Freshworks (FRSH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $174.1 million, up 20% year-over-year, with strong free cash flow of $32.8 million and a 19% margin.

• Device42 acquisition completed in June 2024 for $214–$238.1 million, expanding IT asset management capabilities and addressable market.

• AI adoption accelerated, with Freddy Copilot and Self-Service bots seeing rapid uptake and measurable productivity gains.

• Customer base expanded to 67,500, up 5% year-over-year, with notable growth in high-value accounts and over 1,200 Freddy Copilot customers.

• Macroeconomic pressures and FX volatility impacted net dollar retention, which declined to 106% from 108% year-over-year.

Financial highlights

• Non-GAAP income from operations was $13.1 million (8% margin), ahead of expectations; GAAP loss from operations was $(43.8) million, reflecting stock-based compensation.

• Free cash flow for Q2 2024 was $32.8 million, with a margin of 19%.

• Cash, cash equivalents, and marketable securities totaled $1.02 billion as of June 30, 2024.

• Customers contributing over $5,000 in ARR grew 14% year-over-year to 21,744; those over $50,000 in ARR grew 30% to 2,839.

• Calculated billings grew 17% to $185.9 million; excluding Device42, billings grew 12%.

Outlook and guidance

• Q3 2024 revenue expected between $180 million and $183 million, up 17%–19% year-over-year.

• Full year 2024 revenue guidance raised to $707–$713 million, up 18.5%–19.5% year-over-year, including Device42 contribution.

• Non-GAAP operating income for 2024 expected at $60–$66 million; non-GAAP net income per share at $0.32–$0.34.

• Calculated billings growth for 2024 projected at 16%, with 1–2 percentage points from Device42.

• Free cash flow estimate for 2024 increased to $132.5 million.