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Freshworks: Strong Q4 Performance Driven by AI Features


Freshworks, a leading provider of IT services management and customer support software, has reported better-than-expected fourth-quarter numbers, attributing its success, in part, to the rollout of new artificial-intelligence (AI) features in its applications.

Impressive Results

In Q4, Freshworks recorded total revenue of $160.1 million, marking a 20% increase compared to the previous year. This result surpassed the Street consensus forecast of $158.5 million. Furthermore, the company reported adjusted profits per share of 8 cents, exceeding the Street forecast of five cents as tracked by FactSet. Under generally accepted accounting principles, Freshworks posted a loss of 9 cents per share in the quarter.

Outperforming Expectations

Freshworks had initially guided for fourth-quarter revenue between $156.7 million and $159.3 million, with adjusted profits per share expected to range from 4 cents to 6 cents.

Expanding Customer Base

Dennis Woodside, Freshworks’ President, emphasized the company’s successful efforts in attracting larger customers. Freshworks competes with prominent players in the market such as ServiceNow, Salesforce, and Zendesk. Woodside mentioned that the percentage of customers with 250 employees or less has been gradually decreasing compared to larger-scale clients. Notably, during the quarter, the number of customers who spent over $50,000 annually with Freshworks witnessed a significant increase of 31%.

Freshworks continues to distinguish itself in the enterprise-software sector, capitalizing on the integration of cutting-edge AI features and delivering impressive financial results.

Freshworks Reports Strong Growth with the Help of AI

Freshworks, a leading software company, attributes its improving growth to the addition of artificial intelligence (AI) to its portfolio. According to CEO Girish Mathrubootham, they have successfully harnessed the power of generative AI across their products, which has delivered tangible value for their customers.

In the fourth quarter of 2023, Freshworks experienced a significant acceleration in sales thanks to AI. Woodside, a company executive, highlighted that AI has become a recurring topic in conversations with larger customers who are looking for solutions that can future-proof them in the realm of AI. Freshworks closed numerous deals during this period that included AI components.

Furthermore, customers are increasingly recognizing the potential of AI in driving productivity for their customer-service agents and enhancing response quality. This perception has led many CEOs and CFOs to invest more in AI, as they witness the returns in terms of cost savings and improved outcomes. As a result, Freshworks has observed an expansion in IT budgets due to the positive impact of AI.

In terms of financial performance, Freshworks reported revenue of $596.4 million for 2023, an impressive 20% increase compared to the previous year. This exceeded the Street consensus estimate of $594.7 million. Looking ahead, Freshworks projects revenue of $162.5 million to $164.5 million for the March quarter of 2023, with adjusted profits per share expected to be between 7 cents and 8 cents. Moreover, for 2024, the company forecasts revenue of $703.5 million to $711.5 million and expects adjusted profits per share of 29 cents to 31 cents. These projections align closely with market expectations.

Freshworks’ success underscores the transformative role AI plays in the software industry. As the company continues to integrate AI into their solutions, they are well-positioned to meet the evolving needs of their customers and drive further growth.

Freshworks: Heading into Earnings

A Year in Review

Despite experiencing an 8% decline in share value this year, Freshworks has witnessed a commendable 33% growth over the last 12 months. This signifies the company’s ability to navigate the challenges of the market while steadily progressing towards success.

Stay tuned for updates and analysis on Freshworks’ upcoming earnings report.

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