Freshworks Announces Layoffs and Stock Buyback Amidst Q3 Results

The Chennai/US-based IT company Freshworks, a global provider of customer engagement software, has announced a global realignment that will result in the departure of approximately 660 employees(13 per cent). This decision is part of the company's efforts to optimize its operations and focus on key growth areas. Dennis Woodside, CEO & President, said in an email to employees. A majority of its employees work in India.

As per the report, it has delivered a robust third quarter, achieving 22% year-over-year revenue growth, reaching $186.6 million," said Dennis Woodside, CEO and President of Freshworks. "We also improved our operating metrics, with the margin on net cash from operating activities rising to 23% and free cash flow margin reaching 21%. Mid-market and enterprise companies continue to choose Freshworks as their go-to AI-powered service platform, empowering them to scale with exceptional customer and employee experiences.

          Freshworks Implements Global Realignment, Impacts 660 Employees

In November 2024, the company committed to a restructuring plan (the Plan) to better align its talent with its strategic priorities, and to improve operating efficiency. The move is expected to result in $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditure for separation-related payments, employee benefits and related costs.

The plan will be substantially complete by the end of the fiscal year ending December 31, 2024, says a company filing with the US Securities and Exchange Commission.

“To deliver on our strategic priorities around EX, AI and CX, we are realigning our global workforce, putting us on a path to have an even bigger impact for our customers. As a result of this, we have made the decision to reduce our headcount by 13 per cent,” he said.

“There’s simply no good time to make a decision like this that affects people’s lives and it’s my responsibility to be transparent about how and why this decision was made. I am immensely grateful to those who will be leaving for their significant contributions to Freshworks. While this is likely an unexpected way to end your time here, I hope you leave feeling proud of the impact you’ve had,” he said.

“One of the first things our Board of Directors asked me to do when I became CEO five months ago was to assess our strategy and ensure we’re focused on the most critical drivers of our business. This work resulted in our three strategic imperatives (our Employee Experience business, AI and our Customer Experience business) and gave us a clear view into where we need to simplify the way we work and operate more efficiently.

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,” the letter said.

“To add more focus on our EX, AI and CX priorities, we are realigning our global workforce, putting us on a path to have a bigger impact for our customers. We’re making these changes while our business is profitable and our AI-powered products are providing increasing customer value. We believe this will help us accelerate our growth and simplify the way we work, so that we’re running Freshworks in a way that’s efficient and scalable.”

Freshworks has outlined its process for notifying and supporting employees impacted by the recent workforce reduction. In the US and India, affected employees will receive a meeting invitation titled “Transition Discussion.” These discussions are scheduled for Wednesday in the US and Thursday in India, where departing employees will have an individual conversation with a leader from their organization. In other countries, the timeline may vary to accommodate local laws and practices.

To support impacted employees, Freshworks is offering a range of resources, including financial assistance, healthcare benefits, and career transition support. “Transitioning employees may receive severance based on their tenure, continued healthcare coverage, access to our Employee Assistance Program, career transition resources to assist with job searches, and immigration support if applicable. Our approach will be adapted to comply with local laws and customs,” stated CEO Dennis Woodside.