Freshworks, the Nasdaq-listed Software-as-a-Service (SaaS) company, has reported a strong second quarter performance with revenue of $145 million, exceeding expectations and representing a 19% year-on-year increase. The company also achieved an operating profit of $11.7 million, a significant improvement from the $15.8 million loss reported in Q2 of 2022. Freshworks attributed this success to an increase in large enterprise customers.
The number of customers contributing more than $5,000 in Annual Recurring Revenue (ARR) reached 19,105, an 18% YoY increase. Notable additions to Freshworks’ customer base include Claremont McKenna College, The State of Hawaii, Houston Museum of Natural Science, Pitchbook, and Smart Recruiters.
In Q1 of 2023, Freshworks achieved consolidated revenue of $138 million and reported its first-ever quarterly adjusted operating profit of $3.9 million since going public. The company’s focus on business efficiency has resulted in a positive net profit trend.
Freshworks’ GAAP (Generally Accepted Accounting Principles) loss from operations decreased by 54% YoY to $43.5 million. The company’s net loss for Q2 of 2023 was $35.04 million, an improvement from the $68.16 million loss reported in the same quarter last year. The trend indicates Freshworks’ progress toward profitability.
During Q2 of 2023, Freshworks generated a free cash flow of $18.1 million, double the previous quarter’s figure, and up by around 80% YoY. Cash and cash equivalents as of June 30th, 2023, were recorded at $1.16 billion, reflecting the company’s strong financial position.
Freshworks reported a net retention rate of 108% for Q2 2023, indicating an increase in recurring revenue from existing customers. The Net Dollar Retention rate was recorded at 107% during the last quarter, reinforcing the positive outlook for the company.
Despite the positive financial results, Freshworks’ shares on Nasdaq closed at $18.24, down 2.25 percent.
CEO and Founder Girish Mathrubootham highlighted the impact of the company’s AI launches in Q2 2023, expecting increased efficiency and customer satisfaction in the coming quarters. He expressed excitement about the opportunity for companies to utilize Freshworks’ software to improve customer and employee experiences.
Freshworks provided an outlook for the full year 2023, expecting a non-GAAP operating profit of $28 million. The company anticipates a revenue range of $149 million to $151 million for the next quarter, with overall revenues in 2023 projected to be in the range of $587 million to $595 million.
Freshworks’ continued growth and financial success demonstrate its ability to thrive in the SaaS market. The company’s focus on AI-driven enhancements and commitment to improving customer experiences position it well for future success.
