Financial Data and Key Metrics Changes - Freshworks reported Q3 2025 revenue of $215.1 million, a 15% year-over-year increase on both an as-reported and constant currency basis, exceeding previous estimates by approximately three points [5][20] - Non-GAAP operating margin expanded to 21%, five points above estimates, with a free cash flow margin of 27% [5][22] - Adjusted free cash flow for Q3 was $57.2 million, resulting in a 27% margin, an improvement of over 5 percentage points year-over-year [26] Business Line Data and Key Metrics Changes - Employee Experience (EX) business grew to over $480 million in ARR, representing 24% year-over-year growth [7][21] - Customer Experience (CX) business increased to over $390 million in ARR, reflecting 8% growth year-over-year [16][21] - The number of customers contributing more than $50,000 in ARR grew 20% year-over-year to 3,612 customers, representing over 50% of total ARR [23] Market Data and Key Metrics Changes - The number of new and expansion deals exceeding $50,000 in ARR increased by over 40% year-over-year [6] - The company added nearly 75,000 customers by the end of Q3, with over 260 net new customers added in the quarter [23] Company Strategy and Development Direction - Freshworks aims to reach $1.3 billion in ARR in the next three years, focusing on Employee Service Management (ESM), AI, and IT Asset Management (ITAM), each targeting over $100 million in ARR [6][12] - The company is expanding its ESM solution, FreshService for Business Teams, as a standalone product to target non-IT functions, which has already doubled its ARR to exceed $35 million [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformative AI opportunity, highlighting over 50 AI-driven applications currently in use by customers [6][12] - The company anticipates a one-time increase in spending during Q4 to expand its pipeline and drive customer acquisition, which may modestly impact operating margins [30] Other Important Information - Freshworks completed its inaugural $400 million share repurchase program, buying back approximately 27.9 million shares at an average price of $14.35 [26][27] - The company plans to discontinue reporting total customer count quarterly, shifting focus to larger customer measures that better reflect business trajectory [24] Q&A Session Summary Question: Discussion on selling ESM as a standalone solution - Management confirmed that FreshService for Business Teams has seen significant demand outside core IT departments, with a strong value proposition and no new Salesforce required for sales [34][36] Question: Insights on the buy-back program - Management completed the inaugural buy-back program and is open to discussing future capital allocation strategies, including potential M&A opportunities [37] Question: Balancing monetization versus adoption of Freddy AI tools - Management explained the different monetization models for Freddy AI products, indicating a shift towards higher pricing aligned with industry standards [39][41] Question: Government exposure and impact from the government shutdown - Management reported no impact from the government shutdown, noting continued success in landing government and university contracts [45] Question: Details on one-time investment in Q4 - Management clarified that the one-time investment is primarily for marketing and demand generation efforts to capitalize on strong demand for EX products [46] Question: Key differentiators in ITSM win rates - Management highlighted the enterprise-grade solution and flexibility of their offerings as key differentiators in winning larger deals against competitors [56][58]

Core Insights - Freshworks Inc. reported strong financial results for Q3 2025, exceeding previous estimates in growth and profitability metrics, driven by the integration of AI into their software solutions [2][6]. Financial Summary - Total revenue for Q3 2025 was $215.1 million, a 15% increase from $186.6 million in Q3 2024, with the same growth rate when adjusted for constant currency [6]. - GAAP loss from operations was $(7.5) million, improving from $(38.9) million in Q3 2024, resulting in an operating margin of (3.5)% compared to (20.8)% [6]. - Non-GAAP income from operations was $45.2 million, with a non-GAAP operating margin of 21.0%, up from $24.0 million and 12.8% in Q3 2024 [6]. - GAAP net loss per share was $(0.02) based on 286.2 million weighted-average shares outstanding, compared to $(0.10) based on 302.1 million shares in Q3 2024 [6]. - Non-GAAP diluted net income per share was $0.16, compared to $0.11 in Q3 2024 [6]. - Net cash provided by operating activities was $63.5 million, representing a margin of 29.5%, up from $42.3 million and 22.7% in Q3 2024 [6]. - Adjusted free cash flow was $57.2 million, with a margin of 26.6%, compared to $40.1 million and 21.5% in Q3 2024 [6]. Customer Metrics - The number of customers contributing more than $5,000 in ARR reached 24,377, a 9% year-over-year increase [7]. - The net dollar retention rate was 105%, slightly down from 107% in Q3 2024 [7]. Business Highlights - Freshworks onboarded several new customers, including AllSaints/John Varvatos and Société Générale, expanding its market presence [7]. - The company appointed Enrique Ortegon as Senior Vice President and General Manager of Americas Field Sales [14]. Financial Outlook - For Q4 2025, Freshworks expects revenue between $217.0 million and $220.0 million, with year-over-year growth of 12% to 13% [9]. - The full-year revenue forecast is between $833.1 million and $836.1 million, reflecting a 16% growth [9].

Core Insights - Freshworks has appointed Enrique Ortegon as the new Senior Vice President and General Manager of Americas Field Sales to enhance growth and customer expansion across North and South America [1][2] - Ortegon brings over two decades of experience in enterprise SaaS and go-to-market strategy, having previously held senior roles at DocuSign and Salesforce [2][3] - Freshworks aims to deliver exceptional customer and employee experiences through its uncomplicated service software, which is trusted by over 74,000 companies [4] Company Strategy - The company focuses on a growth strategy that emphasizes operational excellence and strategic vision to accelerate regional growth [2] - Freshworks' value proposition is centered around simplicity and superior return on investment, distinguishing it from competitors in the employee and customer experience markets [3] Leadership Background - Enrique Ortegon has a strong track record in scaling businesses from SMB to enterprise levels and has significant operating experience across the Americas [2] - His previous roles include leading North America Majors, Mid-Market, and SMB businesses at DocuSign, and various senior leadership positions at Salesforce [2] Community Engagement - Beyond corporate roles, Ortegon advises startups and an investment fund focused on empowering Latin entrepreneurs and supporting underrepresented communities [3]

Core Insights - The article highlights ten lesser-known companies that leverage artificial intelligence (AI) to address specific industry challenges, providing investment opportunities without the high valuations seen in major players like Nvidia and Microsoft [1][2][3] Company Summaries - **Freshworks**: A SaaS platform offering customer support and CRM solutions, with over 68,000 global customers. Its Freddy AI features enable automation for small and midsize businesses, showing mid-teens revenue growth and improving margins [5]. - **Oscar Health**: A tech-enabled health insurer aiming to simplify interactions in the healthcare sector. Its Superagent AI assistant is designed to reduce service costs and improve efficiency, potentially capturing significant market share [6]. - **Nerdy**: Operates Varsity Tutors and an AI-powered platform for education services, tapping into the $100 billion tutoring market. The company combines human expertise with AI to offer personalized learning experiences [8]. - **Lemonade**: A digital insurance company utilizing AI bots for underwriting and claims processing. Its automation could enhance margins if loss ratios stabilize, although it faces challenges in proving AI's effectiveness in underwriting [9]. - **Recursion Pharmaceuticals**: A biotech firm using AI and large datasets for drug discovery. Its partnership with Nvidia positions it as a potential leader in AI-driven therapeutics, with a market cap around $2 billion [10]. - **BigBear.ai**: Provides decision intelligence platforms for the U.S. Department of Defense. Its AI-based systems are well-suited for the growing demand in defense digitization, though it faces revenue volatility [11]. - **Amplitude**: Offers product analytics software that enhances user engagement through AI-generated insights. Despite competition, its focus on product optimization helps maintain differentiation [12]. - **PagerDuty**: A platform for IT incident management that uses AI to improve response times, delivering measurable ROI for enterprises. Its shift towards AI-driven operations aligns with the demand for faster issue resolution [13]. - **Sprinklr**: Operates a customer experience management platform with AI tools for engagement and insights, serving major brands like McDonald's and Nike, positioning it well for AI adoption in marketing [14]. - **Innodata**: Provides data engineering and AI training datasets, benefiting from the increasing demand for high-quality training data as AI adoption grows [15]. Investment Perspective - These ten companies apply AI to solve specific business problems, creating defensible niches in large markets. While they do not compete directly with Nvidia, they represent practical applications of AI across various industries [16].

Freshworks Investor Day 2025 Summary Company Overview - **Company**: Freshworks (NasdaqGS:FRSH) - **Event**: Investor Day 2025 - **Date**: September 11, 2025 - **Focus**: Uncomplicated AI-native service platform for customer and employee experiences Core Industry Insights - **Industry**: Software as a Service (SaaS) focusing on IT and customer service - **Market Size**: Total addressable market for EX (Employee Experience) and CX (Customer Experience) software is estimated at **$80 billion** [22] - **Target Market**: Mid-market and lower-end enterprise customers, which account for over **$10 trillion** in economic activity in the U.S. alone [22] Key Company Highlights - **Growth Metrics**: - Recurring revenue increased from approximately **$560 million** to **$840 million** in two years [10] - Achieved Rule of 45 milestone ahead of schedule [10] - AI monetization grew to **$20 million**, doubling in the last year [10] - 25% revenue growth from customers spending over **$100,000** [12] - Majority of revenue now from mid-market and enterprise customers [11] - **Product Portfolio**: - **Freshservice**: AI-powered platform for IT and employee services - **Freshdesk**: AI-powered customer service solution - **Freddy AI**: Includes Freddy AI Copilot, Freddy Insights, and Freddy AI Agents for enhanced customer and employee support [9] Strategic Focus Areas - **AI Integration**: Continuous infusion of AI across core products to enhance value and solve more problems [57] - **Vertical Expansion**: Focus on sectors like education, healthcare, and government [57] - **Add-on Products**: Scaling IT asset management and enterprise service management (ESM) products [58] - **Adjacency Expansion**: Exploring areas like AI Ops and SecOps for future growth [59] Customer Base and Testimonials - **Diverse Customer Base**: Over **74,000** companies including Fortune 500 firms like Panasonic and various government entities [6][7] - **Customer Success Stories**: - **Big Bus Tours**: Transformed customer service center into a profit center using Freddy AI [63] - **Modamax**: Unified IT operations and improved onboarding processes through Freshservice [51][52] Financial Outlook - **Future Projections**: On track to achieve over **$1.3 billion** in recurring revenue by 2028 with strong cash flow and operating margins [21] - **Sustained Growth**: EX business expected to sustain **20% growth** for years [21] Conclusion - Freshworks is positioned to capitalize on the growing demand for uncomplicated, AI-driven solutions in the SaaS market, with a clear strategy for growth and a strong commitment to customer success. The company aims to continue its upward trajectory by leveraging its innovative product offerings and expanding into new market segments.

Financial Performance & Growth - Freshworks' ARR exceeded $840 million[24], with a 2-year CAGR of 20%[24] - The company achieved 18% YoY revenue growth and a 27% adjusted FCF margin in Q2 2025[24] - Freshworks is on track for $1.3 billion+ ARR by 2028[34] - The company projects revenue between $822.9 million and $828.9 million for 2025, representing 14%-15% YoY growth[232] - Non-GAAP income from operations is projected between $153 million and $157 million for 2025[232] Customer Base & AI - Freshworks has 74,000+ paying customers across 120+ countries[21] - Mid-market and Enterprise customers account for >60% of total ARR[24] - Freddy AI is now a >$20 million ARR business[24, 96] Employee Experience (EX) - EX remains a durable 20%+ growth engine[34] - EX customers with >$100K ARR increased by 32% YoY[58] - Databricks achieved 23% ticket deflection via self-service using Freshworks[61]

Core Viewpoint - Freshworks reported strong Q2 2025 financial results, exceeding revenue and earnings expectations, driven by operational improvements and AI product adoption [1][5][14] Financial Performance - GAAP revenue reached $204.7 million, surpassing estimates of $198.8 million, marking a 17.6% year-over-year increase from $174.1 million [2][5] - Non-GAAP earnings per share were $0.18, significantly above the expected $0.11 and up 125% from $0.08 in Q2 2024 [2][5] - Non-GAAP income from operations was $44.8 million, a 241.2% increase from $13.1 million in the same quarter last year [2][6] - Adjusted free cash flow increased by 65.5% year-over-year to $54.3 million, with operating cash flow climbing to $58.6 million, up 61.4% [2][6] Profitability Metrics - Gross margin improved to 84.8%, up from 83.8% a year ago, while non-GAAP operating margin reached 21.9%, up from 7.5% [7][6] - Free cash flow margin improved to 26.5%, reflecting effective cost control relative to revenue [6] Customer Growth - The number of customers generating over $5,000 in annual recurring revenue increased by 10% year-over-year to 23,975, indicating strong long-term revenue retention potential [8] - Net dollar retention remained steady at 106%, reflecting stable customer spending [8] AI Developments - The Freddy AI suite surpassed $20 million in annual recurring revenue, showcasing the success of AI-driven solutions [9] - Freshworks launched the Freddy AI Agent Studio, a no-code tool for businesses to create AI-powered automation agents [9] Market Positioning - Freshworks secured a multi-year partnership with McLaren Racing, enhancing its visibility in enterprise sales and competing against larger SaaS vendors [10][11] - The company continues to focus on integrating AI features across its software offerings, utilizing a product-led growth strategy [4] Future Guidance - Management raised revenue guidance for Q3 2025 to between $207.0 million and $210.0 million, projecting 11-12% year-over-year growth [14] - Full-year revenue is expected to be in the range of $822.9 million to $828.9 million, indicating 14-15% growth [14] - Non-GAAP operating income is anticipated to rise to $153.0–$157.0 million, with earnings per share forecasted at $0.56–$0.58 [14] Competitive Landscape - The company faces competitive dynamics as larger software firms introduce their own AI features, which may impact customer adoption rates of Freshworks' AI modules [16]

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 ...