Why Freshworks Shares Are Seeing Blue Skies Today

Freshworks Inc FRSH shares are trading higher by around 15% after the company reported better-than-expected Q2 results.

Revenues rose 19% Y/Y to $145.1 million, beating the consensus of $141.22 million.

Number of customers contributing over $5,000 in ARR stood at 19,105, up 18% Y/Y and 17% Y/Y, adjusting for constant currency.

Net dollar retention rate came in at 108% (107% adjusting for constant currency), vs. 111% a year ago.

Adjusted EPS of $0.07 surpassed the consensus of $0.01.

Adjusted income from operations of $11.7 million was better than the adjusted operating loss of $(15.8) million a year ago.

Operating cash flow stood at $19.9 million, versus operating cash outflow of $(6.8) million the prior year. Free cash flow came in at $18.1 million in Q2 2023.

As of June 30, 2023, cash, cash equivalents, and marketable securities stood at $1.16 billion.

Outlook: For Q3, the company expects revenue of $149.0 million - $151.5 million (+16% to +18% Y/Y, consensus: $150.06 million), adjusted operating income of $6.0 million - $9.0 million, and adjusted EPS of $0.04 - $0.06 (consensus: $0.02).

For 2023, FRSH raised guidance for revenue to $587.0 million - $595.0 million (from $580.0 million - $592.5 million vs. consensus: $586.33 million), adjusted operating income to $24.0 million - $32.0 million (from $2.0 million- $8.0 million) and adjusted EPS to $0.18 - $0.22 (from $0.08 - $0.12, consensus: $0.10). 

Price Action: FRSH shares are up 15.4% at $21.05 premarket on the last check Wednesday.