Freshworks Revenue Grows 22%, Strong EPS and Cash Flow Reported

Freshworks announced impressive Q4 results, with revenues up 22% and a solid operating margin. The outlook suggests continued growth, making it an appealing option for potential investors.

Date: 12-02-2025

AI Rating: 7

Financial Metrics Overview

Freshworks reported strong performance in Q4 2024. Revenue grew by 22% year over year to $194.6 million, exceeding previous estimates. The company maintained a significant non-GAAP operating margin of 21%, reflecting successful cost management and strategic execution. Adjusted free cash flow came in at $41.7 million, matching a healthy adjusted free cash flow margin of 21% for the quarter, hence indicating the company’s ability to generate cash in line with its revenue growth.

Revenue Growth

The 22% revenue growth signals strong demand for Freshworks' products, particularly within its employee experience (EX) business, which surpassed $400 million in Annual Recurring Revenue (ARR) and grew by 35% year-over-year. This trend highlights the rising preference for Freshworks over traditional, complex software vendors, suggesting strong continual growth potential going forward.

Free Cash Flow

With adjusted free cash flow of $41.7 million in Q4, effectively doubling from the previous year, Freshworks displays a strong operational capacity to convert revenue into cash. The outlook for 2025 indicates an anticipated $210 million in free cash flow, denoting confidence in sustained growth and operational efficiency.

Strategic Focus and Market Position

Freshworks is committed to investing in both employee experience and artificial intelligence (AI), which are viewed as critical growth areas. The company aims to leverage its strong position in the mid-market landscape to capture more customers from legacy systems by offering competitive, uncomplicated solutions.

Overall, the reported metrics point towards a positive outlook for Freshworks and affirm its strategic direction while providing foundational support for future growth. However, the presence of foreign exchange (FX) impacts should also be monitored going forward, as it introduced a notable shift in reported results.

Stocks: FRSH