee and customer experience service solutions," Woodside said.
Just a day before the Q4 results, venture capital firm Peak XV Partners offloaded nearly a 1 percent stake in Freshworks for $51.5 million, according to filings with the U.S. Securities and Exchange Commission (SEC). The stake was sold through multiple open market transactions between December 9, 2024, and January 28, 2025.
During the quarter under review, Freshworks' cash, cash equivalents, and marketable securities were around $1.07
billion. This provides the company with ample resources to invest in growth and potential acquisitions.
While announcing the results in June of 2024 Freshworks said that it has entered into a definitive agreement to acquire Device42, an IT asset management for $230 million.
The company has brought down its net dollar retention rate to 103 percent from around 108 percent last year. Net dollar retention (NDR) reflects a company's ability to maintain and grow revenue from existing customers by factoring in upgrades, downgrades, and customer churn.
NRR over 100 percent indicates growth via a consistent customer base, and that the revenue gained from upsells, cross-sells, and add-ons is larger than the revenue lost due to downgrades and churn.
Freshworks saw its number of customers contributing more than $5,000 in ARR grow to 22,558, an increase of 11 percent YoY.
The growth also comes as Freshworks underwent a restructuring exercise, which saw the company lay off around 660 employees in November 2024. The firm stated that the move aligns with its strategic priorities to enhance efficiency and streamline operations across teams. The firm had more than 5,000 employees on a roll and has conducted multiple rounds of layoffs and management rejig since 2024.
The company forecasts its revenue to grow 12-14 percent for the full year of 2025 to around $809-$820 million. The firm expects to report an operating income of $131-$139 million in 2025. In Q1 the firm expects to grow by 15 percent -17 percent to $190 - $193 million.
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