Freshworks Reports Fourth Quarter and Full Year 2024 Results

SAN MATEO, Calif., Feb. 11, 2025 (GLOBE NEWSWIRE) -- Freshworks Inc. (Nasdaq: FRSH), the provider of people-first AI service software, today announced financial results for its fourth quarter and full year ended December 31, 2024.

"Freshworks outperformed its previously provided estimates again in Q4 across all our key metrics, delivering another strong quarter with revenue growing 22% year over year to $194.6 million, operating cash flow margin of 21%, and an adjusted free cash flow margin of 21%," said Dennis Woodside, Chief Executive Officer & President of Freshworks. "Companies are leaving legacy vendors and coming to Freshworks for our uncomplicated, modern employee and customer experience service solutions."

Fourth Quarter 2024 Financial Summary Results

   -- Revenue: Total revenue was $194.6 million, representing growth of 22% 
      compared to total revenue of $160.1 million in the fourth quarter of 
      2023, and 21% adjusting for constant currency. 
 
   -- GAAP (Loss) from Operations: GAAP (loss) from operations was $(23.8) 
      million, compared to $(40.0) million in the fourth quarter of 2023. 
 
   -- Non-GAAP Income from Operations: Non-GAAP income from operations was 
      $40.3 million, compared to $11.5 million in the fourth quarter of 2023. 
 
   -- GAAP Net (Loss) Per Share: GAAP basic and diluted net (loss) per share 
      was $(0.07) based on 303.6 million weighted-average shares outstanding, 
      compared to $(0.09) based on 296.0 million weighted-average shares 
      outstanding in the fourth quarter of 2023. 
 
   -- Non-GAAP Net Income Per Share: Non-GAAP diluted net income per share was 
      $0.14 based on 306.1 million weighted-average shares outstanding, 
      compared to $0.08 based on 303.2 million weighted-average shares 
      outstanding in the fourth quarter of 2023. 
 
   -- Net Cash Provided by Operating Activities: Net cash provided by operating 
      activities was $41.4 million, compared to $30.9 million in the fourth 
      quarter of 2023. 
 
   -- Adjusted Free Cash Flow: Adjusted free cash flow was $41.7 million, 
      compared to $28.6 million in the fourth quarter of 2023. 
 
   -- Cash, Cash Equivalents and Marketable Securities: Cash, cash equivalents, 
      and marketable securities were $1.07 billion as of December 31, 2024. 

Full Year 2024 Financial Summary Results

   -- Revenue: Total revenue was $720.4 million, representing growth of 21% 
      compared to total revenue of $596.4 million in 2023 and 21% adjusting for 
      constant currency. 
 
   -- GAAP (Loss) from Operations: GAAP (loss) from operations was $(138.6) 
      million, compared to $(170.2) million in 2023. 
 
   -- Non-GAAP Income from Operations: Non-GAAP income from operations was 
      $99.1 million, compared to $44.5 million in 2023. 
 
   -- GAAP Net (Loss) Per Share: GAAP basic and diluted net (loss) per share 
      was $(0.32) based on 300.8 million weighted-average shares outstanding, 
      compared to $(0.47) based on 293.1 million weighted-average shares 
      outstanding in 2023. 
 
   -- Non-GAAP Net Income Per Share: Non-GAAP diluted net income per share was 
      $0.43 based on 300.8 million weighted-average shares outstanding, 
      compared to $0.26 based on 293.1 million weighted-average shares 
      outstanding in 2023. 
 
   -- Net Cash Provided by Operating Activities: Net cash provided by operating 
      activities was $160.6 million, compared to net cash provided by operating 
      activities of $86.2 million in 2023. 
 
   -- Adjusted Free Cash Flow: Adjusted free cash flow was $153.3 million, 
      compared to $77.8 million in 2023. 

All financial numbers for 2024 include the results of Device42, Inc. for the period after the closing of the acquisition. A description of non-GAAP financial measures is contained in the section titled "Explanation of Non-GAAP Financial Measures" below and a reconciliation of GAAP to non-GAAP financial measures is contained in the tables below.

Fourth Quarter Key Metrics and Recent Business Highlights

   -- Number of customers contributing more than $5,000 in ARR was 22,558, an 
      increase of 11% year-over-year and 13% adjusting for constant currency. 
 
   -- Net dollar retention rate was 103% (105% adjusting for constant currency), 
      compared to 107% in the third quarter of 2024 and 108% in the fourth 
      quarter of 2023. Adjusted for constant currency, net dollar retention 
      rate was 105% in the third quarter of 2024 and 107% in the fourth quarter 
      of 2023. 
 
   -- Welcomed and onboarded more customers to the Freshworks community 
      including New Balance, Rawlings Sporting Goods, Sophos, Onfido, Mesa 
      Airlines and many more. 
 
   -- Appointed Srinivasan Raghavan as Chief Product Officer and Venkitesh 
      Subramanian as Senior Vice President of Product Management, Customer 
      Experience. 
 
   -- Announced a new strategic agreement with Unisys, a leading global systems 
      integrator partner. 

Financial Outlook

We are providing estimates for the first quarter and full year 2025 based on current market conditions and expectations. The revenue growth rates are adjusted for constant currency to provide better visibility into the underlying business trends. We emphasize that these estimates are subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below.

For the first quarter and full year 2025, we currently expect the following results:

 
($ in millions, except per share data)     First Quarter 2025  Full Year 2025 
Revenue(1)                                  $190.0 - $193.0    $809.0 - $821.0 
Year-over-year growth                               15% - 17%        12% - 14% 
Year-over-year growth (constant currency)           16% - 18%        13% - 15% 
 
Non-GAAP income from operations(1)           $32.5 - $34.5     $131.0 - $139.0 
 
Non-GAAP net income per share(2)             $0.12 - $0.14      $0.52 - $0.54 
 
 

(1) Revenue and non-GAAP income from operations are based on exchange rates as of February 7, 2025 for currencies other than USD.

(2) Non-GAAP net income per share was estimated assuming 307.3 million and 306.4 million weighted-average shares outstanding for the first quarter and full year 2025, respectively.

These statements are forward-looking and actual results may differ materially. Refer to the "Forward-Looking Statements" safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled our estimates for non-GAAP financial measures to GAAP due to the uncertainty and potential variability of expenses that may be incurred in the future. As a result, a reconciliation is not available without unreasonable effort and we are unable to address the probable significance of the unavailable information. We have provided a reconciliation of other GAAP to non-GAAP financial measures in the financial statement tables for our fourth quarter and full year 2024 and 2023 non-GAAP results included in this press release.

Webcast and Conference Call Information

We will host a conference call for investors on February 11, 2025 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the company's financial results and business highlights. Investors are invited to listen to a live audio webcast of the conference call by visiting the investor relations website at ir.freshworks.com. A replay of the audio webcast will be available shortly after the call on the Freshworks Investor Relations website and will be available for twelve months thereafter.

Explanation of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including revenue adjusted for constant currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income per share, non-GAAP net income attributable to common stockholders, adjusted free cash flow, and adjusted free cash flow margin. This press release and the accompanying tables also contain certain other metrics, including annual recurring revenue, net dollar retention rates, revenue growth rates, and related presentation thereof adjusted for constant currency.

We adjust revenue and related growth rates for constant currency to provide a framework for assessing business performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for currencies other than USD are converted into USD at the average exchange rates in effect during the comparison period (for Q4 2023, the average exchange rates in effect for our major currencies were 1 USD to 1.08 EUR and 1 USD to 1.24 GBP), rather than the actual average exchange rates in effect during the current period (for Q4 2024, the average exchange rates in effect for our major currencies were 1 USD to 1.07 EUR and 1 USD to 1.28 GBP). To present constant currency for full year results, we combine the quarterly constant currency results for the year that were converted into USD at the average exchange rates in effect during the relevant comparison periods (for example, for Q1 2024 results, we use the average exchange rates in effect for Q1 2023).

(MORE TO FOLLOW) Dow Jones Newswires

February 11, 2025 16:10 ET (21:10 GMT)