Freshworks Raises 2025 Outlook on Strong AI-Driven Growth and Improved Profitability

Freshworks lifts annual revenue, profit forecast on steady demand for AI software

April 29 (Reuters) - Freshworks (FRSH.O), opens new tab raised its annual revenue and profit forecast above Wall Street expectations following upbeat quarterly results on Tuesday, fueled by growing demand for its AI-driven software services. As more businesses digitize their operations, they increasingly rely on AI-powered software products to enhance IT services and automate workflows, benefiting companies like Freshworks. The company now expects full-year 2025 revenue to be between $815.3 million and $824.3 million, compared to its previous forecast of $809 million to $821 million. On average, analysts project annual revenue of $813.3 million, according to data compiled by LSEG. The company raised its annual adjusted profit per share forecast to a range of 56 cents to 58 cents, with the midpoint exceeding estimates of 53 cents. Freshworks, which serves over 72,000 clients, including American Express (AXP.N), opens new tab, Databricks, Nucor (NUE.N), opens new tab and Sony (6758.T), opens new tab, among others, offers a variety of products that help clients automate routine tasks, assist with employee onboarding and management, and provide tailored solutions for customer issues. The company expects its second-quarter revenue to be between $197.3 million and $200.3 million, with the midpoint largely in line with estimates. It also expects an adjusted profit per share in the range of 10 cents to 12 cents for the second quarter, compared to estimates of 11 cents. Revenue for the first quarter ended March 31 grew 19% to $196.3 million, beating estimates of $191.9 million, while adjusted profit per share of 18 cents also exceeded estimates of 13 cents. Reporting by Priyanka.G in Bengaluru; Editing by Mohammed Safi Shamsi Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology

Freshworks Lifts FY2025 Outlook as Q1 Revenue Soars 19% with AI | AIM

For the second quarter, Freshworks expects revenue between $197.3 million and $200.3 million, representing a 13-15% increase over Q2 2024. Freshworks reported a 19% year-over-year increase in its Q1 2025 revenue, reaching $196.3 million, up from $165.1 million in the same quarter last year. The strong performance has prompted the Nasdaq-listed SaaS company to raise its full-year revenue forecast to between $815.3 million and $824.3 million, compared to its previous estimate of $809 million to $820 million. Driven by increasing enterprise adoption and the continued rollout of AI features across its product portfolio, Freshworks now expects a 13-14% year-over-year revenue growth in FY2025. The company also updated its non-GAAP operating income guidance to a range of $139.5 million to $147.5 million, up from the earlier estimate of $131 million to $139 million. "Freshworks had another fantastic quarter, outperforming our previously provided financial estimates in Q1 with revenue growing 19% year-over-year to $196.3 million, operating cash flow margin of 30% and adjusted free cash flow margin of 28%," said Dennis Woodside, CEO & president of Freshworks. For the second quarter, Freshworks expects revenue between $197.3 million and $200.3 million, representing a 13-15% increase over Q2 2024, and projects non-GAAP net income per share of $0.10-$0.12. This is in line with the firm's earlier prediction of reaching $1 billion revenue by FY26. In an earlier conversation with AIM, Shelton Rego, vice president and managing director at Freshworks said that AI has had a very strong tailwind. He emphasised this shift, noting that AI fundamentally changes how businesses interact with software. "Customers don't care about which cloud platform they are using...What they care about is value, use cases, ROI, and time to market," Rego said, adding that the real value lies not in the infrastructure behind AI but in its applications. One of the biggest factors in Freshworks' $1 billion roadmap is the focus on lean and scalable growth. Using AI, the company aims to streamline operations while keeping costs in check. "We want to be as operationally efficient as possible. We want to be able to be very lean when we grow." This ensures that as Freshworks expands its global footprint, it can do so without excessive resource expansion. The firm made significant progress toward profitability in Q1. GAAP loss from operations narrowed to $10.4 million, a considerable improvement from $32.2 million in Q1 2024. Meanwhile, non-GAAP income from operations more than doubled, rising to $46.4 million from $21.8 million in the year-ago period. The company attributed this to better cost control and operational efficiency.

Operating efficiency, customer adoption lift Freshworks Q1 revenue 19%; net loss narrows sharply

Nasdaq-listed software-as-a-service (SaaS) company Freshworks on Tuesday reported a 19% year-on-year increase in revenue to $196.3 million for the quarter ended March 31, 2025, up from $165.1 million a year earlier. The San Mateo (California), and Chennai-headquartered company significantly narrowed its net loss to $1.3 million from $23.3 million in the same period last year, buoyed by higher operating efficiency and increased customer adoption. "Freshworks had another fantastic quarter. We outperformed all our financial metrics for growth and profitability in Q1. We continue to see that our uncomplicated customer and employee service solutions are winning against outdated legacy software vendors," Dennis Woodside, the company's CEO and president, said during the earnings call. "Companies are choosing our AI-powered solutions to remove complexity, improve efficiency and unlock growth." The company posted a non-GAAP income from operations of $46.4 million, more than double the $21.8 million reported in Q1 2024. Net cash provided by operating activities also rose to $58 million, from $40.6 million a year ago. Freshworks said the number of customers contributing more than $5,000 in annual recurring revenue (ARR) rose 13% year-on-year to 23,275 during the quarter, while its net dollar retention rate, a key metric that measures revenue retention from existing customers, improved to 105%, from 103% in Q4 2024, though slightly down from 106% in Q1 last year. Also, total operating expenses for the quarter rose 3% to $176.8 million, from $171.4 million last year, though it managed to reduce its sales and marketing expenses by around 6% during the period. Freshworks currently works with more than 73,000 customers in over 120 countries across multiple verticals, including ecommerce, logistics, financial services, auto and manufacturing. During the quarter, the company onboarded over 1,000 net customers, including All3Media, Broad River Retail, Freudenberg Group, The Christie NHS Foundation Trust, and Veracode. It also launched a new global partner programme aimed at expanding its reseller offerings and service delivery network. Founded in Chennai in 2010, Freshworks initially targeted small and medium businesses (SMBs). However, in recent quarters, the company has increasingly focused on mid-market and enterprise customers to offset macroeconomic softness in its traditional SMB base. According to the company, more than 60% of its total annual recurring revenue (ARR) now comes from these segments. Woodside outlined three strategic imperatives for Freshworks: investing in its employee experience (EX) business; delivering AI capabilities across its products and platforms to drive productivity gains for customers; and accelerating growth in its customer experience solutions. For the second quarter of 2025, Freshworks expects revenue to be in the range of $197.3 million to $200.3 million, representing 13% to 15% year-on-year growth. For the full year, it projects revenue to range between $815.3 million and $824.3 million. Freshworks' AI capabilities, including the Freddy Copilot assistant, are also expected to continue driving adoption and monetisation across its customer and employee experience products.

Why AI Stock Freshworks Trounced the Market Today | The Motley Fool

Next-generation business software developer Freshworks (FRSH 3.42%) was a winner with investors on Wednesday. Following its latest quarterly earnings release, market players were encouraged enough to pile into the stock, pushing it to an over 3% price gain across the trading session. So the stock was up on a generally forgettable day for equities, as the S&P 500 index could only muster an increase of under 0.2%. Freshworks, an eager user of artificial intelligence (AI) technology to power its solutions, booked total revenue of just over $196 million in its first quarter. That figure was 19% higher than the same period of 2024. A more impressive feat was the company's more than doubling of its non-GAAP (adjusted) net income; this came in at $46 million ($0.18 per share) against the year-ago quarter's nearly $22 million. With those key fundamentals, Freshworks notched convincing beats over the consensus analyst estimates. These anticipated a bit over $192 million for revenue and per-share, adjusted net income of $0.13. The company also topped its own guidance. Another positive for Freshworks is that it's clearly getting clients to spend more on its solutions. It said the number of customers contributing over $5,000 to the company's annual recurring revenue saw a 13% year-over-year increase to 23,275. Like its trailing results, Freshworks's revenue guidance topped the average analyst estimates. It proffered forecasts for both its current (second) quarter and the entirety of 2025. For the latter period, it's expecting to earn revenue of $815.3 million to $824.3 million. Collectively, pundits tracking the stock are modeling slightly over $213 million. Freshworks anticipates netting an adjusted profit of $0.56 to $0.58 per share, meanwhile.

Freshworks projects $824.3M revenue for FY2025 with strong AI and EX growth (NASDAQ:FRSH)

CEO Dennis Woodside highlighted a strong performance for Q1 2025, with revenue reaching $196.3 million, a year-over-year growth of 19%. The non-GAAP operating margin improved significantly to 24%, and adjusted free cash flow margin was Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.