Freshworks Inc. · NASDAQ:FRSH

Freshworks — Investor Day (September 2023)

109 slides from Freshworks's investor day presentation, Sep 7, 2023

Slide 1: Investor Day 2023
Investor Day 2023 September 7, 2023
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by Freshworks Inc. (“Freshworks”) for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by Freshworks or any officer, director, e
Slide 4: Investor Day Agenda
Investor Day Agenda 8:30am Welcome Joon Huh, VP Finance & Investor Relations 8:35am Company Vision and Strategy Girish Mathrubootham, Chief Executive Officer & Founder 8:55am Solutions in Action Dennis Woodside, President Mukesh Mirchandani, SVP Global Solution Engineering Payal Patel, Director Solu
Slide 6: Company Vision and Strategy
Company Vision and Strategy Girish Mathrubootham Chief Executive Officer & Founder © 2023 Freshworks Inc. All rights reserved. © 2023 Freshworks Inc. All rights reserved. 6
Slide 7: Freshworks at a glance
Freshworks at a glance 2010 $545M 20% Multiple Founded TTM Revenue Q2 Revenue Growth YoY Products (constant currency basis) Two at scale 5,000+ 19,105 FRSH 10% Employees Customers over Initial Public Offering FCF Margin $5K ARR September 2021 FY 2023 Est. Notes: Unless otherwise noted, financial dat
Slide 8: Our mission
Our mission We deliver modern and innovative AI-guided customer and employee service solutions that enable the Fortune 5 million to drive delightful engagement and increase productivity © 2023 Freshworks Inc. All rights reserved. 8
Slide 9: Industry tailwinds helping Freshworks grow
Industry tailwinds helping Freshworks grow 1 Digital transformation of every business 2 Rising demands of customers and employees 3 The data imperative and the opportunity of generative AI © 2023 Freshworks Inc. All rights reserved. 9
Slide 10: Businesses of all sizes must transform to compete in a digital-first world
1 Businesses of all sizes must transform to compete in a digital-first world Large companies Small companies must be agile must deliver world and responsive class experiences © 2023 Freshworks Inc. All rights reserved. 10
Slide 11: Expectations for customer and employee experience have changed
2 Expectations for customer and employee experience have changed The race for faster, more enjoyable service Conversational Contextual Immediate Multi-channel engagement understanding results interaction © 2023 Freshworks Inc. All rights reserved. 11
Slide 12: The need for better insights drives demand for high-quality data
3 The need for better insights drives demand for high-quality data Need to break The rise of customer Your AI is only as down data silos data platforms good as your data © 2023 Freshworks Inc. All rights reserved. 12
Slide 13: Consistent innovation and product evolution
Consistent innovation and product evolution Journey to multi-persona, AI-guided strategy Freshsales Sales Freshworks CS Suite Customer service Freshservice Freshmarketer ITSM Marketing automation 2023 2020 Customer Freshservice 360 Vision for Business Teams ESM 2011 Freshworks Neo Platform Freshchat
Slide 14: The Freshworks solution
The Freshworks solution IT & Employee Service Customer Service Sales & Marketing Freshdesk Freshchat Freshservice Freshservice Freshsales Freshmarketer for Business Teams Freshworks CS Suite Neo Platform Freddy AI Data & Analytics Unified Customer Experience Developer & Marketplace Experience © 2023
Slide 15: Neo platform and Freddy infuse AI across all products
Neo platform and Freddy infuse AI across all products IT & Employee Service Customer Service Sales & Marketing Freshservice Freshdesk Freshchat Freshservice for Business Teams Freshsales Freshmarketer Freshworks CS Suite Neo Platform Freddy AI Capabilities Freddy Self Service Freddy Copilot Freddy I
Slide 16: Our India advantage
Our India advantage World class talent that innovates fast ● Born in India, global from Day 1 ● Access to world class talent ● Product scale and velocity Hyderabad Bengaluru Chennai © 2023 Freshworks Inc. All rights reserved. 16
Slide 17: Global customer base
Global customer base 65K+ customers across verticals and 120+ countries Retail, Logistics, Financial Auto & Media & High Hospitality & & E-Commerce Services Manufacturing Entertainment Tech Travel © 2023 Freshworks Inc. All rights reserved. 17
Slide 18: Culture is our intangible asset
Culture is our intangible asset Craftsmanship Happy ‘Work’ Agility with True Friend to Environment Accountability the Customer These values are the bedrock of our culture © 2023 Freshworks Inc. All rights reserved. 18
Slide 19: Experienced global leadership team
Experienced global leadership team CEO & Girish Mathrubootham Dennis Woodside Chief Executive Officer & Founder President President PRIOR: PRIOR: Leadership Tyler Sloat Prakash Ramamurthy Pradeep Rathinam team Chief Financial Officer Chief Product Officer Chief Revenue Officer PRIOR: PRIOR: PRIOR: P
Slide 20: Our path to multi billion dollar scale
Our path to multi billion dollar scale We are competing in three massive TAMs We have business momentum moving upmarket and serving larger customers Our customers are adopting multiple products as cross sell remains a large opportunity AI & automation is a tailwind to our business creating increment
Slide 22: We compete in three large, growing and adjacent markets
We compete in three large, growing and adjacent markets IT & Employee Customer Sales & Service Service Marketing $78B BUSINESS NEEDS Intelligent, Omnichannel, Unified sales right-sized service intelligent customer and marketing management support automation TAM (1) Sales & BUYERS IT Teams Support Te
Slide 25: Our products scale with the needs of IT departments and beyond
Our products scale with the needs of IT & Employee Service IT departments and beyond Project Business ITSM ITOM ITAM Management Teams Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 25
Slide 26: Freshservice crossed $260M in ARR and is growing fast
Freshservice crossed $260M in ARR and IT & Employee Service is growing fast 2022 TAM(1) ARR(2) Growth Rate(2) $20B $260M Low 40s 2022-2026 Target Customers TAM CAGR(1) Persona >$5K ARR(2) 12% CIO 8,624 (1) Source: Gartner. This includes IT Service Management, IT Asset Management & Software Asset Man
Slide 27: Significant opportunity to innovate within IT and adjacent spaces
Significant opportunity to innovate within IT & Employee Service IT and adjacent spaces Sec Ops Freshworks for Gov’t. MSPs Governance, Business Risk and Teams Compliance Freddy AI Industry ITAM Solutions Freddy ITOM Gen AI IT Project ITSM Management 2023 FUTURE © 2023 Freshworks Inc. All rights rese
Slide 28: Customer and industry analyst recognition
IT IT & ITSM Solutions & Employee Service Service Customer and industry analyst recognition User Ratings User Reviews Industry Analyst Coverage “Freshservice has allowed us to handle approximately 20% more tickets and incidents per month, Covered in 3 distinct markets compared to our previous legacy
Slide 29: A&E selects Freshservice to handle IT and G&A requests seamlessly
IT & Employee Service CASE STUDY A&E selects Freshservice to handle IT and G&A requests seamlessly Business Challenge The Solution Legacy ITSM solution did not allow With Freshservice, multiple A&E A+E Networks is a global content company comprised A&E to efficiently route and respond departments we
Slide 30: Freshservice enables digital transformation for Georgetown University
IT & Employee Service CASE STUDY Freshservice enables digital transformation for Georgetown University students and faculty Business Challenge The Solution Georgetown University is in Using a homegrown IT management All faculty and student IT, HR and Washington DC with 20,000 system made it difficul
Slide 31: Product Demo – IT & Employee Service
Product Demo – IT & Employee Service Mukesh Mirchandani Payal Patel SVP Global Solution Engineering Director Solution Engineering © 2023 Freshworks Inc. All rights reserved. 31
Slide 33: We offer modern, intelligent omnichannel customer service solutions
We offer modern, intelligent Customer Service omnichannel customer service solutions Automated Conversational Advanced Voice self service support ticketing support Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 38
Slide 34: Customer service solutions at $300M in ARR
Customer service solutions at $300M in ARR Customer Service Growth Rate(2) 2022 TAM(1) ARR(2) Low-Mid $27B $300M Teens 2022-2026 Target Customers TAM CAGR (1) Persona >$5K ARR(2) 15% CS, CCO 10,272 (1) Source: Gartner. Customer Service includes: Customer engagement center, CCI and CCAS, Workforce En
Slide 35: Building upon a history of innovation
Building upon a history of innovation Customer Service Field Service Quality Management All in one Management, Customer WFM, Agent Freddy AI Service Suite Performance Omnichannel Management & Support & Training Conversational Customer Success Industry Support Solutions Social Self Service Freddy Sup
Slide 36: Customer and industry analyst recognition
Customer and industry analyst recognition Customer Service User Ratings User Reviews Industry Analyst Coverage “I am using Freshdesk in my organization to support more Covered in 2 distinct markets than 13,000 customers. The ticketing system records and solves all their inquiries, requests, and repo
Slide 37: Ingram Micro scales to 28 countries, delighting customers with Freshdesk
CASE STUDY Customer Service Ingram Micro scales to 28 countries, delighting customers with Freshdesk Business Challenge The Solution Ingram Micro used multiple tools Freshdesk and Freshbots helped About Customer to provide customer support over Ingram Micro automate and Ingram Micro is a global dist
Slide 38: Clopay selects Freshworks to automate and modernize dealer support
CASE STUDY Customer Service Clopay selects Freshworks to automate and modernize dealer support Business Challenge The Solution Clopay experienced increasing Freshdesk, Freshchat and Freshcaller About Customer multi-channel interactions with were purchased to create a unified Clopay is North America’
Slide 39: Product Demo – Customer Service
Product Demo – Customer Service Mukesh Mirchandani Payal Patel SVP Global Solution Engineering Director Solution Engineering © 2023 Freshworks Inc. All rights reserved. 44
Slide 41: Our Sales and Marketing solution offers a unified view of the customer journey
Our Sales and Marketing solution offers a Sales & Marketing unified view of the customer journey Sales Force Marketing Configure, Price Ecommerce Automation Automation & Quote integrations Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 53
Slide 42: Sales and Marketing products complement our customer service solutions in a large TAM
Sales and Marketing products complement S&M&Solutions Sales Marketing our customer service solutions in a large TAM Growth Rate(2) Less than 2022 TAM(1) ARR(2) $32B $25M 10% 2022-2026 Target Persona Customers CRO TAM CAGR (1) >$5K ARR(2) 15% 1,114 CMO (1) Source: Gartner. Sales includes Sales Execut
Slide 43: Unified CRM to accelerate growth
Unified CRM to accelerate growth Sales & Marketing Conversational Commerce Highly Personalized Experiences Freddy AI Unified CRM On UCR Generative AI Enhancements Marketing Automation E-commerce Integrations Freshsales Suite Sales Automation 2023 FUTURE © 2023 Freshworks Inc. All rights reserved. 55
Slide 44: Addison Lee hits the brakes on legacy CRM and selects Freshworks
CASE STUDY Sales & Marketing ITSM Solutions Addison Lee hits the brakes on legacy CRM and selects Freshworks About Customer Business Challenge The Solution Addison Lee is an on-demand A disjointed set of customer Building upon their positive ride service based in the UK management and communication
Slide 45: Product Demo – Sales & Marketing
Product Demo – Sales & Marketing Mukesh Mirchandani Payal Patel SVP Global Solution Engineering Director Solution Engineering © 2023 Freshworks Inc. All rights reserved. 57
Slide 47: Our growth drivers
Our growth drivers 1 Unique GTM designed to efficiently serve the Fortune 5 Million 2 SMB opportunity remains large 3 Large customers are increasingly turning to Freshworks 4 Significant opportunity to expand with our existing customers 5 AI and Neo amplify our value proposition © 2023 Freshworks In
Slide 49: We have 3 sales motions to drive a high velocity business
We have 3 sales motions to drive a high velocity business Efficient Inbound Growing Field Scaling Partner Sales Motion Sales Motion Ecosystem Online search, web traffic, Deeper coverage for our Enable Partners to build a trials, paying customers largest customers profitable business 45% of new 30% o
Slide 50: Efficient inbound sales motion serves businesses of all sizes
Efficient inbound sales motion serves businesses of all sizes Thousands of monthly trials Majority sourced from non-paid channels Multiple acquisition Intuitive, DIY Transparent Products Pricing High velocity business sources 80% of SMB accounts close within 30 days(1) Low cost of sales Due to India
Slide 51: Growing field sales motion provides local customer coverage
Growing field sales motion provides local customer coverage Utrecht London Berlin Seattle, WA Denver, CO Paris San Mateo, CA Hyderabad Bengaluru NA EMEA APAC & ROW Chennai 44% of Revenue 39% of Revenue 17% of Revenue Q2-23 Q2-23 Q2-23 Singapore Average time to close Closed 17 $100K+ ~5 months, avera
Slide 52: Our partner ecosystem supports our strategy of moving upmarket
Our partner ecosystem supports our strategy of moving upmarket ● Refreshed partner program this year ● Partners are now winning bigger deals with us: Robust Ecosystem In Q2-23, Partners In H1, partners 400+ partner sourced generate 25% closed 11 large Partners new business of our new customers grew
Slide 53: Changes to GTM are driving business impact
Changes to GTM are driving business impact Separation of new Focus on New business & expansion larger deals leadership Record field new Highest number of Senior leaders across business in H1-23 large deals signed in GTM and supporting Q2-23 in company functions are driving history growth © 2023 Fres
Slide 55: Millions of SMBs need to adopt AI and automation to compete
Millions of SMBs need to adopt AI and automation to compete > 332M SMBs > 1.2M SMBs $23B TAM worldwide in 2021 (1) with 10+ employees and growing fast (3) in the USA alone (2) (1) Source: Statista, Estimated number of small and medium sized enterprises (SMEs) worldwide from 2000 to 2021. (2) Source:
Slide 56: Strong track record of solving the needs of SMBs
Strong track record of solving the needs of SMBs CAGR SMB Customers using Freshworks 2019 to Q2-23 SMB customers 15% >51,700 51,700 Avg. deal size 50,200 44,900 $2K ARR 38,700 Avg. time to close 31,700 25 days Payback period ~10 months Served out of India 2019 2020 2021 2022 Q2-23 Note: Above data i
Slide 57: PLG 2.0 project to supercharge our SMB business
PLG 2.0 project to supercharge our SMB business Expanding content sources to acquire Product Discovery new leads; optimizing SEO strategy Experimenting with personalized sign up, revised tutorials, and proactive customer Sign-up and Adoption assistance to accelerate time to value Revamping post 30-d
Slide 58: SMBs trust us to transform and compete in digital-first world
SMBs trust us to transform and compete in digital-first world About the company About the company About the company Blue Raven Solar is one of the fastest Employee Retention Credit (ERC) Specialists J. W. Pepper & Son, Inc. is a privately growing residential solar companies in are tax experts dedica
Slide 60: Freshworks delivers against the pain points large companies face
Freshworks delivers against the pain points large companies face Solutions that require High cost solutions Complex solutions Siloed apps with long implementation that require expensive that require specialized clunky integrations cycles that take consultants or significant skills and knowledge that
Slide 61: Larger companies are adopting Freshworks
Larger companies are adopting Freshworks Mid Market & Enterprise Customers using Freshworks We are winning more Mid Market and Enterprise customers than ever before CAGR ● 759 new customers landed in Q2-23, 2019 to Q2-23 13,800 30% YoY growth 16% 11,118 ● 215 of G2000 have at least one deployment 8,
Slide 62: Coherent leaves legacy system behind to increase work efficiency with Freshservice
CASE STUDY Coherent leaves legacy system behind to increase work efficiency with Freshservice About Customer Business Challenge The Solution Coherent is comprised of two distinct Coherent selected Freshservice for of Coherent Corp. (NYSE: COHR) sectors: Commercial and Aerospace its ability to separa
Slide 64: Our largest customers already use multiple Freshworks offerings
Our largest customers already use multiple Freshworks offerings Customer Customer Service IT & Employee Service Sales & Marketing 1. Financial Services ✓ 2. IT Infrastructure & services ✓ ✓ ✓ 3. Telecommunications ✓ ✓ 4. IT Infrastructure & services ✓ 5. Financial Services ✓ 6. Retail ✓ Top 20 Custo
Slide 65: We have multiple expansion paths with our customers
We have multiple expansion paths with our customers New Products 20% of new IT customers are Bots buying Freshservice for Business Teams $100 for 1,000 agents along Agent Addition Freshbots with IT(1) sessions 26% CAGR 2019 to Q2-23 Add-on SKUs Freddy AI Pricing & Plans Copilot $29 per agent ● Ratio
Slide 66: iQor increases business efficiency as it expands to multiple Freshworks products
CASE STUDY iQor increases business efficiency as it expands to multiple Freshworks products Business Challenge The Solution About Customer Manually managing email inboxes Freshservice integrated with for their internal support system existing systems and quickly helped iQor is a business process slo
Slide 68: Our Freddy AI resolves millions of inquiries
Our Freddy AI resolves millions of inquiries >220M 1,000+ >20M Interactions assisted Customers assisted Times Gen AI was by Freddy Self Service (1) by Freddy Copilot (1) used to increase agent productivity (1) “We adopted Freshworks' Freddy omnibot platform for a highly automated and personalized cu
Slide 69: AI is a tailwind for Freshworks
AI is a tailwind for Freshworks Agent Software Customer Customers see value from: Savings ● Improved agent productivity AI Software Freshworks ● Lower labor costs Software Agent Software Costs ● Better outcomes We capture value from: Customer ● Per seat license upcharge Agent Costs (Freddy Copilot)
Slide 70: Neo Platform is a force multiplier
Neo Platform is a force multiplier Neo Platform 1 2 3 Shared platform Marketplace Apps AI services power services enable for interoperability Freddy Insights faster innovation and extensibility across products © 2023 Freshworks Inc. All rights reserved. 87
Slide 71: Our growth drivers
Our growth drivers 1 Unique GTM designed to efficiently serve the Fortune 5 Million 2 SMB opportunity remains large 3 Large customers are increasingly turning to Freshworks 4 Significant opportunity to expand with our existing customers 5 AI and Neo amplify our value proposition © 2023 Freshworks In
Slide 73: Customer Spotlight
© 2023 Freshworks Inc. All rights reserved. Customer Spotlight Prakash Ramamurthy Paddy Rathinam Chief Product Officer Chief Revenue Officer © 2023 Freshworks Inc. All rights reserved. 90
Slide 78: Business model highlights
Business model highlights Delivering Durable Creating Operating Maturing Financial Revenue Growth Leverage Model ● 2 products at scale ● Prioritizing investment to drive ● Creating a path to more than top line growth $1B in revenue ● Serving SMB to lower enterprise, globally ● Maintaining strong gro
Slide 79: Delivering strong and durable revenue growth
Delivering strong and durable revenue growth ($ in millions) $600 CAGR $591 2019-2023 36% $498 $400 $371 $200 $250 $172 $0 2019 2020 2021 2022 2023E Note: 2023 figures are based on the midpoint of Freshworks full year 2023 financial estimates. © 2023 Freshworks Inc. All rights reserved. 96
Slide 80: Growth driven by 2 products at scale with growing ARPA
Growth driven by 2 products at scale with growing average revenue per account (ARPA) CAGR ARPA Drivers 2019 to Q2-23 $17.5K ● With smaller initial 19% CAGR deal sizes for CS, ARPA CAGR 2019 to Q2-23 growth primarily 2019 to Q2-23 16% driven by expansion 10% ● IT ARPA growth $9.5K $9.0K primarily dri
Slide 81: Larger customers are becoming a bigger part of our business
Larger customers are becoming a bigger part of our business $5K+ ARR Customers $50K+ ARR Customers $100K+ ARR Customers 19,105 CAGR CAGR CAGR 2019 to Q2-23 17,722 2019 to Q2-23 2,186 2019 to Q2-23 855 26% 50% 1,908 56% 14,814 737 11,570 1,416 535 8,588 881 321 534 180 2019 2020 2021 2022 Q2-23 2019
Slide 82: Growth is coming from new lands for $5K+ ARR customers and expansion for larger cohorts
Growth is coming from new lands for $5K+ ARR customers and expansion for larger customer cohorts $5K+ ARR $50K+ ARR $100K+ ARR Customers Customers Customers 12% 64% 78% Net Expansion New Business 88% 36% 22% Contribution of net customer adds over TTM average © 2023 Freshworks Inc. All rights reserve
Slide 83: As we serve larger customers, our billing mix is evolving to longer duration
As we serve larger customers, our billing mix is evolving to longer duration % of ARR Customer Segment % of ARR by Billing Frequency 14% 10% Other 19% Mid Market & 59% 56% Monthly 32% Enterprise 32% 71% SMB 44% 41% Annual 54% 2019 Q2-23 2019 Q2-23 © 2023 Freshworks Inc. All rights reserved. 100
Slide 84: Our annual cohorts have delivered consistent expansion
Our annual cohorts have delivered consistent expansion 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 The chart illustrates the total ARR of each cohort as of December 31, 2022 over the periods presented, net of contraction and churn. Ea
Slide 85: Net dollar retention continues to drive growth
Net dollar retention continues to drive growth with meaningful upside to improve expansion Net Expansion Levers ● Purposeful cross-sell motion: 115% multi-product adoption of 25% 114% 111% ● Drive edition upgrades: opportunity to upgrade across 250K+ agents in lower plans 108% 108% 107% ● Pricing fo
Slide 86: We are driving overall operating efficiency
We are driving overall operating efficiency Non-GAAP Gross Margin 80% 81% 82% 82% 84% Non-GAAP Operating Margin (15%) (3%) (5%) (4%) 6% FCF Margin (13%) 9% 1% (3%) 10% 20% 19% 18% 18% 22% 16% 21% 20% 20% COR 17% R&D 64% S&M 53% 54% 56% 50% G&A 8% 9% 12% 11% 11% 2019 2020 2021 2022 H1-23 Non-GAAP Exp
Slide 87: Our India operations provide a strategic advantage
Our India operations provide a strategic advantage ● 4,200 employees in India, or 85% of total employees, spanning each function of R&D, S&M and G&A ● GTM responsibilities for SMB, inbound and customer support ● Nearly all of product development and engineering with 1,600 employees ● Lower cost infr
Slide 88: Our financial model creates operational agility
Our financial model creates operational agility Growth Drivers Margin Levers ● Recurring revenue provides ● Disciplined approach stability and predictability to hiring ● Shorter lead time for ● GTM investments driven by inbound provides ability efficiency of spend to manage spend ● Prudent discretio
Slide 89: 2023 Financial estimates
2023 Financial estimates ($ in millions except for per share data) Q3-23 Est. FY 2023 Est. Revenue(1) $149.0 - $151.5 $587.0 - $595.0 Year-over-year growth 16% - 18% 18% - 19% Adjusting for constant currency (2) 15% - 16% 18% - 20% Non-GAAP income from operations (1) $6.0 - $9.0 $24.0 - $32.0 Non-GA
Slide 90: Planning to grow to the Rule of 40 and beyond
Planning to grow to the Rule of 40 and beyond Rule of 40 20% Revenue Growth 19% 20% FCF Margin 10% 2023E 2025 Long Term Note: Rule of 40 is calculated as the sum of revenue growth and free cash flow margin. 2023 figures are based on the midpoint of Freshworks full year 2023 financial estimates. See
Slide 91: More than $1 billion revenue for 2026 in our baseline plan
More than $1 billion revenue for 2026 in our baseline plan ARPA continues Larger customers 20% CAGR to increase driving growth % of ARR TODAY 2026 TODAY 2026 TODAY 2026 CS: 51% CS: 35% ARPA: ARPA: >$5K ARR: 19.1K >$5K ARR: 30K+ $9K $14K >$50K ARR: 2.2K >$50K ARR: 5K+ IT: 44% IT: 60% S&M: ~5% S&M: 5%
Slide 92: We have multiple sources of upside to the baseline plan
We have multiple sources of upside to the baseline plan Broader macroeconomic stability Product changes in S&M driving traction & growth AI & bot monetization driving Higher cross expansion persona penetration driving expansion Pricing & packaging adjustments PLG 2.0 driving resulting in greater fas
Slide 93: We are reducing SBC % and managing dilution
We are reducing SBC % and managing dilution 47% 42% 38% Post-IPO PRSUs SBC as % Pre-IPO of Revenue 18-20% 2021 2022 2023 2026 Dilution 12% 5% ~3% <3% Notes: Dilution is calculated as [shares granted - shares forfeited] / weighted average shares outstanding. © 2023 Freshworks Inc. All rights reserved
Slide 94: 2026 Model leads to FCF margin of 20%+
2026 Model leads to FCF margin of 20%+ 2023 2026 Revenue Growth 19% 20-22% Non-GAAP Gross Margin 83% 83% R&D 18% 17% As a % of Revenue S&M 49% 37-39% As a % of Revenue G&A 11% 9% As a % of Revenue Operating Margin 5% 18-20% Free Cash Flow Margin 10% 20-22% GAAP Operating Margin (33%) 0% Notes: 2023
Slide 95: Summary of financial strategy
Summary of financial strategy Durable revenue growth Investments driving 20% revenue building toward a multi-billion growth, with potential upside dollar business Improving operating efficiency Financial model combines growth and FCF generation to achieve with operating agility to deliver Rule of 40
Slide 96: Our path to multi billion dollar scale
Our path to multi billion dollar scale We are competing in three massive TAMs We have business momentum moving upmarket and serving larger customers Our customers are adopting multiple products as cross sell remains a large opportunity AI & automation is a tailwind to our business creating increment
Slide 100: Definitions
Definitions Customer: a unique domain or unique email address with at least one more more paid subscriptions to one or more of our products ARPA: annual revenue per account ARR: annual recurring revenue CAGR: compounding annual growth rate TTM: trailing twelve months SMB: companies with 250 or fewer
Slide 101: Use of Non-GAAP Measures
Use of Non-GAAP Measures In addition to the U.S. generally accepted accounting principles (“GAAP”) financials, this presentation includes certain non- GAAP financial measures, including non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP cost of revenue, non-GAAP operating expens
Slide 102: GAAP to non-GAAP Reconciliations: Revenue
GAAP to non-GAAP Reconciliations Revenue ($ in millions) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 GAAP Revenue $121.4 $128.8 $133.2 $137.7 $145.1 YoY Growth rates 37% 33% 26% 20% 19% Add: Effects of foreign currency rate fluctuations $2.6 $3.4 $3.9 $3.5 $1.2 Revenue adjusted for constant currency(1) $124.0 $13
Slide 103: GAAP to non-GAAP Reconciliations: Cost of revenue
GAAP to non-GAAP Reconciliations Cost of revenue ($ in millions) 2019 2020 2021 2022 H1-23 GAAP cost of revenue $36.5 $52.5 $78.0 $95.8 $50.1 Less: stock-based compensation expense - employee awards – – (5.6) (7.0) (3.4) Less: employer taxes and employee stock transactions – – (0.3) – (0.1) Less: am
Slide 104: GAAP to non-GAAP Reconciliations: Gross profit
GAAP to non-GAAP Reconciliations Gross profit ($ in millions) 2019 2020 2021 2022 H1-23 GAAP gross profit $135.9 $197.2 $293.0 $402.2 $232.7 Add: stock-based compensation expense - employee awards – – 5.6 7.0 3.4 Add: employer taxes and employee stock transactions – – 0.3 – 0.1 Add: amortization of
Slide 105: GAAP to non-GAAP Reconciliations: Operating expenses
GAAP to non-GAAP Reconciliations Operating expenses ($ in millions) 2019 2020 2021 2022 H1-23 GAAP sales and marketing $111.1 $133.3 $260.3 $343.2 $174.8 Less: stock-based compensation expense - employee awards (0.1) – (53.2) (64.3) (33.0) Less: employer taxes and employee stock transactions – – (4.
Slide 106: GAAP to non-GAAP Reconciliations: Operating expenses
GAAP to non-GAAP Reconciliations Operating expenses ($ in millions) 2019 2020 2021 2022 H1-23 GAAP research and development $38.6 $69.2 $120.4 $135.5 $67.0 Less: stock-based compensation expense - employee awards (0.2) (15.9) (45.2) (36.4) (19.0) Less: employer taxes and employee stock transactions
Slide 107: GAAP to non-GAAP Reconciliations: Income (loss) from operations
GAAP to non-GAAP Reconciliations Income (loss) from operations ($ in millions) 2019 2020 2021 2022 H1-23 GAAP income (loss) from operations ($29.7) ($56.1) ($204.8) ($233.4) ($91.4) Add: stock-based compensation expense - employee awards 0.3 43.3 173.4 207.7 104.9 Add: employer taxes and employee st
Slide 108: GAAP to non-GAAP Reconciliations: Free cash flow
GAAP to non-GAAP Reconciliations Free cash flow ($ in millions) Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Net cash provided by (used in) operating activities $1.4 ($6.8) ($4.2) $7.2 $11.5 $19.9 Less: purchases of property and equipment ($1.4) ($2.0) ($1.9) ($1.8) ($0.4) ($0.3) Less: capitalized internal-u
Slide 109: GAAP to non-GAAP Reconciliations: Free cash flow
GAAP to non-GAAP Reconciliations Free cash flow ($ in millions) 2019 2020 2021 2022 H1-23 Net cash provided by (used in) operating activities ($8.2) $32.5 $11.5 ($2.5) $31.4 Less: purchases of property and equipment ($11.5) ($4.4) ($5.6) ($7.1) ($0.7) Less: capitalized internal-use software ($3.3) (

Freshworks — Investor Day (September 2023) on 6ix

Freshworks — Investor Day (September 2023)

Slide 1: Investor Day 2023

Slide 2: Welcome

Slide 3: Disclaimer

Slide 4: Investor Day Agenda

Slide 5: Submit Questions

Slide 6: Company Vision and Strategy

Slide 7: Freshworks at a glance

Slide 8: Our mission

Slide 9: Industry tailwinds helping Freshworks grow

Slide 10: Businesses of all sizes must transform to compete in a digital-first world

Slide 11: Expectations for customer and employee experience have changed

Slide 12: The need for better insights drives demand for high-quality data

Slide 13: Consistent innovation and product evolution

Slide 14: The Freshworks solution

Slide 15: Neo platform and Freddy infuse AI across all products

Slide 16: Our India advantage

Slide 17: Global customer base

Slide 18: Culture is our intangible asset

Slide 19: Experienced global leadership team

Slide 20: Our path to multi billion dollar scale

Slide 21: Our Solutions in Action

Slide 22: We compete in three large, growing and adjacent markets

Slide 23: Why we win

Slide 24: IT & Employee Service

Slide 25: Our products scale with the needs of IT departments and beyond

Slide 26: Freshservice crossed $260M in ARR and is growing fast

Slide 27: Significant opportunity to innovate within IT and adjacent spaces

Slide 28: Customer and industry analyst recognition

Slide 29: A&E selects Freshservice to handle IT and G&A requests seamlessly

Slide 30: Freshservice enables digital transformation for Georgetown University

Slide 31: Product Demo – IT & Employee Service

Slide 32: Customer Service

Slide 33: We offer modern, intelligent omnichannel customer service solutions

Slide 34: Customer service solutions at $300M in ARR

Slide 35: Building upon a history of innovation

Slide 36: Customer and industry analyst recognition

Slide 37: Ingram Micro scales to 28 countries, delighting customers with Freshdesk

Slide 38: Clopay selects Freshworks to automate and modernize dealer support

Slide 39: Product Demo – Customer Service

Slide 40: Sales and Marketing

Slide 41: Our Sales and Marketing solution offers a unified view of the customer journey

Slide 42: Sales and Marketing products complement our customer service solutions in a large TAM

Slide 43: Unified CRM to accelerate growth

Slide 44: Addison Lee hits the brakes on legacy CRM and selects Freshworks

Slide 45: Product Demo – Sales & Marketing

Slide 46: Strategy for Durable Growth

Slide 47: Our growth drivers

Slide 48: Unique GTM designed to efficiently serve the Fortune 5 Million

Slide 49: We have 3 sales motions to drive a high velocity business

Slide 50: Efficient inbound sales motion serves businesses of all sizes

Slide 51: Growing field sales motion provides local customer coverage

Slide 52: Our partner ecosystem supports our strategy of moving upmarket

Slide 53: Changes to GTM are driving business impact

Slide 54: SMB opportunity remains large

Slide 55: Millions of SMBs need to adopt AI and automation to compete

Slide 56: Strong track record of solving the needs of SMBs

Slide 57: PLG 2.0 project to supercharge our SMB business

Slide 58: SMBs trust us to transform and compete in digital-first world

Slide 59: Large companies are turning to Freshworks

Slide 60: Freshworks delivers against the pain points large companies face

Slide 61: Larger companies are adopting Freshworks

Slide 62: Coherent leaves legacy system behind to increase work efficiency with Freshservice

Slide 63: Opportunity to expand our existing customers

Slide 64: Our largest customers already use multiple Freshworks offerings

Slide 65: We have multiple expansion paths with our customers

Slide 66: iQor increases business efficiency as it expands to multiple Freshworks products

Slide 67: AI and Neo amplify our value proposition

Slide 68: Our Freddy AI resolves millions of inquiries

Slide 69: AI is a tailwind for Freshworks

Slide 70: Neo Platform is a force multiplier

Slide 71: Our growth drivers

Slide 72: Break

Slide 73: Customer Spotlight

Slide 74: Jacen Cabading

Slide 75: Director

Slide 76: Vice President

Slide 77: Financial Overview

Slide 78: Business model highlights

Slide 79: Delivering strong and durable revenue growth