Freshworks Q4 Earnings Exceed Expectations but Stock Declines
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy FRSH?
Source: NASDAQ.COM
- Earnings Beat: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, surpassing Wall Street expectations by $0.03 and $3.9 million respectively, indicating strong operational performance.
- Significant Stock Drop: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor concerns about the company's future amidst a broader market valuation contraction.
- Cautious Guidance: The company forecasts Q1 2023 sales between $222 million and $225 million, with full-year sales projected at $952 million to $960 million, aiming for approximately 14% annual growth, yet this guidance failed to alleviate investor apprehensions.
- Deteriorating Market Conditions: With the software sector experiencing significant valuation pullbacks, the S&P 500 and Nasdaq Composite fell by 1.4% and 2.1% respectively, leading investors to adopt a more selective approach towards software stocks, which may increase volatility in the near term.
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Analyst Views on FRSH
Wall Street analysts forecast FRSH stock price to rise
9 Analyst Rating
6 Buy
3 Hold
0 Sell
Moderate Buy
Current: 7.040
Low
13.00
Averages
18.88
High
25.00
Current: 7.040
Low
13.00
Averages
18.88
High
25.00
About FRSH
Freshworks Inc. is a software company. Its software-as-a-service (SaaS) solutions fall into two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams, and Device42. The Company's generative artificial intelligence (AI) solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Freshworks Rated as One of the Best Mid-Cap AI Stocks
- Strong Performance: Freshworks Inc. reported Q4 revenue of $222.7 million, reflecting a 14% year-over-year increase that surpassed market expectations, thereby boosting investor confidence in its SaaS offerings.
- Annual Recurring Revenue Growth: The company achieved an 18% year-over-year increase in annual recurring revenue (ARR), reaching $907 million, indicating a robust customer base expansion and revenue stability that lays a foundation for future growth.
- Analyst Rating Adjustment: Cantor Fitzgerald lowered its price target for Freshworks from $19 to $14 while maintaining an Outperform rating, suggesting that despite challenges of slowing growth, analysts remain optimistic about its long-term potential.
- Strong Customer Growth: The company added over 1,500 customers generating more than $100,000 in ARR during the quarter, demonstrating the attractiveness of its products in the market and customer loyalty, despite management's concerns over growth deceleration.
See More
Freshworks Stock Plummets Despite Q4 Earnings Beat
- Earnings Beat: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, exceeding Wall Street's EPS target by $0.03 and sales estimates by approximately $3.9 million, indicating strong operational performance.
- Significant Stock Decline: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor dissatisfaction with the company's forward guidance and a shift towards bearish market sentiment.
- Deteriorating Market Conditions: The broader software sector faced challenges, with the S&P 500 and Nasdaq Composite falling 1.4% and 2.1% respectively, highlighting a cautious investor outlook that contributed to Freshworks' stock decline amid a tough trading environment.
- Future Sales Guidance: Freshworks projects Q1 sales between $222 million and $225 million, with full-year sales expected to range from $952 million to $960 million, aiming for approximately 14% annual revenue growth, yet the selective investment approach in software stocks leaves its future uncertain.
See More
Freshworks Q4 Earnings Exceed Expectations but Stock Declines
- Earnings Beat: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, surpassing Wall Street expectations by $0.03 and $3.9 million respectively, indicating strong operational performance.
- Significant Stock Drop: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor concerns about the company's future amidst a broader market valuation contraction.
- Cautious Guidance: The company forecasts Q1 2023 sales between $222 million and $225 million, with full-year sales projected at $952 million to $960 million, aiming for approximately 14% annual growth, yet this guidance failed to alleviate investor apprehensions.
- Deteriorating Market Conditions: With the software sector experiencing significant valuation pullbacks, the S&P 500 and Nasdaq Composite fell by 1.4% and 2.1% respectively, leading investors to adopt a more selective approach towards software stocks, which may increase volatility in the near term.
See More
Freshworks Stock Plummets Due to Earnings Guidance
- Performance Beats: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, exceeding Wall Street's EPS target by $0.03 and sales estimates by approximately $3.9 million, indicating strong operational performance.
- Significant Stock Drop: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor dissatisfaction with the company's forward guidance and a shift towards bearish market sentiment.
- Market Environment Impact: The broader market faced challenges, with the S&P 500 declining 1.4% and the Nasdaq Composite falling 2.1% in the last week, as software stocks were particularly affected, highlighting growing investor caution in the sector.
- Future Sales Guidance: Freshworks projects Q1 sales between $222 million and $225 million, with full-year sales expected between $952 million and $960 million; although the management's 14% annual growth target is reasonable, investor selectivity in software stocks is increasing.
See More
Analyst Predicts GM Stock Could Rise Following a Strong Year; Also Featuring Cloudflare, Vertiv, and Others.
Source of Reports: The reports are excerpts from various investment and research firms, recently issued and edited by Barron’s.
Analysts' Perspectives: They represent a sampling of analysts' thoughts and should not be interpreted as Barron’s official views or recommendations.
Investment Services Disclosure: Some firms that issued the reports may have provided or intend to provide investment-banking or other services to the companies analyzed.
Caution on Interpretation: Readers are advised to consider the reports as insights rather than definitive investment advice.
See More
Freshworks Stock Plummets 14.8% Despite Q4 Earnings Beat
- Earnings Beat: Freshworks reported Q4 adjusted earnings per share of $0.14 on revenue of $222.7 million, surpassing Wall Street expectations by $0.03 and $3.9 million respectively; however, the stock plummeted 14.8%, indicating market dissatisfaction with future guidance.
- Weak Revenue Growth: The 14.4% year-over-year revenue growth in Q4 is overshadowed by management's guidance for Q1 2026, targeting revenue between $222 million and $225 million, reflecting a modest year-over-year growth of only 13.9%, failing to inspire investor confidence and leading to a significant stock drop.
- Annual Outlook: Freshworks anticipates full-year revenue between $952 million and $960 million, representing approximately 14% growth, but adjusted earnings per share are projected to decline to between $0.55 and $0.57, down from $0.66 last year, indicating a notable drop in profitability that affects market valuation perceptions.
- Market Reaction: Despite raising its full-year sales target, the overall market response has been tepid as investors are assigning lower valuation multiples to software stocks, compounded by the company's insufficiently strong forward guidance, resulting in a significant post-earnings stock decline.
See More
Freshworks Rated as One of the Best Mid-Cap AI Stocks
- Strong Performance: Freshworks Inc. reported Q4 revenue of $222.7 million, reflecting a 14% year-over-year increase that surpassed market expectations, thereby boosting investor confidence in its SaaS offerings.
- Annual Recurring Revenue Growth: The company achieved an 18% year-over-year increase in annual recurring revenue (ARR), reaching $907 million, indicating a robust customer base expansion and revenue stability that lays a foundation for future growth.
- Analyst Rating Adjustment: Cantor Fitzgerald lowered its price target for Freshworks from $19 to $14 while maintaining an Outperform rating, suggesting that despite challenges of slowing growth, analysts remain optimistic about its long-term potential.
- Strong Customer Growth: The company added over 1,500 customers generating more than $100,000 in ARR during the quarter, demonstrating the attractiveness of its products in the market and customer loyalty, despite management's concerns over growth deceleration.
See More
Freshworks Stock Plummets Despite Q4 Earnings Beat
- Earnings Beat: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, exceeding Wall Street's EPS target by $0.03 and sales estimates by approximately $3.9 million, indicating strong operational performance.
- Significant Stock Decline: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor dissatisfaction with the company's forward guidance and a shift towards bearish market sentiment.
- Deteriorating Market Conditions: The broader software sector faced challenges, with the S&P 500 and Nasdaq Composite falling 1.4% and 2.1% respectively, highlighting a cautious investor outlook that contributed to Freshworks' stock decline amid a tough trading environment.
- Future Sales Guidance: Freshworks projects Q1 sales between $222 million and $225 million, with full-year sales expected to range from $952 million to $960 million, aiming for approximately 14% annual revenue growth, yet the selective investment approach in software stocks leaves its future uncertain.
See More
Freshworks Q4 Earnings Exceed Expectations but Stock Declines
- Earnings Beat: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, surpassing Wall Street expectations by $0.03 and $3.9 million respectively, indicating strong operational performance.
- Significant Stock Drop: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor concerns about the company's future amidst a broader market valuation contraction.
- Cautious Guidance: The company forecasts Q1 2023 sales between $222 million and $225 million, with full-year sales projected at $952 million to $960 million, aiming for approximately 14% annual growth, yet this guidance failed to alleviate investor apprehensions.
- Deteriorating Market Conditions: With the software sector experiencing significant valuation pullbacks, the S&P 500 and Nasdaq Composite fell by 1.4% and 2.1% respectively, leading investors to adopt a more selective approach towards software stocks, which may increase volatility in the near term.
See More
Freshworks Stock Plummets Due to Earnings Guidance
- Performance Beats: Freshworks reported non-GAAP earnings per share of $0.14 and sales of $222.7 million for Q4 2022, exceeding Wall Street's EPS target by $0.03 and sales estimates by approximately $3.9 million, indicating strong operational performance.
- Significant Stock Drop: Despite the positive earnings report, Freshworks' stock plummeted 18.8% over the past week, reflecting investor dissatisfaction with the company's forward guidance and a shift towards bearish market sentiment.
- Market Environment Impact: The broader market faced challenges, with the S&P 500 declining 1.4% and the Nasdaq Composite falling 2.1% in the last week, as software stocks were particularly affected, highlighting growing investor caution in the sector.
- Future Sales Guidance: Freshworks projects Q1 sales between $222 million and $225 million, with full-year sales expected between $952 million and $960 million; although the management's 14% annual growth target is reasonable, investor selectivity in software stocks is increasing.
See More
Analyst Predicts GM Stock Could Rise Following a Strong Year; Also Featuring Cloudflare, Vertiv, and Others.
Source of Reports: The reports are excerpts from various investment and research firms, recently issued and edited by Barron’s.
Analysts' Perspectives: They represent a sampling of analysts' thoughts and should not be interpreted as Barron’s official views or recommendations.
Investment Services Disclosure: Some firms that issued the reports may have provided or intend to provide investment-banking or other services to the companies analyzed.
Caution on Interpretation: Readers are advised to consider the reports as insights rather than definitive investment advice.
See More
Freshworks Stock Plummets 14.8% Despite Q4 Earnings Beat
- Earnings Beat: Freshworks reported Q4 adjusted earnings per share of $0.14 on revenue of $222.7 million, surpassing Wall Street expectations by $0.03 and $3.9 million respectively; however, the stock plummeted 14.8%, indicating market dissatisfaction with future guidance.
- Weak Revenue Growth: The 14.4% year-over-year revenue growth in Q4 is overshadowed by management's guidance for Q1 2026, targeting revenue between $222 million and $225 million, reflecting a modest year-over-year growth of only 13.9%, failing to inspire investor confidence and leading to a significant stock drop.
- Annual Outlook: Freshworks anticipates full-year revenue between $952 million and $960 million, representing approximately 14% growth, but adjusted earnings per share are projected to decline to between $0.55 and $0.57, down from $0.66 last year, indicating a notable drop in profitability that affects market valuation perceptions.
- Market Reaction: Despite raising its full-year sales target, the overall market response has been tepid as investors are assigning lower valuation multiples to software stocks, compounded by the company's insufficiently strong forward guidance, resulting in a significant post-earnings stock decline.
See More
