Freshworks’ shares rose over 6% post the earnings announcement and closed at $14.05 apiece.
Adjusted operating profit in this context helps standardise the operating income of the company by excluding large one-off cost items in a given financial period.
The software as a service (SaaS) company has raised its full-year 2023 financial forecast midpoint for an adjusted operating profit of $5 million. It was moved to a range of $2 million to $8 million, against a previously forecast adjusting operating loss of $6 million to $14 million.
The Chennai and San Mateo, California-headquartered company said its net loss shrank to $42.7 million, or 15 cents per share in the first quarter ended March 2023, from $49.1 million, or 18 cents per share, a year earlier. Excluding items, Freshworks had suffered a $600,000 loss in Q1 of 2022.
Total revenue in Q1 2023 rose 20% to $137.7 million. “More companies are taking advantage of the opportunity to buy software that is designed to scale to meet their IT and customer needs,” said Girish Mathrubootham, CEO and founder, Freshworks.
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The company said the number of customers contributing more than $5,000 in annual recurring revenue was up 18% at 18,441. Freshworks, founded in Chennai in 2010 and listed on the Nasdaq in 2021, primarily targets small and medium businesses with its customer relationship management software.
To rein in costs, Freshworks executed more job cuts last month. “We continue to review organisational efficiencies to avoid duplicated effort and maintain a strong performance culture.
As a result, a small number of individuals are impacted and are leaving the company,” a spokesperson had said in a statement then.
The company employs more than 5,000 people across its global offices. It had laid off 90 employees globally in December 2022, of which 60 were part of its India team.
During the quarter under review, Freshworks revealed that its cofounder and chief technology officer (CTO) Shanmugam Krishnasamy had quit the company last September.
Krishnasamy, who decided to take a career break after 11 years with the firm, has handed his responsibilities over to chief product officer (CPO) Prakash Ramamurthy, who led both the product and engineering teams.