Freshworks (FRSH) Q3 2021 Results

In this photo, a Freshworks Inc logo appears on a smartphone screen.

Pavlo Gonchar | SOPA Pictures | LightRocket | Getty Images

Shares of customer service and support software maker Freshworks fell more than 15% in extended trading on Tuesday after releasing quarterly results for the first time following its IPO.

Here’s how the company did it:

  • Earnings: Loss of 4 cents per share, adjusted, compared to a loss of 10 cents per share as expected by analysts, according to Refinitiv.
  • Returned: $ 96.6 million, compared to $ 90.8 million as expected by analysts, according to Refinitiv.

Revenue increased nearly 46% in the quarter, Freshworks said in a statement.

The company said it sees an adjusted loss of 22 cents to 20 cents per share, less than the 23 cents per share expected by analysts polled by Refinitiv. But for revenue, the company’s projection of $ 364.5 million to $ 366.5 million was just below the Refinitiv consensus of $ 366.5 million in the middle of the range. This would reflect quarterly revenue growth of less than 37%.

This might be fine for some companies, but Freshworks shares have risen rapidly from their price to $ 36 in September. Before the after-hours move, the stock had risen 39% since its debut. Over the past year, investors have rushed to buy high-growth cloud stocks, with the WisdomTree Cloud Computing Fund rising 50%, while the S&P 500 index has risen less than 40% over the same period. .

Google invested several times in Freshworks as it continued to face competition from Oracle, Salesforce, SAP and Zendesk.

Some employees will be able to sell shares of the company for the first time on Thursday, Tyler Sloat, chief financial officer of Freshworks, said in a conference call with analysts.

Freshworks may increase the amount of revenue it earns from a particular customer when the customer adds agents to process inquiries and when they sign up for additional products. For example, the company has a human resources software offering called Freshteam, which CEO Girish Mathrubootham says is an incubation phase. Longer term, executives believe the company may have a net dollar retention rate, representing growth over existing customers, of 110%, Sloat said. The rate was 117% in the third quarter, compared to 118% in the second quarter.

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