Freshworks(FRSH) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended March 31, 2025, was $196.3 million, representing a year-over-year growth of 19% from $165.1 million in the same period of 2024[104] - Revenue for the three months ended March 31, 2025, was $196.3 million, a 19% increase from $165.1 million in the same period of 2024[136] - Gross profit increased to $166.4 million, with a gross margin of 85% for Q1 2025, up from 84% in Q1 2024[141] - Non-GAAP income from operations for the three months ended March 31, 2025, was $46.4 million, compared to $21.8 million in 2024[118] - Free cash flow for the three months ended March 31, 2025, was $53.9 million, an increase from $38.7 million in 2024[120] - The company incurred operating losses of $10.4 million for the three months ended March 31, 2025, compared to $32.2 million in 2024[104] Customer Metrics - The number of customers contributing more than $5,000 in annual recurring revenue (ARR) increased to 23,275, a growth of 13% from 20,549 in 2024[108] - Monthly subscriptions represented 14% of ARR as of March 31, 2025, down from 16% in 2024[111] - The net dollar retention rate decreased to 105% as of March 31, 2025, down from 106% in the same period of 2024, primarily due to lower expansion within existing customers[112] - The net dollar retention rate was 105% as of March 31, 2025, reflecting expansion within existing customers despite a decrease from 106% in the prior year[140] Expenses - Research and development expenses rose by $5.3 million, or 15%, totaling $40.0 million for Q1 2025, driven by increased personnel-related costs[144] - Sales and marketing expenses decreased by $5.5 million, or 6%, totaling $89.2 million for Q1 2025, primarily due to lower stock-based compensation and marketing costs[145] - General and administrative expenses increased by $5.2 million, or 12%, totaling $47.2 million for Q1 2025, mainly due to higher stock-based compensation and personnel-related costs[146] - Total operating expenses for Q1 2025 were $176.8 million, a 3% increase from $171.4 million in Q1 2024[143] Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended March 31, 2025, was $58.0 million, an increase from $40.6 million in the same period of 2024[157] - As of March 31, 2025, the company had cash and cash equivalents of $594.2 million and marketable securities of $401.1 million, totaling $995.3 million in liquidity[152] - The company reported an accumulated deficit of $3.7 billion as of March 31, 2025[152] - Net cash used in financing activities for the three months ended March 31, 2025, was $130.3 million, primarily due to share repurchases[162] - The company repurchased 6.7 million shares of Class A common stock for $111.8 million under its share repurchase program, with $272.7 million remaining for future repurchases as of March 31, 2025[154] - The company had net cash provided by investing activities of $46.2 million for the three months ended March 31, 2025, mainly from maturities and redemptions of marketable securities[160] Market and Economic Conditions - The company expects macroeconomic pressures to continue impacting demand for its products and services in the foreseeable future[106] - A 10% adverse change in foreign currency exchange rates could result in a gain or loss of approximately $9.2 million[167] - As of March 31, 2025, the total notional amount of outstanding designated foreign currency forward contracts was $62.7 million[169] - A hypothetical 100 basis points movement in interest rates would not have a material effect on the combined market value of cash and cash equivalents and marketable securities[172] Other - The acquisition of D42 Parent, Inc. in 2024 expanded the company's product offerings to include software licenses with associated maintenance[103] - Interest and other income, net, was $13.0 million for Q1 2025, a slight increase of 1% compared to $12.8 million in Q1 2024[149] - Restructuring charges of $0.4 million were recorded for Q1 2025, related to the restructuring plan initiated in November 2024[148] - For the three months ended March 31, 2025, the provision for income taxes was $3.9 million, a decrease of 2% from $4.0 million in the same period of 2024[151]