Freshworks at Bank of America Conference: AI and Growth Strategy

On Wednesday, June 4, 2025, Freshworks Inc. (NASDAQ:FRSH) presented its strategic initiatives at the Bank of America Global Technology Conference 2025. The company emphasized its focus on scaling within the SMB market and stabilizing its customer experience (CX) business, driven by innovations like the Freddie Copilot AI. While Freshworks highlighted its competitive edge over more complex and costly rivals, it also addressed challenges in transitioning customer preferences and pricing strategies.

Key Takeaways

• Freshworks is focusing on scaling in the SMB market and stabilizing its CX business.
• Freddie Copilot AI has over a 20% attach rate, boosting customer acquisition and expansion.
• Freshworks aims to differentiate itself with less complex, cost-effective solutions compared to competitors.
• The revamped partner program emphasizes long-term relationships and performance-based compensation.
• The free-to-paid conversion strategy has seen higher-than-expected success.

Freddie Copilot Impact and AI Strategy

• The attach rate for Freddie Copilot AI has surpassed 20%, showing quarter-on-quarter growth.
• Freshworks is driving higher plan purchases and expansion revenue through AI, meeting the demand for efficiency and innovation.
• The company is exploring usage-based pricing while bundling AI with higher plans to maintain revenue.

CX Business Stabilization and Growth

• Freshworks reported a 7% growth in Annual Recurring Revenue (ARR) last quarter, consistent with previous quarters.
• The goal is to achieve mid-teens growth, leveraging increased win rates against competitors like Zendesk and Intercom.
• New product leadership and a revised CX strategy are expected to bolster growth.

Partner Program Revamp

• Freshworks is shifting from transactional to long-term partnerships, with a focus on performance-based compensation.
• The partner network is being curated to enhance representation and drive growth.
• An upcoming event will provide partners with roadmap previews and input opportunities.

Competitive Landscape and Differentiation

• Freshworks targets SMB and mid-market customers, offering integrated, less complex solutions with faster ROI.
• The company positions itself as a cost-effective alternative to Salesforce, ServiceNow, and Zendesk.
• Customers benefit from a quicker realization of ROI, often within a quarter.

Free-to-Paid Conversion Strategy

• Freshworks limited free agents to two in Q3 last year, resulting in successful conversions to paid plans.
• The conversion strategy includes a six-week limit on free usage, achieving high retention rates among converted customers.

For a deeper understanding of Freshworks’ strategic direction, refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Unidentified speaker, Senior SMIDCAP software analyst at the bank: The senior SMIDCAP software analyst at the bank, really, really pleased to have Freshworks with us today and and Mika. So thank you so much for for coming out. I I really appreciate you coming.

Mika, Leads Marketing, Sales, and Support, Freshworks: Thanks for having us.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: I don’t know if anything you wanted to begin with, any kind of overview or any kind of disclaimer. Wasn’t sure if there’s anything you wanted to start.

Mika, Leads Marketing, Sales, and Support, Freshworks: I can introduce myself and just talk about my

Unidentified speaker, Senior SMIDCAP software analyst at the bank: role here. That’d be outstanding. Thank you. Yeah.

Mika, Leads Marketing, Sales, and Support, Freshworks: I spent my career on scaling companies. And so companies like Microsoft who have gone from on prem software to subscriptions, we’ve done that for Windows. They wanted to go into new markets, so brought Russia, Brazil, India, China work on those strategies. If you wanna digitize or go to market, that was work at SAP. Focus on SMB was work at SAP.

So, really, companies that wanna go into different markets wanna go into different channels. So SAP, Microsoft, Amazon, Adobe. And so now at Freshworks, I work on scaling Freshworks. And so I lead marketing. I lead the sales organization that handles the new business expansion and customer success motions for customers below 500 employees.

Mhmm. And then the support organization at Freshworks as well.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Yeah. That’s a great segue to my first question for you. Can you talk about the Freddie copilot attach rates in SMB?

Mika, Leads Marketing, Sales, and Support, Freshworks: I can. What’s amazing is it has actually been a really good accelerator for growth for us in the new business space and the expansion space. If I talk if I think about every quarter that I’ve had conversations with customers, talked to a few dozen customers every every quarter, at the beginning or middle of last year, it was, we’re kinda thinking about AI. Mhmm. Near the end of last year, it was, you know, we’re piloting AI.

And there has been a dramatic shift over the last couple months where it’s like, we want to go in and put it in production and start seeing efficiencies now, but not sacrifice efficiencies for, you know, customer satisfaction and employee satisfaction. I met with, for example, you know, an electronics manufacturer in February out east here in The United States. And they’re like, maybe we’ll consider AI. I met with her two weeks ago, and she’s like, please help me put in AI to eliminate mind numbing tasks. And so it’s been amazing to see the acceleration of how many customers are going from wait and see to pilot to I wanna put it into my business and actually see and actually see some growth.

And so we’re seeing quarter on quarter increase in attach rates for and now we’re at, you know, we’re over 20% attach rate for Freddie copilot in

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Incredibly high.

Mika, Leads Marketing, Sales, and Support, Freshworks: Which is amazing. And we’re seeing actually really healthy expansion business for Freddie Copilot as well with our like, in in expanding our businesses. So it’s been great at, you know, increasing the the value we can give to our customers that are already in our portfolio. So it’s really been a good accelerator for growth for us.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: And I’d love to get a better understanding, like, what what the catalyst has been for the company is moving from, you know, we’re we’re thinking about AI to, you know, we’re we’re doing a science project test with AI to reaching out to you now and saying, you know, what can you provide to help us here? And and before we start, Richmond, our about our kids and trying to find internships and their stories all over about, you know, the kind of the the note Still Israel. Well, about the the the no firing, no hiring economy that So I’m just curious if that’s been part of the catalyst for companies, you know, don’t have the budget to hire more people but are still trying to, you know, increase productivity and and and workflow and maybe how that’s contributing the macro contributing to the inbound phone call through outreach that you’re hearing about how can we use AI?

Mika, Leads Marketing, Sales, and Support, Freshworks: The main catalyst is exactly what you’re saying is let’s find efficiencies. But the thing that we’ve seen a lot of in more, press has said, you know, we’re going to see AI completely eliminate jobs and completely drive for efficiency sake only. I haven’t had one customer conversation where it’s just been about efficiency. It’s been about how do I make sure and this is large customers to the very small customers. It’s how do I actually increase customer satisfaction?

How do I actually increase retention of my customers while I drive efficiency? And so the the goal has been to do two things. One has been how do I accelerate? You know, I’m accelerating growth in my company. How do I make sure that my top line grows faster than my bottom line?

And so that’s been a major, whether it’s, you know, medical companies, whether it’s consumer product companies, software companies. And some companies are then taking those funds and, you know, actually using those funds to invest. Right? There’s no extra money to invest in innovation, but they’re using the money that they would have otherwise spent on straight lining their OpEx with their top line Mhmm. With people and using that to using that to innovate or upscale their employees to deal to be able to deal with more complex issues.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Yeah. Make make makes total sense and very and very consistent. So how how is pretty Copilot contributing to customer ACV, you know, retention, so just the general economics of your business with customers?

Mika, Leads Marketing, Sales, and Support, Freshworks: We’re seeing economics in every single major lever. So from a new business standpoint, it’s helping us get, you know, customers not just buying AI, but customers actually buying higher plans. And so we have a number of plans that we offer small and mid sized businesses, and they’re buying higher plans so they can enjoy the benefit of of more functionality to to coincide or to Mhmm. You know, to work alongside either Freddie AI Copilot or Freddie AI agent. So it’s helped us increase the the ACV for our new business.

It it has been incredible for us in terms of being able to drive an expansion motion. And so what we’re seeing is that the mix of expansion is shifting so that we have more of our expansion motion on, you know, taking up add ons versus just relying on agent ads. We’re actually seeing a lot more of our revenues from an expansion standpoint, you know, take place with the you know, with with AI investments as well as other investments of extending, for example, for fresh service, which is ITSM products. Yep. We have a lot of customers that that use that in SMB.

And they’re saying, hey. I see these benefits in IT, but I actually wanna see these benefits in my HR department. So we’re actually seeing our ESM product

Unidentified speaker, Senior SMIDCAP software analyst at the bank: k.

Mika, Leads Marketing, Sales, and Support, Freshworks: Actually do very well in the SMB space as well. So we we’re seeing, you know, AI do really well from an expansion standpoint. Mhmm. And we’re actually seeing other our other add ons do extremely well in the SMB space. And that that trending, you know, took place throughout last year.

We saw a really healthy expansion business in q one for us as well as new business attach of of Freddie copilot. And then we’re we’re our linearity for q two is looking pretty solid too.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Okay. That’s that’s great. That’s all great commentary. I want to touch on pricing for a moment, which I know is also a core to your job. And how do you think about pricing for Freddie Co Pilot or other products to, I guess, the kind of balance between maximizing profitability versus penetrating the market and that whole expansion motion that you mentioned earlier.

So what is the right pricing strategy in your view?

Mika, Leads Marketing, Sales, and Support, Freshworks: I think that we’re seeing the market move to more use based use pricing, resolution based pricing, or employee account based pricing.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Which is much more intuitive. Which is a

Mika, Leads Marketing, Sales, and Support, Freshworks: lot more intuitive. Right now, we’re pricing at a per, you know, per agent fee. And so what we’re doing is we’re should I try to remove that friction, especially in the SMB space. We’re bundling it. So we’re saying, hey.

If you buy this higher plan and you buy it with Freddie Copilot, you know, you can get this bundle at a at a reduced price, and we don’t discount that price beyond that bundle price. So it actually helps us preserve a lot of our a lot of our top line because we’re we we just say we don’t we aren’t gonna discount it beyond that price. So right now, we’re doing it on a on a per agent from a, you know,

Unidentified speaker, Senior SMIDCAP software analyst at the bank: from a

Mika, Leads Marketing, Sales, and Support, Freshworks: per agent perspective, but, you know, we’re considering other models.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Are customers asking for more of the consumption or usage based pricing? You know, is that a conversation that you’re initiating with them?

Mika, Leads Marketing, Sales, and Support, Freshworks: They’re not, actually.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Okay.

Mika, Leads Marketing, Sales, and Support, Freshworks: You know, I think that there’s still a you know, as we as we look and we’re studying like, we study other business models all the time. And as we look at other business models in the market, I think it we’re what we’re seeing is that it’s still a wait and see in terms of moving from an agent based pricing to a, you know, utility based pricing for the type of business that we’re in. I think, you know, markets moving there, but we’re not having customers actually ask us for that.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: How how worried are you though as we move towards more consumption based model for AI and for any co Copilot specifically that it accelerates the drive towards pricing at basically marginal cost rather than a per seat model where maybe the margin kind of profitability is less clear to customers.

Mika, Leads Marketing, Sales, and Support, Freshworks: I think that going to per going to a utility based pricing actually is more predictable for customers. It’s more desirable for us. You know, based on our product road map, we wanna make sure that we’re driving enough value with our products so that there’s enough you know, there’s value in AI, for example, that will make sure that we can continue to grow, that we can continue to see growth, and we continue to see opportunities to be able to drive add ons like, you know, them for our customers, like AI for our customers. And we’re looking at, you know, other innovation, and, you know, you’ll you’ll see it next week. We have a we have an event where we’re talking about some of our announcements in terms of other innovations that we’re driving.

And so as we look at c the CX business specifically, and we’re seeing a lot of customers ask for, how do I drive a unified experience across email, across social, across the web, and voice? Where I think some people thought, well, voice is going away because everybody wants to be digital. Everyone uses their Sure. Not for talking. Mhmm.

We’re actually seeing the opposite in every single customer of all sizes we’re seeing ask about voice. So that’s something that you may see us actually invest in the future.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Is there anything you wanna preview today for the event next week and the innovation and new products?

Mika, Leads Marketing, Sales, and Support, Freshworks: Not necessarily.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: I mean,

Mika, Leads Marketing, Sales, and Support, Freshworks: I’ll I’ll keep the cat in the bag and go get trouble with

Unidentified speaker, Senior SMIDCAP software analyst at the bank: our partner. Think there’ll be a web cat. I had to try. There’s been an ongoing investor concern about the CX business, right? And that was going to continue to deteriorate.

You’ve done a notable job actually stabilizing that business. And so what does it take to continue to stabilize and then drive that business back to growth?

Mika, Leads Marketing, Sales, and Support, Freshworks: Yeah. We were not necessarily in a really awesome place, I think, at the beginning of last year with CX. Mhmm. We have stabilized that growth, and we’ve actually seen you know, last quarter, we saw 7% that 7% growth in our ARR, and that’s actually consistent with what we saw in q three and q four. And, again, q two is is is looking pretty good.

But we want to you know, as we look at the market, market’s growing at mid teens. We’d like to you know, our goal is to grow at mid teens. And so the accelerators for growth for us are making sure because when we’re in front of our customers, we win. Our win rates are going up. Biggest competitor, you know, Zendesk Intercom.

When we go head to head with our with our with our competition, we win. And so and so and those again, like I said, win rates are going up. So getting in front of more customers is something we’re really focused on. Accelerators for growth for us are being able to really lean into our partner channel. That’s something that we’ve started to lean into.

I think we need to be more aggressive at leaning into our distribution channel from, like, distribution from a partner standpoint. I think there’s an opportunity for us to look at cosell partners. So other customers I saw other companies that focus on small businesses and say, hey. How how can we cosell because it’s better together? Mhmm.

We’re also looking at our PLG motion. That’s been a motion that you’ve we’ve had high hopes for, you know, for a number of quarters that hasn’t really paid out, but is a massive opportunity for us. And so we’ve got new product leadership that came on in q four of last year, and we’ve started to innovate a little bit there with some in products nudges and messages to customers when they’re trying our products. We’re starting to see green shoots there. So the PLG motion is is is is something that’s gonna be strong for us.

Ongoing execution rigor, and lastly, you know, we’ve we’ve actually renovated our whole CX strategy because we have new product leadership. You know, we have a new leader. His name is Benke, and he came in late last year. Extensive experience in the CX space. And so he you know, we presented our new CX strategy to the board at the beginning of this year.

We’re starting to and you’ll see some of the announcements for for the benefits that we’re seeing already Board

Unidentified speaker, Senior SMIDCAP software analyst at the bank: of it.

Mika, Leads Marketing, Sales, and Support, Freshworks: Next week. Yes. And so and so the you know, seeing some more product innovation and seeing more of a unified, you know, a unified approach to how our customers can deal with their customers, whether their customers wanna deal with them, you know, through social media, through their website, through, you know, through voice or through email. You can see one single view of the customer regardless of how they contact you. Adding efficiencies with AI, whether it’s Freddie copilot as assistance to an agent or deflecting, you know, the mundane tasks or the mind numbing tasks as our customer Sure.

With Freddie AI agent is also an opportunity. And so a lot of innovation coming out that that we believe is going to drive, you know, increased growth from new business standpoint and massive opportunities for us in terms of what we can do for expansion for our existing customers, whether they’re CX customers or cross selling into our our EX base or our TSM base and the SMB space.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Mhmm. You you touched on the partnerships earlier. I I wanna go back to that. So how how how have you revamped partner relationships? You know, whether it’s through partner compensation, partner education, you know, closer relationships with and expansions.

How how how have you reworked that to improve that and I guess accelerate that motion?

Mika, Leads Marketing, Sales, and Support, Freshworks: Everything you just mentioned. So really trying to drive more regular touch points with the customers that we’ve, sorry, with the partners that we’ve got. We weren’t that strong previously. We, you know, brought in new leadership to deal with our partner channel and partner strategy last year, Laura Padilla. And so we’re looking at how do we actually drive more consistent relationship with our partners where it’s less transactional and more of a relationship.

Sure. You know? So it is we’ve looked at moving away from commission based compensation to more, you know, compensation that is more tied to their performance and incent them to actually perform

Unidentified speaker, Senior SMIDCAP software analyst at the bank: better with What does that what does that mean exactly, though, moving away from commission based to performance based compensation?

Mika, Leads Marketing, Sales, and Support, Freshworks: Previously, it was just a straight, you know, straight up percentage on it from a commission standpoint, and now it’s more tied to their tied to their performance. And so when they grow when when we when they grow, you know, they’ll make more money. And so they’re they’re positive there. A big feedback point we have also is enablement. So how do we get them up to speed on our latest innovations and our latest road maps?

So that’s something we’re leaning into as well. And interestingly, a lot of partners are looking to modernize their and scale their go to market approaches. So something that we’re doing is to help them with running their businesses more effectively. They’re looking to drive an outbound motion. So where they’ve typically dealt with, you know, inbound motions from a lead standpoint, a lot of a lot of our partners are looking to build an outbound motion, which is how do I find a set of customers that I wanna go and how do I strategically go after them?

So actually driving workshops on saying, hey. Here’s how you can run your business better. So it’s a lot more of a relationship on how do we make you successful as a partner, them successful as a partner. And so that’s what we’re doing with our existing partners. We’re going out to recruit new partners and bring them online and make sure that the partners that we’ve got in our family are actually producing for us versus idle partners that aren’t producing.

So it’s just constant touch points and more more deliberate efforts. So we talked about our announcement next week. There’s going to be a partner track. We’re inviting our partners with us.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Oh, great.

Mika, Leads Marketing, Sales, and Support, Freshworks: Previews to our road maps to have them have input into our road map. So it’s more it’s far more of a relationship and less of a transaction.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Are you actually actively curating your partnerships? So calling the ones that, you know, maybe aren’t effective or, aren’t accurately depicting your brand or your products and then trying to add ones that you feel could do that better. Is that something you actively do or is it more reactive?

Mika, Leads Marketing, Sales, and Support, Freshworks: No, active. We’ve got a pipeline of partners. We’re actually you know, we’re actually we’ve got a big pipeline of partners for our field organization, so our larger customers as well as targeting small and mid sized business customers. We’ve got a pipeline of partners that we’re actually proactively going after and, you know, getting them and bringing them in. And then looking at the partners that are currently with us in our as part of our, you know, as part of our portfolio now and and paying more, you know, more attention to those that are are producing more for us or leaning into us to to be able to drive to be able to drive more growth with us.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: You mentioned product road map earlier, and I’m sure next week, you’re gonna walk us through a lot of that. But, you know, maybe hitting it from a different direction. What are your customers asking you for? If you have conversations where, okay, love your core products, but I wish, right? Like I wish you had this, I wish you had that with this capability.

What do you most frequently hear customers want to see?

Mika, Leads Marketing, Sales, and Support, Freshworks: In the CX space, it is a, you know, more unified and integrated approach to how they can deal with customers from multiple channels. Mhmm. It is helping them be more efficient while, you know, raising the bar from a customer satisfaction standpoint and that, actually, they’re asking us more. We’re seeing more customers ask us about AI and what the possibilities of AI. Mhmm.

The benefit we have is that we have thousands of customers, you know, 2,700 customers using Freddie Copilot. We’ve got 1,600 customers using Freddie AI agent. And there’s there’s no shortage, as I’m sure all of you see, nor shortage of cost of companies out there that are touting AI and agentic AI. Challenge is that there isn’t a lot with a lot of proof with thousands of customers with a lot of proof points of having really delivered value. And that’s saving time from a copilot standpoint or deflecting l one, l two tickets from a agent’s agentic standpoint or sorry.

AI agent standpoint, conversational AI standpoint. And so we’re able to say, look, companies that look just like you within, you know, hours or days are able to get up to speed because it’s preintegrated in our products. You don’t have to have a data scientist, a bunch of consultants, or a bunch of extra staff online to actually bring AI up and get it running and continue to have it learned on your behalf. And so that’s been a really good tailwind for us in terms of seeing, you know, growth for us as a as a company in bigger deal sizes. And so customers are actually now proactively asking us.

Like, the woman that I was talking about, like, I visit her frequently, you know, consumer electronics manufacturer, and she was like, wait and see, maybe pilot. And now she’s like, please help me with my mind numbing tasks. She’s asking and pulling. And we’re seeing this all over is is just customers saying, hey, can you help me get Met with a a medical company, you know, just last week said the same thing.

I just I need to actually we’re growing amazingly fast.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Mhmm.

Mika, Leads Marketing, Sales, and Support, Freshworks: We don’t wanna grow our OpEx in the at the same rate. So how can you help me get to be more efficient while I can still innovate and drive extraordinary customer satisfaction? And so that’s what our customers are asking for is more integrated, you know, faster time to market, faster ROI, less complex solutions. And that’s why we’re winning against a lot of our competitors, you know, whether it’s ServiceNow, even in the small and mid sized business space, and against Zendesk is because we’re less complex, we’re less costly to run, and the ROI is actually realized over time quicker for our customers. And so they’re asking us for for all of those things and we’re able to deliver.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: And and the ROI points really interesting. So we’ve heard the last couple of years, we’ve run our IT spending survey, which we probably most recent one this week, by the way, that, customers are increasingly focused on shorter term return investments. Right? So investments, can get a 12 or less return because they’re getting pressure from their own their own CFOs. So, you know, as you kind of market or pitch to the customers, what what do you pitch as the ROI and then kind of the the cash on cash return?

How do you how do you pitch that?

Mika, Leads Marketing, Sales, and Support, Freshworks: You know, we pitch it. And I mean, I drink my own champagne as well. Yeah. Support. So we use Freshdesk.

We use our AI products. And what’s what’s amazing is that, you know, when you stand up AI agent, for example, and it no longer because it’s conversational and you can point it to a dataset or a knowledge base and it can get up to it can get up and running within within hours or a day, it immediately starts deflecting tickets. And so we see, you know, 50 to 70% deflection of l one tickets, which is really extraordinary because then you just need fewer people to, again, get rid of those, you know, not not have to deal with a mind numbing task.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: And they’re expensive seats too.

Mika, Leads Marketing, Sales, and Support, Freshworks: Well, they’re Right. The thing is that they’re I mean, support individuals are are not they’re they’re less costly than some knowledge workers, but they turn over fast.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Mhmm.

Mika, Leads Marketing, Sales, and Support, Freshworks: Right? And you have to get that up and running. Sure. And so you wanna make sure that you can retain and maintain a a set of a set of people to deal with complex tasks. Mhmm.

And then the people you know, you just don’t wanna have to staff people to deal with password resets or, you know, inventory status, for example. I mean, you just, like, that’s not worth a human being. Yeah. And the, you know, the way that AI agents work now is that they’re more conversational. They’re more it feels like, you know, someone’s actually paying attention to you and talking to you.

And so customer satisfaction has gone up. With us, with our use of AI, whether it’s Copilot or whether it’s AI agent, our customer sat has gone up, and we’re able to actually deflect more calls and save, you know, save, you know, 30 to 40% of of a an agent’s time when using Copilot. So it’s time savings so that they can deal with either more customers over a set of time or more complex customers. And then it’s fewer agents that have to deal with mundane tasks, so you can deal with more agents, highly skilled agents that then attrite not as fast to deal with more complex issues. And so it really is efficiency and increasing customer sat, which ultimately leads to opportunities for either expansion or less churn for those customers.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Now it make makes a ton of sense. I wanted to touch on the macro for a second. It’s been sort of a top goal the last few months at least. And there’s been a lot of concern about the macro impact on SMBs, right, market. So maybe help us understand what you’re hearing from your customers as they talk about the macro and the uncertainty and their willingness to either lean in or maybe pull back from making investment.

Mika, Leads Marketing, Sales, and Support, Freshworks: The macro, we don’t I talked to dozens of customers, and they have not mentioned macro as being a major reason why they may not invest. Mhmm. And so now I feel like I need to knock on wood just to make sure I’m not jinxing myself. But but I have not not had one customer, you know, worldwide, regardless of size, actually say, we are not investing because of the macro. What they have said is I need to make sure that this drives returns for me because I’m putting my neck on the line to drive this investment.

And a lot of companies are actually looking to us to be able to invest because they are actually saving money because they’re dealing with vendors that are actually more complex in terms of their human capital to actually run their systems, the licensing cost to run their systems. So they come to us and they say, hey. And so I guess we benefit if we can benefit from the macro is that they we’ve got a lot of pressure. We can free up cash on people and licensing costs by investing with us. We see faster ROI.

Like, our customers see faster ROI, and then they can free up that money to be able to innovate or to, you know, put it to the bottom line. And so but there hasn’t been a lot of customers that have said, look. I can’t invest with you because because of the macro. It’s more we want to invest because we want to see greater efficiencies. We wanna increase our customer sat because most of our customers, except for those very small customers, are moving from, you know, Outlook to using Outlook to to to using an official system.

A lot of our customers are using either a really nascent system or a more clunky system from our competitors that, again, cost more to to to license and cost more to run. Mhmm. And so they just wanna see more efficiencies. So the macro itself has not been has has been less of a reason has not been a reason for them not to invest. It’s been more of a reason for them to lean in and invest with us, which maybe is a reason why we’re seeing an increase in our in our win rates, in the EX business and SMB as well as as well as in our CS business.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Which is one of the surprising part as well. Right? The increase in win rates and how well you’ve done competitively in the last twelve months. And I’m sure you think about this a lot, but how do you even just in the kind of bigger, more complex solutions that are out there, big name brand companies, How do you define your lane and how do you keep those larger competitors out of your lane? Right.

So you can continue to have the competitive advantage and the the win rates that you’ve talked about.

Mika, Leads Marketing, Sales, and Support, Freshworks: Well, they I mean, they keep themselves out of our lane just because they’re more complex. Right? And they’re more costly. And so we have no business in in running Bank of America. Right?

I mean, we we would not wanna go into you know, we because Bank of America needs so very large complex companies need bespoke solutions for which our because some of our competitors are very well suited.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: We want everything custom built.

Mika, Leads Marketing, Sales, and Support, Freshworks: We and you need it. You have to for security reasons based on the complexity and size and scale of your business. You have to. But a lot of our customers, which are, you know, customers that you know, if if I think of our whole portfolio at Freshworks, there are customers who are saying, hey. Like, I don’t need all of these bells and whistles.

I I don’t need them, and therefore, I don’t wanna pay for them.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Mhmm.

Mika, Leads Marketing, Sales, and Support, Freshworks: And then I really don’t wanna have this set of people that are sitting off to the side whether it’s Salesforce or Zendesk or, you know, ServiceNow. I don’t wanna have a set of people on staff or consultants. I have to sit there, and when I wanna make a change Mhmm. When I wanna make a change, I have to go deploy them to make a change and wait forever to make that change. Now we have admins that can make changes in the system.

We have people within the companies already that can implement the systems. And again, like we talked about ROI within the year, they see ROI within quarter, you know, the quarter that they invest with us. And so and so that’s been a a really big benefit for us, you know, in terms of seeing returns for our customers and, again, seeing a lot of a lot of, you know, seeing a lot of win rates from our from our competitors. So they stay out of they stay they essentially stay in their lane because they’re just more complex by by nature of their businesses and by nature of by by virtue of who they focus on.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: And your expectations is that they will continue to focus upmarket more bespoke complex solutions and that they wouldn’t also wanna create a, you know, a similar easy to use plug and play product to at least take part of that market?

Mika, Leads Marketing, Sales, and Support, Freshworks: I’m sure they would want to. I mean, it’s a it’s an it’s an amazing market. It’s hard to move when you’re a bespoke or a very complex solution. It’s really hard to move down market. I mean, I’ve tried at SAP.

I’m trying to focus on the SMB market and trying to move down market. That’s a really hard thing to do. Ended up

Unidentified speaker, Senior SMIDCAP software analyst at the bank: having It’s cultural thing as well. Right? Cultural.

Mika, Leads Marketing, Sales, and Support, Freshworks: And and right. The the ability to drive a predictable scale and, you know, scale and scale motion that focuses on the SMB space or even the mid market space is a very different motion than the true enterprise motion. Sure. And it’s not just the sales motion. It’s the support motion.

It’s the community motion. It’s actually what’s expected of customers from an in product experience standpoint, and it requires you to divert a set of, you know, engineers within your organization to focus on that market, which if you’re focused on the upper end of the market and then also, like, upper end, I mean, Fortune 500 Sure. Moving them into focusing and simplifying your product is actually quite complex for those customers or those companies. Sorry. So they they essentially stay out of their own lane or stay out of our lane themselves by being by virtue of them being complex, which is a great fit for certain customers like Bank of America.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Yeah. That make makes a lot of sense. Maybe time for one more question. You kinda touched on it earlier. But the strategy for free to paid conversion, can you just walk us through

Mika, Leads Marketing, Sales, and Support, Freshworks: we had no strategy before. And so essentially, we allowed as many agents as customers want.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: It’s a great job security comment, by the way. Yeah. Yeah.

Mika, Leads Marketing, Sales, and Support, Freshworks: No strategy.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Sure. Came.

Mika, Leads Marketing, Sales, and Support, Freshworks: That was the free to pay was a target rich environment definitely, because we allowed customers to essentially enjoy our product perpetually for free regardless of how many agents they wanted to have for free. And it was it was a it was a downgraded version, but it was good enough.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Yeah.

Mika, Leads Marketing, Sales, and Support, Freshworks: So we did in q three of last year is we limited the number of agents you could have for free, and so we limited it to two. And so now customers can only enjoy two free agents on our Mhmm. Free to paid, like, free free plan. And so that converted about, you know, 2,000 customers in q four and about, you know, six six hundred customers in ’1 this year to paid.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Tremendous lift.

Mika, Leads Marketing, Sales, and Support, Freshworks: Which is awesome. Yeah. Yeah. It’s great. And and they’re they’re happy customers.

And then now we’re actually limiting how long you can enjoy free. So Okay. You’ll see in the next few weeks is us going into saying, look. You can have two agents and you can only have it for six.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: So size and duration now Duration. For the gating factors for how long you can keep that and then you get migrated. Okay.

Mika, Leads Marketing, Sales, and Support, Freshworks: Yeah. And it’s actually the conversion of the customers that were on free because they’ve enjoyed the benefits of being on Freshdesk to move and to convert is was actually surprisingly a lot a lot higher than we thought. Wow. So it was good. It was

Unidentified speaker, Senior SMIDCAP software analyst at the bank: great. Yeah.

Mika, Leads Marketing, Sales, and Support, Freshworks: And they’re still with us. A lot of them are still with us, so it was good.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Well, that’s amazing. Yeah. It’s a good place to stop. Thank you so much for coming in today. Really appreciate it.

Mika, Leads Marketing, Sales, and Support, Freshworks: Thanks for having me.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Okay. Thank you all.

Mika, Leads Marketing, Sales, and Support, Freshworks: Thank you.

Unidentified speaker, Senior SMIDCAP software analyst at the bank: Thank you again for doing that.

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