Freshworks Announces 13% Workforce Reduction In Strategic Restructuring

Freshworks, a Nasdaq-listed software-as-a-service (SaaS) platform, plans to reduce its workforce by 13per cent -- around 660 employees -- as part of a strategic restructuring to improve operational efficiency. The company employs over 5,000 people in multiple countries, including the US, India, Germany, France, the UK and the UAE.

It expects the restructuring to cost between $11 million and $13 million in the fourth quarter of 2024. The potential expenses include severance payments, employee benefits and other associated costs, according to a filing with the United States Securities and Exchange Commission (SEC), adding it expects the plan, including the related cash payments, to be completed by the end of the fiscal year on December 31, 2024.

On November 6, Freshworks' CEO, Dennis Woodside, who took over the role in May 2024, informed employees about the company's layoff plan. His message read, “I'm reaching out to share important news that I'd like you to hear directly from me. We've made the difficult decision to reduce our global headcount by approximately 13 per cent, impacting about 660 employees.”

Woodside said that the layoffs were part of a broader initiative to align the company's workforce with its strategic goals focusing on three key areas — “Employee Experience business, AI and our Customer Experience business.”

“We began by combining teams focused on Customer Experience (CX) products, including support, sales and marketing, and reallocating people and investments to prioritise our fastest growing Employee Experience (EX) business. These decisions were made thoughtfully and carefully to set a strong foundation for our future,” Woodside said.

He added that employee notifications will occur on different timelines across countries, with impacted staff in the US and India receiving “Transition Discussion” meeting invitations on Wednesday and Thursday, respectively, while the process in other countries may take longer due to local laws and practices.

For the third quarter ending in September, Freshworks revenue grew 22 per cent year-on-year. Woodside, in a separate statement, said, “Freshworks delivered a strong third quarter, with revenue growing 22 per cent year over year to $186.6 million, net cash provided by operating activities margin improving to 23 per cent, and free cash flow margin improving to 21 per cent.”

The company has projected Q4 revenue to range between $187.8 million and $190.8 million, a year-on-year growth of 17 per cent to 19 per cent. The company also expects to end the fiscal year with revenue of around $713.6 million to $716.6 million, which translates to a year-on-year growth of 20 per cent.

Freshworks has authorised a stock repurchase programme of up to $400 million of its Class A common stock. In a separate press release, the company said that its Board of Directors has approved the stock repurchase programme. The company may buy back shares through open market purchases, privately negotiated transactions, or other methods in compliance with the Securities Exchange Act of 1934. The timing, method, price, and quantity of any repurchases will be at Freshworks' discretion, based on factors like market conditions, stock prices, and regulatory requirements. The repurchase program may be suspended or terminated at any time, said the company.

Freshworks was founded by Girish Mathrubootham in Chennai, India. It moved abroad for listing to access more mature markets and fundraising opportunities. Mathrubootham led the company to a successful Nasdaq listing in 2021. In May 2024, he resigned from the company's day-to-day affairs, passing the baton to Dennis Woodside.