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Freshworks (FRSH) Q4 Earnings Report Preview: What To Look For


Kayode Omotosho /
2023/02/06 3:00 am EST
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Business software provider Freshworks (NASDAQ: FRSH) will be announcing earnings results tomorrow after market hours. Here's what to look for.

Last quarter Freshworks reported revenues of $128.7 million, up 33.2% year on year, beating analyst revenue expectations by 2.61%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in net revenue retention rate. The company added 501 enterprise customers paying more than $5,000 annually to a total of 16,713.

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 23.5% year on year to $130.3 million, slowing down from the 44.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.04 per share.

Freshworks Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 4.57%.

Looking at Freshworks's peers in the sales and marketing software segment, only Qualtrics has so far reported results, delivering top-line growth of 23.1% year on year, and beating analyst estimates by 2.08%. The stock traded up 1.25% on the results. Read our full analysis of Qualtrics's earnings results here.

There has been positive sentiment among investors in the sales and marketing software segment, with the stocks up on average 23.4% over the last month. Freshworks is up 13.6% during the same time, and is heading into the earnings with with analyst price target of $17.40, compared to share price of $16.31.

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.