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Reflecting On Sales Software Stocks’ Q3 Earnings: Freshworks (NASDAQ:FRSH)


Kayode Omotosho /
2023/01/20 4:52 am EST
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As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q3. Today we are looking at the sales software stocks, starting with Freshworks (NASDAQ:FRSH).

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality, coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrate data analytics with sales and marketing functions.

The 4 sales software stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 2.52%, while on average next quarter revenue guidance was 0.86% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital, but sales software stocks held their ground better than others, with share prices down 4.11% since the previous earnings results, on average.

Freshworks (NASDAQ:FRSH)

Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium sized businesses.

Freshworks reported revenues of $128.7 million, up 33.2% year on year, beating analyst expectations by 2.61%. It was an ok quarter for the company, with underwhelming revenue guidance for the next quarter.

“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.

Freshworks Total Revenue

The stock is up 13.8% since the results and currently trades at $15.16.

Read our full report on Freshworks here, it's free.

Best Q3: ZoomInfo (NASDAQ:ZI)

Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ:ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.

ZoomInfo reported revenues of $287.6 million, up 45.5% year on year, beating analyst expectations by 3.24%. It was a mixed quarter for the company, with exceptional revenue growth but decelerating growth in large customers.

ZoomInfo Total Revenue

ZoomInfo delivered the fastest revenue growth among its peers. The company added 85 enterprise customers paying more than $100,000 annually to a total of 1,848. The stock is down 40.2% since the results and currently trades at $25.99.

Is now the time to buy ZoomInfo? Access our full analysis of the earnings results here, it's free.

Weakest Q3: Salesforce (NYSE:CRM)

Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software as a service platform that helps companies access, manage and share sales information.

Salesforce reported revenues of $7.83 billion, up 14.1% year on year, in line with analyst expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.

Salesforce had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update in the group. The stock is down 8.53% since the results and currently trades at $146.12.

Read our full analysis of Salesforce's results here.

HubSpot (NYSE:HUBS)

Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software as a service platform that helps small and medium-size businesses sell, market themselves, and get found on the internet.

HubSpot reported revenues of $443.9 million, up 30.8% year on year, beating analyst expectations by 4.19%. It was a mixed quarter for the company, with solid topline results but underwhelming revenue guidance for the next quarter.

HubSpot delivered the strongest analyst estimates beat and highest full year guidance raise among the peers. The company added 8,040 customers to a total of 158,905. The stock is up 18.4% since the results and currently trades at $311.82.

Read our full, actionable report on HubSpot here, it's free.

The author has no position in any of the stocks mentioned