Summary
Freshworks reported third quarter fiscal 2024 revenue of $186.6 million, up 21.5% from $153.6 million in the prior-year quarter. Gross profit rose 23.2% to $156.8 million. Gross margin was 84.0%, up 1.1 percentage points from 82.9%. The company still posted an operating loss of $38.9 million, roughly flat against a $38.7 million loss in the third quarter of 2023. Net loss narrowed to $29.96 million from $31.03 million. Diluted net loss per share improved to $0.10 from $0.11. For the first nine months of 2024, revenue was $525.8 million, up 20.5%, and net loss narrowed 32.8% to $73.5 million.
Cash generation improved sharply. Net cash provided by operating activities was $42.3 million in the quarter, up 77.0% from $23.9 million a year earlier. Free cash flow, a non-GAAP measure, was $40.1 million, compared with $22.1 million. Capital expenditures were $1.06 million, up 279.9%. Deferred revenue reached $296.1 million, up 20.3%. Remaining performance obligations were $488.9 million, up 30.1%. The number of customers contributing more than $5,000 in ARR was 22,359, up 14% year over year. Net dollar retention rate was 107%, down from 108% in the prior-year quarter. ARR from customers contributing more than $5,000 represented 90% of total ARR, up from 88%. Monthly subscriptions were 15% of ARR, down from 18%.
The quarter included the Device42 acquisition, which closed in June 2024 for approximately $238.1 million, consisting of $225.3 million in cash and $12.9 million in common stock and stock options. Freshworks also announced a restructuring plan in November 2024 to reduce global headcount by approximately 13%, or about 660 employees. The company authorized a share repurchase program of up to $400 million of Class A common stock. It appointed Murali Swaminathan as chief technology officer. Product momentum included Freddy AI Agent for Customer Experience and Employee Experience. New customers included Republic Airways, City of Bellevue, ChampionX, University of Oxford, Sparebank 1, and TechStyle Fashion Group.
Management guided fourth quarter 2024 to $187.8 million to $190.8 million in revenue, representing 17% to 19% year-over-year growth. For full year 2024, revenue guidance was $713.6 million to $716.6 million, or 20% growth. Fourth quarter non-GAAP income from operations was guided to $22.0 million to $24.0 million, and full year non-GAAP income from operations to $80.8 million to $82.8 million. Fourth quarter non-GAAP net income per share was guided to $0.09 to $0.10, and full year non-GAAP net income per share to $0.38 to $0.39. In the third quarter, non-GAAP income from operations was $24.0 million, compared with $17.4 million a year earlier, and non-GAAP diluted net income per share was $0.11, compared with $0.08.
Risks remain. Macroeconomic uncertainties, inflationary pressures, and foreign currency volatility could hurt demand and revenue. Net dollar retention declined to 107% from 108% because of lower expansion within existing customers, though favorable foreign currency, Device42, and slightly better churn partly offset that. Freshworks has a history of net losses. The restructuring is expected to incur charges in the fourth quarter of 2024, primarily cash expenditures for separation-related payments and employee benefits. The company also faces execution risk as it integrates Device42 and realigns around Employee Experience, AI, and Customer Experience priorities.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $186.6M | $174.1M | +7.1% | $153.6M | +21.5% |
| Gross profit | $156.8M | $146.0M | +7.4% | $127.3M | +23.2% |
| Gross margin | 84.0% | 83.8% | +0.2 pp | 82.9% | +1.1 pp |
| Research & development | $47.9M | $41.0M | +16.8% | $34.9M | +37.3% |
| Sales & marketing | $101.3M | $104.2M | -2.9% | $90.7M | +11.7% |
| General & administrative | $46.5M | $44.5M | +4.5% | $40.5M | +14.9% |
| Total operating expenses | $195.6M | $189.7M | +3.1% | $166.0M | +17.8% |
| Operating income (loss) | -$38.9M | -$43.8M | +11.2% | -$38.7M | -0.3% |
| Operating margin | -20.8% | -25.1% | +4.3 pp | -25.2% | +4.4 pp |
| Net income (loss) | -$30.0M | -$20.2M | -48.4% | -$31.0M | +3.5% |
| Net margin | -16.1% | -11.6% | -4.5 pp | -20.2% | +4.2 pp |
| Diluted EPS | -$0.10 | -$0.07 | -$0.03 | -$0.11 | +$0.01 |
| Net retention rate | 107.0% | 106.0% | +1.0 pp | 108.0% | -1.0 pp |
Risks
Net dollar retention rate decreased from 108% as of September 30, 2023 to 107% as of September 30, 2024, primarily due to lower expansion within existing customers driven by macroeconomic pressures, and the company expects these pressures to persist for the foreseeable future.
Approximately 27% of revenue exposure was related to the euro and British Pound for each of the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, and foreign currency exchange rate fluctuations have negatively impacted revenue growth historically, with volatility potentially persisting.
Monthly subscriptions represented 15% and 18% of ARR as of September 30, 2024 and 2023, respectively; net dollar retention for monthly contracts has generally been lower than overall, and the ARR-based retention calculation may overstate actual revenue if monthly subscribers do not renew.
In November 2024, the company committed to a restructuring plan expected to incur charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits, and related costs, which may disrupt operations and affect near-term results.
The June 2024 acquisition of Device42 for approximately $238.1 million added software license and maintenance revenue and amortization of acquired intangibles, and the company's consolidated results include Device42 since the acquisition date, creating integration and purchase accounting risk.
Operating expenses increased 18% for the three months ended September 30, 2024, including a 37% increase in research and development expense, and management expects research and development, sales and marketing, and general and administrative expenses to continue to increase in dollar amount for the foreseeable future.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Non-GAAP Operating Margin
Free Cash Flow
Remaining Performance Obligations
Non-GAAP Gross Margin
ARR from Customers Contributing More Than $5,000 in ARR as a Percentage of Total ARR
Customers Contributing More Than $5,000 in ARR
Non-GAAP Income from Operations
Summary, forecast, risks and KPIs are extracted from Freshworks Inc.'s SEC filings for Q3 FY2024 (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 2, 2026.