Freshworks Inc. (NASDAQ: FRSH), a leading software company
empowering businesses to delight their customers and employees,
today announced financial results for its third quarter ended
September 30, 2022.
“We delivered a strong quarter of results with revenue up 37% on
a constant currency basis and significantly improved our operating
efficiency,“ said Girish Mathrubootham, CEO and founder of
Freshworks. “In Q3, we continued to deliver on our promise of
modern, powerful, easy to use software for everyone with new
updates to our product suite.”
Third Quarter 2022 Financial Summary
Results
- Revenue: Total revenue was $128.8 million,
representing growth of 33% compared to the third quarter of 2021
and 37% adjusting for constant currency.
- GAAP (Loss) from Operations: GAAP (loss) from
operations was $(58.3) million, compared to $(140.3) million in the
third quarter of 2021.
- Non-GAAP (Loss) from Operations: Non-GAAP
(loss) from operations was $(3.1) million, compared to $(1.5)
million in the third quarter of 2021.
- GAAP Net (Loss) Per Share: GAAP basic and
diluted net (loss) per share was $(0.20) based on
286.7 million weighted-average shares outstanding, compared to
$(24.72) based on 95.9 million weighted-average shares
outstanding in the third quarter of 2021.
- Non-GAAP Net (Loss) Per Share: Non-GAAP basic
and diluted net (loss) per share was $(0.01) based on
286.7 million weighted-average shares outstanding, compared to
$(0.04) based on 95.9 million weighted-average shares
outstanding in the third quarter of 2021.
- Net Cash (Used in) Provided by Operating
Activities: Net cash (used in) operating activities was
$(4.2) million, compared to net cash (used in) operating activities
of $(2.0) million in the third quarter of 2021.
- Free Cash Flow: Free cash flow was $(7.2)
million, compared to $(4.2) million in the third quarter of
2021.
- Cash, Cash Equivalents and Marketable
Securities: Cash, cash equivalents, and marketable
securities were $1.2 billion as of September 30, 2022.
A description of non-GAAP financial measures is contained in the
section titled "Explanation of Non-GAAP Financial Measures" below
and a reconciliation of GAAP to non-GAAP financial measures is
contained in the tables below.
Third Quarter Key Metrics and Recent Business
Highlights
- Number of customers contributing more than $5,000 in ARR was
16,713, an increase of 19% year-over-year and 23% adjusting for
constant currency.
- Net dollar retention rate was 107% and 113% adjusting for
constant currency, compared to 111% in the second quarter of 2022
and 117% in the third quarter of 2021.
- Welcomed new customers to the Freshworks community including:
Altasciences, Clark College, Dwyer Instruments LLC, Dynata,
HelloFresh, Media.Monks, Plume, Viessmann, and more.
- Appointed Dennis Woodside as President and member of our Board
of Directors.
- Announced Freshservice for Business Teams to extend IT service
management solutions to non-IT departments.
- Enhanced Freshchat with AI-powered suggestion functionality to
help agents improve response time.
- Added real time lead scoring by embedding artificial
intelligence within Freshsales and Freshmarketer.
- Held our first Global Developer Summit for customers building
on the Freshworks Neo Platform.
Financial Outlook
We are providing estimates for the fourth quarter and full year
2022 based on current market conditions and expectations. The
revenue growth rates are only adjusted for constant currency to
provide better visibility into the underlying business trends. We
emphasize that these estimates are subject to various important
cautionary factors referenced in the section entitled
“Forward-Looking Statements” below.
For the fourth quarter and full year 2022, we currently expect
the following results:
($ in millions, except per share data) |
Fourth Quarter 2022 |
Full Year 2022 |
Revenue(1) |
$129.2 - $131.2 |
$494.0 - $496.0 |
Year-over-year growth |
22% - 24% |
33% - 34% |
Adjusting for constant
currency(2) |
27% - 28% |
36% - 37% |
|
|
|
Non-GAAP loss from
operations(1) |
($10.5) - ($8.5) |
($30.0) - ($28.0) |
|
|
|
Non-GAAP net loss per
share(3) |
($0.05) - ($0.03) |
($0.13) - ($0.11) |
(1) Revenue and non-GAAP loss from operations are based on
exchange rates as of October 28, 2022 for currencies other than
USD.(2) Revenue growth rates adjusted for constant currency are
based on average exchange rates in effect during the comparison
period for currencies other than USD. See the section entitled
“Explanation of non-GAAP Financial Measures” and the table entitled
“Reconciliation of Selected GAAP Measures to non‑GAAP Measures” for
a reconciliation of GAAP to non‑GAAP measures.(3) Non-GAAP net loss
per share was estimated assuming 288.5 million and 284.6 million
weighted-average shares outstanding for the fourth quarter and full
year 2022, respectively.
These statements are forward-looking and actual results may
differ materially. Refer to the “Forward-Looking Statements” safe
harbor section below for information on the factors that could
cause our actual results to differ materially from these
forward-looking statements.
We have not reconciled our estimates for non-GAAP loss from
operations to GAAP loss from operations or non-GAAP net loss per
share to GAAP net loss per share due to the uncertainty and
potential variability of expenses that may be incurred in the
future. Accordingly, a reconciliation is not available without
unreasonable effort. We have provided a reconciliation of other
GAAP to non-GAAP financial measures in the financial statement
tables for our third quarter 2022 non-GAAP results included in this
press release.
Webcast and Conference Call Information
We will host a conference call for investors on November 1, 2022
at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the
company’s financial results and business highlights. Investors are
invited to listen to a live audio webcast of the conference call by
visiting the investor relations website at ir.freshworks.com. A
replay of the audio webcast will be available shortly after the
call on the Freshworks Investor Relations website and will be
available for twelve months thereafter.
Explanation of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), this press
release and the accompanying tables contain non-GAAP financial
measures, including revenue and revenue growth rates adjusted for
constant currency, non-GAAP gross profit, non-GAAP gross margin,
non-GAAP sales and marketing expense, non-GAAP research and
development expense, non-GAAP general and administrative expense,
non-GAAP loss from operations, non-GAAP operating margin, non-GAAP
net loss per share, non-GAAP net loss attributable to common
stockholders, and free cash flow. The presentation of these
financial measures is not intended to be considered in isolation or
as a substitute for, or superior to, financial information prepared
and presented in accordance with GAAP.
We adjust revenue and related growth rates for constant currency
to provide a framework for assessing business performance excluding
the effect of foreign currency rate fluctuations. To present this
information, current period results for currencies other than USD
are converted into USD at the average exchange rates in effect
during the comparison period (for Q3 2021, the average exchange
rates in effect for our major currencies were 1 USD to 1.18 EUR and
1 USD to 1.38 GBP), rather than the actual average exchange rates
in effect during the current period (for Q3 2022, the average
exchange rates in effect for our major currencies were 1 USD to
1.01 EUR and 1 USD to 1.18 GBP).
We use these non-GAAP measures in conjunction with GAAP measures
as part of our overall assessment of our performance, including the
preparation of our annual operating budget and quarterly forecasts,
to evaluate the effectiveness of our business strategies and to
communicate with our board of directors concerning our financial
performance. We believe these non-GAAP measures provide investors
consistency and comparability with our past financial performance
and facilitate period-to-period comparisons of our operating
results. We believe these non-GAAP measures are useful in
evaluating our operating performance compared to that of other
companies in our industry, as they generally eliminate the effects
of certain items that may vary for different companies for reasons
unrelated to overall operating performance.
Investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an
analytical tool. The non-GAAP measures we use may be different from
non-GAAP financial measures used by other companies, limiting their
usefulness for comparison purposes. We compensate for these
limitations by providing specific information regarding the GAAP
items excluded from these non-GAAP financial measures.
We exclude the following items from one or more of our non-GAAP
financial measures, including the related income tax effect of
these adjustments:
- Stock-based compensation expense. We exclude stock-based
compensation, which is a non-cash expense, from certain of our
non-GAAP financial measures because we believe that excluding this
expense provides meaningful supplemental information regarding
operational performance. In particular, stock-based compensation
expense is not comparable across companies given the variety of
valuation methodologies and assumptions.
- Employer payroll taxes on employee stock transactions. We
exclude the amount of employer payroll taxes on equity awards from
certain of our non-GAAP financial measures because they are
dependent on our stock price at the time of vesting or exercise and
other factors that are beyond our control and do not believe these
expenses have a direct correlation to the operation of our
business.
- Amortization of acquired intangibles. We exclude amortization
of acquired intangibles, which is a non-cash expense, from certain
of our non-GAAP financial measures. Our expenses for amortization
of acquired intangibles are inconsistent in amount and frequency
because they are significantly affected by the timing, size of
acquisitions, and the allocation of purchase price. We exclude
these amortization expenses because we do not believe these
expenses have a direct correlation to the operation of our
business.
- Gain on sale of non-marketable equity investments. We exclude
gains on sale of non-marketable equity investments from certain of
our non-GAAP financial measures because we believe they are
unrelated to our ongoing operating performance and are not expected
to recur in our continuing operating results.
We define free cash flow as net cash provided by operating
activities, less purchases of property and equipment and
capitalized internal-use software. We believe that free cash flow
is a useful indicator of liquidity as it measures our ability to
generate cash from our core operations after purchases of property
and equipment. Free cash flow is a measure to determine, among
other things, cash available for strategic initiatives, including
further investments in our business and potential acquisitions of
businesses.
Operating Metrics
Number of Customers Contributing More Than $5,000 in ARR. We
define ARR as the sum total of the revenue we would contractually
expect to recognize over the next 12 months from all customers at a
point in time, assuming no increases, reductions or cancellations
in their subscriptions. We define our total customers contributing
more than $5,000 in ARR as of a particular date as the number of
business entities or individuals, represented by a unique domain or
a unique email address, with one or more paid subscriptions to one
or more of our products that contributed more than $5,000 in
ARR.
Net Dollar Retention Rate. To calculate net dollar retention
rate as of a given date, we first determine Entering ARR, which is
ARR from the population of our customers as of 12 months prior to
the end of the reporting period. We then calculate the Ending ARR
from the same set of customers as of the end of the reporting
period. We then divide the Ending ARR by the Entering ARR to arrive
at our net dollar retention rate. Ending ARR includes upsells,
cross-sells, and renewals during the measurement period and is net
of any contraction or attrition over this period.
We also adjust the above operating metrics and related growth
rates for constant currency to provide a framework for assessing
our business performance excluding the effects of foreign currency
rates fluctuations. To present this information, the Ending ARR of
the current period in currencies other than USD is converted into
USD at the exchange rates in effect at the end of the comparison
period (for Q3 2021, the period end exchange rates in effect for
our major currencies were 1 USD to 1.16 EUR and 1 USD to 1.35 GBP),
rather than the actual exchange rates in effect at the end of the
current period (for Q3 2022, the period end exchange rates in
effect for our major currencies were 1 USD to 0.98 EUR and 1 USD to
1.12 GBP).
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements relate to, among other things, our GAAP and
non-GAAP estimates for the fourth quarter and full year 2022, our
financial outlook, the value of our products to customers, our
ability to drive long-term growth, and the usefulness of the
measures by which we evaluate our business, among other things.
These forward-looking statements are based on our current
expectations, estimates and projections about its business and
industry, management’s beliefs and certain assumptions made by the
company, all of which are subject to change. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as, “future”, "believe," "expect,"
"may," "will," "intend," "estimate," "continue," “anticipate,”
“could,” “would,” “projects,” “plans,” “targets” or similar
expressions or the negative of those terms or expressions. Such
statements involve risks and uncertainties, many of which involve
factors or circumstances that are beyond our control, which could
cause actual results to vary materially from those expressed in or
indicated by the forward-looking statements. Factors that may cause
actual results to differ materially include our ability to achieve
our long-term plans and key initiatives; our ability to sustain or
manage any future growth effectively; our ability to attract and
retain customers or expand sales to existing customers; delays in
product development or deployments or the success of such products;
the failure to deliver competitive service offerings and lack of
market acceptance of any offerings delivered; the impact to the
economy, our customers and our business due to global economic
conditions, including market volatility, foreign exchange rates,
and impact of inflation; the timeframes for and severity of the
impact of any weakened global economic conditions on our customers’
purchasing and renewal decisions, which may extend the length of
our sales cycles or adversely affect our industry; our history of
net losses and ability to achieve or sustain profitability, as well
as the other potential factors described under "Risk Factors"
included in our Annual Report on Form 10-K for the year ended
December 31, 2021 and our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2022 and June 30, 2022, and other
documents of Freshworks Inc. we file with the Securities and
Exchange Commission from time to time (available at www.sec.gov),
including our Quarterly Report on Form 10-Q that will be filed for
the quarter ended September 30, 2022.
We caution you not to place undue reliance on forward-looking
statements, which speak only as of the date hereof and are based on
information available to us at the time the statements are made
and/or management’s good faith belief as of that time with respect
to future events. We assume no obligation to update any
forward-looking statements in order to reflect events or
circumstances that may arise after the date of this release, except
as required by law.
About Freshworks Inc.
Freshworks Inc., (NASDAQ: FRSH) makes business software people
love to use. Purpose-built for IT, customer support, and sales and
marketing teams, our products empower the people who power
business. Freshworks is fast to onboard, priced affordably, built
to delight, yet powerful enough to deliver critical business
outcomes. Headquartered in San Mateo, California, Freshworks
operates around the world to serve more than 60,000 customers
including Allbirds, Blue Nile, Bridgestone, Databricks, Klarna,
NHS, OfficeMax, and PhonePe. For the freshest company news visit
www.freshworks.com and follow us on Facebook, LinkedIn and
Twitter.
Investor Relations Contact:Joon
HuhIR@freshworks.com650-988-5699
Media Relations Contact:Jayne
GonzalezPR@freshworks.com408-348-1087
© 2022 Freshworks Inc. All Rights Reserved. Freshworks and its
associated logo is a trademark of Freshworks Inc. All other
company, brand and product names may be trademarks or registered
trademarks of their respective companies. Nothing in this press
release should be construed to the contrary, or as an approval,
endorsement or sponsorship by any first parties of Freshworks Inc.
or any aspect of this press release.
FRESHWORKS INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(in
thousands, except per share
data)(unaudited)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
128,760 |
|
|
$ |
96,614 |
|
|
$ |
364,829 |
|
|
$ |
265,542 |
|
Cost of revenue(1) |
|
24,179 |
|
|
|
22,236 |
|
|
|
70,616 |
|
|
|
57,632 |
|
Gross profit |
|
104,581 |
|
|
|
74,378 |
|
|
|
294,213 |
|
|
|
207,910 |
|
Operating expense: |
|
|
|
|
|
|
|
Research and development(1) |
|
35,871 |
|
|
|
57,087 |
|
|
|
100,885 |
|
|
|
91,377 |
|
Sales and marketing(1) |
|
86,865 |
|
|
|
96,785 |
|
|
|
248,369 |
|
|
|
188,155 |
|
General and administrative(1) |
|
40,133 |
|
|
|
60,759 |
|
|
|
117,723 |
|
|
|
76,785 |
|
Total operating expenses |
|
162,869 |
|
|
|
214,631 |
|
|
|
466,977 |
|
|
|
356,317 |
|
Loss from operations |
|
(58,288 |
) |
|
|
(140,253 |
) |
|
|
(172,764 |
) |
|
|
(148,407 |
) |
Interest and other income,
net |
|
2,249 |
|
|
|
22,923 |
|
|
|
2,609 |
|
|
|
23,428 |
|
Loss before income taxes |
|
(56,039 |
) |
|
|
(117,330 |
) |
|
|
(170,155 |
) |
|
|
(124,979 |
) |
Provision for (benefit from)
income taxes |
|
1,804 |
|
|
|
(9,915 |
) |
|
|
6,500 |
|
|
|
(7,720 |
) |
Net loss |
|
(57,843 |
) |
|
|
(107,415 |
) |
|
|
(176,655 |
) |
|
|
(117,259 |
) |
Accretion of redeemable
convertible preferred stock |
|
— |
|
|
|
(2,264,838 |
) |
|
|
— |
|
|
|
(2,646,662 |
) |
Net loss attributable to
common stockholders |
$ |
(57,843 |
) |
|
$ |
(2,372,253 |
) |
|
$ |
(176,655 |
) |
|
$ |
(2,763,921 |
) |
Net loss per share
attributable to common stockholders - basic and diluted |
$ |
(0.20 |
) |
|
$ |
(24.72 |
) |
|
$ |
(0.62 |
) |
|
$ |
(32.96 |
) |
Weighted average shares used
in computing net loss per share attributable to common stockholders
- basic and diluted |
|
286,697 |
|
|
|
95,930 |
|
|
|
283,258 |
|
|
|
83,860 |
|
______________________(1) Includes
stock-based compensation expense as follows (in thousands):
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Cost of revenue |
$ |
1,772 |
|
$ |
3,983 |
|
$ |
5,212 |
|
$ |
3,983 |
Research and development |
|
10,318 |
|
|
36,823 |
|
|
26,446 |
|
|
36,823 |
Sales and marketing |
|
16,635 |
|
|
40,465 |
|
|
44,204 |
|
|
40,465 |
General and
administrative |
|
25,167 |
|
|
42,988 |
|
|
74,790 |
|
|
42,988 |
Total stock-based compensation
expense |
$ |
53,892 |
|
$ |
124,259 |
|
$ |
150,652 |
|
$ |
124,259 |
FRESHWORKS INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(in
thousands)
|
|
September 30,2022 |
|
December 31, 2021 |
|
|
(unaudited) |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
432,313 |
|
|
$ |
747,861 |
|
Marketable securities |
|
|
719,218 |
|
|
|
575,679 |
|
Accounts receivable, net |
|
|
56,835 |
|
|
|
51,756 |
|
Deferred contract acquisition costs |
|
|
18,282 |
|
|
|
14,640 |
|
Prepaid expenses and other current assets |
|
|
42,431 |
|
|
|
31,440 |
|
Total current assets |
|
|
1,269,079 |
|
|
|
1,421,376 |
|
Property and equipment,
net |
|
|
23,381 |
|
|
|
21,478 |
|
Operating lease right-of-use
assets |
|
|
28,821 |
|
|
|
— |
|
Deferred contract acquisition
costs, noncurrent |
|
|
17,598 |
|
|
|
15,007 |
|
Intangible assets, net |
|
|
579 |
|
|
|
1,894 |
|
Goodwill |
|
|
6,181 |
|
|
|
6,181 |
|
Deferred tax assets |
|
|
5,396 |
|
|
|
6,284 |
|
Other assets |
|
|
12,050 |
|
|
|
10,592 |
|
Total assets |
|
$ |
1,363,085 |
|
|
$ |
1,482,812 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
3,873 |
|
|
$ |
6,321 |
|
Accrued liabilities |
|
|
57,447 |
|
|
|
55,829 |
|
Deferred revenue |
|
|
190,969 |
|
|
|
160,173 |
|
Income tax payable |
|
|
65 |
|
|
|
1,023 |
|
Total current liabilities |
|
|
252,354 |
|
|
|
223,346 |
|
Operating lease liabilities,
non-current |
|
|
24,630 |
|
|
|
— |
|
Other liabilities |
|
|
26,098 |
|
|
|
21,427 |
|
Total liabilities |
|
|
303,082 |
|
|
|
244,773 |
|
Stockholders' equity: |
|
|
|
|
Common stock |
|
|
3 |
|
|
|
3 |
|
Additional paid-in
capital |
|
|
4,516,386 |
|
|
|
4,509,724 |
|
Accumulated other
comprehensive loss |
|
|
(8,790 |
) |
|
|
(747 |
) |
Accumulated deficit |
|
|
(3,447,596 |
) |
|
|
(3,270,941 |
) |
Total stockholders'
equity |
|
|
1,060,003 |
|
|
|
1,238,039 |
|
Total liabilities and
stockholders' equity |
|
$ |
1,363,085 |
|
|
$ |
1,482,812 |
|
FRESHWORKS INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands)(unaudited)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash Flows from
Operating Activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(57,843 |
) |
|
$ |
(107,415 |
) |
|
$ |
(176,655 |
) |
|
$ |
(117,259 |
) |
Adjustments to reconcile net
loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,795 |
|
|
|
3,374 |
|
|
|
8,574 |
|
|
|
9,792 |
|
Amortization of deferred contract acquisition costs |
|
4,625 |
|
|
|
3,416 |
|
|
|
13,321 |
|
|
|
9,085 |
|
Non-cash lease expense |
|
1,567 |
|
|
|
— |
|
|
|
4,463 |
|
|
|
— |
|
Stock-based compensation |
|
53,892 |
|
|
|
124,259 |
|
|
|
150,652 |
|
|
|
124,259 |
|
Premium amortization on marketable securities |
|
(533 |
) |
|
|
411 |
|
|
|
564 |
|
|
|
1,206 |
|
Gain realized on sale of marketable securities and non-marketable
equity investments |
|
— |
|
|
|
(23,821 |
) |
|
|
— |
|
|
|
(23,835 |
) |
Change in fair value of equity securities |
|
10 |
|
|
|
(35 |
) |
|
|
(75 |
) |
|
|
(100 |
) |
Deferred income taxes |
|
— |
|
|
|
(11,721 |
) |
|
|
309 |
|
|
|
(11,721 |
) |
Other |
|
273 |
|
|
|
69 |
|
|
|
1,468 |
|
|
|
133 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(1,432 |
) |
|
|
(3,929 |
) |
|
|
(5,256 |
) |
|
|
(10,039 |
) |
Deferred contract acquisition costs |
|
(6,913 |
) |
|
|
(6,032 |
) |
|
|
(19,554 |
) |
|
|
(17,032 |
) |
Prepaid expenses and other assets |
|
(3,929 |
) |
|
|
(12,963 |
) |
|
|
(12,374 |
) |
|
|
(14,823 |
) |
Accounts payable |
|
(2,416 |
) |
|
|
(4,513 |
) |
|
|
(1,962 |
) |
|
|
(542 |
) |
Accrued and other liabilities |
|
668 |
|
|
|
24,193 |
|
|
|
3,874 |
|
|
|
18,517 |
|
Deferred revenue |
|
8,173 |
|
|
|
12,661 |
|
|
|
30,796 |
|
|
|
38,975 |
|
Operating lease liabilities |
|
(3,160 |
) |
|
|
— |
|
|
|
(7,837 |
) |
|
|
— |
|
Net cash (used in) provided by
operating activities |
|
(4,223 |
) |
|
|
(2,046 |
) |
|
|
(9,692 |
) |
|
|
6,616 |
|
Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(1,907 |
) |
|
|
(1,270 |
) |
|
|
(5,288 |
) |
|
|
(4,056 |
) |
Proceeds from sale of property and equipment |
|
49 |
|
|
|
8 |
|
|
|
132 |
|
|
|
565 |
|
Capitalized internal-use software |
|
(1,106 |
) |
|
|
(873 |
) |
|
|
(3,828 |
) |
|
|
(3,050 |
) |
Sale of non-marketable equity investments |
|
— |
|
|
|
23,979 |
|
|
|
— |
|
|
|
23,979 |
|
Purchases of marketable securities |
|
(250,301 |
) |
|
|
(43,988 |
) |
|
|
(538,501 |
) |
|
|
(154,828 |
) |
Sales of marketable securities |
|
— |
|
|
|
2,076 |
|
|
|
92,786 |
|
|
|
36,831 |
|
Maturities and redemptions of marketable securities |
|
113,055 |
|
|
|
30,750 |
|
|
|
293,625 |
|
|
|
112,554 |
|
Net cash (used in) provided by
investing activities |
|
(140,210 |
) |
|
|
10,682 |
|
|
|
(161,074 |
) |
|
|
11,995 |
|
Cash Flows from
Financing Activities: |
|
|
|
|
|
|
|
Proceeds from initial public offering, net of underwriting
discounts |
|
— |
|
|
|
1,069,348 |
|
|
|
— |
|
|
|
1,069,348 |
|
Proceeds from issuance of common stock under employee stock
purchase plan, net |
|
— |
|
|
|
— |
|
|
|
7,011 |
|
|
|
— |
|
Proceeds from exercise of stock options |
|
2 |
|
|
|
12 |
|
|
|
98 |
|
|
|
43 |
|
Payment of withholding taxes on net share settlement of equity
awards |
|
(13,367 |
) |
|
|
— |
|
|
|
(151,716 |
) |
|
|
— |
|
Payment of deferred offering costs |
|
— |
|
|
|
(3,067 |
) |
|
|
(109 |
) |
|
|
(5,472 |
) |
Payment of acquisition-related liabilities |
|
— |
|
|
|
(900 |
) |
|
|
— |
|
|
|
(900 |
) |
Net cash (used in) provided by
financing activities |
|
(13,365 |
) |
|
|
1,065,393 |
|
|
|
(144,716 |
) |
|
|
1,063,019 |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in
cash, cash equivalents and restricted cash |
|
(157,798 |
) |
|
|
1,074,029 |
|
|
|
(315,482 |
) |
|
|
1,081,630 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
|
590,180 |
|
|
|
105,932 |
|
|
|
747,864 |
|
|
|
98,331 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
432,382 |
|
|
$ |
1,179,961 |
|
|
$ |
432,382 |
|
|
$ |
1,179,961 |
|
FRESHWORKS
INC.RECONCILIATION OF SELECTED GAAP MEASURES TO
NON-GAAP MEASURES(in thousands, except percentages
and per share data)(unaudited)
|
|
Three Months EndedSeptember
30, |
|
|
|
|
|
2022 |
|
|
2021 |
|
Growth Rates |
Revenue |
|
|
|
|
|
|
GAAP revenue |
|
$ |
128,760 |
|
$ |
96,614 |
|
33 |
% |
Effects of foreign currency rate fluctuations |
|
|
3,428 |
|
|
— |
|
|
Revenue adjusted for constant
currency |
|
$ |
132,188 |
|
|
|
37 |
% |
FRESHWORKS
INC.RECONCILIATION OF SELECTED GAAP MEASURES TO
NON-GAAP MEASURES(in thousands, except percentages
and per share data)(unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of
gross profit and gross margin: |
|
|
|
|
|
|
|
|
GAAP gross profit |
|
$ |
104,581 |
|
|
$ |
74,378 |
|
|
$ |
294,213 |
|
|
$ |
207,910 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,772 |
|
|
|
3,983 |
|
|
|
5,212 |
|
|
|
3,983 |
|
Employer payroll taxes on employee stock transactions |
|
|
58 |
|
|
|
523 |
|
|
|
25 |
|
|
|
523 |
|
Amortization of acquired intangibles |
|
|
175 |
|
|
|
990 |
|
|
|
1,015 |
|
|
|
2,939 |
|
Non-GAAP gross profit |
|
$ |
106,586 |
|
|
$ |
79,874 |
|
|
$ |
300,465 |
|
|
$ |
215,355 |
|
GAAP gross margin |
|
|
81.2 |
% |
|
|
77.0 |
% |
|
|
80.6 |
% |
|
|
78.3 |
% |
Non-GAAP gross margin |
|
|
82.8 |
% |
|
|
82.7 |
% |
|
|
82.4 |
% |
|
|
81.1 |
% |
|
|
|
|
|
|
|
|
|
Reconciliation of
operating expenses: |
|
|
|
|
|
|
|
|
GAAP research and
development |
|
$ |
35,871 |
|
|
$ |
57,087 |
|
|
$ |
100,885 |
|
|
$ |
91,377 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(10,318 |
) |
|
|
(36,823 |
) |
|
|
(26,446 |
) |
|
|
(36,823 |
) |
Employer payroll taxes on employee stock transactions |
|
|
(25 |
) |
|
|
(1,632 |
) |
|
|
127 |
|
|
|
(1,632 |
) |
Non-GAAP research and
development |
|
$ |
25,528 |
|
|
$ |
18,632 |
|
|
$ |
74,566 |
|
|
$ |
52,922 |
|
GAAP research and development
as percentage of revenue |
|
|
27.9 |
% |
|
|
59.1 |
% |
|
|
27.7 |
% |
|
|
34.4 |
% |
Non-GAAP research and
development as percentage of revenue |
|
|
19.8 |
% |
|
|
19.3 |
% |
|
|
20.4 |
% |
|
|
19.9 |
% |
|
|
|
|
|
|
|
|
|
GAAP sales and marketing |
|
$ |
86,865 |
|
|
$ |
96,785 |
|
|
$ |
248,369 |
|
|
$ |
188,155 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(16,635 |
) |
|
|
(40,465 |
) |
|
|
(44,204 |
) |
|
|
(40,465 |
) |
Employer payroll taxes on employee stock transactions |
|
|
(746 |
) |
|
|
(4,409 |
) |
|
|
(954 |
) |
|
|
(4,409 |
) |
Amortization of acquired intangibles |
|
|
(101 |
) |
|
|
(101 |
) |
|
|
(300 |
) |
|
|
(299 |
) |
Non-GAAP sales and
marketing |
|
$ |
69,383 |
|
|
$ |
51,810 |
|
|
$ |
202,911 |
|
|
$ |
142,982 |
|
GAAP sales and marketing as
percentage of revenue |
|
|
67.5 |
% |
|
|
100.2 |
% |
|
|
68.1 |
% |
|
|
70.9 |
% |
Non-GAAP sales and marketing
as percentage of revenue |
|
|
53.9 |
% |
|
|
53.6 |
% |
|
|
55.6 |
% |
|
|
53.8 |
% |
|
|
|
|
|
|
|
|
|
GAAP general and
administrative |
|
$ |
40,133 |
|
|
$ |
60,759 |
|
|
$ |
117,723 |
|
|
$ |
76,785 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(25,167 |
) |
|
|
(42,988 |
) |
|
|
(74,790 |
) |
|
|
(42,988 |
) |
Employer payroll taxes on employee stock transactions |
|
|
(165 |
) |
|
|
(6,815 |
) |
|
|
(457 |
) |
|
|
(6,815 |
) |
Non-GAAP general and
administrative |
|
$ |
14,801 |
|
|
$ |
10,956 |
|
|
$ |
42,476 |
|
|
$ |
26,982 |
|
|
|
|
|
|
|
|
|
|
GAAP general and
administrative as percentage of revenue |
|
|
31.2 |
% |
|
|
62.9 |
% |
|
|
32.3 |
% |
|
|
28.9 |
% |
Non-GAAP general and
administrative as percentage of revenue |
|
|
11.5 |
% |
|
|
11.3 |
% |
|
|
11.6 |
% |
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
Reconciliation of
operating loss and operating margin: |
|
|
|
|
|
|
|
|
GAAP loss from operations |
|
$ |
(58,288 |
) |
|
$ |
(140,253 |
) |
|
$ |
(172,764 |
) |
|
$ |
(148,407 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
53,892 |
|
|
|
124,259 |
|
|
|
150,652 |
|
|
|
124,259 |
|
Employer payroll taxes on employee stock transactions |
|
|
994 |
|
|
|
13,379 |
|
|
|
1,309 |
|
|
|
13,379 |
|
Amortization of acquired intangibles |
|
|
276 |
|
|
|
1,091 |
|
|
|
1,315 |
|
|
|
3,238 |
|
Non-GAAP loss from
operations |
|
$ |
(3,126 |
) |
|
$ |
(1,524 |
) |
|
$ |
(19,488 |
) |
|
$ |
(7,531 |
) |
GAAP operating margin |
|
(45.3) % |
|
(145.2) % |
|
(47.4) % |
|
(55.9) % |
Non-GAAP operating margin |
|
(2.4) % |
|
(1.6) % |
|
(5.3) % |
|
(2.8) % |
|
|
|
|
|
|
|
|
|
Reconciliation of net
loss attributable to common stockholders: |
|
|
|
|
|
|
|
|
GAAP net loss attributable to
common stockholders - basic and diluted |
|
$ |
(57,843 |
) |
|
$ |
(2,372,253 |
) |
|
$ |
(176,655 |
) |
|
$ |
(2,763,921 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Accretion of redeemable convertible preferred stock |
|
|
— |
|
|
|
2,264,838 |
|
|
|
— |
|
|
|
2,646,662 |
|
Stock-based compensation expense |
|
|
53,892 |
|
|
|
124,259 |
|
|
|
150,652 |
|
|
|
124,259 |
|
Employer payroll taxes on employee stock transactions |
|
|
994 |
|
|
|
13,379 |
|
|
|
1,309 |
|
|
|
13,379 |
|
Amortization of acquired intangibles |
|
|
276 |
|
|
|
1,091 |
|
|
|
1,315 |
|
|
|
3,238 |
|
Gain on sale of non-marketable equity investments |
|
|
— |
|
|
|
(23,830 |
) |
|
|
— |
|
|
|
(23,830 |
) |
Income tax adjustments |
|
|
565 |
|
|
|
(11,555 |
) |
|
|
1,528 |
|
|
|
(11,555 |
) |
Non-GAAP net loss attributable
to common stockholders - basic and diluted |
|
$ |
(2,116 |
) |
|
$ |
(4,071 |
) |
|
$ |
(21,851 |
) |
|
$ |
(11,768 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of net
loss per share - basic and diluted: |
|
|
|
|
|
|
|
|
GAAP net loss per share
attributable to common stockholders - basic and diluted |
|
$ |
(0.20 |
) |
|
$ |
(24.72 |
) |
|
$ |
(0.62 |
) |
|
$ |
(32.96 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Accretion of redeemable convertible preferred stock |
|
|
— |
|
|
|
23.61 |
|
|
|
— |
|
|
|
31.56 |
|
Stock-based compensation expense |
|
|
0.19 |
|
|
|
1.29 |
|
|
|
0.53 |
|
|
|
1.48 |
|
Employer payroll taxes on employee stock transactions |
|
|
— |
|
|
|
0.14 |
|
|
|
— |
|
|
|
0.16 |
|
Amortization of acquired intangibles |
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.04 |
|
Gain on sale of non-marketable equity investments |
|
|
— |
|
|
|
(0.25 |
) |
|
|
— |
|
|
|
(0.28 |
) |
Income tax adjustments |
|
|
— |
|
|
|
(0.12 |
) |
|
|
0.01 |
|
|
|
(0.14 |
) |
Non-GAAP net loss per share
attributable to common stockholders - basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.14 |
) |
Weighted-average shares used
in computing GAAP and non-GAAP net loss per share attributable to
common stockholders - basic and diluted |
|
|
286,697 |
|
|
|
95,930 |
|
|
|
283,258 |
|
|
|
83,860 |
|
|
|
|
|
|
|
|
|
|
Computation of free
cash flow: |
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
(4,223 |
) |
|
$ |
(2,046 |
) |
|
$ |
(9,692 |
) |
|
$ |
6,616 |
|
Less: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,907 |
) |
|
|
(1,270 |
) |
|
|
(5,288 |
) |
|
|
(4,056 |
) |
Capitalized internal-use software |
|
|
(1,106 |
) |
|
|
(873 |
) |
|
|
(3,828 |
) |
|
|
(3,050 |
) |
Free cash flow |
|
$ |
(7,236 |
) |
|
$ |
(4,189 |
) |
|
$ |
(18,808 |
) |
|
$ |
(490 |
) |
Net cash provided by (used in)
investing activities |
|
$ |
(140,210 |
) |
|
$ |
10,682 |
|
|
$ |
(161,074 |
) |
|
$ |
11,995 |
|
Net cash provided by (used in)
financing activities |
|
$ |
(13,365 |
) |
|
$ |
1,065,393 |
|
|
$ |
(144,716 |
) |
|
$ |
1,063,019 |
|
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