Freshworks Reports $596.4M Revenue for 2023
2024-02-08
Freshworks, a leading provider of AI-enabled software solutions, recently held its earnings call to discuss its performance in the fourth quarter and full year of 2023, as well as its outlook for 2024. The call was attended by key executives including Girish Mathrubootham (CEO), Dennis Woodside (President), Tyler Sloat (CFO), and Joon Huh (VP of Investor Relations).
During the call, Freshworks highlighted several initiatives and achievements. In 2023, the company launched the Freshworks customer service suite, which includes AI capabilities like Freddy Self-service, Copilot, and Insights. These AI features have been well-received by customers, with notable success in larger B2C companies for Freddy Self-service and traction across SMB and mid-market segments for Copilot.
Freshworks also announced partnerships with major brands such as Big Lots, S&P Global, Fila, Cineworld, Forbes, L.A. Dodgers, Nucor, Giant Eagle, and Johnsonville Sausage, showcasing its ability to land and expand with big names in various industries.
The company's financial results for Q4 2023 showed a revenue of $160.1 million and generated $28.6 million in free cash flow. For the full year 2023, Freshworks reported revenue of $596.4 million and a free cash flow margin of 13%.
Freshworks has been focused on improving its operating efficiency, and in 2023, it significantly improved its operating and free cash flow margins compared to the previous year. The company went from using cash for operations in 2022 to generating $78 million of free cash flow in 2023.
Looking ahead, Freshworks plans to continue advancing its AI features across its products and platform. It also aims to enhance its offerings in Freshservice, particularly in Enterprise Service Management (ESM), IT Operations Management (ITOM), and verticalized solutions.
During the earnings call, the company addressed investor concerns about AI adoption and its impact on seat-based models. Freshworks believes that AI, specifically its gen AI and Freddy Self-service and bot, can bring natural language conversational automation to customer service and help drive better automation. The company saw AI as the first line of defense before transferring to a live agent for more complex queries.
Freshworks also discussed its plans for monetization, with a focus on usage-based revenue from bots, Copilot seat add-ons, and Insights. While it is still early days for monetization, the company is optimistic about the potential for growth.
Overall, Freshworks remains confident in its business and growth prospects. The company is committed to delivering value to its customers, expanding its customer base, and achieving its billion-dollar target by 2026 through various strategies, including go-to-market enhancements, the enterprise push, AI advancements, and new product offerings.