Freshworks Inc., a software-as-a-service (SaaS) company listed on the NASDAQ, announced a 44 percent increase in sales to $ 105.5 million in the three months ending in December, marking the company’s first quarter above the $ 100 million mark. Freshworks had a spectacular debut on Nasdaq late last year, but the company subsequently dropped 60% amid a wider selloff in the U.S. IT sectors. So far, Chief Executive Officer CEO Girish Mathrubootham hasn’t cared. “We have no control over the stock market. I’ve always focused on things that are under your control ”he stated.
We had a pretty solid quarter and a very good end to the year. So if you look at revenue for the year, we grew 49 percent compared to 2020. If you look at Q4, it was 44 percent growth and revenue was $ 105.5 million. This is the first quarter as a company where we have surpassed the $ 100 million mark. Now in defeat, you’re talking about losing GAAP versus non-GAAP. Because of stock-based compensation and other things, it’s more of an accounting term. But when you look at the operational metrics, we’re really positive on free cash flow, and I think we’ve generated free cash flow. I think it was $ 2.8 million for the quarter and then the total year was $ 2.3 million free cash flow which was positive. Non-GAAP is what most investors look at. Because that’s what tells the real picture of how we run the business. So that’s the clarification of that question.
He spoke with Moneycontrol after Freshworks reported earnings for the fourth quarter, where it reported a $ 56.4 million loss based on Generally Accepted Accounting Principles (GAAP), which was returned by stock-based compensation. , among other things. Founded by Mathrubootham and Shan Krishnasamy in 2010 in Chennai, Freshworks became the first Indian SaaS firm to list on the US stock exchange in September. The company competes with the likes of salesforce.com Inc. and Zendesk Inc. In an interview with Moneycontrol, Mathrubootham talked about the company’s growth and path to profitability, what it means to be a listed company, and the war for talent.
If you look at the guidance we mentioned today, we expect this person to burn at approximately $ 25 million. Primarily, the main factors are the cost of being a public company, with the opening of travel and offices. But the way we are guiding by the end of this year in Q4, we expect cash flow to be positive, and then expect it to be positive in the future. We were positive on cash flow in Q4, and for the entire year of 2021. So we seem to see an opportunity to invest in growth. And we’re making a conscious call to invest in growth in 2022. And even after that, and considering all the costs of being a public company, we expect cash flow to be positive by the end of the year.
Now on the side of ITSM (information technology service management), we are a really reliable alternative to ServiceNow, which focuses on large enterprise vendors. So we are firmly focused on the mid-market, and we are expanding beyond the main ITSM market with the addition of IT operations management and enterprise service management, moving to other departments such as HR (human resources), legal , and finance, to offer the same employee engagement experience. So, these two are huge trends that we’re investing heavily in this year. We see that demand continues to drive for us.
If you zoom out, we’ll see tremendous opportunities in three of our key markets where we’re playing. If you take Customer Support Market, we started as a helpdesk ticketing play. But now, every consumer business is looking to support or interact with customers through digital channels like WhatsApp, text messaging, Instagram and Facebook. We have some big B2C brands like Discover card or Cloud Nine Europe, or a PhonePe or Paytm in India, that use either our Bots to automate customer service or our agent communication experience to support customers on those digital channels. We enhance that capability by adding more channels and allowing businesses to interact more with customers. That’s a huge trend that happened during COVID-19.
And of course, last but not the least, our vision of delivering a unified customer view will open up disruptive play in the CRM (customer relationship management) market. It’s still early days for us. But that’s where we drove towards. This is a top priority. And we feel super bullish on that occasion.
Yes, so in the macro environment, I don’t think we’re immune to that. We all know that two years of COVID, back-to-back meetings, and great resignations, are all real things. But at Freshworks, we take pride in the way we build the company and culture. In the last interview after the IPO, you asked us, ‘Hey, BMW is getting some of your competitors, what do you think?’ I told what I thought and you can see now where those companies are. So I think good companies that value employees will always have an advantage. And I think the macro environment is difficult. I do not deny that. But I still think, Freshworks is a great place for employees to build a career, especially people who have a long -term vision and want to work on meaningful things. I think we are one of the best places to work for Indians.
We had a fantastic IPO, had a great Q3 and Q4, and lost numbers in both quarters. But the stock market is something we cannot control. My core belief in life is always to focus on things you can control. And that is the message for our employees. We will continue to perform and maintain healthy growth. You can see that Freshworks is a company showing solid growth, all of our data is in the public domain. If you look at the last six to eight quarters, you can see how much each quarter we are showing sustainable growth and that’s all that matters. So I don’t look at the price of my house every day when I wake up. Markets will rise, markets will go down, and eventually, in the long run, things will automatically correct themselves. So that’s how I think here. I think at the end of the day, private investors and public investors are both investors who are our partners. That is my view. The people who have invested in Freshworks are people who believe in this story and are part of the journey. They want to be part of the journey. Now the time frame may be different. A venture investor may be willing to take a longer idea of things and the public investor, perhaps some of them, may have a shorter perspective. I need to deliver growth, whether it’s public or private investors, and make sure we have the right channels, continue to develop the right products, and move on. I think, another world. I am learning a lot and we will continue to execute.
In the demand trend, we see really healthy demand in each of our markets. In fact, we want to take in more people and grow more. In the multi-product, up-sell, cross-sell motion, we mentioned today in the earnings call that 21 percent of Freshworks customers actually use more than one product. We see that as a huge increase because we can continue to sell more products to our existing customers and that number is even higher. We are making steady progress. At the time of the IPO, if you recall, that number was at 18 percent. So we grow our customers and that’s a good thing. And if you look at our larger customers, who pay us more than $ 5,000 in annual recurring revenue, that number grew 28 percent year-over-year in Q4. This cohort represents more than 40 percent of our revenue. So we still think this is a very healthy number. And it also represents the fact that Freshworks products are developed for companies of all sizes. So we have really small SMBs up to really big businesses that use our products. And that’s what we want. So my job as CEO is to find the best team that can possibly win. So last year, you saw that we had an amazing IPO. And to do that, I had to assemble a world-class team, which would do all the work to make that happen. So we are always a global company and the culture is the same. We do not have a different cultural code for each geography. And I think the beauty of Freshworks, and I’m talking about it inside, is between 2016 and now, what has changed? So we learn in the art of marriage or marriage in the art of Indian entrepreneurship and in the science of value measurement. So the people we’ve brought on board, the leadership over the past two years, are all the people that have been there, have done that in terms of scaling companies, and we’re clearly proud of the way our building of our business, product, ethos of people and culture. We learn from each other and these are exciting times for us.
All shares will be unlocked on Monday. I know nothing about market volatility. I can’t comment on the market. But the people who know and believe in our journey obviously want to stick around and the people who want to sell, they’ll take care of it, so I have no comment.
- I don’t look at the price of my house every day; markets will eventually correct themselves – Girish Mathrubootham, CEO of Freshworks
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