Shares in customer service and support software firm Freshworks Inc. dropped in late trading despite the company topping estimates in its latest earnings report.

For the quarter ended March 31, Freshworks reported a loss before costs such as stock compensation of one cent per share, half the loss in the same quarter of last year. Revenue rose 42%, to $114.6 million, up 42%. Analysts had expected an adjusted loss of five cents per share on revenue of $108.26 million.

Net cash flow provided by operating activities in the quarter came in at $1.4 million, down from $7.8 million in the first quarter of 2021, while free cash flow was negative $1.4 million, down from $4.8 million year-over-year.

Highlights in the quarter included the number of customers contributing more than $5,000 in annual recurring revenue increasing 27%, to 15,639. The net dollar retention rate was 115%, a point up from the previous quarter and three points higher than the first quarter of 2021.

New Freshworks customers in the quarter included California Credit Union, Kuka AG, Marymount Manhattan College, Sodexo, Ticket Network and Thermo Fisher Scientific Inc. The company also launched Freshworks CRM for e-commerce, a solution for consumer companies that integrates conversational marketing and support.

“We’re off to a strong start to the year with Q1 revenue growth of 42% year over year,” Girish Mathrubootham, founder and chief executive of Freshworks, said in a statement. “We made progress on our 2022 product priorities with the launch of Freshworks CRM for e-commerce while increasing net dollar retention to 115%, and continuing to run our business efficiently.”

Looking forward, Freshworks estimated an adjusted loss per share of six to eight cents in the second quarter on revenue of $117 million to $119 million. Analysts had expected a loss of six cents per share on revenue of $116.75 million.

For the full year 2022, Freshworks predicts an adjusted loss per share of 16 to 18 cents on revenue of $495.5 million to $501.5 million. Analysts had expected an adjusted loss of 21 cents per share on revenue of $490.2 million.

With the exception of the second-quarter predicted loss coming in ever so slightly lower at the midpoint compared to expectations, seven cents versus six cents, the rest of the figures were positive all around.

It’s the ongoing quarterly story of Freshworks that beating expectations do not equate to its shares increasing. Freshworks shares were down 8% after the bell.

Photo: Freshworks/Facebook