Freshworks(US:FRSH)2025-04-29 21:00Financial 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% [8][31][34] - The non-GAAP operating margin expanded by more than 10 percentage points compared to the previous year [8] - Adjusted free cash flow increased by 43% year over year to $55.4 million [31][38] Business Line Data and Key Metrics Changes - Employee Experience (EX) business achieved over $420 million in ARR, growing 33% year over year [10][33] - Customer Experience (CX) business reached over $370 million in ARR, reflecting 7% year over year growth [23][33] - The company added over 1,000 net customers in Q1, ending with over 73,300 total customers [9][36] Market Data and Key Metrics Changes - Net dollar retention remained stable at 105% on a constant currency basis [9][35] - The number of customers contributing more than $5,000 in ARR grew 13% year over year to 23,275 [35] - The number of customers contributing more than $50,000 in ARR increased by 24% year over year to 3,217 [35] 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 [9][10] - The integration of Device 42 into existing offerings is enhancing the value proposition and driving new business [52] - The company is committed to leveraging AI to improve operational efficiency and customer satisfaction [22][30] Management Comments on Operating Environment and Future Outlook - Management noted no significant changes in demand due to macroeconomic conditions, emphasizing the necessity of their solutions for efficiency [49][90] - The company expects to continue benefiting from its competitive pricing and uncomplicated solutions compared to legacy providers [51][92] - Future guidance includes revenue expectations for Q2 2025 in the range of $197.3 million to $200.3 million, growing 13% to 15% year over year [41] Other Important Information - The company repurchased $111.8 million of its shares in Q1, continuing its capital allocation strategy [39] - The launch of Freddie AI Insights is expected to enhance decision-making capabilities for managers [21][80] Q&A Session Summary Question: Update on Device 42 and CX growth - Management confirmed strong demand for Device 42, with significant contributions to new business and upsell opportunities [52] - CX continues to see growth in agent count and AI adoption, with optimism about future developments [54] Question: Operational efficiencies from AI - Management highlighted over 70 instances of AI products enhancing productivity and driving margin expansion [58] - The company plans to continue investing in AI to optimize operations and improve margins [60] Question: Changes to the partner program - The company is moving to a transfer pricing model for resellers to create more opportunities for partners [66] - There is strong interest from partners, particularly in mid-market segments [68] Question: Market strength and pipeline characterization - The pipeline remains strong, with numerous enterprise wins and a growing recognition of the company's offerings in the market [100]