Freshworks delivered a strong first quarter, upped its outlook for the second quarter and year and CEO Dennis Woodside said the company is positioned well despite economic uncertainty.

The company, which offers employee and customer experience software, broke even on a first quarter earnings per share basis on revenue of $196.3 million, up 19% from a year ago. Non-GAAP earnings were 18 cents a share.

Wall Street was expecting earnings of 13 cents a share on revenue of $191.9 million.

Freshworks said it had 23,275 customers with more than $5,000 in annual recurring revenue, up 13% from a year ago. Freshworks has 73,000 customers across multiple industries.

As for the outlook, Freshworks projected second quarter revenue of $197.3 million to $200.3 million, up 13% to 15%, with non-GAAP earnings of 10 cents a share to 12 cents a share. For 2025, Freshworks is projecting revenue of $815.3 million to $824.3 million, up 13% to 14%. Non-GAAP earnings for the year were projected to be 56 cents a share to 58 cents a share.

I caught up with Woodside to talk about the quarter and Freshworks strategy. Here are the takeaways.

The market. Woodside said the company is focused on employee experience (EX), which encompasses its IT service and IT asset management businesses. In EX, Woodside said Freshworks is focused on the midmarket--think of a 5,000 employee company--and often competes with ServiceNow as well as Atlassian. "Midmarket companies need to automate their IT department, but a ServiceNow implementation is too heavy and expensive," said Woodside.

On the customer experience (CX) side, Freshworks has its customer support offerings and often competes with Zendesk in a fragmented market. "CX skews more SMB, but we're taking that upmarket too," said Woodside, who noted that a big division of Airbus and S&P Global are Freshdesk customers.

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The value proposition. Woodside said the value proposition for Freshworks is offering software that's not complicated and is half the cost of larger legacy competitors. The bet is that value proposition plays well in uncertain economies. "We haven't seen changes in customer behavior, but if we do see a recession we think we're well suited because customers are going to need to save money," said Woodside. "As contracts with legacy providers come up enterprises are going to look for alternatives. We also have the AI and automation."

Agentic AI early. Get AI returns now. Woodside said there is a lot of promise in agentic AI, but it's early. Customers are seeing real business value in AI use to deflect that first ticket and use Freddy Copilot to enhance productivity. Freshworks has 2,700 customers using its Freddy Copilot and AI features so it's still early in the AI adoption game.

Being model agnostic. Woodside said Freshworks has built a layer to swap various large language models as they develop. Its Freddy AI is really a set of more than 70 capabilities "and we don't rely on any single model for these features," said Woodside. "When we look at the future, we're trying to use the best model for the best use case. Today we have introduced 40 different models." Freshworks, which leverages Amazon Web Services as a cloud base, uses OpenAI via Microsoft Azure for conversational use cases, Google Cloud for image capabilities, Meta's Llama for other things and its own proprietary model.

Navigating an uncertain economy. Woodside previously noted that Freshworks is poised to do well in a recession, but it's worth noting that the company provided an annual outlook. Many companies are withholding guidance for 2025 or just providing a quarterly view. "We don't know what's going to happen, but we wouldn't have raised guidance if we didn't have confidence in the business and the trends we're seeing," said Woodside. "We're seeing pretty consistent demand."