Employee unease and C-suite exits as Freshworks’ great results come at a cost

Vidhya Sivaramakrishnan

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Vidhya Sivaramakrishnan

11 reads

Freshworks’ quarterly results for the quarter ended June 2023 saw the company’s stock price hit an 18-month high. Recent layoffs coupled with some impending top-level exits, however, indicate the company’s identity could be changing significantly.

August 07, 2023

9 MINS READ

Key Takeaways

Freshworks’ results for the quarter ended June outperformed the company’s own estimates. Year-on-year, revenue rose by 19% while its net losses almost halved

These results were rewarded by investors, with the company’s share price hitting an 18-month high two days after its results were announced

Freshworks’ turnaround happened despite the prevailing global economic slowdown. A lot of it had to do with taking shrewd, even painful, decisions to move towards profitability

The company even resorted to layoffs, which has led employees to question its organisational culture. Freshworks is now set to lose two C-suite executives

The announcement of Freshworks’ results for the quarter ended June 2023 was a rare bright spot in a tough few years for the company. The Chennai-headquartered company—which follows a January-December financial year—saw its revenue for the quarter surge by 19% year-on-year, touching $145.1 million.

Compared to the same quarter in 2022, Freshworks’ net loss nearly halved—dropping from $69.75 million to $35.66 million. This saw the company post an adjusted operating profit of $11.7 million for the quarter, having posted an adjusted operating loss in the year-ago period.

These results, which outperformed Freshworks’ own forecasts, led to the company revising its revenue projections for 2023 from $580-592.5 million to $587-595 million. It now expects to earn an adjusted operating profit of $24-32 million for the year as well—up from earlier estimates of just $2-8 million.

The news was enough to help the company’s stock price end August 3—two days after it announced its results—at $21.38, an 18-month high. This respite comes on the back of Freshworks’ share price sliding for the better part of the past 18 months. Ever since its bumper listing on the NASDAQ in September 2021—becoming the first Indian software-as-a-service (SaaS) firm to go public on the New York-based exchange—Freshworks has seen its stock price fall victim to the worsening global economic climate.