Freshworks(US:FRSH)2025-11-05 21:19Revenue Performance - Total revenue for the three months ended September 30, 2025, was $215.1 million, a 15% increase from $186.6 million in the same period of 2024[111] - The company generated $616.1 million in revenue for the nine months ended September 30, 2025, reflecting a 17% increase from $525.8 million in 2024[111] - Revenue for the three months ended September 30, 2025, was $215,118 thousand, representing a 15% increase from $186,575 thousand in the same period of 2024[148] - Subscription services, software licenses, and maintenance revenue increased by $28,575 thousand, or 15%, for the three months ended September 30, 2025, compared to the same period in 2024[148] - Total revenue increased by $90.2 million, or 17%, for the nine months ended September 30, 2025, with approximately $51.5 million from existing customers and $38.7 million from new customers[161] Customer Metrics - The number of customers contributing more than $5,000 in annual recurring revenue (ARR) increased to 24,377, representing a 9% growth from 22,359 in 2024[116] - The net dollar retention rate decreased to 105% as of September 30, 2025, down from 107% in the same period of 2024, primarily due to lower expansion within existing customers[120] - The net dollar retention rate decreased to 105% as of September 30, 2025, down from 107% in the prior year, primarily due to lower expansion within existing customers driven by macroeconomic pressures[148] Operating Performance - The company incurred operating losses of $7.5 million for the three months ended September 30, 2025, compared to $38.9 million for the same period in 2024[111] - Non-GAAP income from operations for the three months ended September 30, 2025, was $45.2 million, compared to $24.0 million in 2024[125] - Operating expenses for the three months ended September 30, 2025, totaled $189,620 thousand, a decrease from $195,633 thousand in the same period of 2024[144] - Operating expenses decreased by $6.0 million, or 3%, for the three months ended September 30, 2025, primarily due to lower headcount following restructuring[151] Profitability and Cash Flow - Non-GAAP net income for the nine months ended September 30, 2025, was $155.2 million, an increase from $87.5 million in 2024[126] - Free cash flow for the nine months ended September 30, 2025, was $164,649 thousand, compared to $111,600 thousand for the same period in 2024[128] - The net loss for the three months ended September 30, 2025, was $4,680 thousand, compared to a net loss of $29,959 thousand in the same period of 2024[144] - The company reported a net loss of $7.7 million for the nine months ended September 30, 2025, adjusted for non-cash items including stock-based compensation of $149.5 million[179] Expenses - Cost of revenue for the three months ended September 30, 2025, was $32,955 thousand, an increase of $3,149 thousand, or 11%, from $29,806 thousand in the same period of 2024[149] - Gross margin improved to 85% for the three months ended September 30, 2025, up from 84% in the same period of the prior year, due to increased revenue and economies of scale[150] - Research and development expenses for the three months ended September 30, 2025, were $41,462 thousand, down from $47,885 thousand in the same period of 2024[144] - Research and development expenses decreased by $6.4 million, or 13%, for the three months ended September 30, 2025, mainly driven by lower stock-based compensation expenses[152] - General and administrative expenses increased by $8.3 million, or 6%, for the nine months ended September 30, 2025, primarily due to higher personnel-related costs[166] Cash and Liquidity - Cash inflows from operating activities amounted to $180.0 million for the nine months ended September 30, 2025[173] - As of September 30, 2025, the company had cash and cash equivalents of $420.9 million and marketable securities of $392.3 million[173] - The company expects existing liquidity sources to meet working capital and capital expenditure needs for at least the next 12 months[177] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $180.0 million, compared to $119.3 million for the same period in 2024[178][181] Share Repurchase and Financing Activities - The company repurchased a total of 26.9 million shares of Class A common stock for an aggregate purchase price of $384.5 million under the share repurchase program[175] - Net cash used in financing activities for the nine months ended September 30, 2025, was $428.3 million, primarily due to $386.3 million for share repurchases[184] Foreign Currency Exposure - Approximately 28% of revenue exposure was related to the euro and British Pound as of September 30, 2025, which may impact future results due to foreign currency fluctuations[112] - A hypothetical 10% adverse foreign currency exchange rate change could result in a gain or loss of approximately $12.3 million[190] - The total notional amount of outstanding designated foreign currency forward contracts was $69.6 million as of September 30, 2025[191] Interest Income - Interest income decreased by $9.8 million, or 25%, for the nine months ended September 30, 2025, primarily due to lower balances in marketable securities portfolios[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[194]