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Shares of Freshworks slumped nearly 25 per cent on Thursday, May 2, after the CRM software maker’s founder Girish Mathrubootham stepped down as the firm’s chief executive officer (CEO). The first India-born software-as-a-service (SaaS) firm to trade on a US stock exchange also trimmed its full-year annual revenue guidance between $695 million and $705 million, compared to the previous revenue forecast of $703.5 million and $711.5 million.
Mathrubootham has transitioned from the CEO role to the company’s board as the executive chairman. Freshworks also named Dennis Woodside who will take over as CEO. Woodside joined Freshworks as president in 2022, with a prior professional stints including the ones as President at Impossible Foods, chief operating officer (COO) at Dropbox and CEO at Motorola Mobility.
Also Read: Freshworks CEO Girish Mathrubootham steps down, shares tumble
Freshworks P&L account
For the January-March quarter, Freshworks reported a consolidated revenue of $165 million, up 20 per cent year-on-year. The non-GAAP operating profit jumped to $21.8 million from $3.9 million in the year-ago period, when the company had announced its first full-year operating profit since listing publicly. In the first quarter, free cash flow stood at $38.7 million, compared with $9.1 million a year earlier.
The stock’s current losses are set to erase nearly $1.4 billion from the company’s market value of $5.45 billion based on Wednesday’s closing price. Brokerage Baird Equity said on Thursday that it likes the move upmarket to enterprise. They are stepping to the sidelines and will look for a better entry point upon signs of stability and GenAI clarity.
Freshworks offers an IT service management product called Freshservice, which assists businesses with employee onboarding and management. The company, which once targeted a valuation of nearly $10 billion for its initial public offering, has seen its stock price lose more than 60 per cent from its peak in 2021.
Piper Sandler analysts flagged pressure on Freshworks’ small and medium-sized business (SMB) customers. The SMB cohort continued to see pressure on expansion rates, customer adds and churn during Q1, according to the analysts.
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Published: 02 May 2024, 10:27 PM IST
