Customer service and support software firm Freshworks Inc. took a beating today, with its share price crashing after-hours despite beating analysts’ targets on earnings and revenue in its first-ever quarterly financial report.

The company reported a third-quarter loss before certain costs such as stock compensation of 4 cents per share on revenue of $96.6 million, up a healthy 46% from a year ago. That was better than expected, with Wall Street looking for a bigger loss of 10 cents per share on sales of $90.8 million.

Freshworks also offered strong guidance for the next quarter and full year. It forecast fourth quarter revenue of $99 million to $101 million, well ahead of Wall Street’s forecast of $96.77 million. For the full year, it’s looking at total sales of between $364.5 million and $366.5 million, which compares to analysts expectations of just $356.5 million in annual sales.

The company is clearly performing well but for reasons unknown, investors appeared somewhat less than impressed and a mass sell-off of its stock followed. Freshworks’ stock lost more than 13% of its value in after-hours trading session.

Regardless, Freshworks founder and Chief Executive Girish Mathrubootham (pictured) hailed the company’s “strong results,” which he said reflect continued adoption of its products. “We grew 46% year over year, and saw healthy expansion activity from our customer base,” he insisted.

Founded in 2010, Freshworks is new to the stock markets. It only entered the fray last month when it held its initial public offering, raising $1.03 billion at a valuation of more than $14 billion.

The company sells an innovative customer management and engagement platform for businesses that helps them acquire new customers, close deals and maintain those relationships in the long term. Many people consider it to be a rival to the likes of Salesforce.com Inc., SAP SE and Oracle Corp., which dominate the customer relationship management platform space.

Freshworks argues its products are more user-friendly, easier to implement and less expensive. It’s these advantages that have helped it gain a solid footing with midmarket businesses, which account for more than half of its revenue.

Freshworks made good progress in the quarter, reporting that its number of customers who contribute more than $5,000 in annual recurring revenue rose by 31% from a year ago, to 14,079.

The company also reported a net dollar retention rate of 117%, up from 109% one year ago. NDR is an important metric that represents how much revenue growth or churn a company had over time from its existing pool of customers, which gives investors clues as to the overall health and growth potential of the business.

Freshworks may consider itself a little unlucky to see its stock fall so hard, but a pullback was probably to be expected at some stage. Prior to today, Freshworks’ stock had gained more than 39% since its IPO.

On the conference call, Freshworks Chief Financial Officer Tyler Sloat said some of the company’s employees will be able to sell their shares for the first time on Thursday, which may be what prompted some investors to sell while the going is good.

Analyst Liz Miller of Constellation Research Inc. said Freshworks has largely lived up to its IPO expectation and that “freshman year” is always a bumpy ride filled with learning curves.

“The new logo shows a nice blend of industries, demonstrating how flexible Freshworks’ solution can be across everything from retail, hospitality and into manufacturing,” Miller said. “I expect to see Freshworks pull out the stops on usable and practical innovations on the AI front to make it easier for customers to extract value from its tools more quickly.”

Photo: Girish Mathrubootham/Twitter