Freshworks Q4 2024: Contradictions Rise Over EX Growth, AI Strategy, and SMB Performance

These are the key contradictions discussed in Freshworks' latest 2024Q4 earnings call, specifically including: EX business growth expectations, AI adoption strategy, and SMB business performance and go-to-market strategy:



Revenue and ARR Growth:
- Freshworks reported revenue of $194.6 million for Q4, up 22% year-over-year, surpassing previous estimates.
- The growth was driven by strong performance in both the EX and CX segments, with EX ARR surpassing $400 million and growing 35% year-over-year.

Customer Acquisition and Retention:
- Freshworks added over 2,600 net customers in Q4, representing the largest quarterly increase in 4 years.
- This growth was supported by healthy expansion activity and a net dollar retention rate of 105% on a constant currency basis.

AI Adoption and Integration:
- Over 2,200 customers adopted Freshdesk's Freddy Copilot, with a 30% growth in quarterly net adds.
- AI is expected to be a tailwind for business value, with consistent monetization payoffs starting to materialize.

Operational Efficiency and Margin Improvement:
- Freshworks improved the non-GAAP operating margin by 800 basis points quarter-over-quarter to 21%.
- This efficiency was achieved through strategic cost management, including lower personnel-related expenses and strong collection activities.