Shares of Freshworks Inc. (FRSH) surged over 17% on Tuesday, propelled by the software company's impressive third-quarter performance and raised financial guidance for the full year 2024. The stock rally was driven by robust demand for Freshworks' AI-driven products that help businesses streamline IT services and enhance customer support.

For the quarter ended September 30, Freshworks reported a 22% year-over-year increase in revenue to $186.6 million, exceeding analysts' estimates of $181.6 million. The company's adjusted earnings per share of $0.11 also surpassed expectations of $0.08, reflecting strong operational efficiency.

Encouraged by the strong momentum, Freshworks raised its full-year 2024 revenue guidance to a range of $713.6 million to $716.6 million, up from its previous forecast of $707 million to $713 million. The company also lifted its annual adjusted profit per share outlook to 38 cents to 39 cents, higher than the prior guidance of 32 cents to 34 cents.

Freshworks attributed the impressive performance to growing adoption of its AI-driven solutions like Freshservice for IT service management (ITSM) and Freshdesk for customer service. The company's employee experience (EX) business, which includes ITSM and enterprise service management (ESM), continued to be the primary growth driver, with over 40% year-over-year growth.

Additionally, Freshworks announced a $400 million share buyback program, signaling confidence in its long-term growth prospects and commitment to delivering shareholder value. The company's robust balance sheet, with over $1 billion in cash, provides flexibility for further investments and potential acquisitions.