Freshworks Cuts Quarterly Net Loss By 49% In Q2 2023, Revenue At $145 Mn

NASDAQ-listed Indian SaaS unicorn Freshworks has reported a net loss of $35.66 Mn in the quarter ended June 30, 2023 (Q2 2023), down 48.9% year-on-year (YoY) compared to $69.75 Mn in the corresponding quarter in 2022, off the back of improving revenue and falling costs.

Incidentally, Freshworks had reported an adjusted operating profit for the first time in the January-March quarter of 2023, posting a non-GAAP (Generally Acceptable Accounting Practices) profit of $3.88 Mn during the quarter.

The SaaS unicorn reported revenue of $145.08 Mn during Q2 2023 (April to June), growing 19% YoY from $121.43 Mn reported in Q2 2022. Freshworks said that adjusting for constant currency, the revenue was up 20% YoY. 

The revenue growth can be mostly attributed to the number of customers contributing more than $5,000 in annual recurring revenue (ARR), hitting 19,105, a jump of 18% YoY.

At the same time, Freshworks managed to shave off its operating expenses by about $1.21 Mn, coming down from $164.72 Mn in Q2 2022 to $163.51 Mn in Q2 2023. Quarterly, the operating expenses rose 2%, compared to $160.56 Mn in Q1 2023.

The SaaS unicorn also saw minor improvement in sales and marketing expenses and research and development.

Freshworks reported a free cash flow of $18.1 Mn, compared to -$10.2 Mn in the second quarter of 2022.

“Freshworks is building on the foundations we set at the start of the year to deliver faster product innovation and improve our efficiency,” said Girish Mathrubootham, CEO and founder of Freshworks on the results.

The SaaS giant also launched three new generative AI products – Freddy Self Service, Freddy Copilot and Freddy Insights – during the quarter. Speaking on the same, Mathrubootham added, “In Q2, we launched new generative AI enhancements across our product lines and outperformed our estimates across all our key financial metrics.”

Freshworks also saw layoffs towards the end of the quarter ended June 30, 2023, though the company had denied any company-wide layoffs during the time. The retrenchments reportedly happened within senior positions in the SaaS unicorn’s product, engineering and go-to-market (GTM) teams.

Founded in 2010 by Girish Mathrubootham and Shanmugam Krishnasamy, Freshworks offers a suite of software for customer service and support, customer engagement and IT service management. The company went public in 2021, though its share price has been in freefall since hitting a peak of $50.25 in October 2021.

The SaaS unicorn’s share price stood at $18.24 during Tuesday’s close, giving it a market cap of $5.31 Bn.