Shares of Nasdaq-listed Freshworks jumped more than 28% after the company announced upbeat third-quarter results and a $400 million stock buyback. However, the Saas giant also said it would lay off 660 employees to streamline operations.
Freshworks said it would lay off 13%, or 660 employees, globally. Reuters reported that the company expects to book restructuring charges of approximately $11 million to $13 million in the fourth quarter.
The restructuring plan is expected to be completed by the end of the financial year ending December 31.
Freshworks third quarter results
Freshworks reported better-than-expected third-quarter results, driven by demand for its artificial intelligence-driven products.
The company’s adjusted profit for the third quarter ended September 30 was 11 cents per share, beating estimates of 8 cents. The software company’s third-quarter revenue rose 22% to $186.6 million, compared with analysts’ average estimate of $181.6 million, according to data compiled by LSEG.
The company raised its full-year revenue and profit forecasts. According to Reuters, Freshworks now expects annual revenue to be between US$713.6 million and US$716.6 million, higher than the previous forecast of US$707 million to US$713 million.
The company also raised its forecast for annual adjusted earnings per share to 38 cents to 39 cents from the previous forecast of 32 cents to 34 cents.
According to Reuters, Freshworks expects fourth-quarter revenue to be between $187.8 million and $190.8 million, with the midpoint in line with expectations.
Tools provided by Freshworks include Freshservice, an IT service management software that helps businesses with employee onboarding and management, and Freshdesk, a customer service tool designed to provide quick solutions to customer problems.
The company has more than 68,000 customers, including Databricks, American Express, Nucor and Sony. It competes with companies like Salesforce and ServiceNow.
Announced $400 million stock buyback
In addition to third-quarter results and layoffs, Freshworks also announced that its board of directors approved a stock repurchase program worth $400 million of outstanding Class A common stock. However, the company has not disclosed a timetable for share buybacks.
(With information from Reuters)
