Freshworks Aims for $1 Billion Revenue by 2026, Records Strong 19% Growth in Q3 Consolidated Revenue
- ByStartupStory | November 2, 2023
Nasdaq-listed Software-as-a-Service (SaaS) company Freshworks has released its financial results for the third quarter of 2023, showcasing robust growth and surpassing their revenue estimates. The company reported a consolidated revenue of $153.6 million for the quarter, marking a substantial 19% year-over-year (YoY) increase, exceeding their estimate range of $149 million to $151 million. This impressive growth is attributed to the acquisition of new customers and the retention of existing large clients.
Freshworks also disclosed a Non-GAAP income from operations of $17.4 million, signifying a significant improvement from the non-GAAP loss of $3.1 million in the third quarter of 2022. CEO Girish Mathrubootham expressed his satisfaction during the earnings call, stating, “We delivered another strong quarter, surpassing our own estimates across major financial metrics.”
CFO Dennis Woodside emphasized the company’s growth drivers, with a particular focus on the addition of new, especially larger, customers. In the quarter, nearly 1,000 net customers were onboarded, bringing the total customer count to 66,600. Notably, customers contributing over $50,000 in Annual Recurring Revenue (ARR) exhibited a remarkable 32% YoY growth.
Freshworks also outlined its ambitious outlook, aiming to achieve $1 billion in revenue by 2026, with a strategic focus on attracting larger and higher-yielding customers. This places them in competition with their direct rival, Zoho, which had already reached $1 billion in revenue in 2022.
Further financial metrics revealed positive results for Freshworks. The company’s GAAP (Loss) from Operations improved to $38.7 million from a loss of $58.3 million in the third quarter of 2022. The company reported a net loss of $32 million for the quarter, showcasing a notable improvement from the $57 million loss in Q3 of 2022.
Freshworks’ free cash flow also demonstrated improvement, reaching $22.1 million compared to a negative free cash flow of $7.2 million in the same quarter in 2022. As of September 30, 2023, the company maintained a strong financial position with $1.16 billion in cash, cash equivalents, and marketable securities.
Notably, Freshworks emphasized its commitment to monetizing AI offerings, with plans to monetize the capabilities of its AI chat, Freddy AI, beginning in the first quarter of the following year.
Exciting news! We’re now on WhatsApp Channels too. Subscribe today by clicking the link and stay updated with the latest insights in the startup ecosystem! Click here!
Looking ahead, Freshworks projected its 2023 revenue to fall in the range of $593 million to $596 million, with marginal growth expected in Q4, estimated at $156 million to $159 million. Additionally, the company revised its non-GAAP operating income guidance to a range of $38.5 million to $41 million, up from its previous forecast of $24 million to $32 million. Freshworks also increased its free cash flow estimates to $75 million for the full year, reflecting a $15 million increase.
Follow Startup Story
Related Posts
