A year after helmed at Freshworks, CEO Dennis Woodside has led SaaS Company in a transformational stage. This is defined by operational discipline, a keen strategic focus and a decisive pivot on AI. Under his leadership, FreshWorks reached 21% of its annual revenue jump of 21% to US$724 million in 2024, nearly doubled non-GAAP operating profit to US$99.1 million, and 97% growth in free cash flow to US$153.3 million.
With AI Copilot's over 2,700 paying customers, mid-market companies and a clear march towards a revenue milestone of USD 1 billion, Freshworks is no longer a SaaS success story. Instead, it has established itself as a formidable AI first global platform. In a conversation with BW BusinessWorld, Woodside looks back at the momentum, AI and the roads ahead of Freshworks, his first year as CEO. excerpt:
When Dennis took over as CEO of Freshworks a year ago, you were faced with the challenge of stepping into your big shoes and following the founder's legacy. That said, the company has recorded big numbers in both revenue and margins. How has your journey so far been for you and what was your important learning during the helm of this first year??
Last year, FreshWorks became an AI company. That's the big point. Currently, 2,700 customers are paying for the co-pilot. 1,600 customers have paid AI agents, and hundreds have already used it in their Insights products, the Early Access program. So we have a complete product line, and we are monetized.
“Half of our new, large-scale deals will be announced using AI components.”
I've read that they have more AI customers than ServiceNow, and actually offer large AI to thousands of companies. Thousands of companies benefit from AI. That was the biggest achievement of last year. ai is the forefront and center of all conversations with new prospects.
After leadership changes, there is often cultural change. Did you need to make important adjustments after you stepped into the role? How did you balance your leadership style with your legacy and culture built over the past 14-15 years??
It is common for early stage companies to try a lot to see what works. Freshworks was no different either. We invested in multiple products each with a small team, but as we scale towards a billion-dollar run rate, we need focus. For new products to be important now, there is a clear path to US$100 million. Therefore, over the past year, we have streamlined our strategy around three core pillars. CustomerSupport's FreshDesk, FreshService for IT, and AI. It emphasizes other efforts, and means focusing deeply on these areas and becoming an expert.
It also targets customer focus and targets, such as Taylormade Golf, a global but resource-restricted organization that targets approximately 3,000-5,000 employees. These companies need software that runs out of the box without any major customizations and often overlooked by large enterprise vendors. This clarity, about products and customers, Last year, it made a huge difference.
This year, it led to revenues of approximately USD 820 million. This is driving us down the path to a US$1 billion milestone. What do you think will be the key drivers in this next stage of growth? Enterprise is also the focus?
It clearly distinguishes between the middle market and the company. A company usually means more than 30,000 employees. Our focus is on companies with between 5,000 and 20,000 employees, such as Nucor Steel and Purple in India. These are high-growth organizations that require scalable solutions without the complexity of enterprise software.
AI is an important growth driver. Almost every conversation with new prospects involves AI. Our products serve our IT and customer support teams and leverage AI to help businesses expand operations and increase efficiency. And our addressable market is huge because every business needs to automate these features.
Are there any new verticals that you plan to target as you move forward? Expanding to new segments as part of your growth strategy?
Our business today is very diverse and there is no single vertical that controls our portfolio. This gives the stability across the sector, including law firms, architects, fintech players like PhonePE, manufacturers like Mahindra, or more than 1,100 educational institutions in the US. It also offers a third of NFL, MLB and F1 teams, demonstrating the wide range of product applicability..
We don't traditionally focus on a single vertical, but that is varied by AI agents. Agent AI Studio, a recent launch, is a big step. Customers can build domain-specific AI agents that can autonomously handle tasks such as returns, flight changes, and order tracking..
Now we're building these agents vertically, starting with retail, expanding to travel and fintech as each requires unique system integration. I think that's the most vertical approach we take to develop.
Freshworks clearly has a strong bet on AI. How do you distinguish yourself in a market filled with AI products? What feedback do you get from your customers and how do you respond??
We are extremely careful about designing simple, fast, ready to use AI products. That's what makes us different. At our recent event, we spoke to about 100 customers. Everything explores AI adoption, and they often face two choices. One uses large corporate vendors such as Salesforce and ServiceNow. Their AI solutions are powerful but complex, and often require important customizations, external consultants, long runways to see value. The second option is a startup, generally younger, without deep domain expertise or robust security. These solutions may be innovative, but there are risks regarding data processing and long-term reliability.
Provide a third pass. It's an AI that works from day one. Customers don't need technical expertise, but they can activate their co-pilot in just a few hours. The same interface is now enhanced. With 73,000 customers and nearly 2,000 technical experts behind the product, we combine trust, scale and deep understanding of real-world workflows.
You have seen strong non-GAAP operating profits and healthy free cash flow. What was the key lever that you pulled to drive this performance??
Girish (Mathrubootham) set a bland spot on the AI path as early as 2018, but over the past two years it really accelerated with a focus on AI and that has changed our business. We are definitely an AI company now. All customer conversations include AI. Our sales team is expected to understand and sell AI solutions. It's all the front and center we do.
“We have focused on three core priorities: Freshdesk, FreshService and AI. When you're expanding your business, clarity is important both in the market and in the internals.
This focus unlocked growth. We streamlined, stopped moving the needle, and turned the resources that had relocated the resources into territory with momentum. result? Topline growth has increased, and profitability has improved. It's not about financial engineering, it's about real innovation and providing value to customers.
Do you think FreshWorks is consistently achieving GAAP profitability over the next 12-18 months? And are there any specific benchmarks or internal metrics to use to define success at this stage??
On Investor's Day in September 2023, he said he hopes to achieve profitability for GAAP sometime in 2026. We are going very well for that. However, the metric I tend to focus more closely on is free cash flow. Because it's the real money you can work with, whether you reinvest in growth or return value to shareholders..
This year, we have led to more than US$200 million free cash flow this year, especially considering it was essentially broken just three years ago. In other words, it adds USD 200 million a year to the bottom line. Announced buybacks to return value to shareholders and acquisitions that double their growth strategy.
If you have strong cash flow, you can reinvest in innovation, expand your business and generate sustainable returns. So free cash flow is the metric I focus on most. GAAP profitability continues, and it is inevitable, but cash flow is how business is managed today.
The US$1 billion revenue milestone is expected to be within reach. How do you imagine a business mix looking when approaching that mark? Are there any shared shifts or priorities that could define a boldness at US$1 billion??
Looking two years from now, AI becomes an even more central part of our business as a direct revenue driver through products such as Copilot sold per seat and AI agents using consumption-based models, and indirectly making suites more attractive to customers..
“Our growth will be driven more and more by mid-market resource-constrained companies with great ambitions requiring powerful and easy-to-use software. We have built a truly global footprint with 45% revenue from North America, 40% from Europe and 15% from other regions.
Additionally, our FreshDesk and FreshService offerings have evolved and feel more unified. Whether pushing code changes that improve CX or providing direct routing feedback to developers, more customers are looking for seamless workflows and customer support. Over time, it's not about individual products, but about adopting a complete platform for simplifying and converting operations.
