Q1 2024 Freshworks Inc Earnings Call Transcript
Key Points
- Freshworks Inc (FRSH) reported a 20% year-over-year revenue increase to $165.1 million in Q1 2024, demonstrating solid profitable growth.
- The company achieved a strong free cash flow margin of 23%, significantly surpassing its free cash flow estimate with $38.7 million in Q1.
- Freshworks Inc (FRSH) announced the acquisition of Device42, enhancing its Freshservice offering with advanced IT asset management capabilities, expected to strengthen its position in enterprise-grade solutions.
- The company saw robust adoption of its AI innovations, including Freddy Self Service and Freddy Copilot, which have significantly improved customer and agent productivity.
- Freshworks Inc (FRSH) continues to see momentum with larger customers, with those paying over $50,000 in ARR growing by 29% to 2,593, representing nearly half of the business.
- Despite overall growth, Freshworks Inc (FRSH) experienced pressure on expansion rates in Q1, particularly due to a challenging macroeconomic environment impacting customer decisions.
- The company observed a slowdown in the SMB segment, attributed to macroeconomic pressures and internal challenges in improving the inbound digital motion for customer acquisition.
- Freshworks Inc (FRSH) reported a modest increase in overall churn, although specific figures were not disclosed, indicating potential volatility in customer retention.
- The company's guidance for calculated billings growth in Q2 2024 is set at 12%, indicating a potential deceleration from Q1's performance.
- There are ongoing operational changes and strategic shifts, including a significant leadership transition with the CEO moving to an Executive Chairman role, which could lead to uncertainties in execution during the transition period.
Good day, and thank you for standing by. Welcome to the Freshworks' First Quarter 2024 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to turn the conference over to your speaker today, Joon Huh, Head of Investor Relations. Please go ahead.
Thank you. Good afternoon, and welcome to Freshworks' First Quarter 2024 Earnings Conference Call.
Joining me today are Girish Mathrubootham, Freshworks' Chief Executive Officer; Dennis Woodside, Freshworks' President; and Tyler Sloat, Freshworks' Chief Financial Officer.
The primary purpose of today's call is to provide you with information regarding our first quarter 2024 performance and our financial outlook for our second quarter and full year 2024.
Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are
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