Freshworks (FRSH) recently announced an integration with Zuper, which will help it enhance customer relationships and experiences for businesses with field service teams. Zuper’s direct integration with Freshdesk will smoothen up seamless data flow and sharing without the need to switch platforms.The Freshworks-Zuper integration is now available on the Freshworks Marketplace, which is powered by the Freshworks Neo platform. The platform allows developers to easily build and publish apps that integrate with ...

Freshworks (FRSH) shares have jumped 30.4% in the past six months, outperforming the Zacks Computer & Technology sector’s return of 7.9%. It has been benefiting from a strong portfolio that helped in attracting new clients.In third-quarter 2023, Freshworks reported revenues of $153.6 million, up 19% year over year. The number of customers contributing more than $5,000 in annual recurring revenues was 19,551, up 17% year over year.Freshworks has expanded its portfolio with the launch of an AI-powered Custome ...

Freshworks' (FRSH) trajectory has changed course drastically since it brought in a new president 15 months ago. The software maker overhauled its go-to-market strategy in an effort to nail bigger deals in a new market, and FRSH stock is up 66% this year as a result.X Started in India in 2010, Freshworks launched its initial public offering in September 2021. The IPO raised more than $1 billion, buoying India's high-tech industry. Shares traded up the first day but soon nose-dived before touching bottom in J ...

Core Insights - Freshworks Inc. has reported significant growth in its customer engagement tools, with Freshsales experiencing a 24% increase and Freshdesk achieving a 58% increase in customer satisfaction [1] Group 1: Company Performance - Freshworks Inc. (NASDAQ: FRSH) has announced a partnership with Lalamove to enhance its customer engagement solutions through Freshdesk and Freshsales [1] - The partnership aims to improve customer experience by integrating Lalamove's logistics services with Freshworks' CRM tools [1] - Freshworks serves over 65,000 customers, including notable companies like American Express and Databricks [2] Group 2: Product Development - The collaboration with Lalamove will utilize Freshworks' Unified Customer Record (UCR) to provide a comprehensive view of customer interactions [1] - Freshsales and Freshdesk are designed to streamline customer engagement processes, contributing to the reported increases in customer satisfaction [1] - The integration is expected to enhance operational efficiency and customer service capabilities for Lalamove [1]

PART I [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents Freshworks Inc.'s unaudited condensed consolidated financial statements and management's discussion for the period ended September 30, 2023 [Item 1. Financial Statements (unaudited)](index=6&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) Presents Freshworks Inc.'s unaudited condensed consolidated financial statements for Q3 2023, including Balance Sheets, Statements of Operations, and Cash Flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes Freshworks Inc.'s financial position as of September 30, 2023, detailing assets, liabilities, and stockholders' equity Balance Sheet Summary (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $1,319,501 | $1,277,010 | | **Total assets** | **$1,418,088** | **$1,380,216** | | **Total current liabilities** | $305,721 | $271,692 | | **Total liabilities** | **$359,604** | **$328,398** | | **Total stockholders' equity** | **$1,058,484** | **$1,051,818** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Freshworks Inc.'s financial performance for the three and nine months ended September 30, 2023, including revenue, gross profit, and net loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $153,550 | $128,760 | $436,321 | $364,829 | | **Gross Profit** | $127,287 | $104,581 | $359,961 | $294,213 | | **Loss from operations** | $(38,735) | $(58,288) | $(130,131) | $(172,764) | | **Net loss** | **$(31,033)** | **$(57,843)** | **$(109,355)** | **$(176,655)** | | **Net loss per share** | $(0.11) | $(0.20) | $(0.37) | $(0.62) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines Freshworks Inc.'s cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $55,312 | $(9,692) | | **Net cash provided by (used in) investing activities** | $146,280 | $(161,074) | | **Net cash used in financing activities** | $(47,409) | $(144,716) | | **Net increase (decrease) in cash** | $154,183 | $(315,482) | | **Cash, cash equivalents and restricted cash, end of period** | $458,341 | $432,382 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and financial data, covering revenue recognition, marketable securities, and stock-based compensation Disaggregation of Revenue (in thousands) | Service Offering | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Subscription services | $150,033 | $425,755 | | Professional services | $3,517 | $10,566 | | **Total revenue** | **$153,550** | **$436,321** | - As of September 30, 2023, the company had **$375.8 million** in remaining performance obligations, of which **$285.0 million** is expected to be recognized as revenue in the next 12 months[55](index=55&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Cost of revenue | $1,710 | $5,137 | | Research and development | $9,623 | $28,662 | | Sales and marketing | $18,757 | $51,786 | | General and administrative | $25,035 | $74,482 | | **Total** | **$55,125** | **$160,067** | - As of September 30, 2023, total unrecognized stock-based compensation expense was **$458.4 million**, expected to be recognized over a weighted-average period of approximately **2.8 years** for RSUs/PRSUs and **2.9 years** for stock options[94](index=94&type=chunk) Revenue by Geographic Location (in thousands) | Region | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | North America | $68,847 | $194,158 | | Europe, Middle East and Africa | $59,128 | $168,332 | | Asia Pacific | $21,111 | $61,497 | | Other | $4,464 | $12,334 | | **Total revenue** | **$153,550** | **$436,321** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2023 financial performance, highlighting 19% revenue growth, improved operating losses, and positive free cash flow [Overview and Key Business Metrics](index=29&type=section&id=Overview%20and%20Key%20Business%20Metrics) Freshworks' Q3 2023 revenue grew 19% to **$153.6 million**, with narrowed operating loss, tracking key metrics like large customers and net dollar retention Key Business Metrics | Metric | Sep 30, 2023 | Sep 30, 2022 | % Growth | | :--- | :--- | :--- | :--- | | Customers contributing >$5,000 in ARR | 19,551 | 16,713 | 17% | | Net dollar retention rate | 108% | 107% | N/A | - On a constant currency basis, the net dollar retention rate was **106%** as of September 30, 2023, a decrease from **107%** a year prior, primarily due to lower expansion within existing customers driven by macroeconomic pressures[116](index=116&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like non-GAAP income from operations and free cash flow to assess performance, reporting positive results for Q3 2023 Reconciliation of GAAP to Non-GAAP Income (Loss) from Operations (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Loss from operations (GAAP) | $(38,735) | $(58,288) | | Stock-based compensation expense | $55,125 | $53,892 | | Other adjustments | $1,008 | $1,270 | | **Non-GAAP income (loss) from operations** | **$17,398** | **$(3,126)** | Reconciliation to Free Cash Flow (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $23,913 | $(4,223) | | Less: Purchases of property and equipment | $(278) | $(1,907) | | Less: Capitalized internal-use software | $(1,564) | $(1,106) | | **Free cash flow** | **$22,071** | **$(7,236)** | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Compares Q3 2023 and 2022 financial results, showing 19% revenue growth, improved gross margin, and controlled operating expense increases - Q3 2023 revenue increased by **$24.8 million (19%)** YoY, with **$16.2 million** from new customers and **$8.6 million** from existing customers[144](index=144&type=chunk) - Gross margin for Q3 2023 increased to **83%** from **81%** in Q3 2022, reflecting benefits from economies of scale and cost structure improvements[145](index=145&type=chunk)[146](index=146&type=chunk) - Total operating expenses for Q3 2023 increased by only **2%** YoY, primarily due to a **4%** rise in Sales and Marketing costs, while Research and Development expenses decreased by **3%**[147](index=147&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Freshworks held **$1.16 billion** in cash and marketable securities as of September 30, 2023, generating **$55.3 million** in operating cash flow for the nine months - The company's cash, cash equivalents, and marketable securities totaled approximately **$1.16 billion** as of September 30, 2023[164](index=164&type=chunk) - For the nine months ended September 30, 2023, net cash provided by operating activities was **$55.3 million**, a significant improvement from a net cash use of **$9.7 million** in the same period of 2022[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from foreign currency and interest rate fluctuations, using forward contracts to hedge Indian Rupee exposure - The company's primary foreign currency exposures are to the Indian Rupee, British Pound, and Euro[186](index=186&type=chunk) - To mitigate currency risk, the company entered into foreign exchange forward contracts to hedge a portion of forecasted expenses in Indian Rupee, with a total notional amount of **$49.4 million** outstanding as of September 30, 2023[187](index=187&type=chunk) - A sensitivity analysis indicates that a hypothetical **10%** adverse change in foreign currency rates or a **100 basis point** movement in interest rates would not have a material effect on the company's financial statements[189](index=189&type=chunk)[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures are effective[192](index=192&type=chunk) - No changes were identified in the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[193](index=193&type=chunk) PART II [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) Details legal proceedings, risk factors, and other significant information not covered in the financial statements [Item 1. Legal Proceedings](index=45&type=section&id=ITEM%201.%20Legal%20Proceedings) The company faces securities class action and stockholder derivative complaints related to IPO disclosures, which it intends to vigorously defend - A securities class action complaint was filed on November 1, 2022, alleging violations of the Securities Act of 1933 in connection with the IPO[196](index=196&type=chunk) - A stockholder derivative complaint was filed on March 20, 2023, based on similar allegations as the class action, and this case has been stayed pending the securities class action[197](index=197&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors were reported in the current quarter - The company states there have been no material changes to the risks and uncertainties previously disclosed in its Q1 2023 Form 10-Q[199](index=199&type=chunk) [Item 5. Other Information](index=46&type=section&id=ITEM%205.%20Other%20Information) Discloses adoption of Rule 10b5-1 trading plans by officers and directors, and the departure of the Chief Marketing Officer Rule 10b5-1 Trading Plan Adoptions (Q3 2023) | Name | Title | Adoption Date | Total Securities to be Sold | | :--- | :--- | :--- | :--- | | Tyler Sloat | Chief Financial Officer | Sep 6, 2023 | Up to 400,000 shares | | Sameer Gandhi | Director | Sep 19, 2023 | Up to 100,000 shares | | Barry Padgett | Director | Sep 14, 2023 | Up to 38,356 shares | - Stacey Epstein, the company's former Chief Marketing Officer, departed the company on September 15, 2023[205](index=205&type=chunk)

Freshworks Inc. (NASDAQ:FRSH) Q2 2023 Earnings Conference Call August 1, 2023 5:00 PM ET Corporate Participants Joon Huh - Vice President of Investor Relations Girish Mathrubootham - Chief Executive Officer Dennis Woodside - President Tyler Sloat - Chief Financial Officer Conference Call Participants Brent Bracelin - Piper Sandler Ryan MacWilliams - Barclays Pinjalim Bora - JPMorgan Brian Peterson - Raymond James Patrick Walravens - JMP Securities DJ Hynes - Canaccord Genuity Elizabeth Porter - Morgan Stanl ...

Part I. [FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (unaudited)](index=6&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) The unaudited financial statements for Q2 and H1 2023 reflect revenue growth, a reduced net loss, and a positive operating cash flow, with total assets reaching $1.40 billion [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets were $1.40 billion, a slight increase from $1.38 billion at December 31, 2022, driven by higher cash and cash equivalents and deferred revenue Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $356,220 | $304,083 | | Marketable securities | $804,646 | $843,405 | | Total current assets | $1,303,296 | $1,277,010 | | **Total assets** | **$1,400,307** | **$1,380,216** | | **Liabilities & Equity** | | | | Deferred revenue | $234,358 | $205,626 | | Total current liabilities | $291,556 | $271,692 | | **Total liabilities** | **$342,654** | **$328,398** | | **Total stockholders' equity** | **$1,057,653** | **$1,051,818** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2023, revenue grew 19% year-over-year to $145.1 million, and net loss narrowed significantly to $35.7 million, with similar improvements for the six-month period Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $145,079 | $121,432 | $282,771 | $236,069 | | Gross Profit | $120,218 | $97,390 | $232,674 | $189,632 | | Loss from operations | $(43,289) | $(67,352) | $(91,396) | $(114,476) | | Net loss | $(35,658) | $(69,753) | $(78,322) | $(118,812) | | Net loss per share | $(0.12) | $(0.24) | $(0.27) | $(0.42) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company generated $31.4 million in cash from operating activities, a significant turnaround from the prior year's cash usage Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $31,399 | $(5,469) | | Net cash provided by (used in) investing activities | $44,136 | $(20,864) | | Net cash used in financing activities | $(23,380) | $(131,351) | | **Net increase (decrease) in cash** | **$52,155** | **$(157,684)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies and provide breakdowns of financial statement items, including revenue by service and geography, stock-based compensation, and contractual commitments Revenue by Service Offering (in thousands) | Service Offering | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Subscription services | $141,699 | $118,393 | $275,722 | $229,790 | | Professional services | $3,380 | $3,039 | $7,049 | $6,279 | | **Total revenue** | **$145,079** | **$121,432** | **$282,771** | **$236,069** | - As of June 30, 2023, the company had **$350.8 million** in remaining performance obligations, of which **$267.8 million** is expected to be recognized as revenue in the next 12 months[54](index=54&type=chunk) Revenue by Geographic Location (in thousands) | Region | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | North America | $64,244 | $52,117 | $125,311 | $100,890 | | Europe, Middle East and Africa | $56,338 | $47,878 | $109,204 | $93,383 | | Asia Pacific | $20,361 | $18,240 | $40,386 | $35,719 | | Other | $4,136 | $3,197 | $7,870 | $6,077 | | **Total revenue** | **$145,079** | **$121,432** | **$282,771** | **$236,069** | - As of June 30, 2023, total unrecognized stock-based compensation expense was **$533.8 million**, expected to be recognized over a weighted-average period of approximately **2.9 years** for RSUs/PRSUs and **3.2 years** for stock options[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 revenue growth driven by customer expansion, a net dollar retention rate of 108%, improved non-GAAP operating income, and positive free cash flow, affirming sufficient liquidity [Overview and Macroeconomic Factors](index=28&type=section&id=Overview%20and%20Macroeconomic%20Factors) Freshworks provides modern SaaS products for customer and employee engagement, with Q2 2023 revenue growing 19% year-over-year despite macroeconomic uncertainties and foreign currency risks - The company's mission is to make it fast and easy for businesses to delight their customers and employees through modern SaaS products[106](index=106&type=chunk) - Macroeconomic uncertainties, including inflation and geopolitical developments, could adversely affect demand for the company's products and services[109](index=109&type=chunk) - Approximately **27%** of revenue in Q2 2023 was exposed to the Euro and British Pound, highlighting foreign currency risk[109](index=109&type=chunk) [Key Business Metrics](index=29&type=section&id=Key%20Business%20Metrics) As of June 30, 2023, customers with over $5,000 in ARR grew 18% year-over-year to 19,105, accounting for 88% of total ARR, though the net dollar retention rate decreased to 108% due to macroeconomic pressures Key Business Metrics Comparison | Metric | June 30, 2023 | June 30, 2022 | % Growth | | :--- | :--- | :--- | :--- | | Customers > $5,000 in ARR | 19,105 | 16,212 | 18% | | ARR from Customers > $5,000 in ARR | 88% | 86% | N/A | | Net dollar retention rate | 108% | 111% | N/A | - The decrease in net dollar retention rate from **111%** to **108%** was primarily due to lower expansion within existing customers, attributed to macroeconomic pressures[116](index=116&type=chunk) [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) Freshworks uses non-GAAP measures, reporting Q2 2023 non-GAAP income from operations of $11.7 million and free cash flow of $18.1 million, indicating improved profitability Reconciliation of GAAP Loss from Operations to Non-GAAP Income (Loss) from Operations (in thousands) | Description | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Loss from operations (GAAP) | $(43,289) | $(67,352) | | Stock-based compensation expense | $54,248 | $50,135 | | Other adjustments | $763 | $1,422 | | **Non-GAAP income (loss) from operations** | **$11,722** | **$(15,795)** | Reconciliation to Free Cash Flow (in thousands) | Description | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $19,895 | $(6,824) | | Less: Purchases of property and equipment | $(329) | $(1,984) | | Less: Capitalized internal-use software | $(1,486) | $(1,378) | | **Free cash flow** | **$18,080** | **$(10,186)** | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q2 2023 revenue increased 19% year-over-year to $145.1 million, driven by customer growth and improved gross margin, leading to a reduced operating loss despite higher personnel costs - Q2 2023 revenue increased by **$23.6 million (19%)** YoY, with **$16.3 million** from new customers and **$7.3 million** from existing customers[145](index=145&type=chunk) - Q2 2023 sales and marketing expense decreased by **$2.1 million (2%)** YoY, primarily due to a **$5.2 million** reduction in advertising, marketing, and branding expenses[150](index=150&type=chunk) - Interest income for Q2 2023 surged **434%** YoY to **$11.3 million**, driven by higher interest rates on the company's marketable securities portfolio[152](index=152&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, Freshworks maintained a strong liquidity position with $356.2 million in cash and $804.6 million in marketable securities, generating positive operating cash flow and affirming sufficient funds for the next 12 months - The company has a strong liquidity position with **$356.2 million** in cash and cash equivalents and **$804.6 million** in marketable securities as of June 30, 2023[165](index=165&type=chunk) - The company believes its existing cash, cash equivalents, and marketable securities will be sufficient to meet its needs for at least the next **12 months**[168](index=168&type=chunk) - As of June 30, 2023, remaining performance obligations totaled **$350.8 million**, consisting of **$234.4 million** in deferred revenue and **$116.4 million** in unbilled revenue[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are foreign currency fluctuations and interest rate risk, which are mitigated by hedging strategies and are not expected to materially affect financial statements - The company is primarily exposed to market risks from fluctuations in foreign currency exchange rates (especially **INR, GBP, EUR**) and interest rates[185](index=185&type=chunk)[186](index=186&type=chunk) - To reduce foreign currency risk, the company entered into foreign exchange forward contracts to hedge a portion of its forecasted expenses in Indian Rupee, with a total notional amount of **$43.6 million** as of June 30, 2023[187](index=187&type=chunk) - A sensitivity analysis indicates that a hypothetical **10%** adverse change in foreign currency rates or a **100 basis point** change in interest rates would not materially affect the company's financial statements[189](index=189&type=chunk)[191](index=191&type=chunk) [Controls and Procedures](index=43&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[192](index=192&type=chunk) - No changes were identified in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[193](index=193&type=chunk) Part II. [OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=44&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is facing two significant legal actions: a securities class action complaint alleging material misstatements in IPO documents and a related stockholder derivative complaint - A securities class action complaint was filed against the company, certain officers, directors, and IPO underwriters, alleging violations of the Securities Act of 1933. A motion to dismiss is pending[197](index=197&type=chunk) - A stockholder derivative complaint was filed against the company's current directors, which has been stayed pending the outcome of the securities class action[198](index=198&type=chunk) [Risk Factors](index=44&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023 - The company states there have been no material changes from the risks and uncertainties previously disclosed in its Q1 2023 Form 10-Q[200](index=200&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities and no use of proceeds from such sales during the period - There were no unregistered sales of equity securities during the reporting period[201](index=201&type=chunk)[202](index=202&type=chunk) [Other Information](index=45&type=section&id=ITEM%205.%20Other%20Information) During the second quarter of 2023, several Section 16 officers and directors adopted Rule 10b5-1 trading plans for the potential sale of company securities Adoption of Rule 10b5-1 Trading Plans | Name | Title | Adoption Date | Total Securities to be Sold (shares) | | :--- | :--- | :--- | :--- | | Rathna Girish Mathrubootham | Chief Executive Officer and Chairman | June 14, 2023 | Up to 1,900,000 | | Srinivasagopalan Ramamurthy | Chief Product Officer | June 16, 2023 | Up to 400,000 | | Johanna Flower | Director | June 14, 2023 | Up to 55,400 | | Jennifer Taylor | Director | May 9, 2023 | Up to 95,242 | [Exhibits](index=46&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO, and XBRL data files - The report includes required certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002, as well as XBRL interactive data files[210](index=210&type=chunk)

Financial Performance - Total revenue for the three months ended March 31, 2023, was $137.7 million, representing a year-over-year growth rate of 20% compared to $114.6 million in the same period of 2022[103] - Revenue for the three months ended March 31, 2023, was $137.7 million, a 20% increase from $114.6 million in the same period of 2022[138] - Non-GAAP income from operations for the three months ended March 31, 2023, was $3.9 million, compared to a loss of $0.6 million in the same period of 2022[118] - Net loss for Q1 2023 was $42.7 million, compared to a net loss of $49.1 million in Q1 2022, reflecting a reduction in loss before income taxes[138] - The company incurred operating losses of $48.1 million for the three months ended March 31, 2023, compared to $47.1 million in the same period of 2022[103] Customer Metrics - The number of customers contributing more than $5,000 in annual recurring revenue (ARR) increased to 18,441 as of March 31, 2023, up from 15,639 in 2022[108] - The net dollar retention rate decreased to 107% as of March 31, 2023, down from 115% in the same period of 2022, primarily due to lower expansion within existing customers driven by macroeconomic pressures[112] - The company reported a net dollar retention rate of 107% as of March 31, 2023, down from 115% a year earlier, indicating slower expansion within existing customers[142] - Monthly subscriptions represented 19% of ARR as of March 31, 2023, down from 23% in 2022[111] Cash Flow and Liquidity - Free cash flow for the three months ended March 31, 2023, was $9.1 million, a significant improvement from a negative free cash flow of $1.4 million in 2022[121] - Cash and cash equivalents as of March 31, 2023, totaled $344.5 million, with marketable securities amounting to $806.1 million[152] - Net cash provided by operating activities for Q1 2023 was $11.5 million, reflecting a net loss of $42.7 million, adjusted for non-cash items including stock-based compensation of $50.7 million[158] - Net cash provided by investing activities for Q1 2023 was $41.3 million, primarily from $43.7 million in proceeds from maturities and sales of marketable securities[160] - Net cash used in financing activities for Q1 2023 was $12.4 million, entirely for payment of withholding taxes on net share settlement of equity awards[162] Operating Expenses - Total operating expenses increased by $21.2 million, or 15%, to $160.6 million in Q1 2023, primarily due to higher personnel-related costs and stock-based compensation[145] - Research and development expenses rose by 7% to $32.9 million in Q1 2023, driven by increased personnel-related costs[146] - Sales and marketing expenses increased by 21% to $86.8 million in Q1 2023, largely due to higher personnel costs and stock-based compensation[147] Profitability and Margins - Gross profit margin improved to 82% for Q1 2023, up from 80% in Q1 2022, driven by economies of scale and cost structure improvements[144] Future Obligations and Contracts - Remaining performance obligations as of March 31, 2023 totaled $325.6 million, consisting of $220.6 million in deferred revenue and $105.0 million in unbilled revenue[165] - Estimated future contractual obligations as of March 31, 2023 totaled $126.4 million, with $33.4 million in operating lease commitments and $93.0 million in other contractual obligations[168] Foreign Currency and Interest Rates - Approximately 26% of revenue exposure was related to the Euro and British Pound Sterling for the quarters ended March 31, 2023, and December 31, 2022[104] - The total notional amount of outstanding designated foreign currency forward contracts as of March 31, 2023 was $22.3 million[175] - A hypothetical 100 basis points movement in interest rates would not have a material effect on the combined market value of cash, cash equivalents, and marketable securities[179] - Interest income surged to $9.3 million in Q1 2023, a 1050% increase from $0.8 million in Q1 2022, due to higher balances in marketable securities[149] Taxation - Provision for income taxes increased by 59% to $4.0 million in Q1 2023, primarily due to higher profits in foreign jurisdictions[151] Other Metrics - The net cash outflows from changes in operating assets and liabilities for Q1 2023 were $3.8 million, driven by increases in operating assets[158] - The company does not utilize fluctuations in remaining performance obligations as a key management metric internally[166]

Freshworks Inc. (NASDAQ:FRSH) Q1 2023 Earnings Conference Call May 2, 2023 5:00 PM ET Company Participants Joon Huh - VP of IR Girish Mathrubootham - CEO Dennis Woodside - President Tyler Sloat - CFO Conference Call Participants Elizabeth Porter - Morgan Stanley Brent Thill - Jefferies Pinjalim Bora - JPMorgan Adam Bergere - Bank of America Brent Bracelin - Piper Sandler Brian Peterson - Raymond James Pat Walravens - JMP Securities Ryan MacWilliams - Barclays Nick Altmann - Scotiabank Brett Knoblauch - Cant ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K __________________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-40806 __________________________________________ Freshworks Inc. __________________________________________ (Exact n ...