India-born and California-based SaaS major Freshworks reported a 37 per cent year-on-year jump in its consolidated revenues at $128.8 million for the September quarter, beating analyst estimates. Its Q3 growth was driven by customer retention and addition (~1,700 new clients), and increased operating efficiency, the company said in its earnings statement.
NASDAQ-listed Freshworks also managed to prune its Q3 losses to $58.3 million from $67.4 million a quarter ago and $107.4 million in the year-ago period. “We delivered a strong quarter of results with revenue up 37 per cent on a constant currency basis and significantly improved our operating efficiency Girish Mathrubootham, Founder and CEO, Freshworks stated. “In Q3, we continued to deliver on our promise of modern, powerful, easy to use software for everyone with new updates to our product suite,” he added.
High-value customers, who contributed more than $5,000 to Freshworks’ Annualised Revenue Run rate (ARR) grew 19 per cent year-on-year to 16,713, the company shared. In terms of product development during the quarter, Freshworks launched its Freshservice for Business Teams offering for non-IT businesses. It also enhanced its Freshchat product “with AI-powered suggestion functionality to help agents improve response time”.
Given the challenging macroeconomic conditions, Freshworks shares (FRSH) have lost about 48.3 per cent since the beginning of the year, in comparison to the S&P 500’s decline of -18.8%, according to Zacks Equity Research.
In its cautious guidance for the fourth quarter (October to December), Freshworks expects its revenues to be anywhere between $129 million and $131 million, which is a yearly growth of 22-24 per cent. “While we have reported a strong quarter, we are not immune to this slower economy. While new businesses picked up, expansion slowed down even as we reduced our growth forecasts and headcount needs,” Mathrubootham said in an earnings call.
FRSH was trading 3.16 per cent down at $13.16 on NASDAQ at close of market hours on Tuesday.
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