Group 1 - Freshworks Inc. (FRSH) has experienced a significant decline of 18.8% over the past four weeks, but it is now in oversold territory, indicating a potential trend reversal [1] - The Relative Strength Index (RSI) for FRSH is currently at 20.42, suggesting that the heavy selling pressure may be exhausting itself [5] - Analysts have raised their earnings estimates for FRSH, with a 21.3% increase in the consensus EPS estimate over the last 30 days, which typically correlates with price appreciation [6] Group 2 - FRSH holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Viewpoint - Freshworks Inc. (FRSH) has shown significant stock performance, rallying 41.4% over the past six months, outperforming key indices and sectors [1] Company Overview - Freshworks is a leading provider of AI and SaaS-based customer and employee experience solutions, serving over 72,000 companies globally, and is gaining market share by replacing costly legacy systems [3] - The company offers a wide range of solutions including IT service management, IT asset management, IT operations management, enterprise service management, and customer service management, which allows for effective upselling and cross-selling [3] Business Segment Performance - The employee experience (EX) segment grew 35% year over year in Q4 2024, surpassing $400 million in annual recurring revenues [4] - The customer experience (CX) segment, which includes products like Freshdesk and Freshsales, grew 7% year over year, accounting for over $360 million in annual recurring revenues in Q4 2024 [5] Revenue and Earnings Projections - Freshworks anticipates revenue for 2025 to be in the range of $809-$821 million, with a Zacks Consensus Estimate of $815.1 million, indicating a year-over-year growth of 13.14% [6] - The expected bottom line for 2025 is projected to be between 52-54 cents per share, with a Zacks Consensus Estimate of 53 cents per share, reflecting a year-over-year growth of 23.3% [7] Competitive Positioning - Freshworks has significant room for expansion in the customer relationship management space, targeting customers of legacy vendors like Oracle and SAP, as well as competing against ServiceNow and Atlassian in the employee experience suite market [9][10] - The company is preferred by organizations due to its unified suite that reduces the total cost of ownership compared to maintaining separate systems, thus avoiding integration challenges [11] Conclusion - Freshworks is rapidly capturing market share in both customer relationship management and employee experience sectors, driven by strong traction in its AI solutions, making it an attractive investment opportunity for long-term rewards [12]

Core Insights - Freshworks has announced a strategic partnership with Unisys to resell its IT Service Management (ITSM) solutions, including Freshservice and Device42, targeting the mid-market segment [1][2] - The collaboration aims to provide a fresh approach to IT services, focusing on ease of use and rapid deployment to enhance customer experiences [2][4] - Unisys, as a large-scale Managed Service Provider (MSP), will leverage its global presence and expertise to support Freshworks' expansion into mid-size and large enterprise markets [2][4] Company Overview - Freshworks Inc. is recognized for its people-first AI service software, serving over 72,000 companies, including notable clients like American Express and Sony [6] - Unisys is a global technology solutions provider with a diverse portfolio, including cloud, AI, and digital workplace solutions, operating in over 120 countries [7] Partnership Impact - The partnership is expected to enhance the operational capabilities of clients by delivering innovative ITSM solutions, thereby driving significant value [4] - A recent success story includes a U.S. midsized industrial company that transitioned to Freshservice from its previous ITSM provider, achieving a live deployment in under 12 weeks [3]

Financial Performance - The company reported net losses of $137.4 million and $95.4 million for the years ended December 31, 2023 and 2024, respectively, with an accumulated deficit of $3.7 billion as of December 31, 2024[65]. - The company increased operating expenses to $745.7 million in 2024 from $663.2 million in 2023, while continuing to report a net loss of $95.4 million[93]. - The company relies heavily on a limited number of customers for a significant portion of its revenue, making it vulnerable to fluctuations in those relationships[228]. - The company has foreign tax credits of $8.1 million that will begin to expire in 2027[202]. - The effective tax rate may increase due to new tax laws or regulations, which could adversely affect the company's financial performance[205]. Growth and Market Conditions - The company has experienced significant growth recently, but future growth rates may decline due to factors such as macroeconomic conditions and market maturation[67]. - Future growth is at risk due to disruptive technologies, particularly in AI, necessitating additional investment in proprietary datasets and machine learning systems[81]. - The company must attract new customers and convert trial users to paying customers to achieve revenue growth and profitability[78]. - The competitive landscape is rapidly evolving, with significant competition from both established and emerging companies, which may affect market share and pricing strategies[86][88]. - The company faces risks from larger organizations developing or acquiring their own tools, which could reduce demand for its products[141]. Customer Retention and Sales Strategy - The company relies heavily on customer retention and subscription renewals, with any decline in retention potentially harming future operating results[64]. - Subscription-based revenue model is critical, with customer retention directly impacting future operating results; any decline in renewal rates could harm revenue growth[83]. - The company has experienced increased churn rates, particularly among small and mid-sized business customers, which may negatively affect financial performance[83]. - The typical sales cycle for mid-market and enterprise customers is approximately 130 to 150 days, compared to 30 days for small and medium-sized business (SMB) customers[77]. - Maintaining successful relationships with channel partners is essential for revenue growth; the company has over 500 non-exclusive partners[97]. Operational Risks and Challenges - The company has a limited operating history at its current scale, making it difficult to evaluate future prospects and increasing operational risks[70]. - Macroeconomic uncertainties, including inflation and supply chain disruptions, have adversely affected the business and may continue to do so[73]. - The company faces intense competition for qualified personnel, particularly in AI and machine learning, which may hinder future growth if recruitment efforts are unsuccessful[101]. - The company is susceptible to various cybersecurity threats, including ransomware attacks, which can lead to significant operational interruptions and reputational harm[107]. - The company faces risks related to the use of generative AI technologies, which could lead to leaks of sensitive information and adversely affect business operations[121]. Regulatory and Compliance Issues - The company is subject to stringent data protection laws, which could lead to regulatory investigations, fines, and reputational harm if not complied with[144]. - The implementation of India's Data Protection Act could impose significant financial burdens and compliance costs on the company[156]. - The company anticipates that maintaining compliance with evolving data protection laws will increase legal risks and compliance costs[148]. - Non-compliance with anti-corruption and anti-bribery laws could result in significant fines and harm the company's reputation[166]. - The company is subject to various export control and trade sanction laws that could impair its ability to compete internationally[172]. Intellectual Property and Technology - Unauthorized use of the company's technology and intellectual property remains a challenge, as policing such use is difficult and may not be effective[118]. - The company's ability to protect its intellectual property rights is crucial for maintaining its competitive position, especially in international markets[187]. - The company relies on third-party software and may face risks related to licensing and compliance with open source software, which could disrupt product functionality[199]. - The company may be required to indemnify channel partners and customers against third-party infringement claims, potentially leading to costly litigation[186]. - The company uses AI and ML technologies in its products, which are subject to increasing regulation and scrutiny, potentially impacting business efficiency[157]. Financial Strategy and Capital Management - The company plans to issue an additional 2,850,000 shares of Class A common stock, which will result in dilution for existing stockholders[217]. - A stock repurchase program for up to $400 million of Class A common stock was approved in November 2024, aimed at enhancing long-term stockholder value[218]. - The company does not intend to pay dividends for the foreseeable future, expecting to retain future earnings to fund business development and growth[247]. - The company may need additional capital in the future to support business growth and respond to unforeseen circumstances, with no assurance that financing will be available on favorable terms[245]. - The company is expanding its international operations, which may subject it to potential adverse tax consequences depending on various jurisdictions' tax laws[206]. Environmental, Social, and Governance (ESG) Considerations - Failure to effectively address ESG matters could lead to reputational damage and impact investor relations[258]. - Climate change and related events may disrupt business operations and increase costs, impacting financial condition and results[257]. - The company maintains disaster response plans, but catastrophic events could disrupt operations and harm business results[255]. Employee and Workforce Management - As of December 31, 2024, approximately 3,700 employees reside in India, representing about 83% of the total employee population[161]. - Wage increases in India may diminish the company's competitive advantage and reduce profit margins[169]. - The company may encounter difficulties in attracting and retaining qualified personnel due to increased compliance costs and regulatory requirements[231]. - The company executed a workforce realignment plan resulting in a 13% reduction in force, incurring a charge of approximately $9.7 million in Q4 2024[103]. - The company’s ability to attract users through unpaid internet search results is critical, and any decline in search rankings could negatively impact traffic and revenue[129].

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

Group 1: Pitney Bowes Inc. (PBI) - The company has a Zacks Rank of 1, indicating strong performance potential [1] - The Zacks Consensus Estimate for its current year earnings has increased by 15.2% over the last 60 days [1] - Pitney Bowes has a PEG ratio of 0.58, significantly lower than the industry average of 2.63, and possesses a Growth Score of A [1] Group 2: Life Time Group Holdings, Inc. (LTH) - The company also holds a Zacks Rank of 1, suggesting robust growth prospects [2] - The Zacks Consensus Estimate for its current year earnings has risen by 9.3% over the last 60 days [2] - Life Time Group Holdings has a PEG ratio of 0.68, compared to the industry average of 0.92, and has a Growth Score of B [2] Group 3: Freshworks Inc. (FRSH) - Freshworks carries a Zacks Rank of 1, indicating strong growth potential [3] - The Zacks Consensus Estimate for its current year earnings has increased by 6% over the last 60 days [3] - The company has a PEG ratio of 0.96, lower than the industry average of 1.67, and possesses a Growth Score of A [3]

With the stock markets bouncing around nervously around all-time highs and a volatile earnings season underway, I think it’s prudent for investors to adopt a more risk-aware mindset. Actions I’m taking include reducing my exposure to equities (by around 20% and shiftingWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry t ...

Q4 2024 Earnings Presentation February 11, 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 th ...

Financial Data and Key Metrics Changes - In Q4 2024, revenue grew 22% year-over-year to $194.6 million, exceeding previous estimates [11][52] - Non-GAAP operating margin improved to 21%, an increase of 800 basis points quarter-over-quarter [50][56] - Adjusted free cash flow reached $41.7 million, resulting in a free cash flow margin of 21% for the quarter [11][63] Business Line Data and Key Metrics Changes - Employee Experience (EX) business surpassed $400 million in ARR, growing 35% year-over-year on a constant currency basis [15][54] - Customer Experience (CX) business generated over $360 million in ARR, growing at 7% year-over-year on a constant currency basis [36][55] - Professional Services revenue contributed $2.4 million, while Device42 revenue was approximately $10.3 million for the quarter [53] Market Data and Key Metrics Changes - Over 72,200 total customers were reported, with a net addition of over 2,600 customers in Q4 [11][60] - Net dollar retention was 105% on a constant currency basis, with expectations of approximately 104% for Q1 2025 [58][108] - The number of customers contributing more than $5,000 in ARR grew 11% year-over-year [58] Company Strategy and Development Direction - The company is focusing on investing in EX, enhancing AI capabilities across products, and accelerating growth in CX solutions [13][14] - A strategic partnership with Unisys aims to enhance market reach and service offerings [46][98] - The company is committed to maintaining a balance between operational efficiency and growth investments [89][133] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth in the EX business, particularly in the mid-market segment [81][84] - The company anticipates continued momentum in AI adoption, which is expected to drive future growth [30][106] - The outlook for Q1 2025 includes revenue expectations of $190 million to $193 million, reflecting a growth rate of 15% to 17% year-over-year [70][71] Other Important Information - The company repurchased $15.5 million of its shares in Q4 as part of a $400 million stock repurchase program [65] - Cash, cash equivalents, and marketable securities totaled $1.07 billion at the end of the quarter [68] Q&A Session Summary Question: Growth potential in EX business - Management believes the EX business has significant growth potential, particularly in the mid-market segment, and is seeing a shift from legacy providers to Freshworks [78][80] Question: Balancing investments and M&A opportunities - The company plans to continue focusing on operational efficiency while exploring inorganic growth opportunities as they arise [85][89] Question: Customer additions and IT ESM business performance - Management noted that FX impacts and a strong prior year affected the number of customers contributing over $50,000 in revenue, but they are seeing strong upmarket momentum [92][94] Question: MSP opportunity with Unisys - The partnership with Unisys is expected to evolve into a managed service provider opportunity, with ongoing investments in MSP functionality [96][99] Question: NRR outlook and AI innovation cycle - Management indicated that the innovation cycle around AI is just beginning, with expectations for growth in net dollar retention as AI products gain traction [102][106] Question: SMB demand environment - Demand in the SMB segment is stable to improving, with AI helping to enhance efficiency and effectiveness [111][113] Question: Guidance for CX and Freshservice - The company expects to see tougher revenue comparisons in the second half of 2025 due to the Device42 acquisition anniversary [118][120]

Freshworks Inc. (FRSH) came out with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of $0.10 per share. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 40%. A quarter ago, it was expected that this company would post earnings of $0.08 per share when it actually produced earnings of $0.11, delivering a surprise of 37.50%.Over the last four quarters, the company has ...