Insights

Why Freshworks Stock Zoomed 8% Higher Today

What happened

Business-software specialist Freshworks (NASDAQ: FRSH) was quite the outperformer on Wednesday. Following its latest quarterly earnings release, the company’s share price took off and ultimately closed the day more than 8% higher. Investors obviously liked what they read in the release.

So what

Freshworks issued the release after market hours Tuesday, hence the notable change in price the following day. In its second quarter, the company managed to grow revenue by a robust 37% on a year-over-year basis to just over $121 million. On the bottom line, though, the company’s non-GAAP (adjusted) net loss widened to $15.8 million ($0.06 per share) from second-quarter 2021’s $5.4 million deficit.

Regardless, both headline figures topped analyst projections. Collectively, those prognosticators were estimating Freshworks would book slightly more than $118 million in revenue and post a marginally deeper adjusted net loss of $0.07 per share.

Now what

Freshworks clearly believes the revenue-growth train can keep running. In its earnings release, the company quoted CEO and founder Girish Mathrubootham as saying, “In a changing macro environment, I’m confident that our products will continue to provide incredible value to our customers around the world and drive our long term growth.”

Backing that up, Freshworks proffered rather bullish guidance for both the current (third) quarter and the entirety of this year. The company is projecting that revenue will total $493 million to $497 million, well above the $371 million it earned in 2021. Investors will likely have to keep accepting bottom-line shortfalls, however, as Freshworks is modeling $0.16 to $0.18 per share for an adjusted net loss.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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