Freshworks Earnings: What To Look For From FRSH

Radek Strnad /
2022/08/01 5:06 am EDT

Business software provider Freshworks (NASDAQ: FRSH) will be reporting results tomorrow after market hours. Here's what investors should know.

Last quarter Freshworks reported revenues of $114.6 million, up 42.2% year on year, beating analyst revenue expectations by 5.91%. It was a very strong quarter for the company, with an exceptional revenue growth and a solid beat of analyst estimates. The company added 825 enterprise customers paying more than $5,000 annually to a total of 15,639.

Is Freshworks buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Freshworks's revenue to grow 33.8% year on year to $118.2 million, slowing down from the 56.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.07 per share.

Freshworks Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing two downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time since going public on average by 5.76%.

Looking at Freshworks's peers in the sales and marketing software segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Zendesk delivered top-line growth of 27.9% year on year, beating analyst estimates by 0.62% and Squarespace reported revenues up 8.51% year on year, exceeding estimates by 0.32%. Both companies (Zendesk and Squarespace) traded flat on the results. Read our full analysis of Zendesk's results here and Squarespace's results here.

The whole tech sector has been facing a sell-off since late last year and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 3.81% over the last month. Freshworks is down 10.7% during the same time, and is heading into the earnings with analyst price target of $20.8, compared to share price of $13.18.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.