Can FRSH sustain its earnings growth into Q1 2025?

**Freshworks' (FRSH) ability to sustain its earnings growth into Q1 2025 is cautiously optimistic**. Several factors indicate a promising outlook, while others suggest potential challenges:

1. **Strong Revenue Growth Momentum**: Freshworks has demonstrated a robust increase in revenue, with a 22% year-over-year growth in Q4 2024, reaching $194.6 million. This trend is consistent with the full year 2024, driven by substantial advancements across key segments, including AI product adoption and customer base expansion.

|code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|market_code|
|---|---|---|---|---|---|---|
|FRSH|FRSH.O|Freshworks|2024 Q1|45.32861428839303|19.936524997821227|185|
|FRSH|FRSH.O|Freshworks|2024 Q2|43.395591452128556|20.024951922745537|185|
|FRSH|FRSH.O|Freshworks|2024 Q3|3.460832017529726|21.507652230543798|185|
|FRSH|FRSH.O|Freshworks|2024 Q4|22.01132438303479|21.52256871795192|185|

2. **Customer Base Expansion**: The company ended 2024 with over 72,200 customers, adding more than 2,600 net new customers in Q4 alone. This represents the largest quarterly increase in four years, highlighting Freshworks’ success in expanding its market reach.
3. **AI Product Adoption**: The company's AI product, Freddy Copilot, ended the year with over 2,200 customers, reflecting a 30% growth quarter-over-quarter. Notably, there was over a 50% attach rate for new deals of $30,000 or more, underscoring the growing importance of AI in Freshworks’ strategic initiatives.
4. **Strategic Partnerships**: Freshworks has announced new strategic agreements and successfully onboarded several prominent customers, including Airbus, AMC Networks, and New Balance. These partnerships are likely to contribute to future growth.
5. **Financial Projections**: For Q1 2025, Freshworks expects revenue to range between $190 million and $193 million, growing 15% to 17% year-over-year. Non-GAAP net income per share is projected to range between $0.12 and $0.14. For the full year 2025, revenue is anticipated between $809 million and $821 million, reflecting 12% to 14% growth on an as-reported basis.
6. **Challenges**: Despite the positive outlook, Freshworks faces challenges such as macroeconomic factors and pressures on net dollar retention. The net dollar retention rate decreased to 103% from 108% in Q4 2023, suggesting potential challenges in maintaining customer retention and expansion.
7. **Cash Flow and Liquidity**: The company's balance sheet shows cash, cash equivalents, and marketable securities totaling $1.07 billion as of December 31, 2024. This provides a strong liquidity position, which is crucial for sustaining growth and investing in strategic initiatives.

In conclusion, while Freshworks has shown strong growth and positive financial indicators, the company will need to navigate challenges and maintain its customer retention rate to sustain its earnings growth into Q1 2025. The positive projections for revenue and profitability, coupled with strategic initiatives, provide a cautiously optimistic outlook.