Core Insights - Freshworks has launched the next generation of its Freddy Agentic AI Platform, which not only answers service questions but also resolves them by taking actions across various business applications [1][4][9] - The introduction of the Freddy AI Agent Studio allows businesses to create and deploy autonomous AI agents without coding, enhancing customer support scalability [2][5][11] Product Features - The Freddy AI Agent Studio simplifies the process for customer service teams to build, test, and launch AI agents quickly, enabling them to autonomously handle tasks like issuing refunds and checking order statuses [5][7] - New capabilities include the Freddy AI Agent for email, which automates email support by analyzing incoming messages and drafting contextual replies [6][12] - The platform features a Skills Library and Skills Builder, allowing for the creation of custom skills for AI agents to resolve service requests efficiently [7][8] Performance Metrics - Since its initial release in 2023, Freddy AI has helped over 5,000 organizations achieve significant operational improvements, including up to 70% ticket deflection and 50% productivity gains [10][14] - Companies like Hobbycraft and Five9 have reported substantial improvements in customer satisfaction and operational efficiency through the use of Freddy AI [14] Market Impact - The shift towards agentic AI represents a significant evolution in support operations, particularly benefiting mid-market organizations that lack technical resources [11][15] - Freshworks aims to democratize AI deployment, making advanced capabilities accessible to a broader range of businesses [11][15]

Freshworks (FRSH) 2025 Conference Summary Company Overview - Freshworks is focused on scaling its operations, particularly in the SMB (Small and Medium-sized Business) sector, with a strong emphasis on AI integration and customer satisfaction [5][6]. Key Industry Insights - The adoption of AI, particularly through the Freddie Copilot, has accelerated among customers, with a current attach rate exceeding 20% [9]. - Customers are increasingly seeking efficiencies and improved customer satisfaction rather than merely cost-cutting measures [13]. - The company has seen a 7% growth in Annual Recurring Revenue (ARR) in its CX (Customer Experience) business, which is consistent with previous quarters [29]. Core Business Strategies - Freshworks is focusing on enhancing customer satisfaction and retention while driving efficiency through AI solutions [13]. - The company is shifting its pricing strategy towards more intuitive models, such as usage-based pricing, although current pricing remains per agent [18][19]. - Freshworks is actively revamping its partner relationships to foster more collaborative and performance-based partnerships [39][40]. Customer Engagement and Market Position - Customers are increasingly asking for integrated solutions that streamline interactions across multiple channels, including voice, social media, and email [45]. - The company has a strong competitive position against larger firms like Zendesk and ServiceNow, primarily due to its simplicity and cost-effectiveness [66][71]. - Freshworks has implemented a strategy to convert free users to paid plans by limiting the number of free agents and the duration of free usage, resulting in significant conversion rates [82][84]. Financial Performance and Growth Opportunities - The company is experiencing healthy expansion in its business, particularly in AI investments and add-ons, which are contributing to increased Average Contract Value (ACV) [14][15]. - Freshworks is seeing a trend where customers are willing to invest in solutions that promise faster ROI, even amidst macroeconomic uncertainties [60][62]. Future Outlook - The company is preparing for upcoming product announcements and innovations aimed at enhancing customer experience and operational efficiency [26][34]. - Freshworks is committed to maintaining its focus on the SMB market, which is less complex and more aligned with its product offerings compared to larger enterprises [72][75]. Additional Insights - The macroeconomic environment has not deterred customers from investing; instead, it has prompted them to seek solutions that offer greater efficiencies [63]. - Freshworks is leveraging its existing customer base to demonstrate the effectiveness of its AI solutions, which is a significant selling point in competitive scenarios [46][50].

Freshworks (FRSH) Conference Summary Company Overview - Freshworks is an enterprise software company founded 15 years ago, initially as FreshDesk for customer support software, later evolving to include Freshservice and rebranding to Freshworks [4][5] - The company focuses on two main categories: Customer Experience (CX) products and Employee Experience (EX) products, with a strong emphasis on human-enabled AI products [5] Key Points Business Strategy and Growth - Freshservice now accounts for over 50% of the company's Annual Recurring Revenue (ARR), growing faster than Freshdesk, which has an ARR of $370 million and is growing at high single digits [7][8] - The market for Freshworks is expected to grow in the low to mid-teens, and the company aims to return Freshdesk to double-digit growth by refocusing on the SMB and low mid-market segments [7][30] - The appointment of CEO Dennis Woodside has led to a renewed focus on operational rigor and strategic execution, with a clear plan to prioritize EX products and AI integration across all offerings [10][11][12] AI Integration - Freshworks has developed three AI products: Freddie Co-Pilot, Freddie AI Agent, and Freddie Insights, which are integral to the company's strategy moving forward [12] - The company believes that AI will change how software is delivered and used, with a focus on making products easier to deploy and use [24][25] - AI products are currently not a significant revenue stream but are expected to become more material over time, with a shift towards consumption-based pricing models [35][37] Market Position and Competition - Freshworks is positioned well against legacy providers like BMC and ServiceNow, filling a gap in the market for easy-to-deploy enterprise-grade software [15][16] - The company has made its first acquisition of Device42, enhancing its EX offerings and competitiveness in the enterprise space [13] Financial Performance and Projections - The company reported an ARR growth of around 19%, with guidance for 13% to 15% growth moving forward [41][45] - Freshworks has a healthy balance sheet with $1 billion in cash and is actively engaging in a $400 million buyback program [49][50] - The company aims to maintain efficiency while growing, projecting over $200 million in free cash flow for the year [50] Employee Structure and Operational Efficiency - Over 80% of Freshworks' employees are based in India, providing a cost advantage and operational efficiency [56][58] - The company underwent a headcount reduction of 13% to improve focus and efficiency, emphasizing the need for the right people in the right roles [59][60] Additional Insights - The company is focused on execution in its sales motion and improving conversion rates, particularly in the CX segment, which is currently growing at high single digits [30][32] - Freshworks is committed to innovation in AI while ensuring that core functionalities remain strong, as customers still value traditional support features [39][40]

Freshworks (FRSH) FY Conference Summary Company Overview - Freshworks was founded in Chennai, India in 2011 by Girish Mathrubootham, initially launching Freshdesk, a customer support tool aimed at small businesses [5][6] - The company is guiding for $820 million in revenue for the full year, with a cash flow margin of 26% [6] Business Segments - **Employee Experience (EX)**: - Revenue: $420 million in ARR, growing at 33% last quarter [7][20] - Target market: Mid-market customers, typically companies with around 5,000 employees [8] - **Customer Experience (CX)**: - Revenue: $370 million in ARR, growing at 7% year-over-year [7] - Typical customers are smaller businesses needing flexible customer support tools [9] Strategic Focus Areas 1. **Employee Experience (EX)**: - Identified as the largest and fastest-growing business segment with a favorable competitive landscape [12][13] - Focus on capturing the mid-market, which is currently underserved by competitors [14][23] 2. **Artificial Intelligence (AI)**: - Launched AI products like CoPilot, which has 2,700 paying customers and provides a 30% productivity improvement [15] - AI Agent product for CX is designed to deflect tickets and improve customer interactions [15][50] 3. **Stabilizing and Accelerating CX Growth**: - Aiming to stabilize growth in the CX segment and eventually accelerate it through product improvements and better market strategies [17][49] Market Opportunities - The total addressable market (TAM) for automating IT departments is vast, with every company needing solutions for productivity and asset management [23][24] - The acquisition of Device42 enhances asset management capabilities, which is crucial for larger deals [32][33] Competitive Landscape - Freshworks is increasingly seen as a viable alternative to established players like ServiceNow and BMC, especially in the mid-market [45] - The company is gaining traction against Zendesk due to its simpler, more cost-effective solutions [55] AI Integration and Adoption - AI products are expected to drive efficiency and reduce labor costs for customers, with deflection rates of 70-80% for internal usage and around 50% for CX [64][66] - The transition to AI-driven models is anticipated to enhance overall revenue, moving from seat-based to interaction-based monetization [69] Financial Performance and Projections - Freshworks reported a 19% year-over-year growth in ARR [81] - The company aims to maintain this growth by executing effectively in the EX segment, innovating in AI, and improving the CX business [82][83] Macro Environment - The company has not seen significant impacts from macroeconomic factors, positioning itself as a cost-effective solution during recessionary periods [78] Leadership and Organizational Changes - The departure of a key leader in the go-to-market team is not expected to adversely affect business operations, with capable leaders in place [79][80] Conclusion - Freshworks is strategically focused on enhancing its EX offerings, leveraging AI for growth, and stabilizing its CX segment to capture a larger market share while maintaining strong financial performance.

Core Viewpoint - Freshworks (NASDAQ: FRSH) is rated as a hold, reflecting the belief that the stock price is currently justified by its performance and market conditions [1]. Financial Performance - The 1Q25 results showed solid performance in both growth and margin, indicating a positive financial trajectory for the company [1]. Market Conditions - The company faces macroeconomic headwinds, which could impact future performance [1]. - There is an ongoing internal restructuring of the go-to-market strategy, which may affect operational efficiency [1]. - Uncertainty surrounding AI monetization poses additional risks to the company's growth potential [1]. Investment Philosophy - The investment approach emphasizes understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1]. - The focus is on identifying businesses with the potential for long-term free cash flow generation and shareholder value creation [1]. - The analyst aims to provide accessible and analytical insights to help investors focus on long-term equity value drivers [1].

Group 1 - The analysis begins coverage on Freshworks (NASDAQ: FRSH) and discusses its business model, recent financial performance, valuation, and reasons for a 'Buy' rating for long-term investors [1] Group 2 - No relevant content available for this section [2][3]

Group 1 - The Q1 earnings season is showing relative calm despite volatility since April 2, with investors actively buying on dips to capitalize on potential rebounds [1] - Gary Alexander has extensive experience in technology sectors, having worked on Wall Street and in Silicon Valley, and advises seed-round startups, indicating a strong understanding of current industry trends [1] Group 2 - The article emphasizes the importance of investor sentiment and behavior during earnings seasons, highlighting a trend of buying on dips as a strategy to avoid missing out on rebounds [1]

Financial Data and Key Metrics Changes - In Q1 2025, revenue grew 19% year over year to $196.3 million, with a non-GAAP operating margin of 24% and an adjusted free cash flow margin of 28% [6][29][31] - Adjusted free cash flow increased by 43% year over year to $55.4 million, reflecting strong collection activities and operational efficiencies [29][36] - The company achieved a rule of 47 in Q1, indicating strong growth and profitability [6] Business Line Data and Key Metrics Changes - Employee Experience (EX) business reached over $420 million in ARR, growing 33% year over year [8][31] - Customer Experience (CX) business generated over $370 million in ARR, reflecting 7% year over year growth [21][31] - The company added over 1,000 net customers in Q1, ending with over 73,300 total customers [6][34] Market Data and Key Metrics Changes - Net dollar retention remained stable at 105% on a constant currency basis [7][33] - The number of customers contributing more than $5,000 in ARR grew 13% year over year to 23,275 customers [33] - The number of larger customers contributing more than $50,000 in ARR grew 24% year over year to 3,217 customers [33] Company Strategy and Development Direction - The company focuses on three strategic imperatives: investing in employee experience, delivering AI capabilities across products, and accelerating growth for customer experience solutions [7][8] - The integration of Device 42 into the product offerings is enhancing the value proposition and driving new business [50] - The company aims to leverage AI to improve operational efficiency and customer satisfaction [20][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth despite macroeconomic uncertainties, citing the essential nature of their software solutions [90][92] - The company anticipates continued demand for its products as businesses seek efficiency and cost savings [90] - Forward-looking estimates for Q2 2025 include revenue growth of 13% to 15% year over year [39][40] Other Important Information - The company repurchased $111.8 million of its shares in Q1, continuing its capital allocation strategy [37] - The launch of Freddie AI Insights is expected to enhance decision-making capabilities for managers [19][78] Q&A Session Summary Question: Update on Device 42 pipeline and CX growth - Management noted that demand remains strong and Device 42 is driving platform wins, with a significant number of deals being integrated [45][50] - CX continues to see growth in agent count and AI adoption, with optimism about future developments [51][52] Question: Operational efficiencies from AI and spending plans - The company has seen significant improvements in productivity due to AI, with a reduction in headcount by nearly 20% over two years [56][57] - Management plans to continue investing in sales and marketing despite some expected increases in spending [59] Question: Changes in the partner program and impacts for fiscal 2025 - The partner program has been updated to a transfer pricing model to create more opportunities for resellers [66] - Management is optimistic about the potential for growth through partnerships [67] Question: Market strength and pipeline characterization - The pipeline remains strong, with several enterprise wins and a growing interest from mid-market customers [99][100] - Management does not anticipate any disruption from recent changes in the sales team [104]

Q1 2025 Earnings Presentation April 29, 2025 © 2025 Freshworks Inc. All rights reserved. Disclaimer This presentation has been prepared by Freshworks Inc. ("Freshworks") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by Freshworks or any officer, director, employee, agent, or advisor of Freshworks. This presentation does not purport to be all inclusive or to contain all of the i ...

This quarterly report represents an earnings surprise of 38.46%. A quarter ago, it was expected that this company would post earnings of $0.10 per share when it actually produced earnings of $0.14, delivering a surprise of 40%. Freshworks Inc. (FRSH) came out with quarterly earnings of $0.18 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.10 per share a year ago. These figures are adjusted for non-recurring items. Over the last four quarters, the company h ...