What happened
Shares of freshworks (NASDAQ: FRSH) was crushed on Friday. The software-as-a-service title ended the daily trading session down 18% due to turmoil in the broader market and weaker-than-expected guidance that arrived with the company’s fourth-quarter results.
Freshworks reported fourth-quarter results after the market closed Thursday, reporting a non-GAAP (adjusted) loss per share of $0.06 on revenue of $105.5 million. The loss for the quarter was in line with market expectations, but sales for the period actually exceeded analysts’ average estimate of $5.16 million.
Even so, the company reported mounting losses in the current financial year, and the news came in conjunction with reports of Russia’s likely invasion of Ukraine.
Image source: Getty Images.
So what
Reports suggesting that Russia has decided to go ahead with an incursion into Ukrainian territory shook the market today, and the unfolding situation played a significant role in the sale of Freshworks shares. the S&P500 and Nasdaq Compound the indices ended the day down 1.9% and 2.8%, respectively.
Freshworks managed to grow revenue 44% year-over-year in the fourth quarter, but the company’s adjusted operating loss rose to $10.7 million from $2.3 million l ‘last year. It also looks like the losses will increase significantly this year.
Management’s median forecast calls for an adjusted operating loss of $11.5 million on revenue of $108 million in the first quarter. For the full year, the company expects a median adjusted operating loss of $52.5 million on revenue of $490.75 million.
Now what
The stock has fallen about 61% since the market closed on the day of its IPO in September.
FRSH data by YCharts.
The company now has a market capitalization of around $5.1 billion and is valued at around 10.6 times expected sales for this year. Freshworks continues to grow its sales at an impressive rate, and it may have a long streak of expansion in the enterprise software space, but the current market aversion to growth-dependent software stocks suggests that its shares could see more chaotic trading in the short term.
10 stocks we like better than Freshworks Inc.
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*
They just revealed what they think are the ten best stocks investors can buy right now…and Freshworks Inc. wasn’t one of them! That’s right – they think these 10 stocks are even better buys.
View all 10 stocks
* Portfolio Advisor Returns as of January 20, 2022
Keith Noonan has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
