SaaS major Freshworks announces to lay off over 600 employees despite profits

Alongside these developments, the company revealed plans to lay off 13 percent of its workforce, or about 660 employees, to optimize operations.

The restructuring, anticipated to complete by December 31, is expected to incur costs of $11 to $13 million in the fourth quarter, as reported by Reuters.

Boosted by demand for its AI-driven products, Freshworks surpassed earnings estimates for the third quarter, posting an adjusted profit per share of 11 cents compared to the expected 8 cents.

Revenue also grew by 22 percent to $186.6 million, exceeding analysts' forecast of $181.6 million, based on data from LSEG.

Raising its annual forecast, Freshworks now projects revenue between $713.6 million and $716.6 million, up from its previous outlook of $707 million to $713 million.

The company also adjusted its expected annual profit per share, increasing it to 38-39 cents from the earlier estimate of 32-34 cents.

For the fourth quarter, Freshworks forecasts revenue in the range of $187.8 million to $190.8 million, which aligns with market expectations, Reuters noted.

The company offers tools such as Freshservice, for IT service management, and Freshdesk, a customer support platform.

Freshworks serves over 68,000 clients, including major brands like Databricks, American Express, Nucor, and Sony, competing with industry players like Salesforce and ServiceNow.

Alongside its quarterly performance update and workforce reduction, Freshworks’ board has approved a $400 million share buyback for its outstanding Class A stock, though the company has yet to disclose the timeline for this programme.

Rival Zoho's Sridhar Vembu slams Freshworks for laying off employees

As tech companies worldwide, from giants to startups, continue implementing layoffs to meet Wall Street’s profitability demands, Indian billionaire Sridhar Vembu has voiced his belief that some firms cut jobs out of “naked greed.”

Vembu, the CEO of Indian tech major Zoho Corporation, suggests that companies operating this way should not expect loyalty from their employees, a comment seen as a possible critique of Zoho competitor Freshworks.

“A company that has $1 billion cash, which is about 1.5 times its annual revenue, and is actually still growing at a decent 20% rate and making a cash profit, laying off 12-13% of its workforce should not expect any loyalty from its employees ever. And to add insult to injury, when it can afford $400 million in a stock buyback,” Vembu posted on X, omitting any direct mention of a specific company.

Expressing empathy for situations where layoffs are necessary for a struggling or declining business, he added, “This is not that situation, this is naked greed, nothing less.”