Freshworks’ Net Loss Widens to $49.1 Mn, Revenue Up 42% in Q1 2022

Software-as-a-Service (SaaS) giant Freshworks reported widening of its net loss to $49.1 Mn in January-March quarter of 2022 as against a net loss of $2.4 Mn in the corresponding quarter of previous year.

The company’s operational loss widened to $47.1 Mn from $1.7 Mn a year ago. However, total revenue grew 42% year-on-year (YoY) to $114.6 Mn during the quarter under review. This was also the second straight quarter of the US-listed company recording more than $100 Mn in total revenue.

The non-GAAP (Generally Accepted Accounting Principles) loss in Q1 2022 was unchanged from last year at $0.6 Mn.

Net dollar retention (NDR) rate, a measure of revenue growth and customer churn, stood at 115% during Q1 2022 as compared to 114% in the fourth quarter of 2021 and 112% in the year-ago quarter. 

Freshworks said that the number of customers contributing more than $5,000 in annual revenue run rate (ARR) rose 27% YoY to 15,639 during Q1 2022. The SaaS unicorn also onboarded a slew of new customers such as Sodexo, California Credit Union, Kuka, Marymount Manhattan College, TicketNetwork and Thermo Fisher during the quarter.

For the quarter ending March 2022, net cash provided by operating activities declined to $1.4 Mn as compared to $7.8 Mn during the same period last year. The free cash flow also fell to around the $1.4 Mn mark as compared to $4.8 Mn in the first quarter of 2021.

The company projected a revenue of $117 Mn to $119 Mn for April-June quarter and non-GAAP loss from operations of $18.5 Mn-$16.5 Mn. For the full year, it projected total revenue between $395.5 Mn-$501.5 Mn. The non-GAAP loss from operations is expected to be in the $43.5 million-$37.5 million range.

In a statement, Freshworks CEO and cofounder Girish Mathrubootham said, “We’re off to a strong start to the year with Q1 revenue growth of 42% year over year. We made progress on our 2022 product priorities with the launch of Freshworks CRM for ecommerce, while increasing net dollar retention to 115%, and continuing to run our business efficiently.”

The company’s shares were trading 3% lower at $16.34 on Wednesday (May 4) at around 03:10 PM Eastern Standard Time on the Nasdaq stock exchange. 

Founded in 2010 by Girish Mathrubootham and Shan Krishnasamy, Freshworks offers a suite of softwares for customer management. This includes an AI-powered chatbot and messaging platform for customer support, as well as call centre-based solutions for customer service resolutions.

The SaaS giant was listed on the Nasdaq last year in September with an opening price of $43.5, well above the set price of $36 per share.