Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 1, 2023 © 2023 Freshworks Inc. All rights reserved.
Slide 2: 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, emp
Slide 3: 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 and free cash flow. This presentation also includes certain non-GAAP metrics, i
Slide 4: Our Q2 2023 Product Launch Announcements
Our Q2 2023 Product Launch Announcements Unified CRM Customer Service Sales Automation Marketing Automation IT & Employee Service Freshchat, Freshdesk Freshsales Freshmarketer Freshservice Freddy Self Service Native e-Signature for CPQ Freddy Copilot Freddy Self Service Freddy Copilot WooCommerce Int
Slide 5: Working with amazing brands around the globe
Working with amazing brands around the globe Retail, Logistics, Financial Auto & Media & High Hospitality & & E-Commerce Services Manufacturing Entertainment Tech Transportation © 2023 Freshworks Inc. All rights reserved.
Slide 6: Welcoming more customers every quarter…
Welcoming more customers every quarter… © 2023 Freshworks Inc. All rights reserved.
Slide 7: Revenue by quarter
Revenue by quarter $160M ($ in millions) $140M $145.1 $137.7 $133.2 $128.8 $120M $121.4 $100M Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 YoY Growth 37% 33% 26% 20% 19% YoY Growth CC* 40% 37% 30% 23% 20% *Notes: Revenue growth rates adjusted for constant currency are based on average exchange rates in effect duri
Slide 8: Revenue by geography
Revenue by geography 3% 3% 3% 3% 3% 3% 15% 15% 15% 15% 14% 39% 39% 38% 38% 39% 43% 44% 44% 44% 44% Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Rest of World Asia-Pacific Europe, Middle East, Africa North America Note: Numbers rounded for presentation purposes and may not foot. © 2023 Freshworks Inc. All rights res
Slide 9: Total customers
Total customers (in thousands) 70K 64.9 65.6* 60K 63.4 59.9 61.6 50K 40K 30K Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 YoY Growth 14% 13% 13% 12% 10% *Note: The lower addition of net new customers was driven by the smaller customer cohort of less than $5K ARR. Factors © 2023 Freshworks Inc. All rights reserved.
Slide 10: Customer metrics
Customer metrics Customers >$5K ARR Customers >$50K ARR 20,000 2,250 2,186 19,105 18,441 2,000 17,500 2,013 17,722 1,908 16,713 1,750 16,212 15,000 1,717 1,648 1,500 12,500 1,250 10,000 1,000 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 YoY Growth 22% 19% 20% 18% 18% YoY Growth 42% 36
Slide 11: Net dollar retention
Net dollar retention 120% 115% 110% 113% 111% 110% 108% 108% 108% 107% 107% 107% 100% 90% Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Net Dollar Retention Net Dollar Retention CC* Net Dollar Retention Rate is calculated by taking the Ending ARR of the cohort of customers from 12 months prior divided by the Enteri
Slide 12: Non-GAAP Income (loss) from operations
Non-GAAP Income (loss) from operations ($ in millions) $15.0 $10.0 $11.7 $5.0 $3.9 $0.0 ($3.1) ($2.8) ($5.0) ($10.0) ($15.0) ($15.8) ($20.0) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Notes: 2023 financial data reflects unaudited results as of June 30, 2023. See Appendix for reconciliation of all GAAP to Non-GAAP
Slide 13: Free cash flow
Free cash flow ($ in millions) $20.0 $15.0 $18.1 $10.0 $9.1 $5.0 $4.0 $0.0 ($5.0) ($7.2) ($10.2) ($10.0) ($15.0) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 We define free cash flow as net cash provided by operating activities, less purchases of property and equipment and capitalized internal-use software. We believ
Slide 14: Financial outlook
Financial outlook ($ in millions except for per share data) Q3-23 2023 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 - $32.0 Non-GAAP net income per shar
Slide 15: GAAP to non-GAAP Reconciliations
GAAP to non-GAAP Reconciliations © 2023 Freshworks Inc. All rights reserved.
Slide 16: GAAP to non-GAAP Reconciliations – Revenue
GAAP to non-GAAP Reconciliations – Revenue ($ 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 $2.6 $3.4 $3.9 $3.5 $1.2 rate fluctuations Revenue adjusted for constant currency(1) $124.0 $1
Slide 17: GAAP to non-GAAP Reconciliations – Income (loss) from operations
GAAP to non-GAAP Reconciliations – Income (loss) from operations ($ in millions) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 GAAP income (loss) from operations ($67.4) ($58.3) ($60.6) ($48.1) ($43.3) Add: stock-based compensation expense - $50.1 $53.9 $57.0 $50.7 $54.2 employee awards Add: employer taxes and empl
Slide 18: GAAP to non-GAAP Reconciliations – Free cash flow
GAAP to non-GAAP Reconciliations – Free cash flow ($ in millions) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Net cash provided by (used in) operating activities ($6.8) ($4.2) $7.2 $11.5 $19.9 Less: purchases of property and equipment ($2.0) ($1.9) ($1.8) ($0.4) ($0.3) Less: capitalized internal-use software ($1.4