What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-23 compared with 2022-02-23 · 53 added, 49 removed, 196 unchanged (34% of the section changed)

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We started with Freshdesk, our customer experience (CX) product, and later expanded our offering to include Freshservice, our IT service management (ITSM) product.

and more recently, Freshsales and Freshmarketer, which are our sales force and marketing automation solutions.

Next, we introduced Freshsales and Freshmarketer, our sales force and marketing automation solutions, and Freshchat, our messaging/chat product offering.

Currently, more than 63,400 businesses use our software to delight their customers and employees.

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As of December 31, 2022, over 50% of our annual recurring revenue (ARR) was from customers with more than 250 employees.

We provide products across multiple massive markets in order to address the needs of businesses of all sizes that need to digitally transform to delight their customers and employees.

We provide products across multiple markets in order to address the needs of businesses of all sizes that need to digitally transform to delight their customers and employees.

Our business has grown rapidly in recent periods as our customer base and operations have scaled.

Our total revenue was $498.0 million, $371.0 million and $249.7 million in the years ended December 31, 2022, 2021 and 2020, respectively, representing year-over-year growth rates of 34% and 49%, respectively.

Our Market Opportunity

Digital transformation has driven companies to evaluate how and where they invest in technology solutions to better engage with customers and employees.

We believe that companies around the world, regardless of size, need better software to better manage customer and employee relationships.

We define our total addressable market by utilizing industry research firms and their market estimates.

Based on industry research from International Data Corporation (IDC), we believe we have a large addressable market of approximately $120 billion.

As defined by IDC, we offer products that provide powerful functionality addressing select markets within Customer Relationship Management (CRM)—including Customer Service, Contact Center, Salesforce Productivity and Management, and Marketing Campaign Management;

and System and Service Management (SSM)—including IT Service Management, IT Operations Management and IT Automation and Configuration Management.

According to IDC, by 2025, the markets we address within CRM will represent a $76 billion opportunity and the SSM market will represent a $44 billion opportunity.

Our Business Model

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We offer our products under both free and paid subscription plans, further reducing friction to adoption and accelerating our go-to-market motion.

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We focus our go-to-market motion on businesses based on their size:

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We rely on efficient search marketing and word of mouth to encourage individual users or small teams within an organization to discover, try, and purchase our products.

We drive potential customers to our website as the primary channel to learn about our solutions and we offer 21-day free trials of our premium tier products, giving potential customers flexibility to try before they buy.

We drive potential customers to our website as the

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primary channel to learn about our solutions and we offer 21-day free trials of our products, giving potential customers flexibility to try before they buy.

• Outbound motion :

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Our growing partner ecosystem enriches our offerings, scales our geographic coverage, and helps us reach a broader audience than we would be able to reach on our own, thus amplifying our go-to-market investments.

Our partner ecosystem consists of channel partners, ISV partners and marketplace partners, including developers.

Our partner ecosystem consists of channel partners, independent software vendors (ISV) partners and marketplace partners, including developers.

Once a business has purchased a subscription to one of our products, we activate our customer success programs that are aligned with the size and scale of each customer and are designed to ensure businesses are getting the most out of their subscription.

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These product offerings enable organizations to acquire, engage, and better serve their customers and employees.

For customer facing teams, we offer our CX family of products, Freshdesk, including Freshdesk Support Desk, Freshdesk Omnichannel Suite, Freshdesk Messaging, Freshdesk Contact Center, and Freshdesk Customer Success.

For customer facing teams, we offer our CX family of products, including Freshchat, Freshdesk Support Desk, Freshdesk Omnichannel Suite, Freshdesk Contact Center, and Freshdesk Customer Success.

These products allow businesses to delight their customers across touchpoints, streamline customer conversations, and automate repetitive tasks.

For employee facing teams, our ITSM product, Freshservice, provides both the intelligence and automation businesses need to give employees the “consumer” like experience they now expect.

We also offer additional products, including HR Management.

We also offer additional products, including management of HR and non-IT departments.

These products and capabilities are relatively nascent, but we believe they provide evidence of our continued focus on innovation and will be growth opportunities for Freshworks in the future.

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Businesses can use Neo—which provides a low-code development and a hassle-free deployment environment—to extend and integrate Freshworks into their existing solutions and perform advanced analytics to gain insights that help them run their businesses more efficiently.

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Freshworks Products Overview

Customer Experience Product Offerings

The main product of our CX offerings is Freshdesk Support Desk, which businesses use to interact with their customers and respond to customer service requests.

Customer Relationship Management (CRM) Product Offerings

Freshworks has a unified CRM platform that encompasses Conversational Support, Sales and Marketing.

Customer Experience (CX) Product Offerings

The main product line of our CX offerings is Freshdesk.

It is a multi-product offering that includes all capabilities that customers expect in an "omni-channel" offering, including:

• Freshdesk Support Desk .

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Freshdesk Support Desk also has native technology that scales with the customer, including multilingual support capabilities and prescriptive analytics that support better insights and business decisions.

We also offer additional products in the CX space to address specific communication channels and use cases.

• Freshdesk Messaging.

Freshdesk Messaging provides agents with a modern conversational user interface to proactively engage with their customers across web, mobile, and social messaging applications.

Our Freshdesk Messaging bot technology allows businesses to provide self service to customers by automating commonly performed transactions and providing answers to frequently asked questions.

• Freshdesk Contact Center.

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• Freshdesk Omnichannel Suite.

Freshdesk Omnichannel Suite, an integrated suite of Freshdesk Support Desk, Freshdesk Messaging, and Freshdesk Contact Center solutions, delivers a single, unified customer experience that moves with the customer across multiple support channels.

Freshdesk Omnichannel Suite, an integrated suite of Freshdesk Support Desk, Freshchat, and Freshdesk Contact Center solutions, delivers a single, unified customer experience that moves with the customer across multiple support channels.

Customer experience agents that use Freshdesk Omnichannel Suite are able to engage and track customers across digital and traditional channels to provide a superior customer experience to delight customers.

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Freshdesk Customer Success helps customer success managers at B2B subscription companies proactively manage their customers to increase customer retention and delight.

IT Service Management Product Offerings

The main product of our ITSM offering is Freshservice, which helps IT organizations ensure the allocation and availability of technology throughout the company.

Freshservice capabilities increase employee productivity and job satisfaction so that each employee can best contribute to desired business outcomes.

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Freshservice enables organizations to use its AI-powered service management capabilities to streamline IT service delivery, including unified incident management for holistic handling of incidents, knowledge management and change management, Freshservice supports employee productivity by enabling internal teams to onboard new employees into an organization quickly and with Freshservice's multi-channel approach for self-service, employees are able to interact with service desks across departments using their channel of choice.

Freshservice also offers various efficiency capabilities such as asset management tools for the efficient utilization of assets, integrated project management for collaboration and efficiency across an organization, integrated alert management for timely resolution of service-impacting incidents, powerful dashboards and reporting functionality for greater insights to improve service delivery and virtual agent capabilities that gives employees the option to use self-service with chatbots to rapidly resolve employee service requests.

Sales & Marketing Product Offerings

The products for our Sales & Marketing offering are Freshsales, which businesses use for sales force automation, and Freshmarketer, which businesses use for marketing automation.

Messaging/Chat Product Offerings

Freshchat provides agents with a modern conversational user interface to proactively engage with their customers across web, mobile, and social messaging applications.

Our Freshchat bot technology allows businesses to provide self service to customers by automating commonly performed transactions and providing answers to frequently asked questions.

Freshchat is also commonly included as part of the complete CRM and CX offerings noted above.

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Sales and Marketing Product Offerings

The products for our Sales and Marketing offering are Freshsales, which businesses use for sales force automation, and Freshmarketer, which businesses use for marketing automation.

We also offer Freshsales Suite that includes the best of sales force and marketing automation with a unified customer record so businesses can better market and sell to each customer.

• Freshsales .

Freshsales enables increased seller productivity by providing a multi-tiered approach to automating sales workflow and processes (including emails, telephony, appointments tasks and other information) all within a salesperson’s personalized activity dashboard.

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Freshsales Suite includes a unified customer record for better engagement across each customer touchpoint.

IT Service Management (ITSM) Product Offerings

The main product of our ITSM offering is Freshservice, which helps IT organizations ensure the allocation and availability of technology throughout the company.

Freshservice capabilities increase employee productivity and job satisfaction so that each employee can best contribute to desired business outcomes.

Freshservice is an all-in-one, intuitive service management solution that integrates several traditionally disparate technologies, such as IT Service Management, IT Operations Management, IT Asset Management, Project & Portfolio Management, and Enterprise Service Management, into a single unified solution.

• Freshservice enables organizations to use its AI-powered service management capabilities to streamline IT service delivery, including unified incident management for holistic handling of incidents, knowledge management and change management.

Freshservice supports employee productivity by enabling internal teams to onboard new employees into an organization quickly and with Freshservice's multi-channel approach for self-service, employees are able to interact with service desks across departments using their channel of choice.

Recent additions are service-aware IT Operations capabilities, that automates the processing of large amounts of machine-based system monitoring data and automating response and resolution to service disruptions.

• Freshservice for Business Teams is a new offering introduced in late 2022 that enables business teams outside of IT to benefit from service management and workflow automation.

Non-IT departments such as HR, Finance, Facilities, and Legal, all grapple with a high volume of employee requests that can be easily managed through service management principles.

Freshservice for Business Teams enables admins in each non-IT department to manage those requests through their own interface that is tailored for the needs of their individual department.

Additional Products

Freshteam is our HR Management solution that allows businesses to manage the entire employee lifecycle, including recruiting, employee onboarding, and other HR workflows.

We also periodically experiment with offering free tools which, if they gain traction, will get integrated into one of our main products.

For example, we introduced Freshping, which gives businesses the capabilities to monitor their website’s availability and get multichannel alerts if their website goes down, and Freshstatus, which allows businesses to create a custom branded website status page for internal or external viewing to communicate website uptime and availability.

Most recently, we introduced Freshsurvey, a free tool built entirely on the Neo platform that makes it easy to measure NPS and other satisfaction metrics directly within Freshworks products.

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Our Platform—Freshworks Neo

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Key components of our Neo platform include a developer platform, enterprise services, foundational services, and the Freshworks Marketplace:

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• Our developer platform that enables businesses and developer partners to build, deploy and run feature-rich apps using product APIs, webhooks, and the Freshworks low code serverless application stack.

• Our developer platform enables businesses and developer partners to build, deploy and run feature-rich apps using product APIs, webhooks, and the Freshworks low code serverless application stack.

The platform enables businesses to extend the Freshworks products to serve their specific needs and integrate easily into their existing applications and, in turn, daily workflows.

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The ecosystem of apps and integrations easily extends, enhances, and customizes the capabilities of Freshworks products.

Users of any Freshworks product can install from over 1,100 free and paid applications across a wide range of categories, including agent productivity, e-commerce, bots, Sales & Marketing, reporting and analytics.

Freshworks products are cloud-native SaaS systems that are based on modern, proven technologies—Ruby on Rails, Java, and MySQL.

Leveraging these and other open source technologies, our systems are built to operate as independent ‘pods’ of compute, storage, and database infrastructure.

Our products are hosted in AWS regions in the US, EU, India, and Australia.

Our products are hosted in AWS regions in the United States, EU, India, and Australia.

In addition to their ease of use and functionality, the key characteristics of Freshworks products are:

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Our products are monitored for performance and anomalies 24x7 by a Network Operations Center to provide for system availability and prevent abuse.

We are ISO 27001 certified and SOC 2 attested.

Our security posture is maintained through our internal Omniguard framework of effective controls encompassing product development, application security, production access and data security.

Customer data is encrypted both at rest and in transit.

We are ISO 27001 certified and SOC 2 Type 2 certified.

Our cybersecurity program is based on the concept of defense-in-depth and focuses on securing data at every layer.

Our security posture is maintained by utilizing both enterprise best-of-breed technologies and customized open-source solutions to identify, detect, and prevent cybersecurity threats, as well as 24x7 monitoring for malicious activity.

It encompasses product security, security architecture and engineering, cloud security, penetration testing, third-party risk management and customer support.

Our production network and systems are accessible only to authorized Freshworks personnel.

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Our governance process is geared to identify and implement infrastructure and production architecture optimizations, and effectively utilize the capabilities of our technology and cloud vendors.

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Research and Development

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We have a research and development presence in both the United States and India, which we believe is a strategic advantage for us, allowing us to efficiently invest more in increasing our product capabilities.

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Sales and Marketing

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We layer in both an outbound sales and marketing motion, as well as a partner-led sales distribution strategy to increase success across the breadth of our market opportunity.

We have continually increased investments in our sales and marketing efforts globally.

We have continually increased investments in our outbound sales and marketing efforts globally.

Our sales teams are organized by customer size, targeting SMBs with a highly efficient, cost-effective sales organization based in Chennai, in region sales teams focused on our larger customers, and partner-selling teams supporting our partners in other geographies.

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A significant number of companies have developed or are developing products and services that currently, or in the future may, compete with some or all of our offerings.

Many of these services do not offer complete solutions—often they provide a feature comparable to a component of our platform (e.g., only customer experience management, only IT service management, only Sales & Marketing).

Within CX, we primarily face competition from CX suites, such as Salesforce, Zendesk, and Zoho, legacy vendors, such as Oracle and SAP, and pure-play vendors.

Within ITSM, we primarily face competition from traditional vendors, such as ServiceNow, BMC, Ivanti/Cherwell, and modern pure-play vendors, such as Atlassian.

Within Sales & Marketing, we primarily face competition from full-featured vendors, such as Salesforce, HubSpot, and Microsoft Dynamics, legacy vendors, such as Oracle, SAP, and Sage, and pure-play vendors.

Within Sales and Marketing, we primarily face competition from full-featured vendors, such as Salesforce, HubSpot, and Microsoft Dynamics, legacy vendors, such as Oracle, SAP, and Sage, and pure-play vendors.

We believe we compete favorably based on the following competitive factors:

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• product-led go-to-market motion;

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• fast to go-live;

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The costs of complying with these laws and regulations are high and likely to increase in the future.

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Further, the impact of these laws and regulations may disproportionately affect our business in comparison to our competitors that have greater resources.

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We rely on a combination of patents, trademarks, copyrights, trade secrets as well as contractual provisions and restrictions to establish and protect our proprietary rights.

As of December 31, 2021, we had eight issued U.S.

patents that expire between 2037 and 2038, and ten pending patent applications.

As of December 31, 2022, we had twelve issued U.S.

patents that expire between 2037 and 2040, and nine pending patent applications.

While we believe our patents and patent applications in the aggregate are important to our competitive position, no single patent or patent application is material to us as a whole.

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We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective.

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Our Culture and Employees

As of December 31, 2021, our human capital resources were comprised of approximately 4,600 employees in offices in India, the United States, Europe, and Australia.

As of December 31, 2022, our human capital resources were comprised of approximately 5,400 employees in offices in North America, Europe, and Asia-Pacific.

The majority of our workforce, approximately 4,580 employees, is based in India, where most of engineering, product design, sales and marketing, customer support, and general and administrative personnel are located.

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The Freshworks Culture Code is not simply words on a page—rather it is both a statement of what we are today and what we aspire to be as we continue to grow.

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Employee programs are also designed to reflect our Freshworks’ Culture Code.

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Freshworks Women 360 is our employee resource group focused on career growth, mentorship, and professional development for women at Freshworks.

Additionally, we have publicly joined Pledge for Equality, stating our commitment that 40% of the Freshworks global workforce will be women within the next two years.

Additionally, we have publicly joined Pledge for Equality, stating our commitment that 40% of the Freshworks global workforce will be women.

Women represented approximately 35% of our global workforce as of December 31, 2022.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business