FRSH 8-K
Freshworks Inc. (FRSH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 7.01 Regulation FD Disclosure.
Freshworks Inc. has prepared an investor presentation for use at its Investor Day 2023, to be held on September 7, 2023 at 8:30 a.m. Pacific Time. A copy of the investor presentation is attached hereto as Exhibit 99.1 and will also be accessible on Freshworks’ website at https://ir.freshworks.com/news-and-events/presentations.
The information in this Item 7.01, including Exhibit 99.1, is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall the information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Investor Presentation dated September 7, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Freshworks Inc. | ||||||
| Dated: September 7, 2023 | ||||||
| By: | /s/ Pamela Sergeeff | |||||
| Pamela Sergeeff | ||||||
| Chief Legal Officer and General Counsel | ||||||
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Exhibit 99.1 Investor Day 2023 September 7, 2023
Welcome Joon Huh VP Finance & Investor Relations © 2023 Freshworks Inc. All rights reserved. © 2023 Freshworks Inc. All rights reserved. 2
Disclaimer This presentation has been prepared by Freshworks Inc. (“Freshworks”) for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise, or representation by Freshworks or any officer, director, employee, agent, or advisor of Freshworks. This presentation does not purport to be all inclusive or to contain all of the information you may desire. Information provided in this presentation speaks only as of the date hereof or the date indicated in this presentation accompanying certain historical facts. This presentation contains “forward-looking” statements within the Private Securities Litigation Reform Act of 1995 that are based on our management’s current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. Other than statements of historical facts, all statements contained in this presentation, including statements regarding our annual recurring revenue, revenue, expenses and other results of operations; future financial performance, business strategy and plans; potential market and growth opportunities; addition of new customers or continuing relationship with existing customers; growth rates, competitive position; technological or market trends; and our objectives for future operations, are forward-looking statements. Historical results are not indicative of future performance and you should not rely on past performance as indicative of any future performance by Freshworks. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including our ability to achieve or maintain profitability; our expectations and management of future growth; the effects of increased competition as well as innovations by new and existing competitors in our market; and our ability to retain our existing customers and to increase our number of customers. Moreover, we operate in a very competitive and rapidly changing environment in which new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results or performance to differ materially from those contained in any forward-looking statements we may make. Factors that may cause actual results to differ materially include our ability to achieve our long-term plans and key initiatives; our ability to sustain or manage any future growth effectively; our ability to attract and retain customers or expand sales to existing customers; delays in product development or deployments or the success of such products; the failure to deliver competitive service offerings and lack of market acceptance of any offerings delivered; the impact to the economy, our customers and our business due to global economic conditions, including market volatility, foreign exchange rates, and impact of inflation; the timeframes for and severity of the impact of any weakened global economic conditions on our customers’ purchasing and renewal decisions, which may extend the length of our sales cycles or adversely affect our industry; our history of net losses and ability to achieve or sustain profitability, as well as the other potential factors described under Risk Factors included in our Annual Report of Form 10-K for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, our most recently filed Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, and other documents of Freshworks Inc. we file with the Securities and Exchange Commission from time to time (available at www.sec.gov). We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof and are based on information available to us at the time the statements are made and/or management’s good faith belief as of that time with respect to future events. We assume no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law. Certain terms used in this presentation, such as, “ARR”, “ARPA”, “CAGR”, “FCF”, “SBC”, “SMB”, “TTM” , and others, are defined in the Appendix unless otherwise defined on the slide in which they appear. © 2023 Freshworks Inc. All rights reserved. 3
Investor Day Agenda Welcome 8:30am Joon Huh, VP Finance & Investor Relations Company Vision and Strategy 8:35am Girish Mathrubootham, Chief Executive Officer & Founder Solutions in Action 8:55am Dennis Woodside, President Mukesh Mirchandani, SVP Global Solution Engineering Payal Patel, Director Solution Engineering Strategy for Durable Growth 9:30am Dennis Woodside Break 10:00am Customer Spotlight | Monos, Sony Music Entertainment & Databricks 10:10am Prakash Ramamurthy, Chief Product Officer Paddy Rathinam, Chief Revenue Officer Financial Overview 10:40am Tyler Sloat, Chief Financial Officer Open Q&A 11:10am Joon Huh Lunch 12:00pm © 2023 Freshworks Inc. All rights reserved. 4
Submit Questions [email protected] © 2023 Freshworks Inc. All rights reserved. 5
Company Vision and Strategy Girish Mathrubootham Chief Executive Officer & Founder © 2023 Freshworks Inc. All rights reserved. © 2023 Freshworks Inc. All rights reserved. 6
Freshworks at a glance Multiple 2010 $545M 20% Founded TTM Revenue Q2 Revenue Growth YoY Products (constant currency basis) Two at scale 5,000+ 19,105 FRSH 10% FCF Margin Customers over Employees Initial Public Offering $5K ARR FY 2023 Est. September 2021 Notes: Unless otherwise noted, financial data reflects unaudited results as of June 30, 2023. Employee data is as of June 30, 2023. See Appendix for reconciliation of all GAAP to Non-GAAP financial measures. © 2023 Freshworks Inc. All rights reserved. 7
Our mission We deliver modern and innovative AI-guided customer and employee service solutions that enable the Fortune 5 million to drive delightful engagement and increase productivity © 2023 Freshworks Inc. All rights reserved. 8
Industry tailwinds helping Freshworks grow 1 Digital transformation of every business 2 Rising demands of customers and employees 3 The data imperative and the opportunity of generative AI © 2023 Freshworks Inc. All rights reserved. 9
1 Businesses of all sizes must transform to compete in a digital-first world Large companies Small companies must be agile must deliver world and responsive class experiences © 2023 Freshworks Inc. All rights reserved. 10
2 Expectations for customer and employee experience have changed The race for faster, more enjoyable service Conversational Contextual Immediate Multi-channel engagement understanding results interaction © 2023 Freshworks Inc. All rights reserved. 11
3 The need for better insights drives demand for high-quality data Need to break down The rise of customer Your AI is only as data silos data platforms good as your data © 2023 Freshworks Inc. All rights reserved. 12
Consistent innovation and product evolution Journey to multi-persona, AI-guided strategy Freshsales Sales Freshworks CS Suite Customer service Freshservice Freshmarketer Marketing automation ITSM 2023 2020 Customer Freshservice for Business Teams 360 Vision ESM 2011 Freshworks Neo Platform Freshchat Modern messaging Freddy AI Freshdesk Customer service Freshcaller Cloud telephony © 2023 Freshworks Inc. All rights reserved. 13
The Freshworks solution IT & Employee Service Customer Service Sales & Marketing Freshdesk Freshchat Freshservice Freshservice Freshsales Freshmarketer for Business Teams Freshworks CS Suite Neo Platform Freddy AI Data & Analytics Unified Customer Experience Developer & Marketplace Experience © 2023 Freshworks Inc. All rights reserved. 14
Neo platform and Freddy infuse AI across all products IT & Employee Service Customer Service Sales & Marketing Freshdesk Freshchat Freshservice Freshservice Freshsales Freshmarketer for Business Teams Freshworks CS Suite Neo Platform Freddy AI Capabilities Freddy Insights Freddy Copilot Freddy Self Service for for for Customer Service Customers & Business Sales, Marketing Employees Leaders IT & Developers Data & Analytics Unified Customer Experience Developer & Marketplace Experience © 2023 Freshworks Inc. All rights reserved. 15
Our India advantage World class talent that innovates fast ● Born in India, global from Day 1 ● Access to world class talent Hyderabad ● Product scale and velocity Bengaluru Chennai © 2023 Freshworks Inc. All rights reserved. 16
Global customer base 65K+ customers across verticals and 120+ countries Retail, Logistics, Financial Auto & Media & High Hospitality & & E-Commerce Services Manufacturing Entertainment Tech Travel © 2023 Freshworks Inc. All rights reserved. 17
Culture is our intangible asset Craftsmanship Happy ‘Work’ Agility with True Friend to Environment Accountability the Customer These values are the bedrock of our culture © 2023 Freshworks Inc. All rights reserved. 18
Experienced global leadership team Girish Mathrubootham Dennis Woodside CEO & Chief Executive Officer & Founder President President PRIOR: PRIOR: Leadership Tyler Sloat Prakash Ramamurthy Pradeep Rathinam Chief Financial Officer Chief Product Officer Chief Revenue Officer team PRIOR: PRIOR: PRIOR: Pam Sergeeff Johanna Jackman Chief Legal Officer & Chief People Officer General Counsel PRIOR: PRIOR: Shafiq Amarsi Murali Krishnan SVP GTM Strategy & Operations SVP Customer Experience PRIOR: PRIOR: © 2023 Freshworks Inc. All rights reserved. 19
Our path to multi billion dollar scale We are competing in three massive TAMs We have business momentum moving upmarket and serving larger customers Our customers are adopting multiple products as cross sell remains a large opportunity AI & automation is a tailwind to our business creating incremental monetization opportunities India provides a strategic advantage for the business © 2023 Freshworks Inc. All rights reserved. 20
Our Solutions in Action Dennis Woodside President © 2023 Freshworks Inc. All rights reserved. © 2023 Freshworks Inc. All rights reserved. 21
We compete in three large, growing and adjacent markets IT & Employee Customer Sales & Service Service Marketing Intelligent, Omnichannel, Unified sales $78B right-sized service intelligent customer and marketing management support automation TAM (1) Sales & IT Teams Support Teams Marketing Teams (1) Source: Gartner, IT Operations Management Software, Worldwide, 2020-2026; Customer Relationship Management, Worldwide © 2023 Freshworks Inc. All rights reserved. 22 BUYERS BUSINESS NEEDS
Why we win Unified Time to Total Cost of Ease of Use Experience Value Ownership Rapid Innovation Enterprise scale & extensibility © 2023 Freshworks Inc. All rights reserved. 23
IT & Employee Service © 2023 Freshworks Inc. All rights reserved. 24
IT & Employee Service Our products scale with the needs of IT departments and beyond Project Business ITSM ITOM ITAM Management Teams Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 25
IT & Employee Service Freshservice crossed $260M in ARR and is growing fast 2022 TAM(1) ARR(2) Growth Rate(2) $20B $260M Low 40s 2022-2026 Target Customers TAM CAGR(1) Persona >$5K ARR(2) 12% CIO 8,624 (1) Source: Gartner. This includes IT Service Management, IT Asset Management & Software Asset Management (SAM), IT Infrastructure Monitoring, AIOps, Service Orchestration and Automation Platforms. (2) ARR, ARR YoY growth rate and customer count are as of Q2-23. © 2023 Freshworks Inc. All rights reserved. 26
IT & Employee Service Significant opportunity to innovate within IT and adjacent spaces Sec Ops Freshworks for Gov’t. MSPs Governance, Risk and Business Compliance Teams Freddy AI Industry Solutions ITAM Freddy ITOM Gen AI IT Project Management ITSM 2023 FUTURE © 2023 Freshworks Inc. All rights reserved. 27
ITSM Solutions IT & Employee Service IT & Employee Service Customer and industry analyst recognition User Ratings User Reviews Industry Analyst Coverage “Freshservice has allowed us to handle approximately 20% more tickets and incidents per month, Covered in 3 distinct markets compared to our previous legacy system.” “We use it for ticketing, project Covered in 3 distinct markets management, and problem tracking. The application makes it easy to keep track of our user's problems, resolutions, and feature Covered in 2 distinct markets requests.” © 2023 Freshworks Inc. All rights reserved. 28
IT & Employee Service CASE STUDY A&E selects Freshservice to handle IT and G&A requests seamlessly Business Challenge The Solution With Freshservice, multiple A&E Legacy ITSM solution did not allow A+E Networks is a global departments were able to improve A&E to efficiently route and respond content company comprised self service for nearly 3,000 to employee tickets across HR, IT, of some of the most popular employees. Automated ticket brands in media, including Legal and Finance in a single Lifetime, HISTORY, Lifetime deflection with virtual agents platform, leading to poor agent Movies, FYI, VICELAND, Blaze increased agent productivity productivity. and Crime+Investigation. and improved resolution times. Incumbent System: Servicenow Freshservice Replaced with: © 2023 Freshworks Inc. All rights reserved. 29
IT & Employee Service CASE STUDY Freshservice enables digital transformation for Georgetown University students and faculty Business Challenge The Solution Georgetown University is in Using a homegrown IT management All faculty and student IT, HR and Washington DC with 20,000 system made it difficult for students health services needs are handled by students. Founded in 1789, and faculty to digitally submit Freshservice. Freshchat and Freshcaller it is the oldest Roman Catholic support tickets, and forced IT to help Georgetown’s business teams institution of higher education monitor multiple request channels. deflect inquiries for 450 users across in the United States. multiple departments. Incumbent System: Homegrown solution Replaced with: Freshservice Freshchat Freshcaller Land Expand © 2023 Freshworks Inc. All rights reserved. 30
[Product Demo #1 –IT & Employee Service] © 2023 Freshworks Inc. All rights reserved. 31
Customer Service © 2023 Freshworks Inc. All rights reserved. 37
Customer Service We offer modern, intelligent omnichannel customer service solutions Automated Conversational Advanced Voice self service support ticketing support Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 38
Customer Service Customer service solutions at $300M in ARR Growth Rate(2) 2022 TAM(1) ARR(2) Low-Mid $27B $300M Teens 2022-2026 Customers Target TAM CAGR (1) >$5K ARR(2) Persona CS, CCO 15% 10,272 (1) Source: Gartner. Customer Service includes: Customer engagement center, CCI and CCAS, Workforce Engagement Management, Digital customer service and Field service management. © 2023 Freshworks Inc. All rights reserved. 39 (2) ARR, ARR YoY growth rate and customer count are as of Q2-23.
Customer Service Building upon a history of innovation Field Service Management Quality All in one Management, Customer WFM, Agent Freddy AI Service Suite Performance Omnichannel Management & Support & Training Conversational Customer Success Industry Support Solutions Social Self Service Freddy with Bots Copilot and Support Insights Ticketing Cloud Support Telephony 2023 FUTURE © 2023 Freshworks Inc. All rights reserved. 40
Customer Service Customer and industry analyst recognition User Ratings User Reviews Industry Analyst Coverage “I am using Freshdesk in my organization to support more Covered in 2 distinct markets than 13,000 customers. The ticketing system records and solves all their inquiries, requests, and reported issues.” Covered in 1 distinct market “Freshdesk is a lifesaver for agent occupancy and workload distribution.” Covered in 2 distinct markets © 2023 Freshworks Inc. All rights reserved. 41
Customer Service CASE STUDY Ingram Micro scales to 28 countries, delighting customers with Freshdesk Business Challenge The Solution Ingram Micro used multiple tools Freshdesk and Freshbots helped About Customer to provide customer support over Ingram Micro automate and Ingram Micro is a global distributor different channels and to different centralize support to reduce of information technology products and services, with countries, making transparency resolution times for technical and operations in 61 countries and across accounts very difficult. non-technical issues. Ingram Micro 27,000 associates across 6 continents, generating over increased their agents by 395% $50B in annual revenue. and CSAT score to 85%. Zendesk Incumbent System: Replaced Freshdesk Freshchat Freshcaller Freshservice with: Expand Land © 2023 Freshworks Inc. All rights reserved. 42
Customer Service CASE STUDY Clopay selects Freshworks to automate and modernize dealer support Business Challenge The Solution Clopay experienced increasing Freshdesk, Freshchat and Freshcaller About Customer multi-channel interactions with were purchased to create a unified Clopay is North America’s largest garage door dealers through calls, platform to enhance the agent and garage door manufacturer, mobile chats, website forms and dealer experience. Freshworks has with four manufacturing plants and 52 distribution centers physical walk-ins. scaled with Clopay from 330 to throughout the US and Canada, 413 agents. generating $1.5 billion in annual revenue. Incumbent System: Oracle Replaced with: Freshdesk Freshchat Freshcaller © 2023 Freshworks Inc. All rights reserved. 43
[Product Demo #2 – Customer Service] © 2023 Freshworks Inc. All rights reserved. 44
Sales and Marketing © 2023 Freshworks Inc. All rights reserved. 52
Sales & Marketing Our Sales and Marketing solution offers a unified view of the customer journey Sales Force Marketing Configure, Price Ecommerce Automation Automation & Quote integrations Neo Platform Freddy AI © 2023 Freshworks Inc. All rights reserved. 53
S&M Solutions Sales & Marketing Sales and Marketing products complement our customer service solutions in a large TAM Growth Rate(2) 2022 TAM(1) ARR(2) Less than $32B $25M 10% Target Persona 2022-2026 Customers TAM CAGR (1) >$5K ARR(2) CRO 15% 1,114 CMO (1) Source: Gartner. Sales includes Sales Execution & SFA, Partner Relationship Management (PRM), Configure-Price- Quote (CPQ), Sales Enablement, Sales Performance Management, Sales Engagement, Price Optimization and Customer Success Management. Marketing includes B2B Marketing Automation, Account Based Marketing, MultiChannel marketing, AdTech, Digital Asset Management and Loyalty Management. © 2023 Freshworks Inc. All rights reserved. 54 (2) ARR, ARR YoY growth rate and customer count are as of Q2-23.
Sales & Marketing Unified CRM to accelerate growth Conversational Commerce Highly Personalized Experiences Freddy AI Unified CRM On UCR Generative AI Enhancements Marketing Automation E-commerce Integrations Freshsales Suite Sales Automation 2023 FUTURE © 2023 Freshworks Inc. All rights reserved. 55
Sales & Marketing CASE STUDY ITSM Solutions Addison Lee hits the brakes on legacy CRM and selects Freshworks About Customer Business Challenge The Solution Addison Lee is an on-demand A disjointed set of customer Building upon their positive ride service based in the UK management and communication experience with Freshservice for and available in 350 cities systems caused low agent many years, Addison Lee improved worldwide. Every year, Addison productivity. Sales and Support their sales and support processes Lee transports over 10 million teams lacked a unified view of by using Freshsales, Freshdesk, passengers each year in users across the customer lifecycle. Freshmarketer as an integrated London alone. solution for their GTM teams. Incumbent System: Salesforce Replaced with: Freshservice Freshdesk Freshchat Freshcaller Freshsales Freshmarketer Land Expand © 2023 Freshworks Inc. All rights reserved. 56
[Product Demo #3 – Sales and Marketing] © 2023 Freshworks Inc. All rights reserved. 57
Strategy for Durable Growth © 2023 Freshworks Inc. All rights reserved. © 2023 Freshworks Inc. All rights reserved. 63
Our growth drivers 1 Unique GTM designed to efficiently serve the Fortune 5 Million 2 SMB opportunity remains large 3 Large customers are increasingly turning to Freshworks 4 Significant opportunity to expand with our existing customers 5 AI and Neo amplify our value proposition © 2023 Freshworks Inc. All rights reserved. 64
Unique GTM designed to efficiently 1 serve the Fortune 5 Million © 2023 Freshworks Inc. All rights reserved. 65
We have 3 sales motions to drive a high velocity business Scaling Partner Growing Field Efficient Inbound Ecosystem Sales Motion Sales Motion Enable Partners to build a Online search, web traffic, Deeper coverage for our profitable business trials, paying customers largest customers 45% of new 30% of new 25% of new business ARR (1) business ARR (1) business ARR (1) Note: Data based on the average new business ARR of last four quarters ending with Q2-23. © 2023 Freshworks Inc. All rights reserved. 66
Efficient inbound sales motion serves businesses of all sizes Thousands of monthly trials Majority sourced from non-paid channels Transparent Multiple acquisition Intuitive, DIY High velocity business Pricing sources Products 80% of SMB accounts close within 30 days(1) Low cost of sales Due to India operations Frictionless Buyer Low-touch, Easy Trial Predictable business sales-assist Experience Consistent linearity (1) Data is year-to-date through August 2023. © 2023 Freshworks Inc. All rights reserved. 67
Growing field sales motion provides local customer coverage Utrecht London Berlin Seattle, WA Denver, CO Paris San Mateo, CA Hyderabad Bengaluru Chennai NA EMEA APAC & ROW 44% of Revenue 39% of Revenue 17% of Revenue Singapore Q2-23 Q2-23 Q2-23 Average time to close Closed 17 $100K+ ~5 months, average deals in Q2-23, Sydney deal size $18K(1) up over 50% YoY Melbourne (1) Average time to close and average deal size are as of Q2-23. © 2023 Freshworks Inc. All rights reserved. 68
Our partner ecosystem supports our strategy of moving upmarket ● Refreshed partner program this year ● Partners are now winning bigger deals with us: Robust Ecosystem In Q2-23, Partners In H1, partners partner sourced generate 25% closed 11 large 400+ new business of our new customers Partners grew 37% YoY business(1) (>$100K ARR) NA EMEA APAC & ROW 110 110 180 (1) Data based on the average new business ARR of last four quarters ending with Q2-23. © 2023 Freshworks Inc. All rights reserved. 69
Changes to GTM are driving business impact Separation of new Focus on New business & expansion larger deals leadership Record field new Highest number of Senior leaders across business in H1-23 large deals signed in GTM and supporting Q2-23 in company functions are driving history growth © 2023 Freshworks Inc. All rights reserved. 70
SMB opportunity remains large 2 © 2023 Freshworks Inc. All rights reserved. 71
Millions of SMBs need to adopt AI and automation to compete > 1.2M SMBs $23B TAM > 332M SMBs with 10+ employees and growing fast (3) worldwide in 2021 (1) in the USA alone (2) (1) Source: Statista, Estimated number of small and medium sized enterprises (SMEs) worldwide from 2000 to 2021. (2) Source: United States Census Bureau 2020 SUBS Annual Data Tables by Establishment Industry © 2023 Freshworks Inc. All rights reserved. (3) Source: Gartner and Activate Consulting. Represents TAM for SMBs as of 2022. 72
Strong track record of solving the needs of SMBs SMB Customers using Freshworks CAGR SMB customers 2019 to Q2-23 >51,700 15% 51,700 Avg. deal size 50,200 44,900 $2K ARR 38,700 Avg. time to close 31,700 25 days Payback period ~10 months Served out of India 2019 2020 2021 2022 Q2-23 Note: Above data is as of Q2-23. © 2023 Freshworks Inc. All rights reserved. 73
PLG 2.0 project to supercharge our SMB business Expanding content sources to acquire Product Discovery new leads; optimizing SEO strategy Experimenting with personalized sign up, revised tutorials, and proactive customer Sign-up and Adoption assistance to accelerate time to value Revamping post 30-day onboarding; using in-product nudges to encourage Conversion & Expansion product discovery, cross-sell and upsell © 2023 Freshworks Inc. All rights reserved. 74
SMBs trust us to transform and compete in digital-first world About the company About the company About the company Employee Retention Credit (ERC) Specialists Blue Raven Solar is one of the fastest J. W. Pepper & Son, Inc. is a privately are tax experts dedicated to maximizing credits growing residential solar companies in owned American sheet music retailer for U.S. businesses affected by COVID-19. the U.S based out of Salt Lake City. based in Pennsylvania. Problem we solved Problem we solved Problem we solved Spreadsheets and email slowed down Customer and IT support teams A homegrown CRM and other point employee and customer support, wasting found Jira’s knowledge base and solutions used across teams were hard to time of 200 employees. workflow automation to be maintain and made it challenging to scale insufficient. support and processes. Freshworks products used: Freshworks products used: Freshworks products used: Freshdesk Freshservice Freshdesk Freshservice Freshdesk Freshservice Land Expand Land Expand Land Expand © 2023 Freshworks Inc. All rights reserved. 75
Large companies are turning 3 to Freshworks © 2023 Freshworks Inc. All rights reserved. 76
Freshworks delivers against the pain points large companies face Solutions that require High cost solutions Complex solutions Siloed apps with long implementation that require expensive that require specialized clunky integrations cycles that take consultants or significant skills and knowledge that hinder employee months or years IT resources to deploy for employees productivity and maintain to do their jobs Fast time ½ the TCO Easy to use, Unified to value or less easy to train Solution © 2023 Freshworks Inc. All rights reserved. 77
Larger companies are adopting Freshworks Mid Market & Enterprise Customers using Freshworks We are winning more Mid Market and Enterprise customers than ever before ● 759 new customers landed in Q2-23, CAGR 13,800 30% YoY growth 2019 to Q2-23 16% ● 215 of G2000 have at least one deployment 11,118 8,200 $50K+ ARR Customers $100K+ ARR Customers ● 2,186 customers ● 855 customers ● 33% YoY growth ● 37% YoY growth ● 46% of ARR ● 30% of ARR 2019 Q2-23 Note: Above data is as of Q2-23. © 2023 Freshworks Inc. All rights reserved. 78
CASE STUDY Coherent leaves legacy system behind to increase work efficiency with Freshservice Business Challenge The Solution About Customer Coherent selected Freshservice for of Coherent is comprised of two distinct Coherent Corp. (NYSE: COHR) its ability to separate sector instances sectors: Commercial and Aerospace is a global leader in materials, while acting as a single, easy to use Defense. Collaborating effectively networking, and lasers for the platform for all employees. Our ability between these segments presented industrial, communications, to fulfill major incident management unique challenges due to their parallel electronics, and automotive and employee onboarding needs yet separate operations governed by technology industries with over helped us win the business over an data access laws. $5 Billion in annual revenue. incumbent. Incumbent System: ServiceNow Replaced with: Freshservice © 2023 Freshworks Inc. All rights reserved. 79
Opportunity to expand our existing 4 customers © 2023 Freshworks Inc. All rights reserved. 80
Our largest customers already use multiple Freshworks offerings Customer Customer Service IT & Employee Service Sales & Marketing 1. Financial Services✓ 2. IT Infrastructure & services ✓✓✓ 3. Telecommunications ✓✓ 4. IT Infrastructure & services ✓ 5. Financial Services ✓ 6. Retail✓ 7. Entertainment✓✓ 8. Retail✓✓✓ 9. Entertainment ✓✓ 10. Telecommunications ✓ 11. Financial Services✓✓ 12. Retail✓ 13. IT Infrastructure & services ✓ 14. Telecommunications ✓✓ 15. Financial Services ✓ 16. Entertainment✓ 17. Financial Services✓✓ 18. Hospitality✓✓ 19. IT Infrastructure & services ✓✓ 20. Business Services ✓ Note: Top 20 customers by total ARR as of June 30, 2023. © 2023 Freshworks Inc. All rights reserved. 81 Top 20 Customers
We have multiple expansion paths with our customers New Products 20% of new IT customers are Bots buying Freshservice for $100 for 1,000 Business Teams Freshbots agents along Agent Addition sessions with IT(1) 26% CAGR 2019 to Q2-23 Add-on SKUs Freddy AI Copilot $29 per Pricing & Plans agent ● Rationalize discounts ● Pricing adjustments to reflect value (1) Data from December 2022 to June 2023. © 2023 Freshworks Inc. All rights reserved. 82
CASE STUDY iQor increases business efficiency as it expands to multiple Freshworks products Business Challenge The Solution Manually managing email inboxes Freshservice integrated with About Customer for their internal support system existing systems and quickly iQor is a business process slowed down employee service helped automate support across outsourcing company management across IT, HR, business teams and adding operating 40 call centers Finance teams. Freshchat and Freshcaller later in NoAm, Europe, and Asia improved collaboration. Now iQor with 40,000 employees and is beta testing Freddy AI to further $16B in annual revenue. enhance business efficiency. Incumbent System: Homegrown solution Replaced with: Freshservice Freshchat Freshcaller Freddy AI Land Expand © 2023 Freshworks Inc. All rights reserved. 83
AI and Neo amplify our value 5 proposition © 2023 Freshworks Inc. All rights reserved. 84
Our Freddy AI resolves millions of inquiries >220M 1,000+ >20M Interactions assisted Customers assisted Times Gen AI was by Freddy Self Service (1) by Freddy Copilot (1) used to increase agent productivity (1) “We adopted Freshworks' Freddy omnibot platform for a highly automated and personalized customer experience. We have been using it for a year and can confidently say that we have accomplished most of what we had in mind.” Vishal Gupta, Head of Product at PhonePe (1) Data is as of Q2-23. © 2023 Freshworks Inc. All rights reserved. 85
AI is a tailwind for Freshworks Agent Software Customers see value from: Customer Savings ● Improved agent productivity Freshworks● Lower labor costs AI Software Software Costs● Better outcomes Agent Software We capture value from: Customer ● Per seat license upcharge Agent Costs (Freddy Copilot) ● Consumption-based bot pricing Agent Labor Agent Labor (Freddy Self Service) Costs Costs © 2023 Freshworks Inc. All rights reserved. 86
Neo Platform is a force multiplier Neo Platform 1 2 3 Marketplace Apps AI services power Shared platform for interoperability Freddy Insights services enable and extensibility across products faster innovation © 2023 Freshworks Inc. All rights reserved. 87
Our growth drivers 1 Unique GTM designed to efficiently serve the Fortune 5 Million 2 SMB opportunity remains large 3 Large customers are increasingly turning to Freshworks 4 Significant opportunity to expand with our existing customers 5 AI and Neo amplify our value proposition © 2023 Freshworks Inc. All rights reserved. 88
© 2023 Freshworks Inc. All rights reserved. Customer Spotlight Prakash Ramamurthy Paddy Rathinam Chief Product Officer Chief Revenue Officer © 2023 Freshworks Inc. All rights reserved. 89
Our speaker Jacen Cadabing Customer Experience © 2023 Freshworks Inc. All rights reserved. 90
Our speaker David Harrington IT and Asset Management © 2023 Freshworks Inc. All rights reserved. 91
Our speaker Pradeep Singh Infrastructure and Operations © 2023 Freshworks Inc. All rights reserved. 92
Financial Overview Tyler Sloat Chief Financial Officer © 2023 Freshworks Inc. All rights reserved. 93
Business model highlights Maturing Financial Delivering Durable Creating Operating Revenue Growth Leverage Model ● 2 products at scale● Prioritizing investment to drive● Creating a path to more than $1B in revenue top line growth ● Serving SMB to lower enterprise, globally● Maintaining strong gross margins● Driving current 10% FCF margin to Rule of 40 and more ● Larger deals with continued land● Leveraging S&M, R&D, and G&A ● Reducing SBC as % of revenue and expand strategy to drive margin expansion and managing dilution Key Operating Metrics ● Net Dollar Retention Rate● Customers >$5K ARR © 2023 Freshworks Inc. All rights reserved. 94
Delivering strong and durable revenue growth ($ in millions) $600 CAGR $591 2019-2023 36% $498 $400 $371 $200 $250 $172 $0 2019 2020 2021 2022 2023E Note: 2023 figures are based on the midpoint of Freshworks full year 2023 financial estimates. © 2023 Freshworks Inc. All rights reserved. 95
Growth driven by 2 products at scale with growing average revenue per account (ARPA) ARPA Drivers CAGR 2019 to Q2-23 $17.5K ● With smaller initial 19% CAGR deal sizes for CS, ARPA CAGR 2019 to Q2-23 2019 to Q2-23 growth primarily 16% driven by expansion 10% $9.5K ● IT ARPA growth $9.0K primarily driven by larger initial deal sizes $6.4K $5.4K $4.6K 2019 Q2-23 2019 Q2-23 2019 Q2-23 IT ARPA Overall ARPA CS ARPA © 2023 Freshworks Inc. All rights reserved. 96
Larger customers are becoming a bigger part of our business $5K+ ARR Customers $50K+ ARR Customers $100K+ ARR Customers 19,105 CAGR CAGR CAGR 17,722 2,186 2019 to Q2-23 2019 to Q2-23 2019 to Q2-23 855 26% 50% 56% 1,908 14,814 737 11,570 1,416 535 8,588 881 321 534 180 2019 2020 2021 2022 Q2-23 2019 2020 2021 2022 Q2-23 2019 2020 2021 2022 Q2-23 % of ARR 78% 82% 85% 87% 88% 29% 34% 41% 44% 46% 18% 22% 27% 29% 30% © 2023 Freshworks Inc. All rights reserved. 97
Growth is coming from new lands for $5K+ ARR customers and expansion for larger customer cohorts $5K+ ARR $50K+ ARR $100K+ ARR Customers Customers Customers 12% Net Expansion 64% 78% New Business 88% 36% 22% Contribution of net customer adds over TTM average © 2023 Freshworks Inc. All rights reserved. 98
As we serve larger customers, our billing mix is evolving to longer duration % of ARR Customer Segment % of ARR by Billing Frequency 10% 14% Other 19% Mid Market & 59% 56% Monthly Enterprise 32% 32% 71% Annual 54% SMB 44% 41% 2019 Q2-23 2019 Q2-23 © 2023 Freshworks Inc. All rights reserved. 99
Our annual cohorts have delivered consistent expansion 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 The chart illustrates the total ARR of each cohort as of December 31, 2022 over the periods presented, net of contraction and churn. Each cohort represents customers who made their first purchase from us in a given year. For example, the 2022 cohort includes all customers that purchased their first subscription from us between January 1, 2022 and December 31, 2022. © 2023 Freshworks Inc. All rights reserved. 100
Net dollar retention continues to drive growth with meaningful upside to improve expansion Net Expansion Levers ● Purposeful cross-sell motion: 115% multi-product adoption of 25% 114% ● Drive edition upgrades: opportunity to 111% upgrade across 250K+ agents in lower plans 108% 108% 107% ● Pricing for increased capabilities and value: 4% lift in Freshservice realized price per agent ● New products and add-ons: new AI SKU for Copilot at $29/agent/month ● Churn rate: improvement to mid - high teens driven by product maturity and mix shift 2019 2020 2021 2022 Q1-23 Q2-23 Net Dollar Retention Rate is calculated by taking the Ending ARR of the cohort of customers from 12 months prior divided by the Entering ARR from 12 months ago. For example, Net Dollar Retention Rate would be 110% if the ARR of our customers ending Q2-22 was $100 and the ARR of those customers grew to $110 ending Q2-23. For clarity, above Net Dollar Retention Rate numbers are “as reported” numbers, not adjusted for constant currency. © 2023 Freshworks Inc. All rights reserved. 101 Note: Unless otherwise noted, above data is as of June 30, 2023.
We are driving overall operating efficiency Non-GAAP 80% 81% 82% 82% 84% Gross Margin Non-GAAP (15%) (3%) (5%) (4%) 6% Operating Margin FCF Margin (13%) 9% 1% (3%) 10% 20% 19% 18% 18% 16% 22% COR 21% 20% 20% 17% R&D S&M 64% 53% 54% 56% 50% G&A 9% 12% 11% 11% 8% 2019 2020 2021 2022 H1-23 Non-GAAP Expenses as % of Revenue Notes: We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core © 2023 Freshworks Inc. All rights reserved. 102 operations after purchases of property and equipment. See Appendix for reconciliation of all GAAP to Non-GAAP financial measures.
Our India operations provide a strategic advantage ● 4,200 employees in India, or 85% of total employees, spanning each function of R&D, S&M and G&A ● GTM responsibilities for SMB, inbound and customer support ● Nearly all of product development and engineering with 1,600 employees ● Lower cost infrastructure allows us to scale and innovate fast © 2023 Freshworks Inc. All rights reserved. 103
Our financial model creates operational agility Growth Drivers Margin Levers ● Recurring revenue provides● Disciplined approach stability and predictability to hiring ● Shorter lead time for● GTM investments driven by inbound provides ability efficiency of spend to manage spend ● Prudent discretionary spend Operational Agility © 2023 Freshworks Inc. All rights reserved. 104
2023 Financial estimates ($ in millions except for per share data) Q3-23 Est. FY 2023 Est. Revenue(1) $149.0 - $151.5 $587.0 - $595.0 Year-over-year growth 16% - 18% 18% - 19% Adjusting for constant currency(2) 15% - 16% 18% - 20% Non-GAAP income from operations (1) $6.0 - $9.0 $24.0 - $32.0 Non-GAAP net income per share (3) $0.04 - $0.06 $0.18 - $0.22 (1) Revenue and non-GAAP income from operations are based on exchange rates as of July 28, 2023 for currencies other than USD. See Appendix for reconciliation of all GAAP t Non-GAAP financial measures for the historical periods provided in this presentation. (2) Revenue growth rates adjusted for constant currency are based on average exchange rates in effect during the comparison period for currencies other than USD. (3) Non-GAAP net income per share was estimated assuming 300.2 million and 299.8 million weighted-average shares outstanding for the third quarter and full year 2023, respectively. © 2023 Freshworks Inc. All rights reserved. 105
Planning to grow to the Rule of 40 and beyond Rule of 40 20% Revenue Growth 19% 20% FCF Margin 10% 2023E 2025 Long Term Note: Rule of 40 is calculated as the sum of revenue growth and free cash flow margin. 2023 figures are based on the midpoint of Freshworks full year 2023 financial estimates. See Appendix for reconciliation of all GAAP to Non-GAAP financial measures. © 2023 Freshworks Inc. All rights reserved. 106
More than $1 billion revenue for 2026 in our baseline plan ARPA continues Larger customers 20% CAGR to increase driving growth % of ARR TODAY 2026 TODAY 2026 TODAY 2026 >$5K ARR: 19.1K >$5K ARR: 30K+ ARPA: ARPA: CS: 51% CS: 35% $9K $14K >$50K ARR: 2.2K >$50K ARR: 5K+ IT: 44% IT: 60% S&M: ~5% S&M: 5% 13% CAGR Note: Above data is as of June 30, 2023. © 2023 Freshworks Inc. All rights reserved. 107
We have multiple sources of upside to the baseline plan Broader macroeconomic stability Product changes in S&M driving traction & growth AI & bot monetization driving expansion Higher cross persona penetration driving expansion Pricing & packaging adjustments PLG 2.0 driving resulting in greater faster growth expansion rates of SMB business impacting CS and S&M © 2023 Freshworks Inc. All rights reserved. 108
We are reducing SBC % and managing dilution 47% 42% Post-IPO 38% PRSUs Pre-IPO SBC as % 18-20% of Revenue 2021 2022 2023 2026 Dilution 12% 5% ~3% <3% Notes: Dilution is calculated as [shares granted - shares forfeited] / weighted average shares outstanding. © 2023 Freshworks Inc. All rights reserved. 109
2026 Model leads to FCF margin of 20%+ 2023 2026 19% Revenue Growth 20-22% Non-GAAP Gross Margin 83% 83% R&D 18% 17% As a % of Revenue S&M 49% 37-39% As a % of Revenue G&A 11% 9% As a % of Revenue Operating Margin 5% 18-20% Free Cash Flow Margin 10% 20-22% GAAP Operating Margin (33%) 0% Notes: 2023 figures are based on the midpoint of Freshworks full year 2023 financial estimates. See Appendix for reconciliation of all GAAP to Non-GAAP financial measures. © 2023 Freshworks Inc. All rights reserved. 110
Summary Summary of financial strategy Durable revenue growth Investments driving 20% revenue building toward a multi-billion growth, with potential upside dollar business Financial model combines growth Improving operating efficiency with operating agility to deliver and FCF generation to achieve shareholder value through Rule of 40+ economic cycles © 2023 Freshworks Inc. All rights reserved. 111
Our path to multi billion dollar scale We are competing in three massive TAMs We have business momentum moving upmarket and serving larger customers Our customers are adopting multiple products as cross sell remains a large opportunity AI & automation is a tailwind to our business creating incremental monetization opportunities India provides a strategic advantage for the business © 2023 Freshworks Inc. All rights reserved. 112
Q&A © 2023 Freshworks Inc. All rights reserved. 113
Appendix © 2023 Freshworks Inc. All rights reserved. 114
Definitions Customer: a unique domain or unique email address with at least one more more paid subscriptions to one or more of our products ARPA: annual revenue per account ARR: annual recurring revenue CAGR: compounding annual growth rate TTM: trailing twelve months SMB: companies with 250 or fewer employees Mid market & enterprise: companies with more than 250 employees FCF: free cash flow is net cash provided by operating activities, less purchases of property and equipment and capitalized internal-use software. SBC: stock based compensation All rights reserved. © 2023 Freshworks Inc. 115 Note: Numbers rounded for presentation purposes and may not foot.
Use of Non-GAAP Measures In addition to the U.S. generally accepted accounting principles (“GAAP”) financials, this presentation includes certain non- GAAP financial measures, including non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP cost of revenue, non-GAAP operating expenses, and free cash flow. This presentation also includes certain non-GAAP metrics, including annual recurring revenue, average revenue per account, net dollar retention rates, revenue growth rates and related presentation thereof with adjustments for constant currency. We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures provide investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results. We believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Investors, however, are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Please see the appendix for a reconciliation of the non-GAAP financial measures used in this presentation to the most directly comparable GAAP financial measures. © 2023 Freshworks Inc. All rights reserved. 116
GAAP to non-GAAP Reconciliations Revenue ($ in millions) Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 GAAP Revenue $121.4 $128.8 $133.2 $137.7 $145.1 YoY Growth rates 37% 33% 26% 20% 19% Add: Effects of foreign currency rate fluctuations $2.6 $3.4 $3.9 $3.5 $1.2 (1) Revenue adjusted for constant currency $124.0 $132.2 $137.1 $141.2 $146.3 YoY Growth rates - constant currency 40% 37% 30% 23% 20% (1) Revenue growth rates adjusted for constant currency are based on average exchange rates in effect during the © 2023 Freshworks Inc. All rights reserved. comparison period for currencies other than USD. 2023 financial data reflects unaudited results as of June 30, 2023. 117
GAAP to non-GAAP Reconciliations Cost of revenue ($ in millions) 2019 2020 2021 2022 H1-23 GAAP cost of revenue $36.5 $52.5 $78.0 $95.8 $50.1 Less: stock-based compensation expense - employee awards – – (5.6) (7.0) (3.4) Less: employer taxes and employee stock transactions – – (0.3) – (0.1) Less: amortization of acquired intangibles (1.2) (3.9) (3.9) (1.2) (0.2) Non-GAAP cost of revenue $35.3 $48.6 $68.2 $87.5 $46.4 GAAP cost of revenue as a percentage of revenue 21% 21% 21% 19% 18% Non-GAAP cost of revenue as a percentage of revenue 20% 19% 18% 18% 16% © 2023 Freshworks Inc. All rights reserved. 118 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Gross profit ($ in millions) 2019 2020 2021 2022 H1-23 GAAP gross profit $135.9 $197.2 $293.0 $402.2 $232.7 Add: stock-based compensation expense - employee awards – – 5.6 7.0 3.4 Add: employer taxes and employee stock transactions – – 0.3 – 0.1 Add: amortization of acquired intangibles 1.2 3.9 3.9 1.2 0.2 Non-GAAP gross profit $137.1 $201.0 $302.8 $410.5 $236.3 GAAP gross margin 79% 79% 79% 81% 82% Non-GAAP gross margin 80% 81% 82% 82% 84% © 2023 Freshworks Inc. All rights reserved. 119 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Operating expenses ($ in millions) 2019 2020 2021 2022 H1-23 GAAP sales and marketing $111.1 $133.3 $260.3 $343.2 $174.8 Less: stock-based compensation expense - employee awards (0.1) – (53.2) (64.3) (33.0) Less: employer taxes and employee stock transactions – – (4.6) (1.3) (1.0) Less: amortization of acquired intangibles (0.3) (0.4) (0.4) (0.4) (0.1) Non-GAAP sales and marketing $110.7 $132.9 $202.2 $277.2 $140.6 GAAP sales and marketing as percentage of revenue 64% 53% 70% 69% 62% Non-GAAP sales and marketing as percentage of revenue 64% 53% 54% 56% 50% Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 ($ in millions) GAAP sales and marketing $71.5 $90.0 $86.9 $94.8 $86.8 $88.0 Less: stock-based compensation expense - employee awards (12.5) (15.0) (16.6) (20.1) (15.8) (17.3) Less: employer taxes and employee stock transactions 0.5 (0.7) (0.7) (0.3) (0.6) (0.4) Less: amortization of acquired intangibles (0.1) (0.1) (0.1) (0.1) (0.1) – Non-GAAP sales and marketing $59.3 $74.2 $69.4 $74.3 $70.4 $70.2 GAAP sales and marketing as percentage of revenue 62% 74% 67% 71% 63% 61% Non-GAAP sales and marketing as percentage of revenue 52% 61% 54% 56% 51% 48% © 2023 Freshworks Inc. All rights reserved. 120 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Operating expenses ($ in millions) 2019 2020 2021 2022 H1-23 GAAP research and development $38.6 $69.2 $120.4 $135.5 $67.0 Less: stock-based compensation expense - employee awards (0.2) (15.9) (45.2) (36.4) (19.0) Less: employer taxes and employee stock transactions – – (1.2) 0.1 (0.2) Non-GAAP research and development $38.4 $53.2 $74.1 $99.2 $47.8 GAAP research and development as percentage of revenue 22% 28% 32% 27% 24% Non-GAAP research and development as percentage of revenue 22% 21% 20% 20% 17% ($ in millions) 2019 2020 2021 2022 H1-23 GAAP general and administrative $15.9 $50.8 $117.0 $156.8 $82.2 Less: stock-based compensation expense - employee awards – (27.4) (69.5) (99.9) (49.4) Less: employer taxes and employee stock transactions – – (2.7) (0.6) (0.5) Less: acquisition-related expenses (1.3) (0.3) – – – Non-GAAP general and administrative $14.6 $23.1 $44.8 $56.4 $32.3 GAAP general and administrative as percentage of revenue 9% 20% 32% 31% 29% Non-GAAP general and administrative as percentage of revenue 8% 9% 12% 11% 11% © 2023 Freshworks Inc. All rights reserved. 121 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Income (loss) from operations ($ in millions) 2019 2020 2021 2022 H1-23 GAAP income (loss) from operations ($29.7) ($56.1) ($204.8) ($233.4) ($91.4) Add: stock-based compensation expense - employee awards 0.3 43.3 173.4 207.7 104.9 Add: employer taxes and employee stock transactions – – 8.8 1.8 1.8 Add: amortization of acquired intangibles 1.4 4.3 4.3 1.6 0.3 Add: acquisition-related expenses 1.3 0.3 – – – Non-GAAP income (loss) from operations ($26.6) ($8.3) ($18.3) ($22.3) $15.6 GAAP operating margin (17%) (22%) (55%) (47%) (32%) Non-GAAP operating margin (15%) (3%) (5%) (4%) 6% © 2023 Freshworks Inc. All rights reserved. 122 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Free cash flow ($ in millions) Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Net cash provided by (used in) operating activities $1.4 ($6.8) ($4.2) $7.2 $11.5 $19.9 Less: purchases of property and equipment ($1.4) ($2.0) ($1.9) ($1.8) ($0.4) ($0.3) Less: capitalized internal-use software ($1.3) ($1.4) ($1.1) ($1.3) ($2.0) ($1.5) Free cash flow ($1.4) ($10.2) ($7.2) $4.0 $9.1 $18.1 Net cash provided by (used in) investing activities ($25.6) $4.8 ($140.2) ($123.8) $41.3 $2.8 Net cash (used in) financing activities ($120.0) ($11.3) ($13.4) ($11.6) ($12.4) ($11.0) © 2023 Freshworks Inc. All rights reserved. 123 Note: Numbers rounded for presentation purposes and may not foot.
GAAP to non-GAAP Reconciliations Free cash flow ($ in millions) 2019 2020 2021 2022 H1-23 Net cash provided by (used in) operating activities ($8.2) $32.5 $11.5 ($2.5) $31.4 Less: purchases of property and equipment ($11.5) ($4.4) ($5.6) ($7.1) ($0.7) Less: capitalized internal-use software ($3.3) ($4.6) ($3.6) ($5.1) ($3.5) Free cash flow ($23.0) $23.5 $2.3 ($14.7) $27.2 Free cash flow margin (13%) 9% 1% (3%) 10% Net cash provided by (used in) investing activities ($148.9) ($11.4) ($420.3) ($284.8) $44.1 Net cash (used in) financing activities $150.2 ($1.9) $1,058.4 ($156.0) ($23.4) © 2023 Freshworks Inc. All rights reserved. 124 Note: Numbers rounded for presentation purposes and may not foot.