Freshworks Q2 revenue rises 19%, anticipates full-year operating profit of $28M

Software-as-a-service firm Freshworkshas posted a 19% year-on-year rise in revenue at $145.1 million in the second quarter ended June 30.

The company has raised its full-year 2023 financial outlook midpoint for adjusted operating profit to $28 million.

In the second quarter, the firm saw a narrowed net loss of $35.7 million ($0.12 per share) compared to $69.8 million ($0.24 per share) in the same period last year.

“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.

“In Q2, we launched new generative AI enhancements across our product lines and outperformed our estimates across all our key financial metrics," he added.

The SaaS company reported $11.7 million in adjusted operating profit in Q2, a significant improvement from the $15.8-million adjusted operating loss in the same quarter last year.

In Q1, the company had achieved its first-ever quarterly adjusted operating profit of $3.9 million since going public.

Freshworks, based in California with origins in Chennai, achieved a free cash flow of $18.1 million in Q2 2023, from a negative $10.2 million in the corresponding previous quarter.

The number of customers contributing over $5,000 in annual recurring revenue reached 19,105, showing an 18% year-on-year increase.

During the second quarter, the SaaS firm added customers such as Claremont McKenna College, The State of Hawaii, Houston Museum of Natural Science, Pitchbook, and Smart Recruiters.

Freshworks' net dollar retention rate for Q2 was 108%, compared to 107% in Q1 2023 and 111% in Q2 2022.

In the second quarter, Freshworks unveiled advancements in its AI suite—Freddy Self Service, Freddy Copilot, and Freddy Insights—expanding accessibility to artificial intelligence across workplaces. These additions build on the Freshchat and Freshmarketer beta programmes introduced earlier this year.

Freshworks also appointed Frank Pelzer, Executive Vice President and Chief Financial Officer of F5, Inc., to the board of directors.

Outlook

Freshworks projects third-quarter revenue to range between $149 million and $151.5 million.

The SaaS firm anticipates full-year revenue to be in the range of $587 million to $595 million, up from the earlier forecast of $580 million to $592.5 million. Notably, the company recorded a consolidated revenue of $498 million in 2022.

The Nasdaq-listed firm's stock price closed at $18.24, reflecting a 3.8% increase over the last six months, and a 30.8% rise over the past twelve months.