Freshworks Q2 revenue up 19%, expects $28 million operating profit for 2023

Freshworks witnessed an 18 percent YoY increase in customers contributing over $5,000 in Annual Recurring Revenue (ARR), with a total of 19,105 such customers. Notable new customers added during the quarter include Claremont McKenna College, The State of Hawaii, Houston Museum of Natural Science, Pitchbook, and Smart Recruiters.

In Q1 of 2023, Freshworks achieved a consolidated revenue of $138 million and recorded its first-ever quarterly adjusted operating profit of $3.9 million since becoming a public company.

GAAP stands for Generally Accepted Accounting Principles and includes standard accounting rules and standards for financial reporting. On the other hand, non-GAAP financial results exclude certain items, such as stock-based compensation expenses, payroll taxes on employee stock transactions, and amortization of acquired intangibles, providing a clearer picture of the company's underlying financial performance.

The company's GAAP (loss) from operations reduced by 54 percent YoY, showcasing efforts to improve operational efficiency.

Freshworks' free cash flow for the quarter amounted to $18.1 million, doubling on a quarterly basis and rising approximately 80 percent YoY. As of June 30th, 2023, the company had $1.16 billion in cash and cash equivalents.

The net retention rate for Q2 of 2023 was recorded at 108 percent, while the Net Dollar Retention rate during the previous quarter stood at 107 percent. These metrics measure changes in recurring revenue from the existing customer base and are considered positive indicators of the company's growth.

In terms of outlook, Freshworks provided its full-year 2023 financial outlook, projecting a non-GAAP operating profit of $28 million. The company expects its revenue for the next quarter to range from $149 million to $151 million and anticipates overall revenues for 2023 to fall between $587 million and $595 million.