Customer service and support software firm Freshworks Inc. delivered its first-ever quarterly adjusted operating profit as a public company as it beat first-quarter earnings expectations.

For the quarter that ended March 31, Freshworks reported net income before costs such as stock compensation of $3.9 million, or three cents per share, up from a loss of $600,000 or one cent per share in the same quarter of last year. Revenue rose 20% from a year ago, to $137.7 million. Analysts had been expecting a loss of two cents per share on revenue of $134.25 million.

The company had free cash flow of $9.1 million in the quarter, up from negative $1.4 million in the first quarter of 2022. As of the end of March, cash, cash equivalents and marketable securities sat at $1.5 billion, up from $1.1 billion in the previous quarter.

Freshworks’ better-than-expected headline figures were driven by customer growth, with the number of customers contributing more than $5,000 in annual recurring revenue increasing to 18,441, up 18% year-over-year or 19% adjusted for constant currency. Customers are also sticking around, with the company’s net dollar retention rate sitting at 107%.

New customers joining Freshworks in the quarter included Fila Holdings Corp., Johnsonville LLC, Los Angeles Dodgers LLC, Smyths Toys HQ Unlimted Co., Sonata Software Ltd. and the City of Escondido.

“Freshworks had a strong quarter of execution in Q1,” founder and Chief Executive Girish Mathrubootham said in the company’s earnings release. “More companies are taking advantage of the opportunity to buy software that is designed to scale to meet their IT and customer needs.”

Looking ahead, Freshworks said it expects adjusted net income of between break-even and two cents per share in its fiscal second quarter on revenue of $140 million to $142.5 million. Analysts had expected a loss a penny a share on revenue of $141.32 million.

For its full year 2023, Freshworks expects earnings of eight to 12 cents a share on revenue of $580 million to $592.5 million. Analysts had expected break-even on revenue of $582.12 million.

Photo: Freshworks/Facebook