NASDAQ$FRSH

Freshworks Inc · Q3 2023 earnings

Q3 2023 earnings · · Investor relations

Briefing

Freshworks' Q3 2023 earnings exceeded estimates, driven by product innovation and improved profitability.

Freshworks reported a solid third quarter with revenue growth of 19% year-over-year. The company demonstrated improved business efficiency with positive net cash flow from operating activities and free cash flow. They are raising full year 2023 financial outlook midpoint for non-GAAP operating profit to $40 million.

  • Total revenue was $153.6 million, a 19% increase compared to Q3 2022.
  • GAAP loss from operations was $(38.7) million, an improvement from $(58.3) million in Q3 2022.
  • Non-GAAP income from operations was $17.4 million, compared to a $(3.1) million loss in Q3 2022.
  • Free cash flow was $22.1 million, compared to $(7.2) million in Q3 2022.

Headline financials

Total Revenue

$154M

Previous: $129M+19.3%
EPS (adj)

$0.08

Previous: -$0.01+900.0%
Customers with >$5k ARR

19.6K

Previous: 16.7K+17.0%
Net Dollar Retention Rate

108.0%

Previous: 107.0%+0.9%
Capital Expenditures

-$990K

Previous: -$5.29M+81.3%
Free Cash Flow

-$32M

Previous: -$63.1M+49.3%
Net Income

-$31M

Previous: -$57.8M+46.3%
Operating Income

-$38.7M

Previous: -$58.3M+33.5%
Gross Profit

$127M

Previous: $105M+21.7%
Cash & Equivalents

$458M

Previous: $432M+6.0%
Total Assets

$1.42B

Previous: $1.36B+4.0%
R&D Expense

$34.9M

No prior period
Stock-Based Comp

$55.1M

Previous: $53.9M+2.3%

Revenue & EPS history

Freshworks · Revenue · Quarterly

$154M

Q3 2023+19.3%vs Q3 2022
Beat estimate in 13 of 15 quarters(87%)
ActualEstimate

Forward guidance

Freshworks is providing estimates for the fourth quarter and full year 2023 based on current market conditions and expectations.

Tailwinds

  • Fourth Quarter 2023 Revenue: $156.7 - $159.3 million
  • Fourth Quarter 2023 Year-over-year growth: 18% - 20%
  • Fourth Quarter 2023 Non-GAAP income from operations: $5.5 - $8.5 million
  • Fourth Quarter 2023 Non-GAAP net income per share: $0.04 - $0.06
  • Full Year 2023 Revenue: $593.0 - $595.5 million

Headwinds

  • Full Year 2023 Year-over-year growth: 19% - 20%
  • Full Year 2023 Non-GAAP income from operations: $38.5 - $41.5 million
  • Full Year 2023 Non-GAAP net income per share: $0.23 - $0.25
  • Estimates are subject to various important cautionary factors
  • 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.

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q3 2023

Historical avgQ3 2023

-1.6%

Avg return

Earnings day

-2.6%

Avg return

5 days after

-4.6%

Avg return

30 days after

35%

8 / 23 earnings

Positive

+35.2%

Q3 2024

Best reaction

-21.6%

Q4 2021

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026-0.5%-6.4%+2.9%
Q4 2025-16.4%-17.1%-6.9%
Q3 2025-2.1%+5.2%+16.1%
Q1 2025+3.0%+1.1%+6.5%
Q4 2024-0.3%-4.5%-16.7%
Q3 2024+35.2%+32.7%+33.5%
Q2 2024-6.1%-12.3%-11.9%
Q1 2024-17.8%-20.8%-27.8%
Q4 2023-2.4%+0.2%-14.4%
Q3 2023-0.4%+7.8%+13.6%
Q2 2023+15.8%+12.1%+17.2%
Q1 2023-2.9%-1.1%+16.6%
Q4 2022+4.1%-2.8%-10.1%
Q3 2022-9.9%-9.3%+11.8%
Q2 2021+3.2%+6.8%-13.6%
Q2 2022+12.2%+13.7%-0.7%
Q1 2021-12.0%-15.6%-3.9%
Q1 2022-7.1%-12.9%-10.3%
Q4 2019-5.2%-1.5%+8.1%
Q4 2021-21.6%-5.7%-26.7%
Q3 2020+2.9%-4.1%-28.1%
Q4 2020+2.9%-4.1%-28.1%
Q3 2021-10.7%-20.6%-33.0%
Q2 2020
Q1 2020
Q1 2019
Q4 2018
Q3 2018
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014

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