freshworks revenue guidance, mathrubootham, girish mathrubootham
ETtechBusiness software company Freshworks has reported a 40% increase in second-quarter revenue, but marginally lowered its top-line forecast for 2022 amid signs of macroeconomic headwinds causing customer churn in the small business customer segment.
The US-headquartered company, which has significant operations in India, expects revenue of $493-497 million in 2022, compared with its previous guidance of $495-501.5 million given in May.
Revenue for the April-June quarter was $121.4 million on constant currency terms, or excluding the effect of exchange rate fluctuations. Loss on a non-GAAP basis — or not under the generally accepted accounting principles in the US — widened nearly three times to $15.8 million, but came in below its May forecast of $16.5-18.5 million.
Chief executive Girish Mathrubootham said the software-as-a-service (SaaS) company delivered “solid” second-quarter results. “In a changing macro environment, I’m confident that our products will continue to provide incredible value to our customers around the world and drive our long-term growth,” he said, adding that Freshworks’ “affordable” products delivered “incredible value to customers as they navigate the tough macro environment”.
On the macroeconomic environment, Mathrubootham said the impact had varied across segments: “Our SMB (small and midsize business) customers are feeling the macro pressures, and we are seeing this translate to higher churn, especially at the lower end of SMB, in companies with fewer than 50 employees. In contrast, our larger customers in the mid-market enterprise are showing more resilience and they continue to grow their investment with us,” he said on an earnings call.
Freshworks, which added 1,800 net new customers in the past quarter, has its “largest customers” account for 57% of the annual recurring revenue. The overall churn rate — the metric on how many customers cease to do business with the company — has been the same quarter-on-quarter, Mathrubootham said.
Also Read | Freshworks hits balance in customer mix amid growing mid-tier, enterprise range
Through the quarter, Freshworks expanded capabilities across its key products including a better Unified Customer Record (UCR), Freshmarketer and Freshsales, with Freshchat added to the crop. UCRs are data platforms that garner customer data across touchpoints, helping businesses gain more visibility about the nature and purpose of customer-brand interactions.
Freshworks said its net dollar retention rate was steady at 115% in constant currency terms. For the third quarter, Freshworks guided that its revenue would rise 31-33% in constant currency, and non-GAAP loss would be $12.5-14.5 million.

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