Freshworks, a software-as-a-service (SaaS) firm listed on the Nasdaq as part of its efforts to streamline operations, is laying off 13% of its workforce, affecting over 660 individuals worldwide, according to a letter sent to the company’s employees by CEO Dennis Woodside. At the moment, the company employs around 5,000 people.
Employees at Freshworks in the US, India, and other countries will be affected by the layoffs.
Additionally, Freshworks declared that its board of directors had authorized a $400 million share buyback scheme, although it did not specify when this would take place.
“In November 2024, the company committed to a restructuring plan (the plan) to better align the company’s talent with its strategic priorities and to improve operating efficiency. The company estimates that this will result in approximately 13% reduction in headcount and approximately $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits, and related costs,” Woodside wrote in the letter, which was published by Freshworks in a regulatory filing with the US Securities and Exchange Commission (SEC).
By the conclusion of the fiscal year that ends on December 31, 2024, the corporation anticipates having finished its reorganization plan.
Since last year, the organization has experienced multiple rounds of layoffs. Media revealed on March 16, 2023, that Freshworks implemented layoffs in June after implementing workforce cuts to improve organizational and operational efficiencies. About 60 of the 90 workers the corporation let go worldwide in December 2022 were from its India unit.
“One of the first things our board of directors asked me to do when I became CEO five months ago was to assess our strategy and ensure we’re focused on the most critical drivers of our business. This work resulted in our three strategic imperatives (our employee experience business, AI, and our customer experience business) and gave us a clear view into where we need to simplify the way we work and operate more efficiently,” Woodside wrote in his letter.
“We began by combining teams focused on customer experience (CX) products, including support, sales and marketing, and reallocating people and investments to prioritise our fastest growing employee experience (EX) business. These decisions were made thoughtfully and carefully to set a strong foundation for our future. To add more focus on our EX, AI and CX priorities, we are realigning our global workforce, putting us on a path to have a bigger impact for our customers,” he added.
In addition, the company announced Woodside as its new CEO on May 1 following the resignation of founder Girish Mathrubootham. At Freshworks, Mathrubootham assumed the position of executive chairman.
Quarterly earnings
From $153.6 million in the third quarter of 2023 to $186.6 million in Q3 2024, the company’s total revenue increased by 22%.
For the fourth quarter, the company anticipates revenue of between $187.8 million and $190.8 million. For the entire year, it anticipates a 20% gain in revenue, with estimates ranging from $713 million to $716.6 million.
In Q3, 22,359 customers contributed more than $5,000 in ARR, representing a 14% increase from the previous year.
During the quarter, the company’s net loss decreased slightly to $30 million from $31 million in the same period the previous year.
“We have made great strides in improving our operating efficiency over the past two years as we inflected to generate non-GAAP operating income and deliver significant free cash flow. We also know that we have an opportunity and need to better focus our efforts around our key strategic imperatives. As Dennis (Woodside) mentioned earlier, we shifted a number of technical resources in Q3 to further invest in the EX business as part of this strategic review process,” Freshworks CFO Tyler Sloat said in the company’s earnings call. Non-GAAP income excludes certain non-recurring and non-cash expenses incurred by the company.
Its share price closed at $13.09, up 5.23%, on Wednesday.
Freshworks, founded in Chennai in 2010, primarily targets small and medium businesses (SMB) with its customer relationship management (CRM) software. The Chennai and San Mateo, California-headquartered SaaS firm serves more than 68,000 customers, including American Express, Bridgestone, Databricks, Fila, Nucor and Sony.
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