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Winners And Losers Of Q1: Freshworks (NASDAQ:FRSH) Vs The Rest Of The Sales Software Stocks


Anthony Lee /
2024/07/08 3:43 am EDT

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how sales software stocks fared in Q1, 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 integrates data analytics with sales and marketing functions.

The 4 sales software stocks we track reported a weak Q1; on average, revenues beat analyst consensus estimates by 1.1%. while next quarter's revenue guidance was 1.5% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and sales software stocks have had a rough stretch, with share prices down 14.7% on average since the previous earnings results.

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 $165.1 million, up 19.9% year on year, in line with analysts' expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating growth in large customers.

“Freshworks delivered 20% revenue growth with improving profitability and a strong free cash flow margin in Q1,” said Girish Mathrubootham, CEO and Founder of Freshworks.

Freshworks Total Revenue

Freshworks delivered the weakest full-year guidance update of the whole group. The company added 288 enterprise customers paying more than $5,000 annually to reach a total of 20,549. The stock is down 30.6% since the results and currently trades at $12.65.

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

Best Q1: 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-sized businesses market themselves, sell, and get found on the internet.

HubSpot reported revenues of $617.4 million, up 23.1% year on year, outperforming analysts' expectations by 3.2%. It was a mixed quarter for the company, with a decent beat of analysts' ARR (annual recurring revenue) estimates but full-year revenue guidance missing analysts' expectations.

HubSpot Total Revenue

HubSpot pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The company added 11,749 customers to reach a total of 216,840. The stock is down 0.6% since the results and currently trades at $586.5.

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

Weakest Q1: 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 $310.1 million, up 3.1% year on year, in line with analysts' expectations. It was a weak quarter for the company, with a miss of analysts' billings estimates and full-year revenue guidance missing analysts' expectations.

ZoomInfo had the slowest revenue growth in the group. The company lost 60 enterprise customers paying more than $100,000 annually and ended up with a total of 1,760. The stock is down 24.3% since the results and currently trades at $12.15.

Read our full analysis of ZoomInfo's results here.

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 $9.13 billion, up 10.7% year on year, falling short of analysts' expectations by 0.1%. It was a weak quarter for the company, with a miss of analysts' billings estimates and full-year revenue guidance missing analysts' expectations.

Salesforce had the weakest performance against analyst estimates among its peers. The stock is down 3.3% since the results and currently trades at $263.19.

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

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