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Freshworks Inc, the Chennai-headquartered software-as-a-service company which reported its first quarterly numbers after listing on Nasdaq, has recorded a net loss of $107.4 million (approximately ₹800 crore) for the quarter ended September 30, despite showing a 46 per cent growth in revenues to $96.61 million (₹719.5 crore).
For the nine months ended September 30, the company had revenues of $265.54 million and a net loss of $117.2 million. The company follows the calendar year for its fiscal year too.
Addressing a post-earnings conference call, Tyler Sloat, Chief Financial Officer of Freshworks, explained the quarterly losses saying, “Looking at our GAAP operating expenses, I should note that we have a large impact from stock-based compensation and related expenses of $138 million in Q3. This was related to our IPO which resulted in a significant RC vesting event, and a large catch-up expense for SBC (stock-based compensation). Going forward, we expect [it] to be more normalised – to be at more normalised levels of approximately $45 million per quarter.”
CEO of Freshworks Girish Mathrubootham said: “Total revenue for the quarter was $96.6 million, growing [at] 46 per cent year-over-year. We now have over 14,000 paying customers who are paying us more than $5,000 in annual recurring revenue and driving the vast majority of our business. ”
Freshworks said for the full-year it expects revenue to be in the range of $364.5-366.5 million and non-GAAP loss from operations to be in the range of $19-21 million. In spite of the impressive revenue growth, the markets were not pleased with Freshworks numbers and its shares on Nasdaq went down more than 14 per cent to end the day at $50.07.
Market cap at $14.2 billion
Commenting on the ongoing war for tech talent, Mathrubootham said: “Globally everyone understands that talent is supercritical, and we really think that our location advantage with having access to a high-quality talent in India is a strategic advantage for us.
“We have like all of our R&D there, and so we are able to kind of attract. We are the most preferred SaaS start-up to work for in India now and definitely the best one in Chennai.”
In spite of the recent drop in its share price, Freshworks now has a market capitalisation of $14.2 billion compared to its larger in revenues rival, Zendesk, which had a market capitalisation of $12.6 billion.
Zendesk’s shares have been hammered on the bourses by more than 16 per cent ever since it announced a decision on October 28 to acquire Momentive Global for $4 billion in stock.