Freshworks revenues up 42% as customer growth continues

Stuart Lauchlan Profile picture for user slauchlan May 4, 2022 Audio mode
Summary:
Freshworks CEO Girish Mathrubootham is looking to the firm's new e-commerce CRM offering as a major opportunity.

Girish Mathrubootham

Freshworks turned in solid Q1 numbers yesterday, reporting revenue of $114.6 million, up 42% with a net loss of $49.0 million.

The number of customers contributing more than $5,000 in Annual Recurring Revenue now stands at 15,639, an increase of 27% year-over-year. The total customer count grew 15% to over 58,100 customers, with 2100 customers added during the quarter, the highest number since Q3 2020.

New customers during the quarter included California Credit Union, Kuka, Marymount Manhattan College, Sodexo, Ticket Network and Thermo Fisher.

CEO Girish Mathrubootham cited a number of use case exemplars for particular attention on the Enterprise Service Management (ESM) side of the business:

A US-based multi-billion dollar scientific instrumentation and software company chose Freshservice to automate their internal sales processes. The ability to integrate their custom deal desk applications directly into Freshservice, the company can more quickly receive email requests, create an order and close those deals faster.

Another ESM use case is Allbirds, the global sustainable footwear and apparel company, which implemented Freshservice to manage the entire employee lifecycle. From IT to facilities and HR, the company's employee facing teams can automate and customized processes, features, form, and service catalogs to meet the needs of their department and the employees they serve.

E-commerce

Some 22% of total customers use more than one Freshworks offering, said Mathrubootham, a trend that is likely to continue with the launch of an e-commerce targeted offering last month:

What is primarily driving us are a few patterns that you're seeing. One is our omni-channel Freshdesk customers who buy the omni-channel product. We also see customers using our Freshdesk Messaging product that is in line with the trends that we are seeing in businesses adopting conversational engagement to engage with customers on digital channels. And last week, we announced our unified CRM for e-commerce…the unified CRM can actually help us win multi-persona deals, where customers can land with only sales, only support or only marketing and then kind of add-on or upgrades to the full suite. 

That CRM for e-commerce play is one that is expected to be a big opportunity, said Mathrubootham:

The way to look at the Freshworks CRM for e-commerce is more like a vertical solution for D2C brands and consumer-facing e-commerce companies which want to engage with customers on digital channels. So what we have launched [gives] the opportunity for D2C brands and e-commerce brands to really get a full 360-view of their customers by combining data from Shopify orders, the lifetime value of the customers, in conjunction with the entire history of conversations that the business has had with the customer, and also have visibility into the marketing campaigns that the customers responded to. That kind of visibility was not available to e-commerce companies and sellers for them to understand more about their buyers, so that's what we have launched. And we will continue bringing the power of our unified customer record into other verticals over time.

Currently the new offering is tied into the Shopify ecosystem, but there are expansion plans ahead, he added:

We are listed on the Shopify marketplace. So for the first time for Shopify sellers, we have brought together capability that helps them drive personalized marketing campaigns, self-service automation through bots and conversational agent experience through live support agents and bot agents. Marketing campaigns can now work across WhatsApp, across text messaging or any of the other modern digital channels. The plan is to expand beyond Shopify and go into other e-commerce platforms like WooCommerce and Adobe Commerce, coming later this year. 

SI interest

While Mathrubootham once again repeated his mantra that Freshworks hunts rabbits, not elephants, it’s notable that the firm has seen some major systems integrators implementing projects:

We are not necessarily targeting a move into the larger enterprise. That is not part of our go-to-market motion. While our focus is still SMB and mid-market, we do have teams from larger companies coming to us, specifically when they are looking at us to replace, let's say, an enterprise solution like Zendesk and Salesforce.

TCS is a case in point, he added:

TCS have a special group for us where they understand that Freshworks products actually do not require the traditional 12-month, 18-month implementation cycles. So it's a high velocity model where they have actually completed 150 projects, mostly mid-market companies, but our products can be taken live in eight to 10 weeks.

So the SI companies are adopting a newer velocity model to be able to bring us to market. That is working for us.

My take

Revenue and customer numbers are heading in the right direction and the CRM for e-commerce play is certainly one to watch over the coming months.

Onwards!

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