Summary
Freshworks opened fiscal 2022 with revenue of $114.6 million, up 42% from the prior-year quarter. Gross profit reached $92.2 million, and gross margin rose to 80.5% from 79.3%. The top line grew, but operating loss widened to $47.1 million from $1.7 million a year earlier. Net loss was $49.1 million, or diluted EPS of negative $0.18, compared with net loss of $2.4 million and diluted EPS of negative $0.01 in the first quarter of 2021. Operating margin was negative 41.1%, down from negative 2.1%. The swing reflects heavy stock-based compensation and other public-company costs after the September 2021 IPO.
The customer base continued to move upmarket. Customers contributing more than $5,000 in ARR totaled 15,639, an increase of 27% year over year. Net dollar retention rate was 115%, compared to 114% in the fourth quarter of 2021 and 112% in the first quarter of 2021. Freshworks launched Freshworks CRM for e-commerce during the quarter. It also announced partnerships with Shopify, Device42, Good Data and Yext, and completed 150 projects with Tata Consultancy Services. New customers included California Credit Union, Kuka, Marymount Manhattan College, Sodexo, Ticket Network and Thermo Fisher.
Cash generation weakened. Operating cash flow was $1.4 million, down from $7.8 million in the prior-year quarter. Capital expenditures were $1.4 million, down from $2.0 million. Free cash flow was negative $1.4 million, compared with $4.8 million a year earlier. Deferred revenue was $174.4 million at March 31, 2022. Remaining performance obligations were $251.6 million.
Guidance points to continued spending. For the second quarter of 2022, Freshworks expects non-GAAP loss from operations of $18.5 million to $16.5 million and non-GAAP net loss per share of $0.08 to $0.06. For the full year 2022, it expects non-GAAP loss from operations of $43.5 million to $37.5 million and non-GAAP net loss per share of $0.18 to $0.16. The company also issued revenue guidance for both periods but does not reconcile its non-GAAP estimates to GAAP because of uncertainty around future expenses.
Risks remain material. Freshworks has a history of net losses and may not achieve or sustain profitability. Global economic conditions, market volatility, the Russia-Ukraine conflict and the COVID-19 pandemic could delay customer purchasing and renewal decisions or lengthen sales cycles. The company also faces competition, potential service interruptions, and challenges tied to being newly public. Operating expenses increased during the quarter, driven by headcount and stock-based compensation after the IPO. The large GAAP loss and negative free cash flow show that the company still spends heavily to grow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $114.6M | $105.5M | +8.7% | — | — |
| Gross profit | $92.2M | $85.1M | +8.4% | — | — |
| Gross margin | 80.5% | 80.7% | -0.2 pp | — | — |
| Research & development | $30.7M | $29.0M | +5.8% | — | — |
| Sales & marketing | $71.5M | $72.2M | -1.0% | — | — |
| General & administrative | $37.2M | $40.2M | -7.6% | — | — |
| Total operating expenses | $139.4M | $141.5M | -1.5% | — | — |
| Operating income (loss) | -$47.1M | -$56.4M | +16.4% | — | — |
| Operating margin | -41.1% | -53.5% | +12.3 pp | — | — |
| Net income (loss) | -$49.1M | -$74.7M | +34.4% | — | — |
| Net margin | -42.8% | -70.8% | +28.0 pp | — | — |
| Diluted EPS | -$0.18 | -$0.57 | +$0.39 | — | — |
| Net retention rate | 115.0% | 114.0% | +1.0 pp | — | — |
Risks
Operating loss widened to $47.1 million in FY2022 Q1 from $1.7 million in FY2021 Q1, and net loss widened to $49.1 million from $2.4 million, driven in part by $46.6 million of stock-based compensation expense recognized after the IPO. Continued high stock-based compensation could delay GAAP profitability.
Operating cash flow decreased 82.6% to $1.4 million in FY2022 Q1 from $7.8 million in FY2021 Q1, and free cash flow turned negative to $(1.4) million from $4.8 million in the prior-year quarter. This reflects lower operating cash generation alongside continued purchases of property and equipment and capitalized internal-use software.
Total operating expenses increased 112% to $139.4 million in FY2022 Q1 from $65.6 million in FY2021 Q1, with general and administrative expense up 383%, sales and marketing up 68%, and research and development up 100%. The company expects continued increases as it invests in growth and returns to in-person marketing events and normal business travel.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Non-GAAP Operating Margin
Number of Customers Contributing More Than $5,000 in ARR
Free Cash Flow
Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from Freshworks Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.