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 May 28, 2025 03:00 PM ET Speaker0 Great. Welcome back. We have Tyler, from Freshworks. He, has been at the company now since 02/2020? Speaker1 I think so. Yes. It's been a couple of years. Great conference. Speaker0 Tyler and I have known each other for a while. He's been a fixture in the software industry and tech industry for quite a while. So it's great to have you back, and thanks for supporting the conference. I think a lot of people know the Freshworks story, but maybe in ...

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]