Why AI Stock Freshworks Trounced the Market Today

Next-generation business software developer Freshworks (NASDAQ: FRSH) was a winner with investors on Wednesday. Following its latest quarterly earnings release, market players were encouraged enough to pile into the stock, pushing it to an over 3% price gain across the trading session. So the stock was up on a generally forgettable day for equities, as the S&P 500 index could only muster an increase of under 0.2%.

A top-line boost and higher client spending

Freshworks, an eager user of artificial intelligence (AI) technology to power its solutions, booked total revenue of just over $196 million in its first quarter. That figure was 19% higher than the same period of 2024. A more impressive feat was the company's more than doubling of its non-GAAP (adjusted) net income; this came in at $46 million ($0.18 per share) against the year-ago quarter's nearly $22 million.

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With those key fundamentals, Freshworks notched convincing beats over the consensus analyst estimates. These anticipated a bit over $192 million for revenue and per-share, adjusted net income of $0.13. The company also topped its own guidance.

Another positive for Freshworks is that it's clearly getting clients to spend more on its solutions. It said the number of customers contributing over $5,000 to the company's annual recurring revenue saw a 13% year-over-year increase to 23,275.

It beat on guidance too

Like its trailing results, Freshworks's revenue guidance topped the average analyst estimates.

It proffered forecasts for both its current (second) quarter and the entirety of 2025. For the latter period, it's expecting to earn revenue of $815.3 million to $824.3 million. Collectively, pundits tracking the stock are modeling slightly over $213 million. Freshworks anticipates netting an adjusted profit of $0.56 to $0.58 per share, meanwhile.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.