Freshworks Inc Class A
Q3 2023 Earnings
Did FRSH Beat Earnings? Q3 2023 Results
Freshworks posted a strong third quarter, beating Wall Street estimates on both revenue and earnings as a meaningful profitability inflection took hold across the business. The cloud software company reported Q3 2023 revenue of $153.55 million, up 19.3% year over year and ahead of the $150.70 million consensus, while non-GAAP diluted EPS of $0.08 beat the $0.05 estimate by 60.00%, a sharp improvement from a loss of $0.01 per share in the year-ago period. The primary driver behind the bottom-line swing was disciplined expense management, with non-GAAP sales and marketing costs dropping to 46.4% of revenue from 53.9% a year earlier, allowing operating leverage to flow through as revenue scaled. Non-GAAP operating income reached $17.40 million, compared to a loss of $3.13 million in Q3 2022. Looking ahead, management guided Q4 revenue of $156.70 million to $159.30 million and raised its full-year 2023 revenue outlook to $593.00 million to $595.50 million, reflecting continued confidence in the company's growth trajectory.
- 19% year-over-year revenue growth (18% constant currency)
- Non-GAAP operating margin improved to 11.3% from negative 2.4% in Q3 2022
- Net dollar retention rate of 108%
- Customers contributing more than $5,000 in ARR grew 17% YoY to 19,551
- Non-GAAP gross margin expanded to 84.0% from 82.8%
- Sales and marketing expense as % of revenue declined to 59.1% (GAAP) from 67.5%
“We delivered another solid quarter of execution as we outperformed our estimates across our key financial metrics and further improved our profitability.”
Freshworks CEO, on the earnings call
Forward Guidance & Outlook
For Q4 2023, Freshworks expects revenue of $156.7–$159.3 million (18–20% YoY growth, 17–19% constant currency), non-GAAP income from operations of $5.5–$8.5 million, and non-GAAP net income per share of $0.04–$0.06. For full year 2023, the company expects revenue of $593.0–$595.5 million (19–20% YoY growth), non-GAAP income from operations of $38.5–$41.5 million (midpoint raised to $40 million), and non-GAAP net income per share of $0.23–$0.25.
FRSH YoY Financials
Figures from SEC filings and company reports. Not investment advice.