Summary
Freshworks closed fiscal 2024 with fourth-quarter revenue of $194.6 million, up 21.5% from the year-ago quarter. Gross profit reached $165.1 million, up 24.0%, and gross margin improved to 84.9%, a gain of 1.7 percentage points. The company remains unprofitable on a GAAP basis, but the red ink is thinning. Operating loss was $23.8 million, an improvement of 40.6%, and operating margin reached -12.2%, up 12.8 percentage points. Net loss was $21.9 million, narrower by 22.0%. Strip out stock-based compensation, payroll taxes on equity awards, intangible amortization and restructuring charges and the picture flips: non-GAAP income from operations was $40.3 million, up from $11.5 million a year earlier, and non-GAAP diluted net income per share was $0.14 versus $0.08.
For the full year, revenue was $720.4 million, up 20.8%. Gross profit was $607.1 million, up 23.1%. The GAAP operating loss narrowed 18.5% to $138.6 million, and net loss narrowed 30.6% to $95.4 million. Diluted loss per share was $0.32, an improvement of 31.9%. Those figures include Device42, which Freshworks acquired in June 2024 for about $238.1 million. Full-year revenue mix was 46% North America, 38% EMEA and 16% rest of world.
Cash generation was the standout. Fourth-quarter operating cash flow was $41.4 million, up 34.0%. Full-year operating cash flow was $160.6 million, up 86.4%. Capital expenditures were $5.1 million in the fourth quarter, up 369.6%, and $9.2 million for the year, up 343.5%. Adjusted free cash flow, a separate measure that subtracts purchases of property and equipment and capitalized software and adds back restructuring costs paid, was $41.7 million for the quarter and $153.3 million for the year. The balance sheet held $1.07 billion in cash, cash equivalents and marketable securities on December 31, 2024.
Customer metrics were mixed. Net dollar retention was 103%, down from 108% a year earlier, although it came in at 105% on a constant currency basis. The count of customers spending more than $5,000 in annual recurring revenue rose 11% to 22,558, out of more than 72,200 paying customers overall. Customers contributing at least $50,000 in ARR reached 3,053, a 22% increase. Deferred revenue was $327.3 million, up 22.9%, and remaining performance obligations were $525.3 million, up 25.4%. Roughly 36% of customers bought two or more products, and those accounts represented 46% of total ARR.
Management issued guidance for the first quarter and the full year 2025. First-quarter revenue is expected between $190.0 million and $193.0 million, which works out to 15% to 17% growth, or 16% to 18% in constant currency. For the full year 2025, the company targets $809.0 million to $821.0 million, growth of 12% to 14%, or 13% to 15% in constant currency. Non-GAAP income from operations is guided to $32.5 million to $34.5 million for the first quarter and $131.0 million to $139.0 million for the full year. Non-GAAP net income per share is forecast at $0.12 to $0.14 for the first quarter and $0.52 to $0.54 for the year.
Risks are not hard to find. Management ties the drop in net dollar retention to lower expansion within existing customers as macroeconomic pressure weighs on spending, and it expects those pressures to persist. About 27% of 2024 revenue was exposed to the euro and the British pound, so currency swings matter. Monthly subscriptions, which retain less well than annual contracts, made up 14% of ARR at year end. Freshworks has a history of net losses and an accumulated deficit of $3.7 billion as of December 31, 2024. It also booked $9.7 million in restructuring charges tied to a plan started in November 2024, and it had $384.5 million left under a $400 million share repurchase authorization.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $194.6M | $186.6M | +4.3% | $160.1M | +21.5% |
| Gross profit | $165.1M | $156.8M | +5.3% | $133.1M | +24.0% |
| Gross margin | 84.9% | 84.0% | +0.8 pp | 83.1% | +1.7 pp |
| Research & development | $41.0M | $47.9M | -14.3% | $35.8M | +14.5% |
| Sales & marketing | $90.7M | $101.3M | -10.4% | $92.3M | -1.8% |
| General & administrative | $47.5M | $46.5M | +2.2% | $45.0M | +5.7% |
| Total operating expenses | $188.9M | $195.6M | -3.4% | $173.1M | +9.1% |
| Operating income (loss) | -$23.8M | -$38.9M | +38.8% | -$40.0M | +40.6% |
| Operating margin | -12.2% | -20.8% | +8.6 pp | -25.0% | +12.8 pp |
| Net income (loss) | -$21.9M | -$30.0M | +26.9% | -$28.1M | +22.0% |
| Net margin | -11.3% | -16.1% | +4.8 pp | -17.5% | +6.3 pp |
| Diluted EPS | -$0.32 | -$0.10 | -$0.22 | -$0.47 | +$0.15 |
| Net retention rate | 103.0% | 107.0% | -4.0 pp | 108.0% | -5.0 pp |
Risks
Macroeconomic pressures reduced expansion within existing customers, with net dollar retention rate at 103% as of December 31, 2024, down from 108% as of December 31, 2023, and management expects these pressures to persist. About 27% of revenue exposure is tied to the euro and British pound, and foreign currency volatility may continue to affect results.
Freshworks faces increased competition as AI technologies are integrated into rival offerings, and competitors may develop new AI offerings or incorporate AI more successfully than its Freddy AI products. Developing and deploying AI systems may also raise computing costs and require additional investment in proprietary datasets and machine learning models.
Sales to large customers are a growing part of the business and involve longer sales cycles, with mid-market and enterprise cycles around 130 to 150 days versus 30 days for SMB customers. These customers often require implementation services, pricing discounts, and upfront investment with less predictable deal closure.
The business depends on customers renewing subscriptions and purchasing additional subscriptions, and net dollar retention rate decreased to 103% as of December 31, 2024 from 108% as of December 31, 2023. The company has experienced reduced renewal rates and increased churn, particularly within SMB customers on month-to-month subscriptions.
The employee experience and customer experience markets are highly competitive and fragmented, with competitors including ServiceNow, Atlassian, Salesforce, Zendesk, Oracle, SAP, HubSpot, and Microsoft Dynamics. Competitive pressure may result in price reductions, fewer customers, reduced revenue, gross profit, and gross margin, and increased net losses.
The company deploys generative AI in certain products and services, exposing it to risks related to accuracy, bias, privacy, security, data provenance, and evolving legal or regulatory scrutiny. Flawed or inaccurate AI outputs could lead to customer rejection, reputational harm, or legal liability.
Freshworks initiated a restructuring plan on November 5, 2024 that resulted in a 13% reduction in force and a charge of approximately $9.7 million in the three months ended December 31, 2024. The company may fail to achieve the expected benefits, and public reports of the reduction could exacerbate recruiting challenges and harm culture.
Competition for executive officers, software engineers and product managers with AI and machine learning backgrounds, and sales personnel is intense, and equity awards may be less effective as retention incentives. The recent workforce realignment may further complicate recruiting and retention.
Freshworks acquired D42 Parent, Inc. in June 2024 for approximately $238.1 million, and integration may disrupt operations, divert management attention, and fail to achieve expected benefits. The company may face challenges converting acquired revenue recognition policies and forecasting related revenues.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Non-GAAP Operating Margin
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Operating Cash Flow Margin
Customers Contributing More Than $5,000 in ARR
Monthly subscriptions as % of ARR
Paying Customers
Non-GAAP Income from Operations
Customers Contributing $50,000 or More in ARR
Summary, forecast, risks and KPIs are extracted from Freshworks Inc.'s SEC filings for Q4 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.