Another Startup That Has Been Profitable Since Inception – Freshdesk

Freshdesk is a market leader in customer support in the IT and ITeS industry in India. It provides cloud based multiple-channel customer support services in more than 150 countries across the globe and competes with global leaders Zendesk and Salesforce. Freshdesk is among the very few Indian start-ups that have been profitable since inception. It is owned and operated by Freshdesk Technologies Private Limited.

Financial Performance

The company reported a revenue of INR 44.1 crores in FY 14-15 as against INR 16.4 crores in the previous fiscal, a 168% growth. Its profit grew by 286% in the same period from INR 99 lacs to INR 3.86 crores.

1The company recognizes its revenue from ‘software development and support services’ and ‘sales and marketing support services’ rendered to its Holding Company Freshdesk Inc. based out of San Francisco.

The major expense for the company was the Employee expense which stood at INR 28.5 crores, 75% of total expenses. Surprisingly, the business promotion expense stood at INR 14 lacs, only 0.4% of the expenses. The company had spent only INR 1 lac on the same in the previous fiscal.


The company offers a ticket management system with additional features under different plans. It operates through a freemium model, wherein the basic ticket management features are offered free of cost ‘forever’ and additional premium is charged for proprietary features like multi-channel support, language, multi-product support, customizations, etc. Other offerings include internal IT helpdesk Freshservice and Mobihelp for in-app support for mobile apps.

Growth Story

Freshdesk was founded in December, 2010. It was founded by Girish Mathrubootham and Shanmugam Krishnasamy.

The company started its commercial operations in FY 11-12, and became a wholly owned subsidiary of Freshdesk Inc. It reported a turnover of INR 1.5 crores that fiscal. The growth trajectory for the company has been so high in the past 4 years that as per the company’s claims more than 50,000 businesses and organizations are using its platform. Its clientele includes 3M, Cisco, Petronas, Honda, Sony, UNICEF among others. The company currently has a workforce of more than 500 employees and offices in San Francisco, Chennai, London and Sydney.

The company has received total funds of INR 50 crores infused by its holding company Freshdesk Inc. The last funding was done in October 2015 for INR 32.3 crores.

According to CB Insights, a venture capital database, Freshdesk is on track to achieve a billion dollar valuation and becoming a Unicorn. With multiple acquisitions in 2015 including social recommendation app Frilp, user engagement platform Konotor and video chat solution 1 Click, it has diversified and expanded its offering to email, chat, phone, mobile apps, websites, forums and social media channels. Zendesk acknowledged this Chennai based startup among its 3 biggest competitors in 2014.

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  1. 1

    I don’t think the numbers in this article are correct. I don’t have any inside information about Freshdesk, just some simple maths do not tally. I’m not sure about few things like how the company’s financial structure is organised, the relationship between the US and Indian operations in financial terms, whether the numbers used in this article are only representing Indian revenue.

    Few points I picked up:

    “business promotion expense stood at INR 14 lacs”, this is impossible. If you hire one person to look after your business promotion activities that will eat this number easily, in addition you actual business promotion expenses like PPC ads, Social Media sponsors, Events, etc will all be way too high.

    “profit grew by 286% in the same period from INR 99 lacs to INR 3.86 crores”. INR 4 crores profit is approximately $600k, how can a company with 500+ employee, $90 million in funding, on track to become a unicorn justify this?

    • 2

      Good points. I think this article assumes that the Indian entity is the primary entity. Due to Transfer Pricing norms, I believe, an entity which performs services for a foreign owning entity will have to show certain amount of margins, and thus the profitability. I believe all the marketing and advertising expenses would have been booked by the US entity as relevant. The INR 14lacs may be related to some local India centric advertising.

      Also, the revenue number will likely be much higher if you look at the US entity.

    • 3

      Good observations Saravana. I am putting here some explanation to the inconsistencies you have observed. First, the article is on the Indian entity only and doesn’t represent numbers of the US entity or FreshDesk global. So, the whole scale appears small. Second, expenses of the personnel involved in business promotion would be covered in Employee expenses and not in business promotion expenses. However, still the scale of expenses is quite low and could hardly be believed to be real numbers. I believe that’s because (as pointed by Ravi also), major marketing and advertising expenses are incurred by US entity directly in India without routing through Indian entity. Third, as for the scale of the revenue to justify $90 million, I really don’t have answers. Many startups with negligible revenues are being funded with millions of dollars. I believe, the VCs are looking at long term performance.

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