Freshworks beats fourth quarter revenue estimates on AI-powered demand

(Reuters) - Software firm Freshworks beat Wall Street estimates for fourth-quarter revenue on Tuesday, driven by a surge in demand for its AI-powered customer support and IT services products.

Demand for Freshworks' generative artificial intelligence (GenAI) integrated products has risen as businesses seek to automate their workflow using inexpensive AI solutions.

Freshworks, which counts Nucor, S&P Global and Bridgestone as its clients, offers an IT service management product called Freshservice, which assists businesses with employee onboarding and management.

"We continue to see growth, particularly in larger accounts. While our history was in SMB (small-and-mid-sized businesses)....But today about 60% of our revenue is coming from larger accounts," Dennis Woodside, president at Freshworks told Reuters.

The San Mateo, California-based company posted fourth-quarter revenue of $160.1 million, beating market estimates of $158.5 million, according to LSEG data.

Freshworks, which competes with larger rivals such as Salesforce and Zendesk, expects 2024 revenue between $703.5 million and $711.5 million, the midpoint of which is above analysts' average estimate of $705.4 million.

Excluding items, Freshworks said it expects annual profit per share to be between 29 cents and 31 cents, compared with estimates of 31 cents.

The company expects first-quarter revenue in the range of $162.5 million to $164.5 million and adjusted earnings per share in the range of 7 cents to 8 cents, while analysts expect quarterly revenue of $163.2 million and adjusted earnings per share of 6 cents.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)