Freshworks reports 22% jump in revenue to $186.6M in Q3
The Nasdaq-listed company parred its losses by 3.55% to $29.9 million during the quarter under review, compared to $31 million in the previous year.
Software-as-a-Service (SaaS) major has reported a 22% growth in revenue, climbing to $186.6 million for the third quarter ended September 30, 2024, up from $153.6 million in the same period last year.
The Nasdaq-listed company parred its losses by 3.55% to $29.9 million during the quarter under review, compared to $31 million in the previous year.
“Freshworks delivered a strong third quarter, with revenue growing 22% year over year to $186.6 million, net cash provided by operating activities margin improving to 23%, and free cash flow margin improving to 21%,” said Dennis Woodside, CEO & President of Freshworks.
“We continue to see mid-market and enterprise companies choose Freshworks as the AI-powered service platform that enables them to scale with exceptional customer and employee experiences,” he added.
Total income from operations amounted to $24 million, up from $17.4 million in the third quarter of 2023.
Earlier in May this year, the California-headquartered firm announced the appointment of Dennis Woodside as the new CEO, with Girish Mathrubootham transitioning to the role of Executive Chairman.
The company reported a rise in its total operating expenses to $195 million in Q3 of 2024, up from $166 million in the corresponding period last year.
The firm reported free cash flow of $40.1 million for the third quarter of 2024, up from $22.1 million a year earlier. As of September 30, 2024, cash, cash equivalents, and marketable securities totaled $1.05 billion.
The net dollar retention rate stood at 107%, compared to 106% in the second quarter of 2024 and 108% in the third quarter of 2023.
Net Dollar Retention (NDR) is a key performance metric that measures how well a company retains and expands revenue from existing customers over time.
The number of customers contributing over $5,000 in annual recurring revenue (ARR) grew 14% year-over-year, reaching 22,359.
In addition, Freshworks onboarded several new customers to its portfolio, including Republic Airways, City of Bellevue, ChampionX, University of Oxford, Sparebank 1, aand TechStyle Fashion Group, among others.
Freshworks also announced that its Board of Directors has approved a stock repurchase programme, authorising the buyback of up to $400 million in outstanding Class A common stock.
A stock repurchase programme or buyback is when a company buys back its own shares from the open market in order to increase the value of the remaining shares by reducing the overall supply.
Freshworks' share price closed at $13.09, a 64% decline from its IPO price of $36 per share in 2021.
The firm ended the quarter with the launch of Freddy AI Agent, an easy-to-deploy autonomous service agent designed to enhance both customer experience (CX) and employee experience (EX).
The introduction of Freddy AI Agent comes at a time when many enterprises are adopting AI agents to streamline their workflows. The AI agents can be deployed within minutes and have resolved an average of 45% of customer support requests and 40% of IT service inquiries, said the company in a statement.
In September, Freshworks welcomed former ServiceNow executive Murali Swaminathan as its new Chief Technology Officer. Additionally, after nearly five years, the company’s Chief Product Officer Prakash Ramamurthy stepped down to pursue new career opportunities.
An SEC filing on August 5 announced the appointment of Philippa Lawrence as Chief Accounting Officer. Earlier in the year, Pradeep Rathinam, who served as Chief Revenue Officer, left the company in February.
Edited by Megha Reddy