Freshworks Q2 Earnings Call Highlights

Freshworks delivered a strong second quarter: Revenue rose 16% year over year to $237.4 million, while the company achieved GAAP profitability earlier than expected with $3.2 million in net income. Non-GAAP operating margin reached 24%, and Freshworks maintained its “rule of 40” performance for the eighth consecutive quarter. Employee experience and AI drove growth: EX ARR increased 23% to $567 million, while enterprise service management ARR grew 67% to more than $50 million. More than 7,000 customers paid for AI products, and Freddy AI Copilot was attached to over 70% of new deals above $30,000. Freshworks maintained an optimistic outlook: The company expects approximately 15% full-year revenue growth, $222 million to $228 million in non-GAAP operating income, and about $265 million in adjusted free cash flow. CX growth remains modest at 3%, as the company prioritizes profitability and focuses on larger customers.

Freshworks NASDAQ: FRSH reported second-quarter 2026 revenue of $237.4 million, up 16% year over year on a reported basis and 15% in constant currency, as the company highlighted continued growth in its employee experience, or EX, business and an earlier-than-expected move to GAAP profitability. Chief Executive Officer and President Dennis Woodside said Freshworks posted a 24% non-GAAP operating margin and achieved the “rule of 40” for the eighth consecutive quarter. The company recorded GAAP net income of $3.2 million, or $0.01 per share, ahead of its prior goal to reach GAAP profitability by the end of 2026. Non-GAAP earnings per share were $0.17.

“GAAP profitability is no longer just a goal. It is here,” Woodside said, adding that the company expects to sustain GAAP profitability while funding investments in EX and artificial intelligence. EX business remains Freshworks’ primary growth engine EX annual recurring revenue reached $567 million at quarter-end, increasing 23% year over year as reported and 24% on a constant-currency basis. The segment represented about 59% of total ARR. Freshworks expects EX ARR to grow in the mid-20% range and exceed $600 million by the end of 2026.

Woodside said the company is gaining traction with larger organizations seeking alternatives to legacy service-management systems. Customers generating more than $100,000 in ARR grew 25% year over year on a reported basis, or 26% in constant currency, and accounted for approximately 40% of total ARR. The company cited Seagate, which selected Freshservice after using a legacy provider for 14 years, and American Oncology Network, which deployed Freshservice for IT and business teams alongside Freddy AI Copilot. Woodside said Freshworks is benefiting from demand among “agile enterprises” with up to 20,000 employees that need enterprise capabilities without the complexity of larger platforms.

Freshworks also pointed to expanding adoption of adjacent EX products. Enterprise service management crossed $50 million in ARR, growing 67% year over year, while roughly one-fifth of new EX seats came from outside IT. About one-third of larger new EX customer wins included IT asset management products, and the company said the quarter was its strongest new-logo period to date for that business. The company’s FireHydrant incident-management business generated its first six-figure expansion deal since being acquired by Freshworks and was among the company’s three largest deals of the quarter, according to Woodside.

Freshworks said more than 7,000 customers paid for AI products, and Freddy AI Copilot was attached to over 70% of new deals above $30,000.