Freshworks, a Nasdaq-listed software company, is cutting 13% of its workforce, which means about 660 jobs will be affected worldwide. This decision is part of the company’s efforts to simplify and improve operations which currently employs over 5000 people. The layoffs will impact employees in the US, India among other locations where Freshworks operates.

In addition, Freshworks announced that its board of directors has approved a $400 million share buyback program, though they have not yet specified when this will take place.

In a letter, CEO Dennis Woodside explained that in November 2024, the company began a restructuring plan to better match its workforce with its key goals and improve efficiency. As part of this plan, Freshworks expects to reduce its workforce by 13%, which will lead to an estimated cost of $11 million to $13 million in the fourth quarter of 2024. Dennis, in the letter stated, these costs will mainly cover severance payments, employee benefits, and related expenses.

The company plans to complete the restructuring by the end of the fiscal year on December 31, 2024.

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Businesses are increasingly using AI tools to digitalize their operations, which is driving higher demand for companies like Freshworks. Freshworks offers products like Freshservice, an IT service management tool that helps businesses manage employee onboarding and tasks, and Freshdesk, a customer service platform designed to quickly solve customer issues.

Freshworks serves over 68,000 customers, including big names like Databricks, American Express, Nucor, and Sony. It competes with companies like Salesforce and ServiceNow.

The company now expects its annual revenue to reach between $713.6 million and $716.6 million, up from the earlier forecast of $707 million to $713 million. It has also raised its forecast for annual adjusted profit per share to between 38 cents and 39 cents, an increase from the previous range of 32 cents to 34 cents.

For the third quarter, Freshworks reported a 22% revenue growth, reaching $186.6 million, which exceeded analysts’ expectations of $181.6 million. The company also posted an adjusted profit per share of 11 cents, surpassing estimates of 8 cents.

Looking ahead, Freshworks expects fourth-quarter revenue to be between $187.8 million and $190.8 million, with the midpoint of the range in line with analyst estimates.

(With PTI Inputs)