SUMMARY
Freshworks reported $38.7 Mn in net loss from operations in Q3 2023, down 33.6% Y-o-Y from $58.3 Mn in Q3 2022
The company has posted a non-GAAP profit of $17.4 Mn during the quarter compared to non-GAAP (loss) from operations of $3.1 Mn in the third quarter of 2022
The SaaS unicorn is now optimistic and has raised full year 2023 financial outlook midpoint for non-GAAP operating profit to $40 Mn
NASDAQ-listed Indian SaaS unicorn freshworks
has reported a revenue of $153.6 Mn, representing a growth of 19% compared to $128.7 Mn in the third quarter of 2022. The SaaS unicorn said that adjusting for constant currency, the revenue was up 18% YoY.
Interestingly, the company has posted a non-GAAP (Generally Acceptable Accounting Practices) profit of $17.4 Mn during the quarter, compared to non-GAAP (loss) from operations of $3.1 Mn in the third quarter of 2022.
The SaaS unicorn is now optimistic and has raised full-year 2023 financial outlook midpoint for non-GAAP operating profit to $40 Mn. Freshworks is also confident to achieve its goal of $1 Bn in revenue in the next three years.
The increase in revenues can be attributed to the rise in the number of customers contributing more than $5,000 in ARR to 19,551, a Y-o-Y increase of 17%. The company added to its community customers such as ASPCA, Cenveo, Giant Eagle Inc., Kelly Benefits, Qualfon, Salvation Army Australia and Tri Pointe Homes.
“Our continued traction with larger customers over $50,000 in ARR, and — combined with our expansion motion and large SMB opportunity, create a go-to-market motion unique to Freshworks. We believe it is this combination of growth levers that gives us confidence in our ability to reach our goal of $1 billion in revenue in the next three years,” said Dennis Woodside, President, Freshworks during the company’s third quarter 2023 earnings conference call held on October 31, 2023.
During the quarter under review, the SaaS unicorn also unveiled an AI-powered customer service suite which brings together self-service bots, agent-led conversational messaging, and automated ticketing management in an all-in-one solution by uniting Freshchat, Freshdesk, and the company’s generative artificial intelligence technology, Freddy AI.
Further, the company has further reported a GAAP (loss) from operations of $38.7 Mn in Q3 2023. This is 33.6% less compared to $58.3 Mn loss in the third quarter of 2022.
Freshworks registered that net cash provided by operating activities was $23.9 Mn, compared to net cash (used in) operating activities of $4.2 Mn in the third quarter of 2022. Free cash flow was reported as $22.1 Mn, compared to $7.2 Mn in Q3 2022.
“We delivered another solid quarter of execution as we outperformed our estimates across our key financial metrics and further improved our profitability. Our market traction is fueled by continued product innovation that brings generative AI and rapid time to value to companies of all sizes,” said Girish Mathrubootham, CEO and Founder of Freshworks.
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 $17.94 during Tuesday’s (October 31) close, giving it a market cap of $5.27 Bn.
Freshworks competes with the likes of Zoho, Hubspot, Salesforce, Microsoft and many other Indian and international tech majors.
Earlier in November 2022, bootstrapped SaaS unicorn Zoho reported its annual revenue surge beyond $1 Bn mark in the calendar year 2021. It reported a net profit of INR 2,749 Cr in FY22, registering a 43% jump from INR 1,917 Cr in FY21. In September 2023, it also surpassed 100 Mn users across its various business applications and now serves over 700K businesses across 150 countries.
