In a recent financial report, Freshworks, the NASDAQ-listed Indian SaaS unicorn, has showcased impressive growth in its Q3 revenue, reaching $153.6 million, marking a 19% increase compared to the same period in 2022. Notably, the company reported a non-GAAP profit of $17.4 million during the quarter, demonstrating remarkable financial performance. Freshworks has set its sights on achieving a significant goal of $1 billion in revenue by 2026, underlining its ambition and optimism for the future. Let’s delve into the details of this success story and Freshworks’ strategic outlook.
Steady Revenue Growth Freshworks’ Q3 revenue of $153.6 million reflects a substantial 19% growth compared to the previous year, with an 18% YoY increase when adjusted for constant currency. This remarkable growth can be attributed to several factors, including the company’s expansion of its customer base, especially among those contributing over $5,000 in ARR (Annual Recurring Revenue). Freshworks now counts 19,551 such customers, marking a 17% YoY increase. The addition of notable community customers, such as ASPCA, Cenveo, Giant Eagle Inc., Kelly Benefits, Qualfon, Salvation Army Australia, and Tri Pointe Homes, has further contributed to the company’s success.
Confidence in Future Growth Freshworks is not resting on its laurels. The company has raised its full-year 2023 financial outlook midpoint for non-GAAP operating profit to $40 million. Additionally, Freshworks is determined to reach its ambitious goal of $1 billion in revenue within the next three years. Dennis Woodside, President of Freshworks, emphasized the company’s unique growth levers and its commitment to providing innovative solutions as key drivers of this confidence.
Innovation and Expansion During Q3, Freshworks introduced an AI-powered customer service suite that combines self-service bots, agent-led conversational messaging, and automated ticketing management into a single, comprehensive solution. This suite, integrating Freshchat, Freshdesk, and the company’s generative artificial intelligence technology, Freddy AI, enhances the company’s offerings and strengthens its position in the market.
Financial Resilience and Performance Despite the competitive market and challenges, Freshworks has displayed resilience and financial prowess. The company reported a GAAP (loss) from operations of $38.7 million in Q3 2023, a significant 33.6% reduction compared to the third quarter of 2022. Freshworks also noted a net cash provided by operating activities of $23.9 million, showcasing its strong financial management.
Founders and Market Presence 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. Despite its share price experiencing fluctuations since going public in 2021, Freshworks maintains a strong market presence, with a market cap of $5.27 billion.
Competitive Landscape Freshworks competes with industry giants like Zoho, Hubspot, Salesforce, Microsoft, and other Indian and international tech majors in the SaaS domain.
Zoho’s Success in the Space In November 2022, SaaS unicorn Zoho reported annual revenues surpassing the $1 billion mark in 2021, marking a significant milestone. Zoho’s success in the competitive SaaS market further underlines the growth potential in this sector.
