Q3 2022 Freshworks Inc Earnings Call

November 1, 2022

Yeah.

Ladies and gentlemen, thank you for standing by and walk through the fresh works third quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the special need to press Star one on your telephone I would now like to turn the call over to your host.

Again.

Thank you good afternoon, and welcome to <unk> third quarter 2022 earnings Conference call.

Joining me today are garage method with them freshwater chief Executive Officer, Dennis Woodside Fresh works, President and Tyler Sloat Fresh works Chief Financial Officer.

Primary purpose of todays call is to provide you with information regarding our third quarter 2022 performance and our financial outlook for our fourth quarter and full year 2022.

Some of our discussion and responses to your questions may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

These forward looking statements are based on <unk> current expectations and estimates about its business.

Industry and the macroeconomic environment in which it operates managements beliefs and the ability to continue to operate efficiently and drive growth and certain other assumptions made by the company as of the date hereof, all of which are subject to change.

Statements are subject to risks uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking statements.

For a discussion of material risks and other important factors that could affect our results. Please refer to today's earnings release, our most recently filed Form 10-Q, and other periodic filings with SEC fresh.

<unk> assumes no obligation to update any forward looking statements in order to reflect events or circumstances that may arise.

After the date of this presentation, except as required by law.

During the course of today's call, we will refer to certain non-GAAP financial measures.

Conciliations between GAAP and non-GAAP financial measures are included in our earnings release, which is available on our Investor Relations website at IR Dot <unk> Dot com.

Courage, you to visit our Investor Relations site to access our earnings release.

Periodic SEC reports, a replay of today's call or to learn more about fresh works and with that let me turn it over to Chris.

Thank you Joe Good afternoon, everyone and welcome to the pressure Q3 earnings call.

We delivered a strong quarter with $128 $8 million in revenue.

This represents growth of 37% on a constant currency basis.

Our non-GAAP operating loss came in well ahead of expectations.

We adjusted our spend and a changing macro environment overall.

Overall, we continue to operate efficiently while growing at a healthy rate.

In Q3.

We added approximately seven 700, new customers and saw good momentum in new business led by Chris Tovey.

This quarter, we crossed over 61000 customer.

Our powerful it's improved products.

Well consumer brands, like Hello, fresh and Blue and <unk> companies like <unk> and <unk>.

Right.

This quarter.

Added some exciting new features across all three business lines.

Specifically in <unk>.

Continue to make enhancements to the <unk> product to help support the engaged organizationally with their customers.

Earlier this year, we added new channels like Instagram, Google business messages and Whatsapp.

In Q3, we invested in making the agent experience of managing those tenants even easier.

An exciting New addition interest at the ability to bring support for customer email into the unified agent Inbox.

We have also added new auto complete responses that turned <unk> into a high speed engagement solution while models DXP.

Okay.

An exciting new feature and a fresh desk product is a pretty auto correct Peter.

The system automatically calculated prioritizes and lost the ticket to the right support agent group saving agent hours of manual effort, giving them time to focus on solving critical issue.

Together, Chris chat and <unk> improved the agent and customer experience. An example of this is blue light.

Adding online retailer of fine jewelry.

This fresh debt and pre tax to result, approximately 90% of customer equity in the first excellent.

200 agents are able to engage their customers across telephone E mail and chat channels.

Blue Nile also recently added fresh sales to offer personalized experiences across the entire customer lifecycle.

We also enhanced our unified CRM solution by adding eight hour features to help sales and marketing team increased productivity to win more business.

If our prestige new intelligently coding.

Businesses understand how customers use their product and who is ready to buy more of the.

The AI learns from customer data and behavior to deliver insights and predictions that helps companies make data driven decisions and have more personalized conversations with their customers.

A large American extract manufacturer of more than 200000 product.

Prestige is mid <unk> debt to unify it's new business and upsell processes.

The new predictive lift coding identified buyers that are most likely to reorder and alert sellers, ensuring that they can stay on top of customer requests and others.

Only five pressure dashboard create alignment across sales marketing and support these ultimately, helping the company deliver more value to their customers.

We also help our customers create incredible employee experiences.

That's why we have made it easier and more secure to extend service beyond 80 Department to now support all business team.

There are already thousands of companies who use their service within HR finance and legal teams to support their internal stakeholders.

Big data bricks for example, up and using for service to support the need of 4500 employees data bricks expanded its deployment to HR legal security and learning and development departments.

To provide employees with the same great experience when interacting with any team E tailers.

Recently, we announced an exciting new module.

For service for business team the capabilities that enable departments beyond 80 to offer a modern imply XP.

What makes for service for business teams unique is the support for private Workspaces for every team.

These new Workspaces with interest service.

Power, the Hedgehog finance legal or any internal operations team and the ability to manage employed equip and automate their departmental workflows mulch.

Multiple teams can co exist independently within a single crystal with infant with the ability to configure manage and control access to that individual look basis.

These men are German provider of climate solutions with $3 4 billion euros and revenue is another customer that cemented our position to launch this product.

These men have 13000 employees spread across 74 countries.

And then people organization and ATP used for service to unify that internal team with a single service management solution for a fast easy and seamless and <unk>.

Companies of all sizes are realizing the benefit of expanding IP service management principles to nominated Department empowering the employee experience with uninterrupted service delivery.

What makes all of these product innovations possible is our platform fresh look Neil.

It has evolved from being a set of internally focused shared platform services and analytics deployed across fresh product to our customer impacting developer friendly platform that makes building apps professionals products faster and easier.

Today more than 50% of our customers extend the utility of our products through the pressure marketplace and custom built app powered by the new platform in.

In Q3.

<unk> built a brand new SaaS application entirely on top of the Neo platform and NPS survey tool to help businesses run surveys to measure customer satisfaction and delight.

We are using it internally for now but this is a great example that demonstrates the power of our platform.

In Q3, we held our first Delaware stomach in Bangalore and another in San Francisco scheduled later this month.

Next week, we'll be hosting a virtual event to demo all of these Q3 product updates from our fall product release to our customers.

To recap we.

We had a strong quarter given the changing market conditions.

<unk> growth coupled with our operational efficiency is a differentiator among new public software company.

But like others in the tech sector, we are not immune to the slower economy.

While our new business activity picked up expansion slowed down as companies reduced their growth forecast and head count.

On a positive note we saw good new business growth in North America, and the mid market and enterprise.

Our overall gross churn rate remains roughly the same and we even saw F&B churn stabilized in the quarter.

Anecdotally, we're hearing that mid market and enterprise businesses are focused on value and managing their software costs towards the end of the year.

Modern affordable solutions are well placed for this segment of customers.

As I look ahead, I am optimistic about our future.

I am happy to introduce our new pivoted, Dennis Woodside, who comes with a proven track record of helping businesses.

Robert Dennis to accelerate our growth and even start with a focus on go to market strategy and operations.

This will enable me to focus on.

Long term vision and product strategies there.

The entire management team will report to both Dennis and I as we partner together on our journey.

Now I would like to welcome Dennis to talk about why he chose to join pressure what is observed so far and the opportunities for us.

Thanks, Jay and good afternoon, everyone I am excited and honored to be here today as a member of the <unk> management team.

I spent 20 years working in technology for growth companies that are challenged the status quo and delivered amazing experiences for their customers.

Dropbox impossible foods and now frameworks.

I've always been inspired by founders Larry page through Houston, Pat Brown, they pushed the limits of what the rest of US think is possible and I know how to help them scale.

That's why I joined fresh works.

I believe in the company's division, we put the power of software back into People's hands with applications easy enough for everyone to use.

She has always believed that enterprise software it doesn't have to be complicated and that businesses can add powerful technology without sacrificing agility I believe in that mission.

During my first few months I have had several observations that make me excited about the opportunity ahead for <unk>.

Our customers love our products.

Around the world and that with customers like Weizmann and Internet stores in Germany.

<unk> in France, and Fraser's group in the UK.

It is clear that fresh works customers see an immediate value from our software and we continue to innovate fast to keep our customers happy.

Second we are set up to continue innovating at scale.

You heard <unk> talk about the differentiating features and new products, we introduced in just one quarter.

That's because we have a team of product and engineering veterans from the world's leading tech companies.

And finally, there is a huge opportunity to serve larger customers and to win more big deals.

As Gene mentioned, Ireland focused initially on our go to market operations.

Over the last few years <unk> products have evolved to meet the needs of larger companies and I see this as a big opportunity for our growth.

We have a great team and we're already making changes to our sales organization to meet that demand.

I believe that with a few adjustments, we can make our field sales, even more efficient and effective.

Earlier today, we announced the upcoming departure of our Chief revenue Officer Jose morale.

We thank Jose for his contributions over the last few years towards the growth of the business.

In the interim our chief customer officer, Patty wrapping up has taken over <unk> responsibilities.

He is acutely familiar with our customer needs and products and has decades of sales experience at Microsoft and Harman.

Im looking forward to working closely with Patty and the other go to market leaders to build a sales motion that can deliver the consistent performance that we expect.

I am bought energy vision, and believe that our value to customers our business model and our people can achieve it over.

Over the coming months.

I'm sure I'll be meeting with many of you and sharing more insights on our journey ahead.

Now.

I'll hand things over to Tyler.

Thanks, guys and welcome aboard we're excited to have you on a fresher X team and we're looking forward to working with you.

Now looking at our Q3 performance, we delivered a strong quarter of financial results, beating expectations for revenue by approximately 3% and coming in more than a $10 million ahead of expectations on non-GAAP operating loss.

Further highlighting our ability to drive efficient growth in our financial model.

Given the FX rate changes throughout the quarter and the year, including since our last earnings call.

I'll spend more time today talking through constant currency comparisons to provide a better view of our business fundamentals.

Ill review, our Q3 financial results provide background on key metrics.

And close with our expectations for the upcoming quarter Q4, and full year 2022.

Most of our discussion for the financial results will be around non-GAAP numbers, which exclude the impact of stock based compensation and related expenses.

Payroll taxes on employee stock transactions amortization of acquired intangibles.

Other adjustments.

Starting with the income statement revenue grew 37% adjusting for constant currency or 33% as reported to $128 $8 million.

While overall macro pressures led to slower expansion activity in Q3, we.

We saw increased year over year growth for our new business bookings in the quarter.

Our diversified business mix across multiple product segments with customers ranging from SMB to mid market and enterprise continues to be durable through a tougher macroeconomic environment.

In Q3, the overall churn rate for the company remained in line with the prior quarter and has been relatively consistent over the first three quarters of the year.

Customers using more than one product continued its steady increase up 1% again to 24% in Q3 and represents approximately half of our overall business.

We saw good wins in CX with customers seeking modern solutions for conversational messaging and we're addressing the ongoing need for unified sales and marketing solution.

<unk> customers are discovering the powerful capabilities of fresh service and extending use cases into other functions.

In Q3 fresh service continues to be the largest contributor to <unk> growth.

Turning to margins.

Our non-GAAP gross margins increased slightly rounding up to 83% for the quarter.

This is the fifth consecutive quarter with strong non-GAAP gross margins in the 82% to 83% range. So we're pleased with these levels as our business grows.

In Q3, non-GAAP operating margins improved approximately 11 percentage points quarter over quarter to negative 2%.

Most of the improvement was driven by lower than expected costs related to head count digital marketing spend and shifting of spend into Q4.

While we are continuing to add to our fresh foods family.

Slowing the pace of hiring as we align our resources with the current market.

We also had a one one.

One time type benefit of nearly $3 million related to the reversal of accrued expenses from earlier in the year.

The revenue beat combined with a more efficient cost base led to non-GAAP operating loss of $3 1 million, which was significantly ahead of our previously given estimates.

Really pleased with our ability to invest prudently to drive efficiency.

Moving to our operating metrics net dollar retention was 113% on a constant currency basis or 107% as reported as we saw increasing impacts from FX rates and lower expansion activity in the quarter.

As we mentioned in the prior call the slowing economic environment is resulting in lower growth projections for businesses and impacting the expansion motion.

Looking ahead to Q4, we expect constant currency net dollar retention to be 110% and assuming the current FX rates hold.

Ported net dollar retention to be 105%.

Looking at our customer metrics customers contributing more than $5000 in <unk> grew 19% to $16 713 customers in the quarter and continues to represent 86% of our IRR.

Once again, a large number of customers fell below the threshold of $5000 and there are because of FX moves. So we're also providing the constant currency figure of 23% growth year over year for this metric.

For larger customers contributing more than $50000 in the IRR. This customer count grew 36% to 1717 and represents 43% of our era.

Adjusting for constant currency this customer cohort grew at 44%.

Lastly.

Our total customers grew to over 61600 customers with a net add of approximately 1700 customers in Q3 as our average revenue per account increased in the quarter.

Now moving to billings balance sheet and cash items.

Despite increasing FX pressures during the quarter calculated billings grew 25% to $136 9 million.

Holding currency constant over the past year calculated billings grew 31%.

Other factors impacting that growth rate include billing.

Billing duration mix of positive, 2% and reserve activity of negative 1% adjusting.

Adjusting for these factors the normalized calculated billings growth was approximately 32% in Q3.

Looking ahead to Q4.

Our preliminary estimate for calculated billings growth is 22% on a constant currency basis or 16% as reported based on current FX rates.

As a reminder.

We will have tougher year over year comparisons in Q4, as we had significant early renewal activity and duration benefit in Q4 of last year.

Turning to our balance sheet and cash items, we maintain a similar cash balance as we ended the quarter with cash and marketable securities of approximately $1 2 billion.

Free cash flow was negative $7 2 million in Q3, beating expectations by approximately $3 million.

We continue to net settle vested equity mounts and used just over $13 million under financing activities for Q3.

Once again this financing activity is excluded from fee free cash flow.

We expect to continue net settling invested equity amounts for the foreseeable future, resulting in quarterly cash cash usage of approximately $18 million at current stock price levels.

Looking out to the remainder of the year, we expect to generate positive free.

The range of $1 million to $2 million in Q4.

This translates to an estimate of negative 17% to $18 million of free cash flow for the full year, which is better than our prior estimates were.

We're pleased with our ability to manage spend and show improvements throughout the year.

We expect to maintain positive free cash flow on an annual basis in the upcoming years.

As we've said before we built a durable and efficient financial model for the business.

We are well capitalized with no debt and have a strong balance sheet, creating financial flexibility to drive sustained growth for our business.

Turning to our Q3 share count.

We had approximately 326 million shares outstanding on a fully diluted basis as of September 32022.

The fully diluted calculation consists of 287 million shares outstanding and approximately $36 million related to Unvested <unk> and Prs use.

And nearly 3 million shares related to outstanding options.

Let me now talk about our forward looking estimates.

I will go through the numbers first and then provide background commentary afterwards.

For the fourth quarter of 2022, we expect.

Revenue to be in the range of $129 2 million to $131 2 million growing 22% to 24% year over year.

Adjusting for constant currency this reflects growth of 27% to 28% year over year.

non-GAAP loss from operations to be in the range of $10 5 million to $8 5 million.

non-GAAP net loss per share to be in the range of five to <unk> <unk>, assuming weighted average shares outstanding of approximately 288 5 million shares.

For the full year 2022, we expect revenue to be in the range of $494 million to $496 million growing 33% to 34% year over year.

Adjusting for constant currency this reflects growth of 36% to 37% year over year.

non-GAAP loss from operations to be in range of $30 million to $28 million.

non-GAAP net loss per share to be in the range of 13 to 11, assuming weighted average shares outstanding of approximately $284 6 million.

These estimates are based on FX rates as of October 28, 2022.

As always we're trying to provide our best view of the business today and in a dynamic market environment.

So a few areas to call out.

First on FX.

With the dollar strengthening again over the quarter. This has resulted in a negative impact of approximately $1 $5 million to our full year 2022 revenue compared to our previously provided estimates.

Second on expansion as we called out earlier, the macro environment is having an impact on our expansion activity.

Especially for our smaller customers.

Our biggest driver expansion revenues agent addition.

With higher costs and downsizing of Workforces were seeing and hearing of customers planning for slower head count growth going forward.

Third on operating loss in addition to incorporating our significant Q3 beat on operating loss into the full year estimates.

We're improving our outlook by another $1 million, given our ability to effectively manage our cost base.

Plan to continue to drive efficiencies wherever possible.

We feel really good about our financial position, we have a strong balance sheet with nearly $1 2 billion in cash and equivalents.

Growing at healthy rates and have a good handle on our cost structure.

We expect to generate positive free cash flow in Q4 and the years ahead.

Let me close by saying I'm pleased with our results for this quarter, our diverse business model has proven to be resilient and durable in a changing market environment, we're continuing to execute on our operating plans. We remain excited about our opportunities ahead.

With that let's take your questions operator.

Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile our Q&A roster.

Our first question comes from Scott Berg with Needham Your line is open.

Hi, everyone. Congrats on a good quarter and thanks for taking my questions.

I guess ill start with a macro question, we will follow up to maybe Tyler. The exact question that you talked about there which well.

Less seat expansions, how should we think about the magnitude of this obviously, it's been an important component of Europe's kind of expansion strategy, but is this at all.

10% lighter from an expansion cadence on what Youre seeing or is this maybe more significant to that.

Thanks Scott.

Yes, we're not quantifying the expansion rates right now, but it is a significant part of our business.

And as you know agent.

In addition drive the majority of our expansion.

And as such you know Thats whats driving that dollar retention down and is causing.

Some of it.

The growth coming down as well so it expansion insignificant for our business.

As companies and are expanding they're just not adding as many agents.

Got it helpful. There.

I guess as you look at your business today and think about the success you've had on the sales and marketing side yet.

I am saying.

The profitability of the business as you mentioned the $1 million per bed in Q4 here and being mindful of that is how do you think about the company's own growth investments here, maybe over the next I don't know two to four quarters.

You need to invest at the pace that we've seen over the last year year and a half or have you maybe changed your philosophy, a little bit based on what youre seeing in the market today.

Yes, I think if you if you look at what we did in Q.

Q3, right, we were able to drive efficiencies in Q3.

Essentially every line item.

G&A R&D.

And sales and marketing came down as a percentage of revenue and there's a lot of factors just thinking about cost and efficiency, but also we've been hiring that it really.

Really high pace and it gives us the opportunity to just kind of digest now, we're still going to invest in sales and marketing specifically, we're actively hiring quota bearing reps right now we think theres, a big opportunity there still and we're going to continue to do that but of course, we're going to we're going to look at efficiencies. We said Scott as you know we're going to produce cash from Q.

Forward, we said on an annual basis, we plan to produce cash going forward.

And that just is leverage that we see in our model that we can gain.

Great. That's all I had thanks for taking my questions and congrats on the strong quarter.

Thanks, Scott on November four our next question.

Our next question comes from Elizabeth <unk> with Morgan Stanley . Your line is open.

Hi, Thanks for taking my question to try and breath of Iran for Elizabeth.

You mentioned a little earlier.

And new business adds for mid market enterprise last few quarters, what's driving this how much of this is due to kind of product advancement market versus just increased focus on lower cost solutions by these type of companies in a slowing environment.

Okay.

I'll take that as Girish.

So I think it's a combination of both our products, especially fresh debt and for service.

Both mature.

Alex which.

And thats been more and more into larger accounts, specifically for service does not pay as much into SMB, it's more mid market focused.

<unk>.

That is the primary reason, but also given the changing macro companies.

Need to kind of.

Spend more cautiously looking to save cost I think the official ex promise has always been a lower total cost of ownership in a rapid time to value I think that dividends relating well with customers.

Got it that's very helpful. Thank you.

One more from me quickly.

Taking a step further on the conversation around expansion is it purely just a slowdown in net expansion for these customers or are we seeing maybe some contraction from specific customers that are most impacted by slowing macro.

Yeah, Hey, Ron I'll take that so what we did say is that churn has been relatively stable.

And.

We have been making improvements on churn kind of quarter over quarter.

For the last year and half, which we've talked about and we've been able to keep it stable when we talk about contractions or what would be a down. So theoretically that is recorded in <unk>. So we've been able to.

See stability there. So it really is more on the expansion motion that is reflected in our numbers.

Okay that makes sense and very encouraging. Thank you appreciate it.

One moment for our next question.

Our next question comes from Alex Zukin with Wolfe Wolfe Research Your line is open.

Hey, guys, it's Ryan on for Alex Thanks for taking the question. So I just had one around kind of the changes to the sales motion.

With the change to <unk>. This quarter, you talked about broader changes in the sales motion that you want to implement I. Just wanted to know what can you guys do to kind of ensure that you aren't taking a step backward in your sales execution, particularly in Europe , where it wasn't an issue earlier this year with all the new changes and then how long do you expect those.

Changes to take to implement until productivity and execution.

That's where you want it to be.

Hi, Ryan its Dennis Thanks for the question.

First of all I think we're very excited about Patty coming in as our interim CFO Patty <unk> had 20 years of sales experience and previously was our chief customer officer. So we don't envision in the very near term substantial changes in our model.

Very happy with the traction we're getting with larger customers I think <unk> talked about this on in his.

Remarks earlier customers over $50000 in IRR.

Really are driving a big part of our business a big part of the growth. So we're excited about that we're excited to lean more into that.

And we'll continue to I think be successful in those kinds of deals.

Great. Thanks.

One moment for our next question.

Okay.

Our next question comes from Adam <unk> with Bank of America. Your line is open.

Hey, Thanks for taking my question I.

I guess for you Tyler is the macro deteriorated in Q2 versus Q3.

Or is it mostly mostly consistent between Q and put another way would you say that there's been like an added level of conservatism or cushion in the guide.

Between Q3 and Q4.

No I think.

In Q2 at the end of our call we said we.

We expected to see pressure and so it kind of the pressure on expansion Moshe as what we saw.

The rest of the quarter kind of came out as we expected.

And I think what we're seeing now is okay number one FX has continued to move against US right and so that's and we've taken that into account.

And then secondarily, we actually.

<unk> now seen the pressure on the expansion motion, we expect that to continue for a while and so.

I don't think its got dramatically worse than what we expected. It's just that now they're pointed members.

Got it Super helpful. Thanks, and then for you Dennis I use the word interim when describing the new CIL. So do you plan on hiring another at some point.

Thanks.

We don't we have no plans now we want to see how Patty does and I'm going to be working very closely with them over the course of the next couple of months thinking about next year.

So thats why were sticking with interim for now.

Got it okay. Thanks, guys.

And one moment for our next question.

Our next question comes from Brent Thill with Jefferies. Your line is open.

Great. Thanks, Hey, Tyler I'll, just I think kind of the.

The new being strong and expansion slowing was kind of counter to what most would think.

Kind of the new customers to slow and expansions to continue can you just explain a little more on that dynamic.

Dennis just to follow up.

<unk> served in a lot of go to market rolls when typically.

You have a change at the top it takes time for that to filter through can you just give us a sense a little more color on why you think this is.

Maybe not as severe or kind of give us a sense of just what's happening from that side.

Yes, Hey, Brian I think the new business won.

We did see increased year over year growth in new business compared to Q3 of the prior year.

And that was a positive and especially we got some good CX Wang.

In the U S and North America.

With our first half potash press service continues to be well.

We've been talking about that product for a long time and again I think it was the largest contributor to growth again in the quarter.

So it's not like it was.

Shockingly spiked up in terms of new business, but.

But in these environments. We've also proven that we are a great alternative for companies. If they are trying to move away from expensive solutions.

Or making new decisions and they can see the value in our products and the right size for that so we were pleased on how we did that.

I think on the go to market side, a couple of things. One is one of the big reasons I joined as I see this huge opportunity with where we are in having very clear product market fit across multiple very big cans and I spent the last two months, both traveling the world and talking to customers probably talked about 20 customers. It's very clear to me that.

We have an opportunity to number one get participated in bigger deals.

This fact that.

The biggest the fastest growing segment that we're going after our $50000 plus deal that's really important for us those deals tend to be in larger companies.

And those deals also tend to have the opportunity for multi product sales from day, one or for expansion. So that will entail as we press more in that direction that will entail adjustments to the teams of talent to the way we go to market I don't anticipate massive changes anytime in the near future.

We're not going after $10 million deals, we're going after sweet spot 500000, $200000 deal. So I don't think that we're going to have like a period of massive instability, if thats what youre concerned about.

More of a refinement and a focusing of the team on the deals that are going to move Neal.

Thank you.

One moment for our next question.

Our next question comes from Ryan Macwilliams with Barclays. Your line is open.

Hey, this is Jack on for Brian . Thanks for taking the question just one quick one for Dennis Congrats on your role Dan just wanted to see if we can get any more specifics on improvements you can help with and into next year and just how youre thinking about the opportunity brown broadly. Thanks.

Yes, like I said I think I think the opportunity is massive and the you think about what we're going after with our ITM product that is a massive massive market you think about what we're doing with our desk product and how customer support is evolving to a much more conversational.

Applications, we have the products that can serve a modern <unk> company when it comes to when it comes to their service operation and then you think about CRM, another massive space, where there's quite a bit of innovation.

We think theres an opportunity for us to play there so.

All of these products spaces are very interesting for us I think we can get sharper in how we are participating in deals and making sure. We're in as many deals as possible.

Our awareness among it decision makers can has room for improvement and then that directly leads to.

How were actually the swings were getting.

I think it's I think there's a lot of let's say.

Execution of adjustments that we can make to.

To take a team that is already operating quite well to the next level and that's really why I joined.

Great that's it for me thanks.

One moment for our next question again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone.

Our next question comes from pendulum bar with Jpmorgan Chase Your line is open.

Thank you congrats on the quarter.

Two questions from me one Tyler on the Opex side, it seems like a nice sequential downtick how much of that is kind of a deliberate.

On cost reduction versus <unk>.

FX savings if you can help us.

Think about that a little bit and any way to think about the.

The trajectory of the margin into 2023 at this point and the second second part is I guess billings guidance of I think I heard 22% in constant currency when I look back a year ago I think it.

It was about three points.

Benefit.

Trying to think if we defeat.

Try to adjust for that is adjusted for already renewals going to be about 25, 25%.

In terms of the guidance any way to help us there would be helpful.

Okay.

Yes, let me break down the two questions on Opex, we did really really well now I wouldn't say it was necessarily just.

Cost.

Focus.

Meaning that wasn't like we entered into the quarter.

<unk> trying to lower.

The lower costs, where we did do is we slowed down some hiring and we looked at certain areas around our sales and marketing spend in other areas.

And we're able to just try to drive some efficiencies, we're still hiring a bunch.

But we were able to do that now we did get some FX benefit from the INR side.

What was your question, but I think in general it has more to do with just having kind of control the.

The growth rates there on operating loss, we also had some nuances from quarter to quarter.

Some large larger.

A larger marketing event and our focal process in Q2 that makes the expenses higher.

The second question on billings on a constant currency I think we said, 22% for Q4 and it is also over a tougher compare because in Q4 of last year, we did have.

Some duration stuff and early renewals, but I wouldnt adjust the 22% to try to normalize for that necessarily I would just I would just use that as a consequence.

Pricing.

Number.

Got it thank you.

One moment for our next question.

Our next question comes from Brian Peterson with Raymond James Your line is open.

Hi, Thanks for taking the question. This is John on for Brian I'm, just curious on the channel partner here any updates you can give us on those efforts over the last 90 days.

Any key data points, you should watch for as we head into 2023.

Hey, John This is <unk> I'll take that question.

So just to give you a quick overview, we have over 500 partners and more than 50 countries.

So we have different <unk>.

Thanks of partners, we have solution partners, who sell our Easter last half to implement and customize it for customers we have technology partners.

Integrations between products.

We also have a startup program and we partnered with multiple institutions.

We also have affiliates, who are modeling that for us for the business. So this is in addition to.

Like the tier one partners like Amazon <unk> Facebook.

Et cetera.

Also have channel partnerships with Instagram Whatsapp and other stuff. So we continue to add.

Our partners are partners drive.

Proximately, 15% of new business.

And I think that number at the same for this quarter as well.

So we continue to add.

Our partners across all of these dimensions.

Thank you very much.

One moment for our next question.

Our next question comes from Brent in Barcelona Piper Sandler Your line is open.

Okay.

Thank you for taking my question here juggling, a few calls Tonight apologize if questions have been asked and answered but I wanted to go back to kind of competition, if I if I look at it.

Zen desk for example, their bookings and billings growth rate this quarter did slow meaningfully to about 8%.

I was wondering if youre seeing.

<unk> Zen desk, or if theres been any sort of a kind of change in the competitive environment in either.

Smaller customers international or <unk>.

Larger deals any change relative to what youre seeing them in the field would be helpful. And then I have one follow up.

Sure I'll take that Brent.

So first of all I think.

We are still continuing disease than Escondida, and we feel good about our win rates against them.

What we are seeing a lot is if it is a bake off with vendors we tend to win more.

They are an incumbent it's a little bit harder a longer conversation to kind of replace them.

But <unk> continues to be competitive space.

Some action moving on to the conversation on space, where we have also launched new.

Initiatives like we got our first chat product. So we have some good wins in North America in the third quarter, specifically against vendors. So.

It sounds like.

Yes.

Customers anecdotally I can tell you we are starting to hear some.

Conversations about customers wanting to move but we are also seeing that then disco stunning really aggressive on pricing.

In the current environment, where they are trying to continue to me.

Great and then my follow up here is really for Dennis.

Obviously, you've been able to scale several tech businesses in the past as you look at.

The fresh works opportunity here what are you most encouraged about I know, it's still early days, but is there.

A great opportunity to really accelerate the scale in the U S is it international that youre going to be focused on first just love to hear where your focus is on U S. Scaling U S is it going to be bundling is it going to be specific products any color. There and then specifically as you think about the fresh service.

Business.

As you look under the hood of that business.

Do you think that business can scale into the larger environments or what what part of that fresh service business do you see having the most success from a swim lane perspective. Thanks.

Yeah. Thanks for the question I think just taking the last part.

First I think the press service business, absolutely can scale up into very large accounts. If you look at our account list today, but just across our service and fresh step you've got some amazing names already coroner discover blue Nile Amex travel baseman Thomas.

Thomas Cook <unk>. So these are these are big sophisticated buyers and the process. We go through is is rigorous.

Every one of those deals is competitive and we're winning consistently and that's that's.

From the outside I thought if <unk> is more of a true <unk>.

<unk> I think whats been really encouraging is how much progress has already been made in these larger and larger accounts.

Which is why I think we continue to invest on the <unk>.

As we get more efficient, we're still investing in growing our force and getting more coverage. There is a lot more opportunity in the U S. I think we absolutely have to win in the U S for sure, but Europe also offers a pretty pretty meaningful opportunity over time in our home market of India is actually pretty interesting for us is in a place where we can experiment.

And try things very close to the product team.

So I think all those things are positive the other.

The thing I've been impressed with is just the strength of the product team. We have our product leaders have typically spans 15 plus years in organizations like Microsoft or salesforce or elsewhere, where they truly understand their spaces quite well and yet we get we take advantage of the fact that were most of our product development and a much lower cost center, which also.

Over time.

Should help us with overall operating efficiency. So I think we're set up really for.

For a very promising future theres, obviously, theres all kinds of macro stuff going on.

But so far it's been it's been great to get in and at the end of the Hood and.

And start getting going.

Hey, Brendan.

I'll just add on to add onto what.

Dennis was saying specifically on the first of them is spot.

Also just.

Announced for service for business teams, which basically takes.

That for modern employee experience that teams.

Teams are delivering.

By expanding that into all the other departments authentic price whether it is HR finance legal or any operations team I think it presents.

It increases.

Notable market significantly far for service as well as provides us a good expansion opportunity to go into existing customers as well and the good news. There is it's already a proven use case, where we have the autosave customers using our service internally. So now with the new capability I think you'd be able to expand mode.

Drive faster adoption of <unk> within the enterprise.

Helpful color. Thank you so much.

One moment for our next question.

Our next question comes from Rob Oliver with RW Baird. Your line is open.

Great. Thank you guys good afternoon.

That is also one for you just you had a chance as you mentioned to go out and talk with a bunch of customers.

There's a bit of a narrative evolving, particularly among enterprise software companies now around some vendor consolidation and I think it's still early to call that out in a multi tenant SaaS world but.

Some big vendors like Salesforce have called that out I'm wondering as you look at the product portfolio refresh works, which.

Again, multi product adoption moving up ever so slightly but what strikes me that there is a real opportunity there and to the extent that some of these headwinds could potentially be tier ones for that multi product sale for you guys. Just how you think about that and then I had a quick follow up for Tyler.

Thanks for the question so.

So first of all I think there is also another opportunity for US that you. Maybe you are alluding to which is that the companies are at least companies I've been talking to they all are looking to drive efficiency and cost and in some cases, they haven't been satisfied with the solutions that they've had for CRM or elsewhere.

Otherwise and.

In the time that they signed their contract, let's say three or five years ago to now our products have advanced.

Massively.

So we're now in the consideration set when those deals come up for renewal I talked to a large transportation company in Europe that recently add made a switch off of a salesforce stack and it was driven by value and the both product value and the overall total cost of ownership. When you look at things like consultants that you need just to keep.

Hill's force up and running and truly get value out of it so.

So I think thats, an opportunity for us as well.

There is a customer base that may not be satisfied with the incumbent tools.

And I think we're going to we're going to have an opportunity there when it comes to multi product. There's multiple dimensions of that there is a number of very small solutions point solutions and in particular, we're seeing them in CX.

And there our opportunity is to kind of embrace and extend into that kind of functionality you think about the chat applications and so forth, where we have a very robust chat suite now.

We need to launch.

New features that enhances the value of that product.

That is the kind of Boston and elsewhere and otherwise those are the kinds of I think applications and.

Use cases that we can chime in.

And as our product set continues to expand we continue to have an opportunity to consolidate spend within within our customers.

Great.

Super helpful color I appreciate that Dennis and then Tyler for you I know one of the things that Dennis as Todd mentioned in his comments earlier was just around some of the awareness of fresh works in.

In some accounts.

Talked about lowered digital marketing spend.

Mitchell.

Maybe could you help us understand a little bit about are you guys able to drive increased efficiencies with the digital marketing spend that you have is it about resource allocation any change is that just relevant to that kind of low rent flywheel type inbound model.

Where do you see the.

These and other risks to kind of that lower marketing spend particularly around kind of a need to raise awareness. Thank you.

Yeah, Rob I think.

<unk> digital marketing spin out I'm not sure how much awareness with drives as opposed to true.

Click through inbound.

Be aware that when we look at the sales and marketing and look at the total spend and maybe even looking now towards next year.

There is this balance of how much we want to spend our brand and in field marketing, which is actually going out and engaging with customers or potential customers versus digital which is.

Just trying to get our name out there when people are searching for things.

Is going to be a balance and we're going to continue to obviously drive that inbound motion.

<unk> continued to do efforts to optimize so that we don't have to rely on the digital spend as much.

That balance will also come with additional brand and field marketing things that we'll be investing there as well so it would be across the board.

Great. Thanks, guys I appreciate it.

Thanks, Rob one of them are for our next question.

Our next question comes from Nick Altmann with Scotiabank. Your line is open.

Great. Thanks, guys.

It seems like the messaging is sort of you guys are going after larger deals just given the SMB weakness.

I guess my question is how does that sort of change your guidance philosophy, just given larger deals maybe we're more of an upside driver in the past.

I guess put another way how do you guys make sure youre not over indexing on the large deal side of the equation, just given it's a little bit lumpier versus SMB.

Hey, Nick this is Tyler I'll take that one so number one it doesn't change our guidance philosophy at all right we're trying to.

Guide based on what we see now SMB it actually it has seasonality to it in Q4 is typically lower for F&B F&B machines still working it.

Doing well, we're not moving away from that so I wanted to be clear about that we do think that's really important and we have different products you play across different customer segments.

I think for the big deal commentary or the larger deal commentary.

He has more to do with the fact that we're already seeing traction with those customers that we have made.

Significant investments in the field over the last couple of years and we're going to continue to do that.

The commentary.

Dennis and Greg is that hey, we should be leaning into that and we should actually be doing more to optimize to go engage with those customers and when those deals and we think that we now have the products or a level of maturity that they are being received by customers and we're proving success and so that's more around what that means as opposed to over indexing to that.

Got it and then I guess just going back to.

But the channel side of the equation as you sort of lean more into mid market and enterprise.

Does that change your philosophy around the channel or even on a direct go to market side does that mean.

I'm trying to work with with new partners that are maybe more geared towards mid market and large enterprise that mean kind of shifting head count resources more hunters on the mid market and enterprise side out of the inbound.

And go to market sales force just any color around that would be very helpful. Thanks.

Hey, Nick I dig desktop so I think first of all.

This is not.

There is no significant change in strategy. Thanks, So so okay just to level set.

So we have inbound driving almost half of our business. If you take new business on outbound field sales generating approximately if you take last two quarters I would say, 25% of our new business and then the partners putting another trigger fingers.

This is the current mix if you look at the overall revenue mix between SMB and <unk>.

Mid market I think SMB is around 43%, which is 250 employees I missed.

Market share it would be as has grown.

Currently it stands at 57% now.

We will continue this trend with.

Okay is there going to be a little bit more focus on hunting.

In the mid market, yes, but that diluted we have reps, who have been hired and ramping and we will continue to go after them and push services really during the last quarter. We said hey, we want to kind of focus more because the better customer profile mortgage market.

We continue to do that on the channel side I think.

There is no significant change in strategy as of now for the book, but.

But to be very clear we are not.

Going after the Dennis worth also mentioning that ongoing up into the.

$5 million.

So it still.

Sticking to our sweet spot.

We have customers, we have enough product market fit to show that we can easily windows 800 gig to undertake kidneys.

So we wanted to focus on that.

Got it thank you.

Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone.

And I'm not showing any further questions at this time. So it's also does conclude today's presentation. You may now disconnect and have a wonderful day.

Great. Thank you everybody.

The conference will begin shortly.

Raise your hand during Q&A, you can dial star one one.

[music] okay.

Yes.

[music].

Yes.

[music].

Okay.

Yes.

[music].

Sure.

Okay.

[music].

Yes.

Sure.

Okay.

Sure.

Yes.

Okay.

[music].

Thanks.

Hum.

Yes.

Sure.

Okay.

Yes.

Okay.

[music].

Okay.

Sure.

[music].

Okay.

[music].

Thank you.

[music].

Okay.

Yes.

Okay.

Please go ahead.

Okay.

Yes.

[music].

Okay.

Thanks.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Sure.

[music].

Okay.

[music].

Yes.

Sure.

Yes.

Sure.

Yes.

[music].

Sure.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Thank you.

Sure.

[music].

Yes.

Okay.

Sure.

[music].

Okay.

Yes.

Good morning.

Okay.

[music].

Okay.

Sure.

[music].

Sure.

Yes.

[music].

Okay.

Sure.

Okay.

Yes.

[music].

Okay.

[music].

Yes.

Okay.

Sure.

Yes.

[music].

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Ladies and gentlemen, thank you for standing by and walk through the fresh <unk> third quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session when you're depressed star one on your telephone I would now like to turn the call over to your host Julie you may begin.

Thank you good afternoon, and welcome to <unk> third quarter 2022 earnings Conference call. Joining me today are <unk>, Mato Grosso freshwater chief Executive Officer, Dennis Woodside, freshwater president and Tyler Sloat Fresh works Chief Financial Officer. The primary purpose of todays call is to provide you with information regarding our.

<unk> third quarter, 2022 performance and our financial outlook for our fourth quarter and full year 2022.

Some of our discussion and responses to your questions may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

These forward looking statements are based on fresh works current expectations and estimates about its business.

Industry and the macroeconomic environment in which it operates managements beliefs and the ability to continue to operate efficiently and drive growth and certain other assumption made by the company as of the date hereof, all of which are subject to change.

These statements are subject to risks uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking statements.

<unk> assumes no obligation to update any forward looking statements in order to reflect events or circumstances that may arise.

After the date of this presentation, except as required by law.

During the course of today's call, we will refer to certain non-GAAP financial measures reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, which is available on our Investor Relations website at IR Dot <unk> Dot com I encourage you to visit our Investor Relations site to access our earnings release.

Lease peer.

Priyadi SEC reports, a replay of today's call or to learn more about fresh works and with that let me turn it over to you rich.

Thank you Joe Good afternoon, everyone and welcome to the fresh look Q3 earnings call.

We delivered a strong quarter with $128 $8 million in revenue.

This represents growth of 37% on a constant currency basis.

Our non-GAAP operating loss came in well ahead of expectations.

We adjusted our spend and a changing macro environment overall.

Overall, we continue to operate efficiently while drilling and the Ltvs.

In Q3, we added approximately 1700, new customers and saw good momentum in new business led by Chris Tovey.

This quarter the cost over 61000 customers at all.

Our powerful yet simple products.

Global consumer brands, like Hello, fresh and Blue and <unk> companies like <unk> and <unk>.

This quarter.

Added some exciting new features across all three business lines.

Specifically in <unk>, we continued to make enhancements to the press check product to help support these engaged organizationally with their customers.

Earlier this year, we added new tenants like Instagram, Google business messages and Whatsapp.

Q3, we invested in making the agent experience of managing those tenants even easier in.

An exciting New addition interest that is the ability to bring support for customer E mail into that unified agent inbox.

We have also added new auto complete responses that tons per set due to our high speed engagement solution for modern <unk>.

Yeah.

An exciting new feature in our finished this product is a pretty autopay Peter that the system automatically categorizes prioritizes and route the ticket to the right support agent group saving agent powerful of Manulife book, giving them time to focus on solving critical issue.

Together, Chris chat and <unk> improved.

Improve the agent and customer experience. An example of this is blue Nile, a leading online retailer of fine jewelry.

We'll use those freshness and Christian will result, approximately 90% of customer equity in the foot excellent.

200 agents are able to engage their customers across telephone E mail and chat tenants.

Luna also recently added <unk> to offer personalized experiences across the entire customer lifecycle.

We also enhanced our unified CRM solution by adding our features to help sales and marketing team increased productivity to win more business.

Our <unk> per se.

Diligently coding.

Businesses understand how customers use their product and who is willing to buy more.

The AI learns from customer data and behavior to deliver insights and predictions that helps companies make data driven decisions and have more light on the vision the DAP customers.

A large American extract manufacturer of more than 200000 product to breastfeed metrics debt to unify it's new business and upsell processes.

The new predictive lift coding identified buyers that are most likely to reorder and alert sellers, ensuring that they can stay on top of customer requests and others.

Unified dashboard create alignment across sales marketing and support these ultimately, helping the company deliver more value to their customers.

We also help our customers create incredible employees.

That's why we have made it easier and more secure to extend Chris' service beyond 80 Department to now support all business team.

That are already thousands of companies who use this service.

Our finance and legal fees to support that internally stakeholders.

Big data breach for example, often using for service to support the need of 4500 employees.

<unk> expanded its deployment to HR legal security and learning and development departments.

To provide employees with the same great experience when interacting with ADT.

Recently, we announced an exciting new module.

<unk> service for business team the capabilities that enable departments beyond AP to offer a modern employee experience.

What makes for service for business teams unique is the support for private Workspaces for every team.

These new workspaces with interest of it.

Power the hits, our finance legal.

Internal operations team and the ability to manage employee to equip and automate the departmental workflow.

Pete can co exist independently within a single crystal into the ability to configure manage and control access to that individual look basis.

These men are German provider of climate solutions.

With $3 4 billion euros and revenue is another customer that cemented our position to launch this product.

These men have 13000 employees spread across 74 countries and that piece of the organization and ATT user service to unify that internal team with a single service management solution.

Easy and seamless employees.

Companies of all sizes.

Realizing the benefit of expanding IP services management principles to nominated Department empowering the employee experience.

With uninterrupted service delivery.

What makes all of these product innovation possible.

As our platform fresh look Neil.

It has evolved from being a kind of internally focused shared platform services and analytics deployed across Facebook product to our customer impacting developer friendly platform that makes building apps for fisher products faster and easier.

Today more than 50% of our customers extend the utility of our products through the fresher marketplace and custom build app powered by the new platform in Q3, RP Vita brand, new SaaS applications and timely on top of the new platform and NPS survey tool to help business.

This is Ron surveys to measure customer satisfaction and delight you.

We are using it internally farmed out but this is a great example that demonstrates the power of our platform.

In Q3, we held our first Delaware stomach in Bangalore and another in San Francisco.

Of this month.

Next week, we'll be hosting a virtual event to demo all of this gives me product update from our fall product released to our customers.

To recap we.

We had a strong quarter given the changing market conditions.

Continued growth coupled with our operational efficiency is a differentiator among new public software company.

But like others in the tech sector, we are not immune to the slower economy.

While our new business activity picked up expansion you're down at companies reduced their growth forecast and his company.

On a positive note we saw good new business growth in North America, and the mid market and enterprise.

Our overall gross churn rate remains roughly the same and we even saw F&B churn stabilized in the quarter.

Anecdotally, we are hearing that Midmarket and enterprise businesses are focused on value and managing the software.

Towards the end of the year, our modern affordable solution, our milk price.

This segment of customers.

As we look ahead.

Im optimistic about our future.

I am happy to introduce our new pivoted, Dennis Worksite will come with a proven track record of helping businesses.

The broader indented.

To accelerate our growth and even stock with a focus on go to market strategy and operations.

This will enable me to focus on.

Long term vision and product strategy.

Entire management team will report to both Dennis and I as we partner together on our journey.

Now I would like to welcome Dennis to talk about why he chose to join pressure what is observed so far and the opportunity for us.

Thanks, Jay and good afternoon, everyone I am excited and honored to be here today as a member of the <unk> management team.

I spent 20 years working in technology for growth companies that are challenged the status quo and delivered amazing experiences for their customers.

<unk> Dropbox impossible foods and now frameworks.

I've always been inspired by founders Larry Page drew Houston, Pat Brown, they pushed the limits of what the rest of US think is possible and I know how to help them scale.

That's why I joined fresh works.

I believe in the company's division, we put the power of software back into People's hands with applications easy enough for everyone to use.

She has always believed that enterprise software it doesn't have to be complicated and that businesses can add powerful technology without sacrificing agility I believe in that mission.

During my first few months I have had several observations that make me excited about the opportunity ahead for <unk>.

First our customers love our products.

I traveled around the world and met with customers like Weizmann and Internet stores in Germany, <unk> in France, and Frasier's group in the UK.

It is clear that pressed works customers see an immediate value from our software and we continue to innovate fast to keep our customers happy.

Second we are set up to continue innovating at scale.

You heard <unk> talk about the differentiating features and new products, we introduced in just one quarter.

That's because we have a team of product and engineering veterans from the world's leading tech companies.

And finally, there is a huge opportunity to serve larger customers and to win more big deals.

As gene mentioned I've been focused initially on our go to market operations.

Over the last few years <unk> products have evolved to meet the needs of larger companies and I see this as a big opportunity for our growth.

We have a great team and we're already making changes to our sales organization to meet that demand.

I believe that with a few adjustments, we can make our field sales, even more efficient and effective.

Earlier today, we announced the upcoming departure of our Chief revenue Officer Jose morale is we think Jose for his contributions over the last few years towards the growth of the business.

In the interim our chief customer Officer Patty.

<unk> has taken over <unk> responsibilities.

He is acutely familiar with our customer needs and product and has decades of sales experience at Microsoft and Harman.

I am looking forward to working closely with Patty and the other go to market leaders to build a sales motion that can deliver the consistent performance that we expect.

I am bought energy vision, and believe that our value to customers our business model and our people can achieve it over.

Over the coming months.

I'm sure I'll be meeting with many of you and sharing more insights on our journey ahead.

Now.

I'll hand things over to Tyler.

Thanks, Jess welcome aboard we're excited to have you on the pressure <unk> team and we're looking forward to working with you.

Now looking at our Q3 performance, we delivered a strong quarter of financial results, beating expectations for revenue by approximately 3% and coming in more than $10 million ahead of expectations on non-GAAP operating loss.

Further highlighting our ability to drive efficient growth in our financial model.

Given the FX rate changes throughout the quarter and the year, including since our last earnings call I will spend more time today talking through constant currency comparisons to provide a better view of our business fundamentals.

I will review, our Q3 financial results provide background on key metrics.

And close with our expectations for the upcoming quarter Q4, and full year 2022.

Most of our discussion for the financial results will be around non-GAAP numbers, which exclude the impact of stock based compensation and related expenses.

Payroll taxes on employee stock transactions amortization of acquired intangibles.

And other adjustments.

Starting with the income statement revenue grew 37% adjusting for constant currency or 33% as reported to $128 8 million.

While overall macro pressures led to slower expansion activity in Q3, we.

We saw increased year over year growth for our new business bookings in the quarter.

Our diversified business mix across multiple product segments with customers ranging from SMB to mid market and enterprise continues to be durable through a tougher macroeconomic environment.

In Q3, the overall churn rate for the company remained in line with the prior quarter and has been relatively consistent over the first three quarters of the year.

Customers using more than one product continued its steady increase up 1% again to 24% in Q3 and represents approximately half of our overall business.

We saw good wins in CX with customers seeking modern solutions for conversational messaging and we're addressing the ongoing need for a unified sales and marketing solution.

<unk> customers are discovering the powerful capabilities of fresh service and extending use cases into other functions.

In Q3 fresh service continues to be the largest contributor to <unk> growth.

Turning to margins are.

Our non-GAAP gross margins increased slightly rounding up to 83% for the quarter.

This is the fifth consecutive quarter with strong non-GAAP gross margins in the 82% to 83% range. So we're pleased with these levels as our business grows.

In Q3, non-GAAP operating margins improved approximately 11 percentage points quarter over quarter to negative 2%.

Most of the improvement was driven by lower than expected costs related to head count digital marketing spend and shifting of spend into Q4.

While we are continuing to add to our fresh foods family.

Slowing the pace of hiring as we align our resources with the current market.

We also had a one type.

One time type benefit of nearly $3 million related to the reversal of accrued expenses from earlier in the year.

The revenue beat combined with a more efficient cost base led to non-GAAP operating loss of $3 1 million, which was significantly ahead of our previously given estimates.

Really pleased with our ability to invest prudently to drive efficiency.

Moving to our operating metrics.

Net dollar retention was 113% on a constant currency basis were 107% as reported as we saw increasing impacts from FX rates and lower expansion activity in the quarter.

As we mentioned in the prior call.

<unk> economic environment is resulting in lower growth projections for businesses and impacting the expansion motion.

Looking ahead to Q4, we expect constant currency net dollar retention to be 110% and assuming the current FX rates hold reported net dollar retention to be 105%.

Looking at our customer metrics.

<unk> contributing more than $5000 in IRR grew 19% to 16713 customers in the quarter and continues to represent 86% of our IRR.

Once again, a large number of customers fell below the threshold of $5000 in IRR because of FX moves. So we're also providing the constant currency figure of 23% growth year over year for this metric.

For larger customers contributing more than $50000 in the IRR. This customer count grew 36% to $1 717 and represents 43% of our era.

Adjusting for constant currency this customer cohort grew at 44%.

Lastly.

Our total customers grew to over 61600 customers with a net add of approximately 1700 customers in Q3 as our average revenue per account increased in the quarter.

Now moving to billings balance sheet and cash items.

Despite increasing FX pressures during the quarter calculated billings grew 25% to $136 9 million.

Holding currency constant over the past year calculated billings grew 31%.

Other factors impacting that growth rate include billing duration mix of positive, 2% and reserve activity of negative 1%.

Adjusting for these factors the normalized calculated billings growth was approximately 32% in Q3.

Looking ahead to Q4.

Our preliminary estimate for calculated billings growth is 22% on a constant currency basis or 16% as reported based on current FX rates as a reminder, we.

We'll have tougher year over year comparisons in Q4, as we had significant early renewal activity and duration benefit in Q4 of last year.

Turning to our balance sheet and cash items, we maintain a similar cash balance as we ended the quarter with cash and marketable securities of approximately $1 2 billion.

Free cash flow was negative $7 2 million in Q3, beating expectations by approximately $3 million.

We continue to net settle vested equity amounts and used just over $13 million under financing activities for Q3.

Once again this financing activity is excluded from fee free cash flow.

We expect to continue net settling invested equity amounts for the foreseeable future, resulting in quarterly cash cash usage of approximately $18 million at current stock price levels.

Looking out to the remainder of the year, we expect to generate positive free.

The range of $1 million to $2 million in Q4.

This translates to an estimate of negative 17% to $18 million of free cash flow for the full year, which is better than our prior estimates were.

We're pleased with our ability to manage spend and show improvements throughout the year.

We expect to maintain positive free cash flow on an annual basis in the upcoming years.

As we've said before we've built a durable and efficient financial model for the business.

We are well capitalized with no debt and have a strong balance sheet, creating financial flexibility to drive sustained growth for our business.

Turning to our Q3 share count.

We had approximately 326 million shares outstanding on a fully diluted basis as of September 32022.

The fully diluted calculation consists of 287 million shares outstanding and approximately $36 million related to Unvested <unk> and Prs use.

And nearly 3 million shares related to outstanding options.

Let me now talk about our forward looking estimates.

I will go through the numbers first and then provide background commentary afterwards.

For the fourth quarter of 2022, we expect.

Revenue to be in the range of $129 2 million to $131 2 million growing 22% to 24% year over year.

Adjusting for constant currency this reflects growth of 27% to 28% year over year.

non-GAAP loss from operations to be in the range of $10 5 million to $8 5 million.

And non-GAAP net loss per share to be in the range of <unk> to <unk> <unk>.

Assuming weighted average shares outstanding of approximately 288 5 million shares.

For the full year 2022, we expect revenue to be in the range of 494 million to $496 million growing 33% to 34% year over year.

Adjusting for constant currency this reflects growth of 36% to 37% year over year.

non-GAAP loss from operations to be in range of $30 million to $28 million.

And non-GAAP net loss per share to be in the range of 13 to 11, assuming weighted average shares outstanding of approximately $284 6 million.

These estimates are based on FX rates as of October 28, 2022.

As always we're trying to provide our best view of the business today and in a dynamic market environment.

So a few areas to call out.

First on FX.

Second on expansion as we called out earlier, the macro environment is having an impact on our expansion activity, especially for our smaller customers.

Our biggest driver expansion revenues agent addition.

With higher costs and downsizing of Workforces were seeing and hearing of customers planning for slower head count growth going forward.

Third on operating loss in addition to incorporating our significant Q3 beat on operating loss into the full year estimates, we're improving our outlook by another $1 million given our ability to effectively manage our cost base.

Plan to continue to drive efficiencies wherever possible.

We feel really good about our financial position, we have a strong balance sheet with nearly $1 2 billion in cash and equivalents.

Growing at healthy rates and have a good handle on our cost structure.

We expect to generate positive free cash flow in Q4 and the years ahead.

With that let's take your questions operator.

Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile our Q&A roster.

Our first question comes from Scott Berg with Needham Your line is open.

Hi, everyone. Congrats on a good quarter and thanks for taking my questions.

I guess ill start with a macro question, we will follow up to maybe Tyler that exact last thing that you talked about there which was.

Less feed expansions, how should we think about the magnitude of this obviously, it's been an important component of your kind of expansion strategy, but is this 10.

10% lighter from an expansion cadence on what Youre seeing or is this maybe more significant to that.

Thanks Scott.

Yes, we're not quantifying the expansion rates right now, but it is a significant part of our business.

And as you know agent.

In addition drive the majority of our expansion.

And as such you know Thats whats driving that dollar retention down and is causing.

Alright.

The growth coming down as well so it expansion is significant for our business.

As companies and are expanding they're just not adding as many agents.

Got it helpful. There.

I guess as you look at your business today and think about the success you've had on the sales and marketing side yet.

I am saying.

You need to invest at the pace that we've seen over the last year year and a half or have you maybe changed your philosophy, a little bit based on what youre seeing in the market today.

Yes, I think if you if you look at what we did in Q.

Q3, right, we were able to drive efficiencies in Q3.

Essentially every line item.

G&A R&D.

And sales and marketing came down as a percentage of revenue and there's a lot of factors.

Thinking about cost and efficiency, but also we've been hiring at a really.

Of course, we're going to we're going to look at efficiencies. We said Scott as you know we're going to produce cash from Q4, and we said on an annual basis, we plan to produce cash going forward.

As you know leverage that we see in our model that we can get.

Great. That's all I have thanks for taking my questions and congrats on the strong quarter.

Thanks, Scott on November four our next question.

Yeah.

Our next question comes from Elizabeth <unk> with Morgan Stanley . Your line is open.

Hi, Thanks for taking my question Thats, Ryan <unk> on for Elizabeth.

You mentioned a little earlier.

Okay.

I'll take that as Girish.

So I think it's a combination of both our products, especially fresh debt and for service.

Both the mature products, which are helping us win more and more into larger accounts specifically for service does not play as much into SMB, it's more mid market focused.

Ill.

That is the primary reason, but also given the changing macro companies.

Need to kind of.

Spend more cautiously looking to save costs I think the official ex promise has always been a lower total cost of ownership in a rapid time to value I think that dividends, making well with customers.

Got it that's very helpful. Thank you.

One more from me quick with them.

Yeah, Hey, Ryan I'll take that so what we did say is that churn has been relatively stable and.

We've been making improvements on churn kind of quarter over quarter.

For the last year, and a half, which we've talked about and we've been able to keep it stable when we talk about contractions or what would be a down. So theoretically that is recorded in <unk>. So we've been able to.

Seafood stability there. So it really is more on the expansion motion that is reflected in our numbers.

Okay that makes sense and very encouraging. Thank you appreciate it.

One moment for our next question.

Our next question comes from Alex Zukin with Wolfe Wolfe Research Your line is open.

Hey, guys, it's Ryan on for Alex Thanks for taking the question. So I just had one around kind of the changes to the sales motion.

With the change to <unk>. This quarter, you talked about broader changes in the sales motion that you want to implement I. Just wanted to know what can you guys do to kind of ensure that you aren't taking a step backward in your sales execution, particularly in Europe , where it wasn't issue earlier this year with all the new changes and then how long do you expect those.

Changes to take to implement until productivity and execution is back to where you want it to be.

<unk>.

Hi, Ryan its Dennis Thanks for the question.

Very happy with the traction we're getting with larger customers I think <unk> talked about this on in his <unk>.

Remarks earlier.

Customers over $50000 in IRR.

We are driving a big part of our business a big part of the growth. So we're excited about that we're excited to lean more into that.

And we'll we'll continue to I think be successful in those kinds of deals.

Great. Thanks.

One moment for our next question.

Okay.

Our next question comes from Adam <unk> with Bank of America. Your line is open.

Hey, Thanks for taking the question.

I guess for you Tyler is the macro deteriorated in Q2 versus Q3.

Or is it mostly mostly consistent between Q.

Put another way would you say that there's been like an added level of conservatism or cushion in the guide.

Between Q3 and Q4.

No I think.

In Q2 at the end of our call we said we.

We expected to see pressure and so it kind of the <unk>.

Restaurant expansion Moshe as what we saw.

The rest of the quarter kind of came out as we expected.

And I think what we're seeing now is okay number one FX has continued to move against US right and so that's and we've taken that into account.

And then secondarily, we actually.

I have now seen the pressure on the expansion motion, we expect that to continue for a while and so I don't think its got dramatically worse than what we expected. It's just that now they're point good numbers.

Got it Super helpful. Thanks, and then for you Dennis I use the word interim when describing the ECR.

You plan on hiring another at some point.

Thanks.

We don't we have no plans now we want to see how Patty does and I'm going to be working very closely with them over the course of the next couple of months thinking about next year.

So that's why we're sticking with interim for now.

Got it great. Thanks, guys.

And one moment for our next question.

Our next question comes from Brent Thill with Jefferies. Your line is open.

Great. Thanks, Hey, Tyler I'll, just I think kind of the.

The new being strong and expansion slowing was kind of counter to what most would think would you expect kind of the new customers just slow and expansions to continue can you just explain a little more on that dynamic.

Dennis just to follow up.

Have you observed in a lot of go to market rolls. When typically you have a change at the top it takes time for that to filter through can you just give us a sense a little more color on why you think this is.

Maybe not as severe or kind of give us a sense of just what's happening from that side.

Yes, Hey, Brian I think the new business won.

We did see increased year over year growth in new business compared to Q3 of the prior year.

That was a positive and especially we got some good <unk> in the U S and North America.

With our first half potash first service continues to be well.

We've been talking about that product for a long time and again I think it is the largest contributor to growth again in the quarter.

No it's not.

Not like it was.

Shockingly spiked up in terms of new business.

But in these environments. We've also proven that we are a great alternative for companies.

Or try to move away from expensive solutions.

Or you know, making new decisions and they can see the value in our products and the right size for that so we were pleased on how we did that.

I think on the go to market side, a couple of things. One is one of the big reasons I joined as I see this huge opportunity with where we are in having very clear product market fit across multiple very big cans and I spent the last two months traveling the world and talking to customers probably talked about 20 customers. It is very clear to me that.

We have an opportunity to number one get participate in bigger deals.

This fact that.

The biggest the fastest growing segment that we're going after our $50 plus deal that's really important for us those deals tend to be in larger companies.

And those deals also tend to have the opportunity for multi product sales from day, one or through expansion. So that will entail as we press more in that direction that will entail adjustments to the teams of talent to the way we go to market I don't anticipate massive changes anytime in the near future.

More of a refinement and a focusing of the team on the deals that are going to move Neal.

Thank you.

One moment for our next question.

Our next question comes from Ryan Macwilliams with Barclays. Your line is open.

Hey, this is Jack on for Brian . Thanks for taking the question just one quick one for Dennis.

Congrats on your role Dan just wanted to see if we can get any more specifics on improvements you can help with into the next year and just how youre thinking about the opportunity brown broadly thanks.

Applications, we have the products that can serve a modern EDC or b to B company. When it comes to when it comes to their service operation and then you think about CRM, another massive space, where there's quite a bit of innovation.

We think theres an opportunity for us to play there so.

All of these products spaces are very interesting for us I think we can get sharper in how we are participating in deals and making sure. We're in as many deals as possible.

Our awareness among it decision makers can has room for improvement and then that directly leads to.

How were actually the swings were getting.

I think it's I think there's a lot of let's say.

Execution, all adjustments that we can make to.

Let's take a team thats already operating quite well to the next level and that's really why I joined.

Great that's it for me thanks.

One moment for our next question again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone.

Our next question comes from pendulum bar with Jpmorgan Chase Your line is open.

Thank you congrats on the quarter.

Two questions from me one Tyler on the Opex side, it seems like a nice sequential downtick how much of that is kind of a deliberate.

On cost reduction versus <unk>.

<unk>, if you can help us.

Think about that a little bit and any way to think about that.

The trajectory of the margin into 2023 at this point and.

And the second second part is I guess billings guidance of I think I heard 22% in constant currency when I look back a year ago I think.

It was about three points.

Benefit I'm trying to think if we if we kind of.

Try to adjust for that is adjusted for already renewals going to be about 25, 25%.

In terms of the guidance any way to help us there would be helpful.

Hey, Jim.

So yes, let me break down the two questions on Opex, we did really really well now I wouldn't say it was necessarily just.

Cost.

Focus.

Meaning that wasn't like we entered into the quarter.

<unk> trying to to.

The lower costs, where we did do is we slowed down some hiring and we looked at certain areas around our sales and marketing spend in other areas.

And we're able to just try to drive some efficiencies, we're still hiring a bunch.

But we were able to do that now we did get some FX benefit from the INR side.

What was your question, but I think in general it has more to do with just having kind of controls or the like.

The growth rates there on operating loss, we also had some nuances from quarter to quarter.

Large.

A larger market and to that end our focal process in Q2 that makes the expenses higher.

The second question on billings, yet on a constant currency I think you said, 22% for Q4 and it is also over a tougher compare because in Q4 of last year, we did have.

Some duration stuff and early renewals, but I wouldnt adjust the 22% to try to normalize for that necessarily I would just I would just you guys youre conflict.

Okay.

Yes.

Got it thank you.

One moment for our next question.

Our next question comes from Brian Peterson with Raymond James Your line is open.

Hi, Thanks for taking the question. This is John on for Brian I'm, just curious on the channel partner here any updates you can give us on those efforts over the last 90 days and any key data points you should watch for as we head into 2023.

Hey, John .

I'll take that question.

So just to give you a quick overview, we have over 500 partners and more than 50 countries.

So we have different.

Types of partners, we have solution partners, who sell our Easter last half to implement and customize it for customers we have technology partners.

We do integrations between products and we also have a startup program and we partner with multiple institutions.

And we also have affiliates, who are modeling that for us inside the business.

This is in addition to.

The tier one partners like Amazon Google Facebook.

Et cetera.

We also have channel partnerships with Instagram Whatsapp.

This stuff so.

Continue to add.

Partners, our partners drive approximately 15% of new business.

And I think that number at the same for this quarter as well.

So we continue to add.

Our partners across all of these dimensions.

Thank you very much.

One moment for our next question.

Our next question comes from Britain, Barcelona Piper Sandler Your line is open.

Thank you for taking my question here.

Juggling a few calls Tonight apologize if questions have been asked and answered but I wanted to go back to kind of competition, if I if I look at zelle.

Zen desk for example, their bookings and billings growth rate this quarter did slow meaningfully to about 8%.

I was wondering if youre seeing less.

<unk> Zen desk, or if theres been any sort of change in the competitive environment in either.

While our customers international or.

The larger deals any change relative to what you are seeing them in the field would be helpful. And then I have one follow up.

Sure I think that Brent.

So first of all I think.

We are still continuing disease, and <unk> and we feel good about our win rates against them.

What we are seeing a lot its a bake off.

We tend to win more.

An incumbent.

Little bit harder and longer conversation to kind of replace them.

But <unk> continues to be competitive space that some action moving onto the conversational space, where we've also launched a new.

Initiatives like we got our first chat product. So we have some good wins in North America in the third.

Specifically against vendors so.

It sounds like.

Yes.

Customers anecdotally I can tell you we're starting to hear some.

Our conversation with our customers wanting to move but we are also seeing that then desk has done a really aggressive on pricing.

And their current enrolment, whether they are trying to kind of go to market.

Great and then my follow up here is really for Dennis.

Obviously, you've been able to scale several tech businesses in the past as you look at the.

The fresh works opportunity here what are you most encouraged about I know, it's still early days, but is there.

Business.

As you look under the hood of that business.

Do you think that business can scale into the larger environments or what what part of that fresh service business do you see having the most success from a swim lane perspective. Thanks.

Yeah. Thanks for the question I think just taking the last part.

First I think the pressure business, absolutely can scale up into very large accounts. If you look at our account list today just to cross press service impressed that you got some amazing names already coroner discover blue Nile Amex travel baseman Thomas.

Thomas Cook <unk>. So these are these are big sophisticated buyers and the process. We go through is is rigorous and every one of those deals is competitive and we're winning consistently and that's that's.

From the outside I thought at Prestwick has more of a true <unk>.

<unk> I think whats been really encouraging is how much progress has already made in these larger and larger accounts.

Which is why I think we continue to invest on the as we get more efficient we're still investing in growing our AE.

<unk> and getting more coverage there is a lot more opportunity in the U S. I think we absolutely have to win in the U S for sure, but Europe also offers a pretty pretty meaningful opportunity over time in our home market of India is actually pretty interesting for us in a place where we can experiment and try things very close to the product team.

So I think all those things are positive the other thing I have been impressed with is just the strength of the product team.

Our product leaders have typically spent 15 plus years in organizations like Microsoft or salesforce or elsewhere, where they truly understand their space, it's quite well and yet we get we take advantage of the fact that were most of our product development and a much lower cost center, which also over time.

Should help us with overall operating efficiency. So I think we're set up really for.

For a very promising future theres, obviously, theres all kinds of macro stuff going on.

So far it's been it's been great to get in and at the end of the Hood and and start getting going.

Hey, Brent.

Just to add on.

To add onto what.

Dennis was saying specifically on the free service, but we also just.

Announce for service for business teams, which basically takes.

For modern employee experience that teams.

Teams are delivering.

Expanding that into all the other departments after enterprise where that is.

Our finance legal on any operations team I think the presenter it increases.

It's a good market significantly far for service as well as provides us.

Good expansion opportunity to go into existing customers as well and the good news that is it's already a proven used cases, where we have thousands of customers using our service internally. So now that the new capability I think you'd be able to expand mode and drive faster adoption of <unk> within the enterprise.

Helpful color. Thank you so much.

One moment for our next question.

Our next question comes from Rob Oliver with RW Baird. Your line is open.

Great. Thank you guys good afternoon.

That is also one for you just you had a chance as you mentioned to go out and see you talk with a bunch of customers.

Some big vendors like Salesforce have called that out I'm wondering as you look at the product portfolio refresh works, which.

Again, multi product adoption moving up ever so slightly but what's like me that there is a real opportunity there and to the extent that.

Some of these headwinds could potentially be tier ones for that multi product sale for you guys. Just how you think about that and then I had a quick follow up for Tyler.

Yeah. Thanks for the question.

So first of all I think there is also another opportunity for us that maybe you were alluding to which is that.

<unk>.

Companies are at least companies I've been talking to they all are looking to drive efficiency and cost and in some cases, they haven't been satisfied with the solutions that they've had for CRM or elsewhere or other.

Wise and in the time that they signed their contract, let's say three or five years ago to now our products have advanced.

Massively and so we're now in the consideration set when those deals come up for renewal I talked to a large.

Transportation company in Europe that recently had made a switch off of a salesforce stack and it was driven by value and the both product value and the overall total cost of ownership. When you look at things like consultants that you need just to keep.

Sales force up and running and truly get value out of it so.

So I think thats, an opportunity for us as well.

There is a customer base that may not be satisfied with the incumbent tools.

And there our opportunity is to kind of embrace and extend into that kind of functionality you think about the chat applications and so forth, where we have a very robust chat suite now.

We need to launch.

New features that enhances the value of that product.

That is the kind of Boston and elsewhere and otherwise those are the kinds of I think applications and.

Use cases that we can shine.

And as our product set continues to expand we continue to have an opportunity to consolidate spend within within our customers.

Great.

Super helpful color I appreciate it Denison at Tyler for you I know one of the things that Dennis mentioned in his comments earlier was just around some of the awareness of fresh works in.

In some accounts.

Talked about lowered digital marketing spend.

Mitchell.

Maybe can you help us understand a little bit about are you guys able to drive increased efficiencies with the digital marketing spend that you have is it about resource allocation any change is that just relevant to that kind of low rent flywheel type inbound model.

Where do you see the opportunities in other risk taking of that lower marketing spend particularly around kind of a need to raise awareness. Thank you.

Yeah, Rob I think that visual marketing spin out I'm not sure how much awareness, which drives as opposed to true.

Click through inbound.

Be aware that when we look at the sales and marketing and look at the total spend and have you been looking now towards next year.

As with balance of how much we want to spend on brand and in field marketing, which is actually going out and engaging with customers or potential customers versus digital which is.

Trying to get our name out there when people are searching for things.

Going to be a balance.

And we're going to continue to obviously drive that inbound motion.

And continue to do efforts to optimize but we don't have to rely on the digital spend as much.

But that balance will also come with additional brand and build marketing things that we'll be investing there as well so it'll be across the board.

Great. Okay. Thanks, guys appreciate it.

Thanks, Rob one of them are for next question.

Our next question comes from Nick Altmann with Scotia Bank. Your line is open.

Great. Thanks, guys.

It seems like the messaging is sort of you guys are going after larger deals just given the SMB weakness.

I guess my question is how does that sort of change your guidance philosophy, just given larger deals maybe we're more of an upside driver in the past.

Put another way how do you guys make sure youre not over indexing on the large deal side of the equation, just given that's a little bit lumpier versus SMB.

Yeah.

Yeah, Hey, Nick this is Tyler I'll take that one so number one it doesn't change our guidance philosophy at all right. We're trying to go.

Guide based on what we see now SMB it actually it has seasonality to it in Q4 is typically lower for smbs, but the F&B machines still working it.

Well, we're not moving away from that so I wanted to be clear about that we'd be think thats really important.

We have different products, you play across different customer segments.

I think for the big deal commentary or the larger deal commentary.

He has more to do with the fact that we're already seeing traction with those customers that we have made.

Significant investments in the field over the last couple of years and we're going to continue to do that and it just I think the commentary.

Benefit in Jamaica that hey.

We should be leaning into that and we should actually be doing more to optimize to go engage with those customers and when those deals and we think that we now have the products are in levels of maturity that they are.

Received by customers that we're proving success and so that's more around what that means as opposed to over indexing to that.

Got it and then I guess just going back to.

The channel side of the equation as you sort of lean more into mid market and enterprise.

How does that change your philosophy around the channel or even on the direct go to market side does that mean.

I'm trying to work with new partners that are maybe more geared towards mid market and large enterprise that mean kind of shifting head count resources.

More hunters on the Midmarket and enterprise side out of the inbound.

And go to market sales force just any color around that would be very helpful. Thanks.

Hey, Nick I dig that Tom So I think first of all.

This is not.

There is no significant change in strategy right. So so okay just to.

Level set.

So we have inbound driving almost half of our business. If you take new business on outbound field sales generating approximately if you take last two quarters I would say, 25% off our new business and then the partners putting another trend.

Now this is the current mix if you look at the overall revenue mix between SMB and <unk>.

Mid market I think SMB is around 43%, which is 250 employees I missed.

<unk> market share it would be as has grown.

Currently it stands at 57% now.

We will continue this trend with.

Okay is there going to be a little bit more focused on hunting.

In the mid market, yes, but that diluted we have reps, who have been hired and ramping and we will continue to go after them and push those.

Really doing well last quarter, we said, hey, we want to kind of focus more because the better customer profile mortgage market. So we're going to do that on the churn, let's say they think.

Beyond that no significant.

Can change inside and you guys have now to report but.

But to be very clear we are not.

Going after the Dennis.

Dennis worth also mentioning they are not going up into the <unk>.

$5 million.

So it's still.

Sticking to our sweet spot.

We have customers, we have enough product market fit to show that we can easily when does it kick 800 gig undertale kidneys.

So we wanted to focus on that.

Got it thank you.

Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your Touchtone telephone.

And I'm not showing any further questions at this time. So it's also does conclude today's presentation. You may now disconnect and have a wonderful day.

Q3 2022 Freshworks Inc Earnings Call

Request a DemoDemo

FRSH

Freshworks

Earnings