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On Monday, 11 August 2025, Freshworks Inc. (NASDAQ:FRSH) presented at the Oppenheimer 28th Annual Technology, Internet & Communications Conference, highlighting its strategic focus on employee experience (EX) and customer experience (CX) products. While showcasing robust growth in its EX business, the company also addressed challenges in the CX segment and outlined its AI integration plans.
Key Takeaways
- Freshworks’ EX business, led by Freshservice, surpassed $450 million in annual recurring revenue (ARR) with over 20% growth.
- The CX segment, anchored by Freshdesk, showed an 8% growth, with AI contributing $20 million in ARR.
- The company is enhancing its enterprise sales capabilities and refining AI pricing strategies.
- Freshworks plans to provide further updates at its Investor Day on September 11th.
Financial Results
- EX Business:
- ARR exceeds $450 million
- Growth rate over 20% (22% in constant currency)
- Approximately 19,000 customers
- Target market includes organizations with 5,000 to 10,000 employees
- CX Business:
- ARR over $380 million
- Growth rate of 8%, up from 7% in the previous quarter
- Approximately 60,000 customers
- Focus on small and medium-sized businesses and low mid-market
- AI Business:
- AI contributes $20 million in ARR
Operational Updates
- EX Focus: Freshworks is prioritizing its EX business, particularly the Freshservice platform, to drive growth and investment.
- AI Integration: AI is being implemented across all products to enhance utility and efficiency.
- CX Optimization: Efforts include improving sales execution, increasing product adoption, and resolving customer issues.
- Sales Strategy: The company is building enterprise-grade sales capabilities for EX and optimizing product-led growth (PLG) for CX.
- Device 42 Acquisition: This acquisition enhances Freshworks’ enterprise-grade asset management capabilities.
Future Outlook
- Continued EX Growth: Freshworks expects the EX business to maintain growth rates above 20%.
- AI Expansion: The company is working on refining AI pricing and packaging strategies to effectively monetize its AI capabilities.
- Investor Day: Freshworks will present its product vision and long-range plan updates at the Investor Day on September 11th.
Q&A Highlights
- CX Stabilization: Freshworks is addressing stabilization in the CX business through improved sales execution and product enhancements.
- AI Impact on Hiring: AI may influence future hiring trends, potentially reducing agent counts.
- Upmarket Opportunity: Freshworks sees an underserved upmarket for EX solutions, citing the complexity and cost of existing solutions like ServiceNow.
- M&A Strategy: The company remains interested in mergers and acquisitions that enhance product capabilities or accelerate AI adoption.
For more details, readers are encouraged to refer to the full transcript below.
Full transcript - Oppenheimer 28th Annual Technology, Internet & Communications Conference:
Brian, Interviewer, Oppenheimer: We have with us the CFO of the company. Tyler is a regular here at the Oppenheimer Tech Conference, so thank you very much for coming back.
Tyler, CFO, Freshworks: Hey, Brian. Thanks for having us, man.
Brian, Interviewer, Oppenheimer: Really appreciate it. Tyler, maybe for for some of the new listeners in the audience who may not be as familiar with Freshworks’ story, maybe just to level set the discussion, can you share from a 20,000 feet view brief company background and the problems that the company is solving?
Tyler, CFO, Freshworks: Absolutely. So, yeah, for folks who don’t know us, we’re not a food delivery business. We are a software company. Freshworks was founded in 2010. So about fifteen years old with Freshdesk as our main product line, and that’s evolved over the years.
Today, we build AI powered software that kind of plays in two big markets, EX and CX. EX are employee facing products and CX are customer facing products. And so we’re selling it to IT and customer support teams. And, you know, the goal goal is to make them more efficient and effective. We have over 74,000 customers now and competing, you know, in different spaces across that EX and CX landscape.
EX is our fastest growing product. It is kind of doing really, really well. We are the kind of number one alternative for ITSM kind of underneath ServiceNow and really focused on kind of that 5,000 to 10,000 employee organizations and really providing them, you know, enterprise grade software that’s really easy to use, really easy to implement with a great ROI. And that’s been our focus for years on that side. That’s now a $450,000,000 plus business growing over 22 over 20%, 22% kind of constant currency, about 19,000 customers there.
Our CX business is still really meaningful with ARR of over $380,000,000. And that that was 8% grower this past quarter, a slight uptick from 7% the quarter before, and that has 60,000 customers. The CX business is really selling from that kind of that long tail of SMB all the way up to very large organizations, but really landing mainly with the SMB kind of mid market, low mid market. Our growth opportunity is really EX right now. We’re very focused on that.
We are selling in, as I mentioned, kind of focusing on that five to 10, but going up to 20,000 person organizations and all the way down to say like companies with two fifty people, we are going to be they we will be their very first IT solution that they procure. And the the playbook has not been it’s been kind of the same, build great software, focused on the end user, which really means great usability and user experience. And then over time, add feature functionality so that we will be a credible alternative for very large customers. Customers like Seagate that was a long time, you know, I think ten plus year ServiceNow customer that has migrated over to FreshserviceNow. And that’s that’s who we are, Freshservice.
We were founded out of India. Our headquarters are in California. We still have a lot of our employee base in India, a lot of our engineering. We handle all of our SMB commercial sales out of India. But over the past couple of years, I’ve been building out our field sales presence across North America and Europe primarily.
So, hopefully, that’s a good summary, Brian.
Brian, Interviewer, Oppenheimer: It is. Thank you for, for level setting. So, so you reported two q earnings a couple weeks ago, and, you had a really good quarter. You exceeded your guidance, and you raised your annual targets. You had a good q one too.
So so maybe from a look back, tell us what’s working so well for the business here in 2025.
Tyler, CFO, Freshworks: Yeah. I would say we even had a great q four, so I think I feel like we’ve strung, you know, three really good quarters together. Specific to this year. Two, you know, coming out into the year, kinda doing exactly what we said we’re gonna do and really execute. We feel really good after the first half of the year.
I so what have we been doing? It’s a question. You know, a year ago, a little bit over a year ago, Dennis was appointed CEO and the board said, hey, you you have ninety days come back with a strategy. We took it very seriously. That strategy, which we’ve been executing against, which we’ve been very clear about is EX first and really making sure that we are kind of taking advantage of this opportunity that’s right in front of us from a competitive dynamic perspective, from the the breadth of our software perspective, and and really trying to to provide a great solution for that that TAM that I talked to, the ICP I talked about.
Second is AI across all of our products. And we gave out our AI number this past quarter on $20,000,000 that we broke that out for the first time. But we’ve been talking about the traction that we’ve been getting on the cross on the attach rates for new business and things that added. It’s it’s it’s starting to happen. It’s it’s going well.
And then the third is kind of a refocus on our CX business, focusing on execution, focusing on really being a great cleanup that SMB mid market space and and really focusing on that POG motion. That’s what we’ve been doing as well. And so look at those three things that we we’re trying not to overcomplicate it. And and really, it’s been about focus and execution across those three parameters.
Brian, Interviewer, Oppenheimer: Sounds good. Can we talk about the moat and kind of your right to win in the market? So so why are you winning? You know, what what is the competitive mode in in differentiation? You know, you’ve you’ve got ServiceNow talks about excitement, new logos in your market, Atlassian’s pushing into customer service.
So what gives Freshworks the right to win in the markets you compete in?
Tyler, CFO, Freshworks: Yeah. Again, it’s we’re not trying to overcompet provide great software that’s really easy to use and implement at a great price. And that’s been the DNA of the company for since we were founded. On the CX side, what does that mean? It’s like at a core of its ticketing still.
And that’s, you know, both of our softwares are must have softwares that we are not you know, for companies of any scale, you have to have these two products. You have to have a customer support solution if you’re selling any product to customers that you need to engage with. And if you want to get to SunScale, you have to have a solution that’s gonna help you manage your employee base and help them do their jobs. And so from that perspective, we’re in a great spot. Right?
Our our TAMs are not gonna go away. These are must have softwares. The software will evolve with with AI capabilities and other, you know, new feature functionality that evolves over time, but the software itself was still gonna be needed. On the CX side, you know, our our right to win is really around providing a really seamless easy solution with great integrations and ticketing for everybody from the SMB all the way up, but really focused on that SMB low mid market. It’s incredibly crowded space.
We know that. And so it’s really focused on making sure we’re focusing on customers who are gonna see a lot of value both on a b two b and b two c side. And whether that’s that it’s a trial based product, meaning that you can start with a trial and within twenty days that trial just just gets converted to production. And that’s just a testament that there are no heavy implementations. It just works, and you’re you’re you’re you’re going.
Integrations are out of the box, and it’s really clean. On the fresh service side, a little bit different because we’re selling this is a true enterprise sales motion. And when you look at who we’re competing against, our number one competitor there is absolutely ServiceNow, but competing against the the low end that goes probably the commercial space of ServiceNow, that 10,000 to 20,000 person organization. The same time, there’s still a ton of legacy out there in the BMC, REM, EV, anti shareware space, and then players like Atlassian who are kind of at the lower end with their GSM product.
Brian, Interviewer, Oppenheimer: All of the all
Tyler, CFO, Freshworks: of those different vendors I mentioned all have different reasons why those customers would switch to us. But at the core is providing enterprise grade software that does everything you really need, may not have every single bell and we’ll associate that ServiceNow has. But with that’s a benefit because without the complexity, that without having the the the four admins having to manage the software, without having the the GSI having to do the deep, deep implementation and customization, it just works, and it does what you need. At the same time, we’ve added a whole bunch of enterprise capabilities specific like device 42 with enterprise grade asset management. And these are the things that are just going to make us more and more relevant to those larger enterprises.
And so we’re going to continue to progress and we’re going to innovate at the same time injecting AI across all of our product lines, which is gonna keep us at the forefront of that. And at the end, that’s gonna be why we’re winning.
Brian, Interviewer, Oppenheimer: Heather, we did get a question on the field from the improvement in the or the stabilization to slight acceleration in the CX business that that you recently reported. Are you seeing any change in seat count trends, or or what what is driving that stabilization to slight acceleration in your CX business?
Tyler, CFO, Freshworks: Yeah. And I I would call it stabilization as opposed to real acceleration. The we have been talking about the reduction of the expansion rates specific to agent addition for over two years now before, you know, any chat GPT announcements came out. It had really more to do with coming out of COVID when everybody was hiring like crazy, and then all of a sudden they started you know, companies started kind of resizing. So we’ve been talking about that for a long time.
So we we’ve been very focused on, okay, how do we make sure we can grow with our customer base without having to rely on that expansion rate continue to increase. On the CX side, what has led to really that stabilization? First is just sales execution. And sales execution is both our new customers, but also on engaging with our existing customers and really getting them focused on adoption and utility of the products. And a lot of that is just the rigor in who we’ve hired, how we manage the teams, and how we engage with our customer base.
The second is really a cleanup of and our focus on a lot of kind of the, you know, call it issue the things we’re seeing from customers and making sure we’re being super responsive and innovating on fixing all the things that are out there. And we’ve been doing that for for the last year. That all leads to better adoption and better churn rates. We’ve been talking about Freshdesk having kind of best ever churn rates. And that’s really one of the reasons of kind of that stabilization.
On the sales execution side, that’s our new business. Our top of funnel has always been relatively healthy, but conversion rates. And that’s one that we talked about. Hey. We haven’t done much on the POG side of the house, especially the trial to really kind of innovate on that side.
And that’s the stuff that we’ve been starting to do. The third thing is really AI and really injecting AI agents, the capabilities on the front end and Copilot capabilities for the agents and innovating very fast there. And then getting making sure our customers see that, but also injecting that to the sales cycle, helping us to win deals. We’ve talked about the attach rates, both are larger deals of greater than 30 ks and then also the SMB side of the house where those are high teens in terms of attach rate to new business. These are all things that have led to kind of the CX stabilization, I would say.
Again, I wouldn’t call it acceleration. We went from 77% to 8%, and I think it’s still gonna stay around that that level. In fact, before we’ve said, hey. It’s gonna be a little bit tougher compared because we had a free to pay initiative last q four. But in general, we feel okay about how the CX stabilization is going with all those efforts that we put in place.
Brian, Interviewer, Oppenheimer: Great. Well, bringing it bringing it back to how you think about investing in the two different business segments, the go to market investments, how do you balance that? You know, you you’ve got a you’ve got a large CX business. You have a large EX business. So how do you balance the the product, the go to market investments in the different segments?
Mhmm. Yep. We’ll start. Yeah. So as
Tyler, CFO, Freshworks: a reminder, Brad, we have two different sales motions and two different leaders. So we have Mika, who’s our chief customer marketing officer. Mika owns all the marketing globally, but she also owns all of our SMB commercial sales, which is, you know, by far the majority inbound and all run out of India. And that’s across all products, but mainly CX. Then we have Ian, who’s our chief field officer, who runs all of our field sales operations globally.
It tends to be on new business, mainly EX, and just in terms of the customers that we’re dealing with. We have been really clear, our opportunity is on EX for growth. And when when we say that, okay, what does that mean? It means that a lot of the investments that we’re gonna be making are building out the enterprise grade sales capability in the field, which we’re, you know, I’d say, you know, early days still in doing. It’s not a muscle that the company has had historically because we’ve, you know, started as selling really to the SMB low mid market.
And as fresh service has evolved over the years, we now need to be really good at selling into enterprise. And so we’re building out that muscle today, and a lot of our investments will be there. In line with that, you have to build pipeline for that. So a lot of that is going be driven by field marketing or outbound marketing going to engage with CIOs. Everything from our customer advisory board stuff that we were now a year into and doing this, maybe a year and a half all the way through to the field marketing stuff that we’re doing to go get more brand awareness out there.
That is where a lot of our focus is going be. At the same time, we’re still very focused on driving top of funnel inbound, which feeds both CX and EX. And when we think about marketing is like how are we optimizing for that demand gen machine to make sure that we are still driving pipeline across both products, but across the ICPs that we think are gonna have the most traction. That’s the way we think about it. EX first is in line of strategy and optimizing for opportunities set there, but still, you know, trying to optimize for top of funnel inbound for CX.
Brian, Interviewer, Oppenheimer: Is it fair to assume also, at least just thinking about customer lifetime values, that the opportunity is bigger in EX in terms of the long term customer lifetime value margin profile for businesses as they scale? Yeah. Right now, we’ve been
Tyler, CFO, Freshworks: really open. EX is is doing really well, and we believe this is a durable 20% plus grower, and it’s growing over the 20% now even with the device 42 kind of lapping that acquisition, making the compares harder. When you look at all the characteristics of that business, it has higher net dollar retention, lower churn, has a higher lifetime value for sure. Cost of acquisition, if you think about feel is a little bit higher, but the deals are bigger. And so when you actually look at the LTV and the LTV to CAC, it’s it’s much better.
And so when we are, you know, looking at capital allocation decisions, we’re we’re clearly gonna lead towards EX to make sure that we are going to fund that for growth, and we’ve been doing that. At the same time, CX is still a very meaningful business. And specific on top of funnel, the whole goal there is you have to make it, you know, much more of a PLG motion. You can drive inbound, but conversion rates have to go up and conversion rates have to be as low touch as possible to make the sales efforts so that you’re really just spending kind of marketing dollars. But after that, the conversion will just happen.
And then once a customer lands, theoretically, they will expand with you. And that that has been a lot of our focus. And so you you’re spot on. EX, a lot of prioritization there. The economics of that business are great, and we are very well competitively positioned positioned, in a very big market there, and we we wanna lean in and capture that.
Brian, Interviewer, Oppenheimer: Good. Please, shift the subject here to AI. Clearly topical. You know, whether AI is an accelerant or a risk to to your business. Maybe I’d start out with the first question.
Looks like it’s an accelerant because your business was an early early evangelist for AI and quickly gone from 0 to 20,000,000 in ARR in your AI business. So how has the uptake of the AI products been compared to your expectations?
Tyler, CFO, Freshworks: Mhmm. So first, absolutely, we think it’s gonna be an accelerant, but I would say it’s a risk for anybody who doesn’t have it. At the end of the day, if you don’t have deep AI capabilities in your product across both of our product lines, you’re not gonna be able to compete. And we we’ve known this. We’ve had AI for years, right, well be long before any, you know, kind of LLM chat GBT announcements, but they’re all hard coded bot kind of AI capabilities.
Now we look at what we’re building on the Copilot side and the Truagenetic side as kind of being at the forefront of AI, but also really focused on providing value to our customers to increase their utility of our products, but also make it a lot easier for them to do their jobs, to service their customers and their employees. And that’s going to be continue to be our focus. You then look as we come out with new feature functionality and new products, the pricing and packaging is what is going to evolve a lot from an external perspective because it has to be something that makes sense for us as a company providing these capabilities, but also makes sense for our customers. What we’ve been trying to do is not come out with new pricing and packaging and then having to change it, you know, a quarter later, which have a lot of our competitors have done, which I think is super confusing for customers. So what we’re doing, like, even with our our new AI our Gentec AI capabilities that we we we released in June, they’re all in kind of in limited release right now, making sure that, okay, everything our customers are adopting the way we think they should, that they’re providing a lot of utility, and then actually engaging a lot with our customers on on talking about pricing and packaging and what that should be.
And and as a result, you know, it should all be a tailwind for us, but it also should be a tailwind for our customers in terms of their savings. And so it’s really who’s gonna who’s gonna get what portion of of of that that new wallet that’s being created essentially, savings on one side and then increased revenue for us. And so these are the things that are gonna evolve over time.
Brian, Interviewer, Oppenheimer: Maybe I could ask you the right to win question in AI. So how is Freshworks AI differentiated from other services focused suppliers AI technologies?
Tyler, CFO, Freshworks: Yeah. I’d I’d say you can put in a couple bucks. There’s some companies that are coming out and just say, we are only an AI business. And if you look at those, I don’t think you can point to anything that’s replacing a true a software. They are sitting on top of other folks’ software.
So Moveworks is mainly sitting on top of ServiceNow. ServiceNow buys them because that that is what they saw happening. For us, our right to win is looking at the software we provide that again is must have software, but then injecting AI across all of that software to make it super easy for our customers to use, but also get a lot of value on. And in doing so, potentially over time, allowing our customers to realize savings in terms of headcount and other things. And that is the way we’re approaching it.
We’ve approached on two fronts right now or three fronts. You’ve got Copilot features, which is really focused on making the agents much more productive at their jobs. You have AgenTic AI agent features, which is at front end. We do not charge for it on the EX side because it’s a captive audience in terms it’s only dealing with your employee base, which is a finite group. And it typically is kind of easy to solve things or should be easy to solve things that your employees are asking internally to IT.
What’s the Wi Fi password in the in the in the office I just walked into, things like that. That is on Slack and Teams. And so our monetization on the EX side is really on Copilot, and then our third on insights. For CX, it’s gonna be the opposite. The agentic features are the ones that are really gonna be the first line of defense for our customers to engage with their customers.
And, really, the opportunity set is how do you actually solve the majority of the end customers’ issues without any human intervention. And then literally start to take actions, which is the new Aejenta capabilities. Like, for the BDC businesses, these are things like, you know, what is my order status? How do I cancel my order? How do I change my shipping address?
How do I do a return? All these kind of things without having to talk to a human. And that that that is evolving really, really fast. And so when you look at it, it’s like looking at every kind of component of the action internally and how do we optimize, how help our customers optimize for that. And that’s where we feel like we have the right to win because we have, first of all, the audience with 75 thou near 75,000 customers using our products.
We can engage with them, and then we have a ton of capability with data, which we have a lot of data, to be able to to optimize for those AI capabilities through that engagement. And then do a lot of testing because we can have also have a lot of data on utility and efficiency. That’s our challenge, but also our opportunity set, which we feel we are taking advantage of.
Brian, Interviewer, Oppenheimer: Tyler, a question came in from the field just, I guess, in regards to, how customers how AI your AI technologies are impacting hiring among your customers. Maybe I’ll I’ll just read the question straightforward. As more customers adopt your Copilot and and generative AI solutions, what are you seeing in terms of seat count? Are your customers slowing hiring and or reducing headcount with the productivity gains that they’re realizing with your AI technologies?
Tyler, CFO, Freshworks: Yeah. So our agent counts are still going up across, you know, all both products product lines. So the number of agents are still going up across both product lines. And so there’s not what’s not happening right now is that you you see, you know, kind of mass reductions in agent counts because the AI capabilities are taking over. That being said, we don’t really know if customers would have been hiring more agents even and hiring more individuals to service our customer base or their employee base, and they haven’t had to because of the efficiencies that they’re seeing from the AI capabilities.
That’s the first thing. So I can’t speak to the hiring rates internally. Second thing is over time, absolutely, the agent count should go down or they should stay flat if a customer is growing really, really fast. And as a result, that’s where I said pricing and packaging has to evolve so that we are gonna be rewarded for the capabilities that we’re providing our customers. But they also should have a lot of savings because they don’t have to hire.
And the cost of that hire should far outweigh the amount we get, but both should win. And then logically, for their end customers and their employees, they should win too because it should be a much better customer experience and employee experience. That is the ultimate goal, right, of any company that’s providing AI capabilities that, you know, the company providing is being rewarded, the customers are are saving money, and the end employees and customers are actually getting a better experience. So that’s the the holy grail. A lot of that will be realized through pricing and packaging.
Brian, Interviewer, Oppenheimer: Good. Switch over to the EX business here. So the business has been focusing moving up market here and has been successful so far selling into larger sized businesses, larger deal sizes. We talked about higher lifetime customer values. I guess the question is why does the upmarket look underserved, you know, and ripe for disruption?
And maybe a follow-up question could be, how would you rate the company’s progress so far?
Tyler, CFO, Freshworks: So when I say why is the upmarket look underserved, I think you have, you know, one entrenched player in ServiceNow that really is very, very focused on the super large enterprise that is gonna pay them the tens of millions of dollars. As such, they have a very heavy software that’s very heavy hard to maintain and administer and very expensive. You have a lot of old technologies that are out there that are legacy, that are just not moving anymore or innovative. Yet they’re still in, and a lot of them are on premise, and the replacement cycles aren’t super rapid. And so as things come about in terms of degradation of those products, it is opportunity for us.
In the space, there’s just for EX an opportunity for kind of a lack of a better word, a fresh player to come in with really easy to use software that is built on a modern stack that is gonna be super easy to administer yet provide you all those enterprise grade features, which is what our game plan has been from the very beginning, which I think that the promise of SaaS is, right, something that’s super easy to implement and use, yet gives you all the feature functionality. What I say is if you build for the end user, which really means building for the SMB, and then over time, you stay true to that DNA as you add feature functionality as you innovate, then you kinda start to get pulled in to deals from larger companies who wanna look at you as an alternative. And that’s what we’ve been doing subtly with Freshservice in particular for years now, but just kind of slowly, not trying to go sell to those mega enterprises, but really being pulled in. Now we’re in a mode where we are gonna go sell, but really in focused on that kind of that mid market low enterprise space because we feel we do have the right to win there.
As such, we will get pulled into the much larger deals at twenty, thirty thousand employee organizational deals where we will win some of those deals, and we have been highlighting some of them. But that isn’t necessarily the ICP. We feel very comfortable that the TAM in that five to 10,000 employee org and then the halo up to 20,000 is a massive TAM that we have the right to win in fresh service, and we’re gonna continue to try to to to capture market there.
Brian, Interviewer, Oppenheimer: Maybe the follow-up question is where are we on the sales efficiency curve, you know, for the company’s initiative to to move up market? Are there still changes needed to optimize the sales organization and the platform to service that market?
Tyler, CFO, Freshworks: Yeah. So we announced Ian Tickle as our global field officer. He’s already hired his replacement in in Europe, in London. There will absolutely still be kind of investments on the field side. I’d say we’re still relatively early days on building out the entire field structure on truly getting into an enterprise sales motion.
And that isn’t just salespeople. It’s the SEs that support it. It’s the it’s the it’s the outbound pipeline machine that that really becomes predictable. It’s the CSMs and AMs and and all the enablement that surrounds it. But we’ve been working on that.
We also hired a global SE leader a couple of months ago who is already having a really good impact. These are all things that not has not been part of the DNA of the company historically that that we’re building as we go yet. I don’t think it’s we’re not reinventing anything here. We have an opportunity. We also have, you know, a lot of folks coming inbound who want these jobs that see in their own companies that we’re winning and want to be part of a winning team.
And so that’s our our thing now is about execution and building it out. From an investment perspective, absolutely. It it costs some money. We’ve built all of that in. We said we’re gonna lean into some of these costs.
We have the opportunity because we’ve also been doing well. And in the first half of the year, we beat all of our numbers. And so the question is, okay, we we’ve been open and we’re gonna some of that as we reinvest it, but still over performing as a result. And so I think you should expect us to continue to do that.
Brian, Interviewer, Oppenheimer: In terms of product trends, I think you mentioned you have almost 75,000 customers, you know, today. How penetrated is the customer base on a product basis? And maybe I’ll From
Tyler, CFO, Freshworks: the EX side, I think it’s, you know, we’re we’re not there yet. Like, we have a lot of runway to go. Again, at the low end, we are selling to, you know, employee organizations of, like, 250 people. We are gonna be their very first EX solution, and they can just put it in and start going immediately. And at the high end, we’re closing deals of twenty, thirty thousand employee organizations and doing, you know, full rip and replaces of ServiceNow or, you know, Remedy or something like that.
And so there’s greenfield on one side, there’s legacy replacement in the middle, and then there’s, you know, taking enterprise share from from from players at the high end. And in that space, that TAM is is there and is growing it. At the same time, it’s about adjacencies. So when we think about EX, we’ve got Device 42, which gets us, you know, asset enterprise grade asset management capabilities that customers need. But we also have been rolling out ESM, which is employee service management.
And that’s selling to functions outside of IT starting really with HR, and then you typically move to to kind of finance and facilities. That’s a massive TAM and one we’re just starting on. And also one that we’ve been pretty open, like, we have the ESM capabilities, but we haven’t we don’t have the prebuilt workflows and things like that, but customers are buying. And once we get a lot of those those workflows in there as well as start landing with that product, which we don’t today, all we do is sell it into our fresh service customers. That I think is a huge opportunity for us as, you know, whether it’s gonna be a Trojan horse opportunity to get into really large organizations and prove out that we can meet that need and then move into fresh service or an expansion of opportunity, you know, into other fresh service accounts that are out there.
And so from from that perspective, I think we have a long ways to go. We’re still pretty small. Right? We’re not, you know ServiceNow can make their, you know, that that there’s a one deal for us to make a quarter. Right?
And from that perspective, that’s fine. We’re just gonna keep trudging along and try to, you know, grow at a faster pace.
Brian, Interviewer, Oppenheimer: No. It sounds good. The strategy sounds very similar with ServiceNow. We’ve seen how successful they’ve been moving into adjacencies. Tyler, I had a question that came in from the field on the m and a strategy.
And I guess the the question is, I’ll just read it, what is more interesting from an a an m and a perspective within that EX business? Is it going deeper into security operation or I’m sorry. Going deeper into security operations or going deeper into IT operations, or maybe there’s the third leg here in in going deeper into adjacencies and building out workflows into different adjacencies. It’s possible stack rank what looks most interesting. No.
Tyler, CFO, Freshworks: I mean, I think Device 42 is a great example. It was the first deal we’ve really done. The company had bought. We had bought companies in the past. I’ve been here five and a half years.
It’s the first deal we did since I’ve been here. We closed one right before I joined. But they had really tended to be really small teams. In the past, Device 42 is the first that was a true, like, technology out of the box that we, you know, could take and sell with it with in a customer base. But was a great example of an adjacency that we knew we needed.
We needed enterprise grade ITAM. We have a our service has a light ITAM solution, and it was a really a builder buy. How long is it will it take us to get there, or could we accelerate that? When we look at the adjacencies specific to Freshservice, we’ve talked about security operations, we talk about ITOM, and we talk about, you know, some other areas that we could move into. And again, it’s gonna be, you know those will be builder by conversations.
And but again, having to stay true, like, we have to have a strategy of how this makes sense for our customer base. And as a SaaS provider, I have to have a vision for how we would actually make it a seamless product, which we we painted out that vision for device 42 as well. On top of that, you know, there’s also a whole bunch of kind of AI acceleration stuff that we we said we’d be open to look at. And these are companies that could accelerate, you know, workflow building and everything else. We’ve always been consistent that we will look at m and a, and we’ll consistently look at it.
We have a team, you know, dedicated to look into opportunities that work very close with our product group. And we’ll be open to it. It just has to make sense from kind of an efficiency perspective, but also from a product strategy perspective. And so we’re gonna stay true to that. And you know, it’s not, you know, something that we’re adding companies every single quarter.
We just been, you know, we’re consistently looking, working with the product group, working with our product road map, and talking to a lot of companies both on the inbound and the outbound side.
Brian, Interviewer, Oppenheimer: Maybe to finish it up with the last question that came in from the field too is is about the Investor Day. So, next month, for everyone who’s listening on September 11 in San Francisco, Freshworks is gonna be holding in Investor Day. It’s been a couple years, since they’ve had their last Investor Day. So so, clearly, this is gonna be a special event. Is there any previews maybe for investors, what they could expect next month from the Yes.
Whoever asked.
Tyler, CFO, Freshworks: Thank you for the plug. And, Brian, thank you for the extra highlights. Yes. September 11, Investor Day. It’s a Thursday in San Francisco.
We hope everybody can attend either in person or virtually. You know, we did our our last Investor Day two years ago. That was our first Investor Day after going public. And so and at that time, we kinda painted out, you know, some three year visions and gave more a little bit more information by product on what we’re doing. I think this is just gonna be an update to that.
We’ve, you know, we’ve been solely giving out more, like, give the ARR ranges now every quarter of what the products are doing. We can get a little bit more information on on our our AI capabilities. I would just consider Investor Day number one kind of be a you know, they’re gonna be a product session to see kind of where we’re going product wise, product strategy wise. We just did a lot of this at our refresh event in London in June. And so, you know, a lot of that is, you know, we’ll kind of re show for the investors and make sure everybody saw everything we announced.
From a kind of kind of a long range plan, we will do an update. You know, the last one we did was two years ago, and that was a three year plan. We have to update that now with everything we’re doing and kind of what some of our goals are financially, and we’re obviously gonna talk about some of that. And we’ll give some go to market updates as well. So hopefully, it’s gonna be a very very valuable use of time for folks to give a little bit more insight into how we’re doing and then, you know, product wise as well.
So we’re looking forward to it.
Brian, Interviewer, Oppenheimer: And we are out of time. I wanna make sure to keep Tyler on track because he’s got a full day of meetings here ahead of him. I wanna thank you very much for presenting Freshworks, and it was great to see
Tyler, CFO, Freshworks: you again. Yeah. You too, Brian. Thanks for having us, man. Always always good news.
Thanks, buddy.
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