Key Points
- Freshworks will reduce its global workforce by 13%, affecting 660 employees.
- The restructuring aims to improve efficiency and align with the company’s business goals.
- The changes will cost $11 million to $13 million, mainly for severance and employee benefits.
- CEO Dennis Woodside stressed a focus on Employee Experience (EX), AI, and Customer Experience (CX).
- Impacted employees will receive severance pay, healthcare, and career support, based on local laws.
- Freshworks reports a 22% increase in revenue and a reduced net loss for Q3 2024.
Looma News
Freshworks, an IT company based in Chennai and the US, announced on Wednesday that it will reduce its global workforce by 13%, impacting 660 employees. CEO Dennis Woodside shared the news in an email to employees, explaining that the layoffs are part of a larger restructuring effort to better align the company’s talent with its business priorities and improve efficiency. Most of the affected employees are in India.
The restructuring is expected to be finished by December 31, 2024, and will cost the company between $11 million and $13 million in the fourth quarter of 2024. These costs will mainly cover severance pay, employee benefits, and other related expenses. The company has filed the restructuring plan with the US Securities and Exchange Commission.
Woodside explained in his email that the changes are aimed at helping the company focus on three main areas: Employee Experience (EX), Artificial Intelligence (AI), and Customer Experience (CX). He said that these changes would help Freshworks make a bigger impact on its customers and support long-term growth. Despite the layoffs, the company remains profitable and continues to see increasing value from its AI-powered products.
Woodside acknowledged that the decision was difficult and thanked the affected employees for their contributions. He explained that the changes were based on a review of the company’s strategy, which included combining teams working on CX products and shifting resources to EX. “We’re making these changes while our business is profitable and our AI-powered products are adding more value for customers,” he said.
Impact on Employees
The layoffs will be announced at different times depending on the location of the affected employees. In the US and India, employees will be notified through ‘Transition Discussions’ with leaders. The process may take longer in other countries because of local labor laws and practices.
Employees who are impacted will receive severance pay based on their years of service, continue to have healthcare coverage, and get additional support like career transition assistance and immigration services where applicable.
Financial Performance
Despite the workforce reduction, Freshworks reported a smaller net loss of $30 million for Q3 2024, compared to $31 million during the same period last year. The company’s revenue for the quarter grew by 22%, reaching $186.6 million, up from $153.6 million in Q3 2023. Part of this growth was due to the acquisition of Device42, Inc., which was included in the financial results for the period after the deal closed.
Freshworks also saw an increase in the number of customers contributing more than $5,000 in annual recurring revenue (ARR), rising by 14% year-over-year to 22,359 customers. The company’s net dollar retention rate for the quarter improved slightly to 107%, up from the previous quarter.
Looking ahead, Freshworks raised its revenue outlook for Q4 2024, expecting total revenue to range from $187.8 million to $190.8 million. The company also updated its full-year revenue forecast to between $713.6 million and $716.6 million. Freshworks introduced its Freddy AI Agent, designed to improve both CX and EX, helping customers increase productivity and drive greater value. Additionally, Murali Swaminathan was named Chief Technology Officer.
