Freshworks Posts $18.3 Million Q3 Profit as Revenue Climbs 14%

Larger customers drive growth

CEO Dennis Woodside said the strategy of targeting bigger customers supported the results. New deals that include multiple employee experience products grew more than 35%, and partners took part in more than half of new business. Customers paying over $100,000 in annual recurring revenue (ARR) rose 25% to 1,821, while those above $50,000 grew 18% to 4,257.

Freshworks also crossed $1 billion in ARR after the quarter ended, ahead of its year-end target. One weak spot is net dollar retention, which held at 104% sequentially and slipped from 105% a year ago. New customers included Tata Technologies, Texas Christian University, Unilabs in the UK and Jose Cuervo.

Outlook and restructuring

For the fourth quarter, the company expects revenue of $253.5 million to $254.5 million, about 14% growth. Full-year revenue is forecast at $965 million to $966 million, roughly 15% growth, a narrower range than the earlier $963.5 million to $966.5 million.

Freshworks is positioning itself as an AI-powered service operations platform covering customer experience, employee experience and IT service management. In May it announced plans to cut about 500 jobs, or 11% of its workforce, to focus on growth priorities and its AI push. It bought incident management platform FireHydrant for $88.7 million in cash in January, and more recently acquired Israel-based AI startup Robusta Dev for an undisclosed sum. Robusta's outage investigation and corrective recommendation tools are planned for integration into Freshservice.