SAN MATEO, Calif. - Freshworks Inc . (NASDAQ:FRSH) reported a robust second quarter, with earnings and revenue surpassing analyst expectations, propelling its shares up by 9% as the market responded favorably to the company's performance and optimistic outlook.
The software company, known for its customer and employee engagement solutions, announced a second-quarter adjusted EPS of $0.08, which was $0.02 higher than the analyst estimate of $0.06.
Revenue for the quarter reached $174.1 million, exceeding the consensus estimate of $169.05 million and marking a 20% increase from the $145.08 million reported in the same quarter last year.
CEO Dennis Woodside (OTC:WOPEY) attributed the strong quarter to Freshworks' financial discipline and the successful deployment of AI-powered solutions that meet customer needs. "Our results reflect our increasing financial discipline and our ability to meet the needs of customers with our AI-powered solutions," Woodside commented.
Looking ahead, Freshworks provided guidance for the third quarter of 2024, forecasting an adjusted EPS range of $0.07 to $0.08, with the midpoint slightly below the consensus estimate of $0.08. However, the company's revenue guidance for the third quarter is set at $180-183 million, surpassing the consensus of $178.7 million.
For the full fiscal year 2024, Freshworks anticipates an adjusted EPS range of $0.32 to $0.34, with the midpoint of $0.33 aligning with the consensus estimate. The company also projects full-year revenue to be between $707 million and $713 million, which is above the consensus estimate of $699.4 million.
The second quarter's financial success was further highlighted by the company's free cash flow margin of 19% and a 14% year-over-year growth in customers contributing more than $5,000 in annual recurring revenue (ARR).
Moreover, Freshworks ended the quarter with strong cash reserves, reporting $1.02 billion in cash, cash equivalents, and marketable securities.
Investors' optimism is reflected in the stock's 9% surge, indicating confidence in Freshworks' trajectory and its ability to outperform market expectations. The company's strategic acquisitions, such as Device42, and its global expansion efforts, including the launch of a new data center in the UAE, are expected to further strengthen its market position.
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