10-Q - Freshworks Inc. (0001544522) (Filer)

Tue, Apr 29, 8:23 PM (12 days ago)

**Freshworks Inc. (FRSH) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** $196.3 million, up 19% year-over-year (YoY) from $165.1 million in Q1 2024. - **Gross Profit:** $166.4 million, with an 85% gross margin. - **Operating Loss:** $10.4 million, improved from a $32.2 million loss in Q1 2024. - **Net Loss:** $1.3 million, significantly improved from a $23.3 million loss in Q1 2024. - **Cash Flow from Operations:** $58.0 million, up from $40.6 million in Q1 2024. **Profit Margins and Cash Flow:** - **Gross Margin:** 85%, up from 84% in Q1 2024. - **Operating Margin:** -5.3%, improved from -19.5% in Q1 2024. - **Free Cash Flow:** $53.9 million, including $1.5 million in restructuring costs. **Earnings Changes and Quarterly Performance:** - **Revenue Growth:** Driven by a 19% increase, with $8.4 million from existing customers and $22.7 million from new customers and Device42. - **Operating Expenses:** Increased by 3% YoY, with notable changes in personnel and stock-based compensation costs. - **Net Dollar Retention Rate:** 105%, down from 106% in Q1 2024, due to macroeconomic pressures. **Trends and Uncertainties:** - **Macroeconomic Factors:** Inflation, foreign exchange rate fluctuations, and geopolitical events pose risks. - **Customer Metrics:** 23,275 customers contributing over $5,000 in ARR, up 13% YoY. - **Future Operations:** Continued investment in R&D, sales, and marketing to drive growth. **Future Operations Impact:** - **Share Repurchase:** $111.8 million spent on repurchasing 6.7 million shares, with $272.7 million remaining. - **Acquisitions:** Integration of D42 Parent, Inc. to enhance IT solutions. - **Market Risks:** Exposure to foreign currency exchange rates and interest rates, with hedging strategies in place. **Key Metrics:** - **ARR from Large Customers:** 90% of total ARR. - **Customer Growth:** 13% increase in customers contributing over $5,000 in ARR. - **Net Dollar Retention Rate:** 105%, reflecting customer expansion and churn rates. **Conclusion:** Freshworks Inc. demonstrated strong revenue growth and improved profitability in Q1 2025, driven by strategic investments and operational efficiencies. The company faces macroeconomic uncertainties but remains focused on growth and customer retention.