Freshworks Inc.

And thank you for standing by. Welcome to the Freshworks fourth quarter and full year 2023 conference call. At this time, all participants on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To ask a question, please press star 11 again. Please be advised, that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, June Ha, VP of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Freshworks' fourth quarter and full year 2023 earnings conference call. Joining me today are Girish Mathurbutam, Freshworks Chief Executive Officer, Dennis Woodside, Freshworks President, and Tyler Slope. FreshWorks Chief Financial Officer. The primary purpose of today's call is to provide you with information regarding our fourth quarter and full year 2023 performance and our financial outlook for our first quarter and full year 2024. Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on FreshWorks' current expectations and estimates about its business and industry, including our financial outlook, macroeconomic uncertainties, management's beliefs, and certain other assumptions made by the company, all of which are subject to change. These statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. Such risks include but are not limited to our ability to sustain our growth, to innovate, to reach our long-term revenue goals, to meet customer demand, and to control costs and improve operating efficiency. For discussion of additional material risks and other important factors that could affect our results, please refer to today's earnings release, our form 10Q from the quarter ended March 31st, 2023, and our other periodic filings with the SEC. Freshworks assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this call, except as required by law. During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures for historical periods are included in our earnings release, which is available on our investor relations website at ir.freshworks.com. I encourage you to visit our investor relations site to access our earnings release, supplemental earnings slides, periodic SEC reports, a replay of today's call, or to learn more about Freshworks. And with that, let me turn it over to Girish.

Thank you, June, and welcome everyone to Freshworks Earnings Call, covering our fourth quarter and full year of 2023. A year ago, we laid out our growth strategies to focus on product innovation, winning in enterprise, landing and expanding to drive revenue growth, and improving our operating efficiency. Over the course of 2023, We launched the Freshworks customer service suite and a range of AI capabilities like very self-service, co-pilot, and insights, all in pursuit of our mission to power businesses with AI-enabled software that helps customers optimize their work and boost productivity. We landed or expanded with big brands like Big Lots, S&P Global, Fila, Cineworld, Forbes, LA Dodgers, Nucor, Giant Eagle, and Johnsonville Sausage. We significantly improved our operating efficiency and inflected our financial model. We went from using cash for operations in 2022 to generating $78 million of free cash flow in 2023. Turning to the quarter, I would like to thank the entire Freshworks team for delivering a strong Q4 as we outperformed across our key business metrics. Our revenue exceeded the high end of our financial estimates coming in at $160.1 million for the quarter. We outperformed on non-GAAP operating margin and delivered a record amount of free cash flow, generating $28.6 million in Q4. For the full year 2023, we finished with revenue of $596.4 million and free cash flow margin of 13%. During today's call, I want to highlight three of our key differentiators, and how they helped finish out the year with a strong Q4. The first is the power of our Neo platform, which underpins our product portfolio, giving us the ability to serve enterprise buyers and cross-sell into more departments with multiple products. Second is our AI innovations, which are already helping customers achieve concrete productivity improvements. And third is our talented product development team in India that drives our innovation velocity and brings products to customers faster. Our Neo platform is a critical component of our success and provides all the services that power our product analytics and Freddie AI, offers extensibility and interoperability for our customers through marketplace apps, and offers a unified customer data model across our products. The development and launch of Customer Service Suite illustrates the power of our platform. Customer Service Suite combines three distinct Freshworks product capabilities, generative AI bots, conversation messaging, and ticketing in one integrated solution to meet the many needs of our customers. For example, ClickFunnels, a provider of sales, marketing, e-commerce, and analytics tools, replaced their previous support solution with our customer service suite. The long developer times required to make even the smallest change forced the funnel marketing company to search for a more robust and agile solution. ClickFunnels chose CSS because of our integrated offering that is powered by AI capabilities, resulting in improved resolution rates. According to a Forrester total economic impact report published in Q4, Freshworks CSS customers surveyed could achieve over a 200% return on investment over three years. Our platform also helps us with rapid adoption of new technologies into all of our products. For example, We built generative AI capabilities across our products in just a few months. We started with Freddie self-service through bots and later introduced Freddie Co-Pilot, built for fresh chat first and then extended to fresh desk and fresh service. We are excited about the AI opportunity and potential monetization as Co-Pilot became generally available recently and we plan to launch Freddie Insights later this year. With Freddie Copilot capabilities in the hands of our customers, we are encouraged by the early results. Several power user customers realized approximately 50% reduction in the resolution times for their customer service agents with the help of Freddie Copilot. As customers grow, many of them will use acquisitions as a part of their growth strategy. And when they do, they have a choice to either cobble together inherited disparate software solutions or pick one unified solution that works for all. like Freshworks. For example, Fraser's Group in the UK, a retail customer that has grown over four decades and completed several acquisitions. It now represents 70 store brands, including sportswear, games, homeware, fashion, and beauty. After they chose Freshdesk in 2022 to consolidate 16 customer support systems into one, the company saved over a million dollars in software licensing costs. Then in recent months, Fraser's group added our AI-powered bot and can now deflect more than a quarter of their customer interactions from human agents, saving more time and money for the company. For our partners, we are seeing them utilize Freddy Copilot for developers to significantly accelerate the app development cycle. In Q4, one partner, Connectify, went from publishing four apps per month to building an average of seven per month, a productivity improvement of 75% with the help of Copilot for developers. With the introduction of Chad GPT-4 last year, every company had the chance to reimagine its use of the latest AI technology. One of our strategic advantages in this moment was our access to high-quality talent in India. Our product and engineering teams were able to quickly innovate on our product roadmap. In 2023, this included integrating generative AI into our platform, to leverage the latest large language models. This year, we plan to continue to advance our AI features across our products and platforms. In CS, we expect to migrate more customers to our integrated customer service suite, which is designed to improve agent productivity. In fresh service, we plan to enhance ESM, ITOM, and verticalized offerings to fuel upmarket growth and expansion across departments. and we plan to make significant upgrades to our sales and marketing products to drive more inbound demand and cross-sell opportunities. Let me now turn it over to Dennis to share what we are seeing in the marketplace, how larger customers are driving our business growth, and how companies are expanding the use of our products.