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Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5:00 p.m. ET Vice President of Investor Relations - Kate Scolnick Chief Executive Officer and President - Dennis Woodside Chief Operating Officer and Chief Financial Officer - Tyler Sloat Need a quote from a Motley Fool analyst? Email [email protected] Operator: Hello everyone, thank you for joining us and welcome to Freshworks Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Kate Scolnick, VP of Investor Relations. Kate, please go ahead. Kate Scolnick: Thank you. Good afternoon, and welcome to Freshworks Second Quarter 2026 Earnings Conference Call. Joining me today are Dennis Woodside, Freshworks' Chief Executive Officer and President; and Tyler Sloat, Freshworks' Chief Operating Officer and Chief Financial Officer. The primary purpose of today's call is to provide you with the information regarding our second quarter 2026 performance and our financial outlook for our third quarter and full year 2026. Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our management's beliefs about our business and industry, including our financial expectations and estimates, uncertainties in the macroconomic environment in which we operate and market volatility, and certain other assumptions made by the company, all of which are subject to change. These statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. Such risks include, but are not limited to, our ability to sustain growth, to innovate, to reach our long-term revenue goals to meet customer demand and to control costs and improve operating efficiency. For a discussion of additional material risks and other important factors that could affect our results, please refer to today's earnings release, our most recently filed Form 10-K, and other periodic filings with the SEC. Freshworks assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this call, except as required by law. During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures for historical periods are included in our earnings release, which is available on our Investor Relations website at ir.freshworks.com. I encourage you to visit our Investor Relations site to access our earnings release, supplemental earnings slides, periodic SEC reports and a replay of today's call to learn more about Freshworks. I will now turn the call over to Dennis. Please go ahead. Dennis Woodside: Good afternoon, everyone, and thank you for joining us. Freshworks is the AI-powered unified service operations platform for the modern agile enterprise. In Q2, we delivered another quarter of strong growth and profitability. Revenue was $237.4 million, up 16% year-over-year. Our non-GAAP operating margin was 24%. We have now achieved Rule of 40 for 8 straight quarters. We are growing our business with discipline quarter after quarter. In Q2, we also achieved a meaningful financial milestone. We reported positive GAAP net income ahead of our previously given expectations. GAAP profitability is no longer just a goal. It is here, and it is funding our investments in EX and AI. And we expect to sustain our GAAP profitability. At our investor event during Refresh in May, we laid out 5 key messages about the durability of our business. Before I get into the quarter, I want to remind everybody of those messages. First, we are an EX first company. When Freshworks went public, 35% of our total ARR came from our employee experience business. By year-end 2026, we expect EX ARR will exceed 60%. Now the market opportunity in EX is significant. The total addressable market we are pursuing spans ITSM, ITAM, ITOM and ESM and is roughly $45 billion, growing 13% a year. We are focused on businesses with up to 20,000 employees, which represent about 60% of that overall total addressable market. It's large, fragmented and no single player in this segment holds more than a 20% share. That leaves plenty of room for Freshworks to win. Second, we are a category leader with agile enterprises and in the mid-market. Freshservice has over 20,000 customers globally with EX ARR up 5x from where we started at the beginning of 2021 just 5 years ago. Freshservice serves companies that carry the complexity of an enterprise but require the speed and agility of a modern platform. Recently, Gartner named Freshworks a leader in the 2026 Magic Quadrant for IT service management platforms. We feel our positioning as a leader by Gartner highlights a clear shift in the market. We're focused on giving agile enterprises the depth and scale they need alongside domain-specific AI so that they can move at the speed of their business while staying firmly in control. Third, AI is a tailwind, enabling growth in our business. Over 7,000 customers are paying for an AI SKU. Our Copilot attach rate on larger deals exceeds 70%, our products allow customers to adapt to an agentic world quickly and achieve measurable IT efficiencies faster. Fourth, we are profitable and scaling. We're demonstrating operating leverage and purposefully concentrating our investment to expand our EX business. And our fifth key message, we are committed to capital efficiency and prudent capital management. Tyler will cover this in more detail as we bring together how Q2 delivered on all 5 of these key objectives. Now let's look at the results from the quarter, starting with EX. Our EX business demonstrated continued growth and large deal traction. EX ARR grew 24% on a constant currency basis, ending the quarter at $567 million, and representing approximately 59% of total ARR. Why are we able to consistently grow EX? Two reasons. First, large customers are actively choosing Freshworks to displace incumbents that no longer serve them. Take Seagate, a global leader in hard drives with 30,000 employees. After 14 years with a legacy provider, they struggled to extract value from AI, were unable to adapt workflows as the business evolves, and were paying for dedicated specialists just to manage the complex system. They evaluated the market, they chose Freshservice and were live in 3 months, that speed to value is what Freshworks delivers. Another example is American Oncology Network, a nationwide cancer care network supporting over 140 clinic locations. They implemented Freshservice for IT, Freshservice for business teams and Freddy AI Copilot in under 30 days. Today, their EX platform has expanded to 7 business departments beyond IT, and it takes just 1 administrator less than 2 hours per week to manage the entire environment. That upmarket momentum shows in our numbers. Customers contributing more than $100,000 in ARR, grew 25% year-over-year and now represent roughly 40% of total ARR. We believe that's the clearest evidence our enterprise motion is working and it's accelerating, not slowing down. Second, we are expanding our right to win by broadening our EX platform. Freshservice ITAM makes infrastructure visible and actionable giving IT teams the context they need for unified service operations. Our offering is powered by Device42, a company we acquired a little over 2 years ago. And today, we offer both on-prem and cloud native advanced ITAM products. About 1/3 of large new EX lands now include ITAM. And in Q2, we had the strongest new logo quarter for this business yet. We are actively serving new Freshservice ITAM cloud customers on our platform, such as DriveTime and Radio France. Our enterprise service management crossed $50 million in ARR this quarter growing 67% year-over-year. ESM continues to be a major long-term growth vector for Freshworks as 1/5 of new EX seats are coming from outside IT. Our investment in fire hydrant showed results this quarter. FireHydrant generated its first 6-figure expansion deal since joining Freshworks and was 1 of our top 3 largest deals of the quarter. This customer is a global cybersecurity leader that chose to consolidate their alerting and incident management on to FireHydrant. Stepping back, Freshworks EX business is in the strongest position in the company's history. We are winning against incumbent and legacy providers expanding our customer base with new platform offerings, growing deal sizes and strengthening our market leadership. Now let's talk about how we are innovating with AI. Freddy AI continues to be embedded throughout our platform, delivering real value for customers while building towards the long-term monetization opportunity. At Refresh, we launched 2 new AI products for Freshservice. Freddy AI agent studio, a no-code environment for rapidly building domain-specific AI agents, and MCP Gateway, which connects Freshservice intelligence to AI tools customers already use, including Claude and Microsoft's Copilot. Despite being available for a short time, we have hundreds of customers using both products in our early access program today. The productivity gains our customers are experiencing with AI are substantial and real. Agents using Freddy AI Copilot handle 50% more tickets. That means they are 50% more productive. That's huge for customers. Freddy AI Agent deflection rates averaged 50% and reach as high as 80% for mature deployments. With Freddy AI, customers are changing the economics of how they run service operations. And we are monetizing AI, Copilot attach rate for new deals above $30,000 exceeded 70%. Eligible EX customers paying for Copilot increased to 22% of our installed base in the quarter. And EX customers with AI continue to carry higher NDR well above total company NDR. iQor demonstrates what Freddy AI can do at enterprise scale, a global BPO with more than 40,000 employees, iQor had a mandate to modernize and automate. They replaced a legacy on-premise system with Freshservice and Freddy AI, now they have an agentic AI solution that is fully automated 35% of their IT service delivery and cut monthly ticket volume by 39%. Turning to the results and highlights of our CX business in Q2. We're seeing steady ARR growth and significant progress on our platform migration. CX ARR grew 4% on a constant currency basis, ending the quarter at $400 million. As of Q2, over 90% of Freshdesk customers have migrated to the new platform. Freshdesk Omni is delivering measurable value for our mid-market customers. They are reporting real efficiency gains, including up to 97% first contact resolution, 60% higher agent productivity and 95% CSAT. These customers are benefiting from an AI-ready platform that provides the unified context needed to deliver better AI outcomes. In Q2, CX AI agent sessions and conversations on Freshdesk Omni were both up 60% quarter-over-quarter and more than fivefold year-over-year. Take Fleet Claims, a U.K.-based motor fleet accident management company. They have reported that they have been able to use our Email AI to resolve about 10% of their tickets without any agent involvement and amplified the importance of being able to respond faster than ever, especially outside business hours. Our CX organization is now fully aligned to drive efficiency and customer value. As of July 1, we've consolidated our CX organization in India. Our GTM product and engineering teams are all co-located in driving that business. Looking ahead, we're encouraged by our Q2 CX developments and have a positive outlook on our ongoing growth opportunities for this business. Taken together, our EX momentum and a more disciplined CX business confirmed that Freshworks is delivering on our mission while investing in our future. As we announced last week, I'm pleased to welcome Ryan Manning to Freshworks as Chief Product and Technology Officer. Ryan will bring deep product and engineering leadership, having built and scaled category-leading platforms across service management and CRM. He joins us from BMC Helix, where he served as Chief Product Officer, with prior leadership roles at Coupa and ServiceNow. Our platform is stronger and broader than ever. AI monetization is taking shape, and our financial model is delivering solid results. We are the AI-powered unified service operations platform for the modern agile enterprise and Q2 delivered on that. I'll now turn it over to Tyler to discuss our financials. Tyler Sloat: Thanks, Dennis, and thanks, everyone, for joining on the call today. We had a strong second quarter, our seventh consecutive quarter exceeding revenue expectations, and we achieved positive GAAP net income ahead of plan. For our call today, I'll cover the Q2 2026 financial results provide context on key metrics and close with our updated outlook for Q3 and the full year 2026. As a reminder, most of my discussion will be focused on non-GAAP financial results. I will provide comparisons on both an as reported and at constant currency basis where available. Starting with the income statement. Total revenue reached $237.4 million in Q2, up 16% year-over-year as reported and up 15% on a constant currency basis, above the high end of our estimates range. Professional services revenue was approximately $3 million, slightly higher than prior quarters. EX continues to be our primary growth engine. EX ARR ended Q2 at $567 million, growing 23% year-over-year as related and 24% on a constant currency basis. As Dennis covered, the growing breadth of our platform that covers ESM, ITAM and ITOM is enabling us to win business well beyond core ITSM, and is broadening the EX growth base. Looking ahead, we continue to expect EX ARR to grow in the mid-20s and to exceed $600 million exiting 2026. Turning to our CX business. CX ARR ended Q2 at $400 million, growing 3% year-over-year as reported and 4% on a constant currency basis. This performance reflects the deliberate operating plan we have in place to run CX with a focus on profitability and for steady-state growth. The actions we took in May have facilitated better efficiency and focus in our CX business and the Freshdesk Omni platform is demonstrating strong market fit for our mid-market ICPs. We continue to expect CX ARR to grow in the low single digits for the full year 2026. Moving to margins. Non-GAAP gross margin at 86% remains consistent with prior quarters. Non-GAAP operating income for Q2 reached $55.9 million, well above estimates. This performance reflects continued top line leverage as well as the partial impact of restructuring savings. Most notably, we achieved positive GAAP net income this quarter. Q2 GAAP net income was $3.2 million, with GAAP EPS of $0.01 and non-GAAP EPS of $0.17. We set a goal to reach GAAP profitability by the end of 2026, and we achieved this ahead of schedule. To be clear about how we're allocating the benefit of operating leverage in our model. As organic growth remains our top capital priority, our first use is continued investment in EX sales capacity and AI R&D. We invested in both of these areas in the first half of the year, and we intend to continue to invest in the second half to support our accelerating growth opportunities in EX. Turning to operating metrics. Net dollar retention was 104% as reported and 105% on a constant currency basis in Q2. Excluding the legacy Device42 customers, Net dollar retention was 106% constant currency, exceeding expectations. Within this, EX NDR, excluding legacy Device42 customers, was over 111% on a constant currency basis. Looking ahead, we expect NDR and EX NDR on a constant currency basis to be roughly the same for Q3. Moving on to customer cohorts. Customers contributing more than $50,000 in ARR and grew 18% year-over-year as reported 19% on a constant currency basis. This cohort now represents over 55% of our total ARR. Customers contributing more than $100,000 in ARR, grew 25% year-over-year as reported and 26% on a constant currency basis. This cohort represents approximately 40% of total ARR. The growth rate of this cohort and mix of total ARR reflects the sustained upmarket shift in our business and validates our strategy of concentrating our ICP in mid-market and agile enterprise customers, and driving an EX multiproduct motion across core ITSM, ITAM, ITOM and ESM improving win rates and deal sizes and new business across the EX portfolio and creating a flywheel for expansion opportunities gives us confidence in sustaining the mid-20s EX growth trajectory. Now on to billings, balance sheet and cash. Calculated billings reached $245.8 million in Q2, growing 15% year-over-year as reported and 16% on a constant currency basis. For Q3, we estimate billings growth of approximately 13% as reported and 14% on a constant currency basis. Looking ahead, we expect billings growth to be in line with revenue growth for 2026. Adjusted free cash flow was $57.7 million in Q2, which was above our previously given estimates. Q2 adjusted free cash flow margin was approximately 24% and adjusted free cash flow per share was $0.21. We remain on track to meet or exceed our full year adjusted free cash flow per share target of $0.94. On capital allocation, our framework is to invest in high-return EX growth first, and return excess capital to shareholders second. Year-to-date, we have deployed over $200 million toward our stock repurchase program and reduced shares outstanding by 7%. In Q2, we repurchased approximately 18.3 million shares for $159 million, while utilizing an additional $10 million to offset dilution through our net cash settlement of equity. We ended Q2 with approximately 296 million fully diluted shares and approximately 263 million basic shares outstanding. At the time of our IPO in 2021, we had approximately 323 million fully diluted shares outstanding. We have reduced our fully diluted share count by 8.3% over the past 5 years. We ended the quarter with $665 million in cash and investments with no debt, providing ample financial capacity to continue our repurchase program while still prioritizing investments in future growth. Now on to our forward-looking estimates. Our non-GAAP net income projections for 2026 assume a tax rate of 24%. For the third quarter of 2026, we expect revenue in the range of $244.5 million to $245.5 million growing approximately 14% year-over-year on an as-reported basis and approximately 14% to 15% on a constant currency basis. Within this, we are including a $0.5 million headwind from FX, compared to our initial estimates at the beginning of the year. Non-GAAP income from operations in the range of $59 million to $61 million and non-GAAP net income per share of approximately $0.18 assuming weighted average shares outstanding of approximately 266 million shares. For the full year 2026, we expect revenue in the range of $963.5 million to $966.5 million, growing approximately 15% year-over-year or 14% to 15% on a constant currency basis. Within this, we are including a $2 million FX headwind compared to our initial estimates at the beginning of the year. Non-GAAP income from operations in the range of $222 million to $228 million, and non-GAAP income per share to be in the range of $0.66 to $0.68, assuming a weighted average shares outstanding of approximately 273 million shares. We expect to generate approximately $265 million in adjusted free cash flow. This resulted in adjusted free cash flow margin target of 27.5% for the full year of 2026. We remain on track to meet or exceed our full year adjusted free cash flow per share target of $0.94, up 24% from fiscal 2025. As a reminder, cash used for stock repurchases is reflected in our financing activities and is excluded from our adjusted free cash flow calculations. Our forward-looking estimates are based on FX rates as of August 1, 2026, and do not take into account any impact from currency moves. Our full year 2026 revenue estimates include $2 million FX headwind. In closing, we delivered strong top line and bottom line performance in Q2, and we remain confident in our ability to achieve our 2026 financial and operational plans. EX remains our primary and largest growth opportunity. Our AI monetization strategy is on track and our CX business is now best positioned for steady-state growth. We are profitable and have the operating leverage to fund our EX platform growth and AI expansion to meet the demand momentum driving us into the second half of the year. Operator, let's open it up to Q&A. Operator: [Operator Instructions] Your first question comes from the line of David Hynes with Canaccord Genuity. Lucas Morison: Great. This is Luke on for DJ. So I'm curious, you guys have always won on the on the enterprise grade without the costs without the complexity of the bigger guys in the space. I'm curious, as you think about layering in -- you've layered in Device42, you have FireHydrant now, maybe you have some security ops down the road. Like how do you think about keeping the product in the implementation experience of that product from getting too complex and potentially weakening that differentiation over time? Dennis Woodside: Yes. Thanks for the question. It's Dennis. That's 1 of the key areas that our engineering and product teams really, really focus on, it's how to -- how we maintain that usability, easy to use, fast time to value, intuitiveness of the product that got us to where we are as we continue to expand the capability of the platform, the enterprise readiness of the platform and so forth. And we work really hard at making that work. We pride ourselves in the focus that we have on design and UX. We've made a lot of strides in unifying our overall design language across all of our products. For Device42, for example, that product today is now fully available in the cloud. If you go into Freshservice and you're an admin, it appears as a tab as other product would, the design language is the same as what Freshservice is all about. It's -- the way you navigate through the product is the same. Data is pulled seamlessly from the asset management capabilities and the CMDB into the Freshservice module. And so the admin can see all that in 1 place. So that's really important. And that approach that we're going to take to FireHydrant as well later this year. So I think it's something that is critical for us. It's going to remain critical for us to continue to focus on that usability as we broaden the platform. Lucas Morison: Yes. Yes, super helpful. And maybe just a follow-up. One thing that our team has been hearing more of with this new wave of AI native or at least potential new wave of AI native service management vendors they're positioning as an intelligent layer that maybe sits on top of whatever ITSM vendor a customer has already. The pitch there is basically you can modernize the employee experience without ripping out something like, say, a ServiceNow, for example. I'm curious, are you starting to hear discussions around that? And how do you think about competing against that approach? Dennis Woodside: Yes. We're cognizant of the startups out there. We have not seen them competitively that much, if at all. And our -- what we're seeing customers want is a system of record that has the kind of control and security that they need that has AI integrated into it in a way that's usable, that's easy for them to get up and running, that's easier for them to configure. And that's consistent with what we've been building all along in the core Freshservice products. So our AI agent studio, which we launched in May for EX, already has over 1,000 customers on it. You might remember, we launched that product into EA, and we have not priced it yet. The intention is to price that fall. That will be a session-based pricing model. But that is an example of customers getting value out of our product immediately and really looking to us to provide that experience layer. So I understand, of course, we're very well aware of the startups coming into the space. But as of yet, we have not seen them make a lot of traction. I think it's going to be hard because to do AI well, you need to understand the operating environment. You need to understand the workflows that already exist, the controls that already exist in the operating environment. That's what we've spent over a decade building. Operator: Your next question comes from the line of Patrick Walravens with Citizens. Patrick Walravens: Congratulations to you guys on the results. Dennis, I saw that Gartner came out with their new Magic Quadrant, I mean, just like a week ago, and it was nice to see Freshworks in this quadrant. I think it's been a long time since they've had one of these for ITSM. Does that -- how much does that help? Does that help with lead generation? And does -- I saw Ian posted it? I'm just wondering what that actually ends up doing for you guys? Dennis Woodside: So look, we think it helps a lot now. In part, the reason we're in the Magic Quadrant is because Gartner has gone out and talked to a lot of customers and understands the value that we've been able to provide for those customers, the capabilities of the product and how that's evolved over time. But we're quite happy with that result. Look, I think -- we've got a lot of ways of driving interest in the business. We've seen a lot more large accounts come in the door that are referred by analysts, referred by other customers. We've got a large cohort now of bigger customers that are on our side and helping us recruit the next generation of customers. You see that in the numbers. You see that in the number of $100,000 accounts growing 26% year-over-year. 40% of our business is now coming from those customers spending over $100,000. We closed our first $1 million deal back in Q1. We continue to see a lot of momentum among much larger deals. And those are the kind of -- that's the kind of evidence, I think that shows that the work that we put into building this complete platform that can handle service operations from frontline employee questions to solving problems when they arise through FireHydrant and our advanced asset management. So all those things are what IT departments want in particular in the segment that we're focused on which is those agile enterprises up to 20,000 employees. They don't have the resources necessarily or want to be spending the time and money on managing a more complicated system. They want something that's going to work for them that they're going to be able to modify, that's modern and that's what we provide. So I think the Gartner validates all of that, and we're very happy about that, very proud of that, but we have a lot of work ahead of us, too. Operator: Your next question comes from the line of Tamjid Chowdhury with Guggenheim Securities. Tamjid Md Moinuddin Chowdhury: I guess the first one, it seems like there's a strong momentum in EX from ITAM and ESM cross-sell. That's good to see. Can you talk about how much runway remains for those products within your existing EX customer base? And what penetration looks like today versus where you think it can go? Dennis Woodside: Yes. So we outlined at our investor event almost a year ago. We believe both of those businesses will be $100 million businesses in the course of the next 2 years. We've got every single quarter, proof points that we're gaining momentum there. ESM grew 67% in the quarter. Our ITAM products that were attached in over 1/3 of our larger deals. Often, ITAM is a quick follow-on after an ITSM land. So it's a good upsell once you've got the customer in the door. And really with where we're going with our IT operations, that intersection between ITAM and ops is really important because to do -- to respond to incidents as well, you need to understand the asset base. So we think that those are actually self-reinforcing. And as we get more momentum with FireHydrant, we integrate that product. We put more and more focus behind that as well. That's going to help even more that ITAM business. ITAM actually accelerated this past quarter. I think we had our best quarter ever for asset management. We launched the new --the cloud-based version of Asset Management last quarter. And we already are tapping into a whole slew of customers that otherwise would not have bought an on-prem product. So the hypothesis there was that there were lots of customers, some of which were smaller than the typical Device42 customer that would be interested in the product. That turned out to be true. We beat our internal goals by wide margin. So we think there's a long way to go. And if we look at the penetration of the existing base for ESM in particular, we're really, really early in driving that business overall. So we're going to continue to stay focused there. We're going to continue to invest in capability for teams outside of IT. A lot of our focus has been in HR capabilities, things like onboarding and offboarding, workflows out of the box. We're facing more on teams like facilities, teams like finance. Those teams also have lots of internal employee service needs, and we can build capabilities out of the box that are agentic that expand and allow us to tap into another team. So those are huge areas for us. We're very excited about both. Tamjid Md Moinuddin Chowdhury: And then 1 quick follow-up. Constant currency NDR has been stable sequentially at about 105%. While it seems like Freddy AI Copilot attach rate is strong. I think you mentioned over 71% of new enterprise deals. While we understand that it doesn't directly -- the attach rate doesn't directly flow to NDR. It likely reflects broader product demand that should also drive Freddy expansion into your existing base? Are you seeing that translate into upsell activity yet? And when should we expect it to show up in NDR? Tyler Sloat: Yes. So you're right, the NDR has been pretty consistent from a constant currency basis. And slightly improving in some cases. The Freddy attach rates for new deals, as you indicated, but absolutely, it is one of our strong expansion motions. Now it is harder to get existing customers to adopt Copilot because they have existing way to work. But we have kind of prescriptive sales plays around it. And we do expect that to continue to be one of our larger expansion motions going forward. I can't say when the impact to NDR is there, but as a percentage of expansion, it is actually increasing. Operator: Your next question comes from the line of Taylor McGinnis with UBS. Taylor McGinnis: I'd love to ask on the EX business. So a slight decel in 2Q to 24% constant currency. So Tyler, could you just maybe talk about, as we look into the back half and the comfort in sustaining mid-20s growth, what some of the drivers are there? Are there any incremental growth opportunities that could potentially lead to an acceleration in that business? Maybe you could just help us unpack the confidence there? Tyler Sloat: Taylor. So 25% in Q1, 24% constant currency. This is up from 22% at the end of the year. We had a really good quarter, and EX continues to be the driver of growth. And so I just think that the 25% to 24%, there's a little bit of noise there, but it's nothing outside of what we expected and we're very confident still on mid-20s growth. As Dennis has mentioned, like we're seeing larger and larger deals, and the pipeline is reflecting that. That's on the new business side. On the expansion side, we just talked about the attach rates on kind of ITAM and ESM where about 20% of seats are ESM and about 1/3 of the lands include ITAM, but that means still 2/3 still have Device42 as the potential to sell. We just kind of went live last quarter with what we call Advanced ITAM Cloud, which is Device42 on the cloud, which really opens up the potential for our entire existing base that wasn't using asset management previously. FireHydrant is a brand new product for us. We haven't talked about when the full integration is going to be done, but we have been selling it. And one of our biggest lands in Q2 was a FireHydrant stand-alone. And that's just going to open up opportunities to kind of cross-sell ITSM, ESM and others into that account, but also as that muscle build is just another way that we can go land with another EX product with kind of a different buying segment. So yes, we're confident on the mid-20s growth, and EX continues to be a driver of that growth for the whole company. Dennis Woodside: And just to add something to that. Look, if the market itself, the market that we're focused on, that mid-market, lower end of the enterprise, that's about 60% of the overall market, and it's still fairly fragmented. No single competitor have more than 20% share. So that's a big opportunity for us. we're seeing the momentum. Obviously, Gartner validates, we've got the product. We've got the customers saying good things about us, all that's good. And now we have this platform where there's multiple ways to win, right? So we land with ITSM, expand with -- into ITAM, into ops, in the ESM and AI. All those things are really building momentum. So you're seeing a lot of that come together. And I think all of that gives a lot of optimism to the team here about the second half. Taylor McGinnis: Perfect. And then my next question is one, just to look at the performance in the quarter. There was a nice 1 point acceleration on a constant currency basis for revenue. So maybe you could just unpack what drove to the upside there? And then secondly, as we look into the back half, the guide is really strong on a revenue basis. So any bigger drivers of that in the second half compared to what you guys saw in the first half? Dennis Woodside: Yes. Let me start and then, Tyler jump in. I would just echo what I said, which is we just see a lot of momentum on the EX side given that the product strategy, the go-to-market strategy are all kind of coming together. We also have confidence in that. We've cracked the code on pipeline. I mean, a year ago, we were a little bit more challenged, I would say, around pipeline. But we entered the year and first -- right out of the gate first quarter, second quarter did really well in generating new pipeline. So that pipeline is maturing and is kind of coming due, so to speak, in the second half of the year. So that gives us confidence. And this was the second order actually in a row that we accelerated revenue slightly. I think we were -- went from 13% to 14%, 14% to 15%. So yes, so far so good this year, and we're optimistic about back half and Tyler maybe talk about the [indiscernible] . Tyler Sloat: Yes, I think just about everything that Dennis just said, Taylor. We talked about in the beginning of the year that kind of record pipe building, but it's really -- again, a lot of the momentum we're seeing on the EX side in that kind of what we call agile enterprise and the high mid-market. And we're quickly becoming the product of choice for those companies, and it's just starting to build on its own. Operator: Your next question comes from the line of Patrick Schulz with Baird. Patrick Schulz: Maybe could you just touch on the linearity of demand throughout the quarter? How does the demand environment and pipeline build compare versus last quarter? Are you seeing any impact on sales cycles as customers maybe cut back and reassess where their AI investments are going? Dennis Woodside: No, we're not seeing any impact on sales cycles or decisions or anything like that in terms of AI. Like I know you're referring to some things that happened, I guess, with some other vendors, but that's -- we're not seeing that at all. I would say the linearity is pretty similar to what we've been seeing in prior quarters where as we go up market more of the -- more of the deals going in at the back half of the quarter, but nothing unusual. And I wouldn't say that the buying cycles are unusual, considering that we -- again, we're moving upmarket. AI actually is more of a motivator for people to think about their vendor and most of our business is coming from another vendor. It could be a small player, but often it's a very large player. So they are faced with a decision often as to, okay, what are we going to do about AI, we're going to migrate to the incumbent vendors platform. Sometimes that requires an upgrade in plan. It certainly requires cost. So it often provokes a discussion as to, well, maybe we should go to market and see what else is out there. And again, a lot of times, you talk about that Seagate, 14-year customer or a competitor, 14 years ago we didn't do this. So they're going out to market now and they're seeing -- they're calling Gartner, they're calling their peers and they're hearing about us, and that's how we're getting in the mix. So I think that, that's driving more of our business than anything else is that customers are saying we need to do something on AI, that's leading to a discussion, do we stick with the incumbent, and that's leading to us to get a shot at winning. So all that's been pretty good for us. Patrick Schulz: Okay. Yes, yes. That's very helpful. And I appreciate the commentary you guys provided around ITAM this quarter. I wanted to dive a little bit deeper there and maybe better understand how important it is that an enterprise-grade ITAM solution as you move further out market? Did you expect that ITAM and Device42 will become a leading driver of new logos? Or is it still more of a cross-sell opportunity? And then just as we think about Device42, maybe just give an update on the cloud transition and how much of that business is still on-prem license? Dennis Woodside: You want to take the second part, Tyler? I'll take the first. Tyler Sloat: Yes. So I think the -- for the on-prem business is part of the reason we're still calling out some of that legacy churn. The migration of those customers, there is no actual purposeful migration. We're not forcing customers to migrate over to the cloud. In fact, there's a lot of customers who want an on-prem version, and we're going to continue to sell that for the foreseeable future. The new ITAM cloud version, which is advanced ITAM, is essentially at parity with the on-prem version. That was the whole goal and point. And that's now available to the existing installed base and any new customer who doesn't want the on-prem. So we kind of offer both now. Dennis Woodside: So on the first part of the question, customers aren't buying just an ITSM. They're buying the full capability to power their IT department, especially upmarket. And asset management, ESM, ops, all that -- that's -- those are table stakes. You have to have that. And if you look at our larger deals, typically, it's multiple components right out of the box. And so I think it's less about -- is it something that you land with and helps you compete? It's absolutely essential for us to continue to move up market. Customers are coming off products that have those capabilities, and they expect that. And that's why we've invested in those areas to build a complete solution, a complete platform. And again, you see it in the numbers, it's working. Operator: Your next question comes from the line of Scott Berg with Needham & Company. Scott Berg: Nice quarter. Apologies I did jump on late, I hope this wasn't asked at least. But I attended the Refresh event in May. And one of the things I thought was interesting is some of the commentary around partners and those individuals that are involved in your partner program and how it's maturing really evolving into more of a long-term account ownership kind of strategy instead of just something that was more transactional in nature. I guess as that structure continues to evolve, do you see that driving, I guess, better retention, better expansion opportunities with your customers if those partners do maintain that ownership more? Or should we see some other benefit to come from that program? Dennis Woodside: So I would say it's both new business, retention and expansion, those things benefit when we have a partner. We know when we have partners involved, our retention rates are higher, for sure. We know when we have partners involved, the expansion happens faster. And we know in the sales cycle, when we have a partner involved, the close rates are higher. So all of those things are really important for us. We've been purposeful about cultivating a select group of partners that can help us and have the expertise to actually manage our business, which is a little different than some of our competitors in terms of what's required on an ongoing basis, what's required for migration. And a lot of our focus has been fewer but higher leverage partners, especially on the EX side. Partners like Unisys, which we talked about in the past, CGI, which we've talked about in the past. So those are -- that's where we're really focused in making sure that those partners that are really investing in the capabilities to serve our customers well, are continuously kept up to speed on our products and that we're collaborating in those customer situations, both to help them grow their business and they can help us grow our business. Scott Berg: That's helpful, Dennis. And then from a follow-up perspective, the partners that we had a chance to speak with seem to be very positive. I don't know, what you guys are doing product-wise and win rate wise, you certainly are making an impact up there. I guess, how do you think about that partner impact on that business today? And where should that be if you look out maybe 12 or 24 months as you lean into this more? Is this more than 50% of your business, 75% of maybe some of your leads and interactions? Or is it maybe having a more muted impact longer term? Dennis Woodside: I think It will continue to grow as we continue to grow up market because you get into these larger companies where they do have -- they're coming off of a deployment that's been around for a while, often, their partner understands that deployment quite well if they have an existing partner or they need somebody to help them move off and configure the new system in the way that they want it. That does take work. And that does take expertise. So -- and then they want that system to continue grow with them over time. So I think that does create a greater opportunity for partners. It's hard to say whether that's 50%, 60% down the road. I think right now, about 40% of our business is partner influence in some way, shape or form. But we're investing there. We have a new -- relatively newer head of our partner team, who's done a great job of building that -- starting to kind of build out that I would say, next level of partner program, and we're going to continue to invest there. Operator: Your next question comes from the line of Matt VanVliet with Cantor. Matthew VanVliet: I guess, first, if we think about the magnitude of either expansion or just deal size growth when Freddy is attached, where do those sit today and now with a couple of more products and more along the way, what should we expect over the next couple of years in terms of deal size growth just from adding those extra capabilities through Freddy? Dennis Woodside: Yes, that's a great question. I think -- in terms of the 1 metric you can look -- we look at is ARPA, ARPA growth. That's been double digit for some time now. We look at the attach rate on new deals internally. We look at attach rate overall. We have over 7,000 accounts paying for a SKU for AI today. As AI infuses itself across the platform the pricing model is going to continue to evolve. So today,. there are elements of our AI capabilities that are embedded into our higher-priced plans like Insights is available for our enterprise plans. There are elements that are add-ons. So copilot today is an add-on. And then there are elements that are consumption-based. AI agent is a consumption-based product. There are elements that we've introduced that we haven't yet monetized. So for EX we introduced AI Agent Studio in May, and we've chosen not to monetize it because we want to get a lot of customers on it, using it. We want to keep building the capabilities and at some point in the fall, we will monetize it on a usage basis. And so I think the models are going to continue to evolve. What's most important for us is, is it helping us win. That's what we really look at. And in every competitive situation, whether it's an upsell just retaining the customers that you have or expanding, AI is essential to the RFP. It's not the only thing that you need in order to win. You need a lot more than that. But you absolutely need to have AI game. And that's why we've been investing so much in AI. And these bigger customers would never come us if they didn't both believe in what we delivered today and believe in where the road map is going. That's super important for them. So yes, I think it's hard to say like, okay, how much is going to be AI-driven. We have a lot of confidence in the overall business. We have a lot of -- we put the number out there, $1.4 billion ARR in the next couple of years. That's up from where we thought we would be a year ago. We wouldn't have done that if we did think we had confidence. We see it in the pipeline numbers. We see it in these large customers who are super happy with us. So all of that gives us confidence that the plan is working, and AI is an important part of it, but there's a lot more than just AI. Matthew VanVliet: Very helpful. And then I guess as you look at maybe the CX business, you talked about a lot more efficiencies there and consolidating some of the organization around India. Curious how much internal usage of AI is driving that efficiency? And how much more can be unlocked as that becomes maybe a little bit more of a on cruise control of running that business and having a little bit more customer-led growth. Dennis Woodside: Yes. So it sounds like 2 questions really, it's kind of our internal use, but also the CX business. CX business, the big change we made this quarter at the end of last quarter is we consolidated the teams that are driving CX into India. Most of that business is SMB. Most of that business was inbound. So most of the team was already there. But now there's a single go-to-market team that is driving that business. And that's going to create a lot more focus around retention, in particular, around ensuring that we're focused on the right customers in the past, any customer was a good enough customer and that results in us acquiring a lot of smaller customers that churn. We're not doing that anymore. So the new business acquisition motion is focused very much on, call it, the higher end of SMB and mid-market. And we would expect, over time, that will help our retention rates. We've made a big investment in the CX product in moving to our new Freshdesk Omni. We have multiple products in the past. Now a customer can get onto 1 product and seamlessly migrate -- or sorry, seamlessly upgrade from a e-mail-based ticketing experience to one involving chat and conversational and voice and one involving AI. That's important for upsell and for retention as well. So we're optimistic about the fact that we've got 90% of our customers now on that new platform, we've got the go-to-market motion much more focused that we're going to be able to get some goodness out of that CX business. And then from an internal standpoint, AI has been suffused across every part of our business. Our entire product development life cycle has changed. We now have designers who can work in Figma, create a product in Figma Make, push it directly to code, we built the hooks between our production environment in Figma, so the code comes out, it's compliant with our internal coding requirements. The process for doing QA is highly automated with AI now. And so that's resulted in a meaningfully shorter cycle times, about 30% faster we're shipping on basically a 2-week cycle now, which we were not doing before for AI products in particular. It's changed our support business as well. We've implemented our AI Email agent internally to handle the questions that we get from our own customers about billing, and we saw about 30% of those questions were completely handled through AI in -- when we turned it on. So I think it's transforming many businesses. It's certainly transforming us. It's helped us drive our overall profitability of the business. GAAP profitable this quarter. That's ahead of where we thought we would be. Cash flow looks good. And so all of that, I think, is good for us. And I make sure that my team is using AI and everything we do, whether it's preparing for this call or doing a presentation to the company, AI's front and center. So I think it's just a part of how we're doing business now. It's maybe a little less dramatic than it was a year ago because it now is how people are used to working. Operator: Your next question comes from the line of Alex Zukin with Wolfe Research, LLC. Aleksandr Zukin: Most of mine have been asked, but I want to double down on Taylor's question because I actually think it's really important. If you look at the net new ARR growth for the EX business, in the first half. It looks like it's about 14%. I think the guide for the second half implies 16% -- or sorry, 18%. So if I think about -- Tyler, you mentioned some noise on why net new ARR for that business was down year-over-year, but I just want to better understand that a little bit? And like what are you seeing in the pipeline to give you the confidence to guide for acceleration of net new ARR in that business for the second half? Tyler Sloat: So we -- so Alex, thanks for the question. So back to what I said to Taylor, right, like she was asking about, hey, '25 versus '24, and I said, hey, there's -- we're really confident on mid-20s growth for EX. And we just talked about that at our Refresh in April there's a little bit of nuances like in terms of quarter-to-quarter, but the EX business is doing really, really well. And we wouldn't keep repeating that if we didn't think we had that strength. I think there's a whole end of avenues to grow outside of new logo, which we talked about the pipes that were already growing, that we -- coming into Q1, we said the strongest pipe kind of ever. but really the expansion products that we're bringing to fruition. Again, FireHydrant, brand new on the ITOM side and Device42 advanced cloud version now being available. So we're very confident what we've seen in the first half of the year, and we expect to continue to see that through the back half of the year. We -- as a whole, we had already talked about what we're seen for the backside. We just rolled through our $4 million beat, and that already encompassed a $2 million FX headwind. So it would have been a $6 million beat for the back half of the year if we didn't see that FX. So again, we're super confident EX is still the driver of growth. CX is stable at 4% right now. Dennis Woodside: Yes. Just to emphasize, like this is a beat and raise quarter. I know we didn't emphasize that, but you count that FX headwind, and we rolled that beat in and we raised by an additional $2 million. Aleksandr Zukin: Got it. Helpful. And then the other thing that we noticed is -- and again, I think you talked about this, but stock-based comp 16% of revenues down from 19% in Q1. What's driving that strong decline? And how do we think about the outlook for the rest of the year and really beyond and any changes that you're making there, it would be good to unpack. Tyler Sloat: I'll start with, and Dennis can add to it. So I think this is not something new for us, right? We've been talking for a couple of years now about how we were going to be looking at our total P&L from a GAAP perspective and the biggest component of that -- the hurdle we had to get to, to get to GAAP profitability, which we hit this quarter, which is a couple of quarters earlier than we expected was going to be SBC. Some of the bigger drops in SBC is that we've kind of -- we've gone through all of the IPO grants now and like we've taken off that tail. And so really, what we're flowing through on the SBC is like our ongoing kind of new grants and focal. And that's the place that we've had added a lot of the discipline under Dennis' leadership, and we're going to continue to do that. We're constantly looking -- working with our total benefits folks, making sure that we are being, number 1, really competitive, so we can bring on the best but number two, using equity really prudently as we go forward. At the same time, we're just looking at total equity, we want everybody focused on free cash flow per share. And that's kind of the North Star metric that we talked about. And in the call, we talked about how we've reduced that considerably in terms of fully diluted shares since we've gone public. But Dennis, if you want to... Dennis Woodside: Yes, I just -- look, I'd pay attention to it, it's important. I think it's important internally that we reward performance with equity but at the same time, in the past, we've been, I would say, a little bit broad in how we thought about it. And we've put in place basically performance managed process to make sure that we're using that. We're thinking of that equity as a really scarce resource, and we're making sure that the people have the biggest impact, see the biggest grants. And that, by definition, is going to create a more, I would say, a more prudent approach to how we're managing things. And Tyler shared where we think we'll be in the next couple of years, and we take that very seriously, and that's what we're going to do. So I think it's a continuation of a trend that we've put in place for a while now. Operator: We have reached the end of the Q&A session. I will now turn the call back to Dennis Woodside's CEO, for closing remarks. Dennis Woodside: All right. I just want to thank everybody for joining the call today. And just to emphasize, Q2 overall for us, reinforced every 1 of the 5 priorities that we laid out of a Refresh. We demonstrated that EX first momentum that category leadership for the mid-market and the agile enterprise. I think we showed that AI is an expanding tailwind to our growth. And that we've been disciplined around profitability and how we're managing capital. So thanks, everybody. Look forward to speaking to everybody next quarter. Bye. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Freshworks, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Freshworks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Freshworks (FRSH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Freshworks’ Q2 results topped Wall Street’s revenue and non-GAAP profit expectations, fueled by continued momentum in its employee experience (EX) platform and robust adoption of AI-powered solutions. Management highlighted large enterprise wins and strong growth in cross-selling advanced IT asset management and incident response modules. CEO Dennis Woodside credited this performance to the company’s ability to displace legacy providers, with customers like Seagate and American Oncology Network transitioning quickly to Freshworks’ unified service operations platform. Woodside noted, “Speed to value is what Freshworks delivers,” as large customers increasingly seek integrated, easy-to-use solutions. Is now the time to buy FRSH? Find out in our full research report (it’s free). Revenue: $237.4 million vs analyst estimates of $233.6 million (16% year-on-year growth, 1.6% beat) Adjusted EPS: $0.17 vs analyst estimates of $0.13 (30.4% beat) Adjusted Operating Income: $55.93 million vs analyst estimates of $42.13 million (23.6% margin, 32.7% beat) The company slightly lifted its revenue guidance for the full year to $965 million at the midpoint from $961 million Management raised its full-year Adjusted EPS guidance to $0.67 at the midpoint, a 8.1% increase Operating Margin: 2.6%, up from -4.2% in the same quarter last year Customers: 25,356 customers paying more than $5,000 annually Net Revenue Retention Rate: 104%, down from 106% in the previous quarter Annual Recurring Revenue: $971.7 million (16.6% year-on-year growth, beat) Billings: $245.8 million at quarter end, up 15.2% year on year Market Capitalization: $3.13 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Lucas Morison (Canaccord Genuity) asked how Freshworks plans to maintain product simplicity as platform capabilities expand. CEO Dennis Woodside said maintaining ease of use is a core engineering focus, citing unified design and cloud migration efforts. Tamjid Md Moinuddin Chowdhury (Guggenheim Securities) inquired about runway for ITAM and ESM cross-sell in the EX base. Woodside described both as early-stage with significant growth potential, supported by recent cloud-based product launches. Taylor McGinnis (UBS) questioned drivers behind anticipated acceleration in EX ARR growth. CFO Tyler Sloat pointed to a strong pipeline, larger deal sizes, and new product integrations as key factors for confidence in sustained growth. Patrick Schulz (Baird) asked about the importance of ITAM for large enterprise wins and updates on cloud transition. Sloat explained that both on-prem and cloud ITAM are offered, with new cloud capabilities expanding addressable markets. Scott Berg (Needham & Company) probed the impact of partner channel evolution on retention and expansion. Woodside stated that partner involvement has led to higher retention, faster expansion, and improved win rates, especially in larger enterprise accounts. In the coming quarters, key areas to watch include (1) further adoption and monetization of AI Agent Studio and other advanced AI modules, (2) sustained growth and cross-sell momentum in the EX business as ITAM and ESM products penetrate more accounts, and (3) the impact of Freshdesk Omni migration and CX organizational changes on customer retention and profitability. Execution in these areas will be central to Freshworks’ ability to maintain its current growth trajectory. Freshworks currently trades at $11.97, in line with $12.04 just before the earnings. Is there an opportunity in the stock? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Freshworks Inc.? Here are five stocks we like better. 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. CRM Stocks Are Hot in 2024 — Should You Hold for 2025 Gains? 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. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Freshworks Stock Soars 50% – Is This the Perfect Entry Point? “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 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. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Top 2 CRM Stocks Positioned to Surge Higher With AI in 2025 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. → Why Rare Earth Processing Could Be the Real 2027 Opportunity 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 are paying for an AI SKU, while the Freddy AI Copilot attach rate on new deals above $30,000 exceeded 70%. Among eligible EX customers, 22% were paying for Copilot during the quarter. Woodside said agents using Freddy AI Copilot handle 50% more tickets, while Freddy AI Agent deflection rates average 50% and can reach 80% in mature deployments. The company launched Freddy AI Agent Studio and MCP Gateway for Freshservice at its Refresh event in May. Hundreds of customers are using the products in early access, and Woodside later said Agent Studio had more than 1,000 customers using it. Freshworks expects to introduce session-based pricing for Agent Studio in the fall. Chief Operating Officer and Chief Financial Officer Tyler Sloat said AI is becoming a larger source of expansion activity, although it can take time for existing customers to adopt Copilot because they have established workflows. EX customers using AI continue to have net dollar retention above the companywide rate, Freshworks said. Customer experience, or CX, ARR totaled $400 million, up 3% year over year as reported and 4% in constant currency. Freshworks continues to expect low-single-digit CX ARR growth for the full year as it operates the segment with an emphasis on profitability and steady-state growth. More than 90% of Freshdesk customers had migrated to the Freshdesk Omni platform as of the second quarter. Woodside said CX AI agent sessions and conversations on Freshdesk Omni rose 60% sequentially and more than fivefold from a year earlier. Freshworks consolidated its CX organization in India as of July 1, bringing go-to-market, product and engineering teams together. Woodside said the company is focusing new customer acquisition on the higher end of the small-business market and the mid-market, rather than pursuing smaller customers that historically carried higher churn. Non-GAAP gross margin was 86%, while non-GAAP operating income reached $55.9 million. Adjusted free cash flow was $57.7 million, representing a 24% margin. Net dollar retention was 104% as reported and 105% in constant currency; excluding legacy Device42 customers, constant-currency NDR was 106%. EX NDR excluding those customers was above 111%. Freshworks repurchased approximately 18.3 million shares for $159 million during the quarter and used another $10 million to offset equity dilution through net cash settlement. The company ended the period with $665 million in cash and investments and no debt. Third-quarter revenue outlook: $244.5 million to $245.5 million, representing approximately 14% year-over-year growth. Third-quarter non-GAAP operating income outlook: $59 million to $61 million. Full-year revenue outlook: $963.5 million to $966.5 million, or approximately 15% growth year over year. Full-year non-GAAP operating income outlook: $222 million to $228 million. Full-year adjusted free cash flow outlook: approximately $265 million, for a 27.5% margin. Sloat said the full-year revenue outlook incorporates a $2 million foreign-exchange headwind compared with the company’s initial expectations for the year. He said Freshworks remains focused on investing first in EX sales capacity and AI research and development, while using excess capital for shareholder returns. Freshworks, Inc is a global provider of cloud-based customer engagement software designed to help businesses streamline customer support, sales, marketing, and IT service operations. The company's integrated suite of solutions enables organizations of all sizes to deliver seamless experiences across multiple channels, including email, chat, phone, and social media. Freshworks' platform is built on modern, user-friendly interfaces and offers native automation, AI-powered insights, and analytics to improve efficiency and customer satisfaction. The company's flagship product, Freshdesk, serves as a helpdesk solution for customer support teams, while Freshservice addresses IT service management needs. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Freshworks Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Revenue grew 16% year-over-year to $237.4 million, exceeding expectations and marking the seventh consecutive quarter of revenue beats. Achieved positive GAAP net income of $3.2 million ahead of schedule, demonstrating strong profitability and financial discipline. EX ARR grew 24% on a constant currency basis to $567 million, with strong momentum in large deals and upmarket traction. AI monetization is gaining traction with over 7,000 customers paying for AI SKUs and Copilot attach rates exceeding 70% on larger deals. Enterprise service management (ESM) crossed $50 million in ARR, growing 67% year-over-year, and ITAM is expanding with strong new logo wins. CX ARR growth remains sluggish at 4% on a constant currency basis, reflecting ongoing challenges in the business. Net dollar retention (NDR) is relatively low at 104-105%, indicating limited expansion from existing customers. The company faces a $2 million FX headwind for the full year, which could pressure revenue growth. Stock-based compensation, while declining, still represents a significant cost, and the company is working to manage it more prudently. The CX business is undergoing restructuring and consolidation, which may cause near-term disruption and uncertainty. Warning! GuruFocus has detected 6 Warning Signs with FRSH. Is FRSH fairly valued? Test your thesis with our free DCF calculator. Q: Can you unpack the drivers behind the EX business's slight deceleration to 24% constant currency growth in Q2 and the confidence in sustaining mid-20s growth in the back half of the year?A: Tyler Sloat, COO and CFO: The slight dip from 25% in Q1 to 24% in Q2 is just noise and within expectations. We remain highly confident in mid-20s growth for EX. This confidence is driven by larger deal sizes and a strong pipeline on the new business side. On the expansion side, we have significant runway: only about a third of new lands include ITAM, leaving two-thirds of the base to upsell. The new Advanced ITAM Cloud product opens up the entire existing base that previously didn't use asset management. Fire Hydrant is also a new land-and-expand opportunity, as evidenced by it being one of our top three largest deals in Q2. Dennis Woodside, CEO, added that the market is still fragmented with no competitor holding more than 20% share, and the platform provides multiple ways to win (ITSM, ITAM, ITOM, ESM, AI), which builds momentum for the second half. Q: How are you thinking about competing against new AI-native service management vendors that position themselves as an intelligence layer on top of existing ITSM systems like ServiceNow?A: Dennis Woodside, CEO: We are aware of these startups but have not seen them make significant competitive traction. Customers want a system of record with the control, security, and integrated AI that is easy to configure and use. Our Freddy AI Agent Studio, launched in May, already has over 1,000 customers in early access, demonstrating demand for our experience layer. We believe it's hard for these startups to succeed because doing AI well requires a deep understanding of the operating environment, existing workflows, and controlssomething we've spent over a decade building. Q: How much does being named a Leader in the 2026 Gartner Magic Quadrant for ITSM help with lead generation and the overall business?A: Dennis Woodside, CEO: It helps a lot. The recognition validates the value we provide and the evolution of our product. It drives interest from larger accounts, often referred by analysts and other customers. This is reflected in our numbers, with customers contributing over $100,000 in ARR growing 26% year-over-year and now representing 40% of total ARR. The recognition confirms that our complete platform, which handles service operations from frontline questions to incident resolution, is what agile enterprises up to 20,000 employees want, as they prefer a modern, manageable system over a more complicated one. Q: What is the runway for growth in the ITAM and ESM cross-sell products within your existing EX customer base, and what is the current penetration?A: Dennis Woodside, CEO: We believe both businesses will reach $100 million in ARR within the next two years. ESM grew 67% in the quarter, and ITAM was attached in over a third of our larger deals. ITAM is often a quick follow-on upsell after an ITSM land, and it's self-reinforcing with our ITOM efforts. We had our best quarter ever for Asset Management, driven by the new cloud-based version, which has attracted many customers who wouldn't have bought an on-prem product. Penetration in the existing base is still early, especially for ESM, and we are investing in out-of-the-box capabilities for HR, facilities, and finance teams to expand into new departments. Q: The constant currency NDR has been stable at about 105%. With strong Freddy AI Copilot attach rates on new deals, are you seeing this translate into upsell activity in the existing base, and when should we expect it to show up in NDR?A: Tyler Sloat, COO and CFO: The NDR has been consistent and slightly improving. While it's harder to get existing customers to adopt Copilot because they have established workflows, we have prescriptive sales plays around it. It is one of our larger expansion motions, and as a percentage of expansion, it is increasing. We can't specify when it will impact NDR, but the trend is positive. Q: Can you discuss the linearity of demand and whether you are seeing any impact on sales cycles as customers reassess their AI investments?A: Dennis Woodside, CEO: We are not seeing any impact on sales cycles or decisions related to AI. Linearity is similar to prior quarters, with more deals closing in the back half of the quarter as we move upmarket. AI is actually a motivator for customers to re-evaluate their vendors. Many of our wins come from customers with legacy providers who are now prompted to consider alternatives because of AI. This dynamic is driving more business for us, as customers like Seagate, a 14-year incumbent customer, go to market and hear about Freshworks. Q: How important is an enterprise-grade ITAM solution as you move upmarket, and will Device42 become a leading driver of new logos or remain a cross-sell opportunity?A: Dennis Woodside, CEO: Customers are not just buying ITSM; they are buying the full capability to power their IT department. Asset management, ESM, and ops are table stakes, especially upmarket. Our larger deals typically include multiple components out-of-the-box. It's essential for us to compete and move upmarket. Tyler Sloat, COO and CFO, added that we are not forcing on-prem customers to migrate to the cloud. The new Advanced ITAM Cloud is at parity with the on-prem version, and we can now offer both to new and existing customers. Q: How is the maturing partner program driving retention and expansion, and what is the long-term impact on the business?A: Dennis Woodside, CEO: When partners are involved, our retention rates are higher, expansion happens faster, and close rates are higher. We are purposefully cultivating a select group of high-leverage partners like Unisys and CGI, especially on the EX side. As we move upmarket, partners become more critical for migrations and ongoing configuration. Currently, about 40% of our business is partner-influenced, and we expect this to grow as we continue to move upmarket. Q: With Freddy AI attached, what is the magnitude of deal size growth, and what should we expect over the next couple of years from adding these capabilities?A: Dennis Woodside, CEO: ARPA growth has been double-digit for some time. We For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Freshworks Inc. FRSH used its second-quarter 2026 earnings call to reinforce employee experience, or EX, as its main growth engine while outlining a path to monetize artificial intelligence. FRSH’s non-GAAP earnings of 17 cents per share topped the Zacks Consensus Estimate of 13 cents. Revenues of $237.4 million also surpassed the consensus estimate of $233.5 million by 1.70%. Freshworks Inc. price-consensus-chart | Freshworks Inc. Quote CEO and president Dennis Woodside said EX annual recurring revenues reached $567 million, rising 24% at constant currency and representing about 59% of total ARR. Woodside said larger customers are replacing legacy platforms with Freshservice because of faster deployment and lower administrative complexity. Customers generating more than $100,000 in ARR grew 26% at constant currency and now account for roughly 40% of total ARR. CFO and COO Tyler Sloat said Freshworks expects EX ARR growth in the mid-20% range and more than $600 million in EX ARR by the end of 2026. CEO and President Dennis Woodside said more than 7,000 customers are paying for an AI product, while Freddy AI Copilot is attached to more than 71% of new enterprise deals. Woodside said Freddy AI Agent Studio has drawn more than 1,000 early-access customers. Freshworks plans to introduce session-based pricing in the fall after expanding usage and functionality. Eligible EX customers paying for Copilot rose to 22% of the installed base. Woodside said EX customers using AI have net dollar retention above the companywide rate, supporting AI as both a sales and expansion tool. CEO and president Dennis Woodside identified IT asset management, enterprise service management and incident operations as key extensions beyond core IT service management. About one-third of large new EX wins include IT asset management, while enterprise service management ARR exceeded $50 million and grew 67% year over year. FireHydrant also produced its first six-figure expansion deal since the acquisition. Responding to a Guggenheim Securities analyst, Woodside said penetration remains early across the customer base. CFO and COO Tyler Sloat added that a cloud version of advanced IT asset management opens cross-sell opportunities unavailable with the on-premises product alone. CFO and COO Tyler Sloat guided third-quarter revenues to $244.5 million to $245.5 million, indicating about 14% reported growth and 14% to 15% growth at constant currency. For 2026, Freshworks raised its revenue estimate to $963.5 million to $966.5 million, or about 15% growth. The outlook includes a $2 million foreign-exchange headwind versus initial assumptions. The company expects full-year non-GAAP operating income of $222 million to $228 million, non-GAAP earnings of 66 cents to 68 cents per share and adjusted free cash flow of about $265 million. A UBS analyst asked about sustaining mid-20% EX growth after the constant-currency rate eased to 24% from 25% in the prior quarter. CFO and COO Tyler Sloat described the change as normal quarterly variation and pointed to larger deals, stronger pipeline conversion and expansion products. CEO and President Dennis Woodside said pipeline generation improved from a year earlier and is maturing into the second half. A Wolfe Research analyst pressed management on the implied acceleration in second-half EX net new ARR. Sloat cited product expansion and pipeline strength, while Woodside emphasized the revenue beat and higher full-year estimates despite currency pressure. CFO and COO Tyler Sloat said Freshworks achieved positive GAAP net income ahead of schedule, with second-quarter GAAP net income of $3.2 million and a non-GAAP operating margin of 23.6%. Freshworks repurchased about 18.3 million shares for $159 million during the quarter. Sloat said the company ended the period with $665 million in cash and investments and no debt, while prioritizing EX sales capacity and AI research and development. FRSH carries a Zacks Rank #3 (Hold), placing it between the top-rated Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks and the sell-ranked categories. You can see the complete list of today’s Zacks #1 Rank stocks here. Its Value Score of D, Momentum Score of D and VGM Score of D are weak under the Style Score framework, while the Growth Score of C sits in the middle. The combination lacks the favorable A or B profile emphasized for top-ranked stocks. The Zacks Rank can change as analysts revise estimates after the latest results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshworks Inc. (FRSH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Beats revenue and profitability expectations, raises full year estimates Total revenues of $237.4 million, representing 16% year-over-year growth Positive GAAP Net Income of $3.2 million, representing the Company’s first quarter of GAAP profitability in 2026 Achieved the 8th consecutive quarter of Rule of 40 demonstrating consistent growth and profitability SAN MATEO, Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Freshworks Inc. (Nasdaq: FRSH), today announced financial results for its second quarter ended June 30, 2026. "Freshworks just delivered its seventh straight quarter beating revenue estimates, its eighth consecutive quarter hitting Rule of 40, and a milestone we said we'd hit - GAAP profitability, months ahead of plan. This isn't just a moment, this has been a pattern of execution," stated Dennis Woodside, CEO & President of Freshworks. "EX ARR grew 24% year-over-year, and Freddy AI Copilot is now attached to over 71% of new enterprise deals. Customers aren't testing AI with us, they’re adopting and using Freddy AI. We built a platform for the mid-market and agile enterprise that we believe no one else can match, and we're demonstrating you can grow fast, stay disciplined, and be profitable all at the same time. This is what a durable, category-defining business should look like." Second Quarter 2026 Financial Summary Results Revenue: Total revenue was $237.4 million, representing growth of 16% compared to total revenue of $204.7 million in the second quarter of 2025, and 15% adjusting for constant currency. GAAP Income (Loss) from Operations: GAAP income (loss) from operations was $6.1 million, representing an operating margin of 2.6%, compared to $(8.7) million, representing an operating margin of (4.2)%, in the second quarter of 2025. Non-GAAP Income from Operations: Non-GAAP income from operations was $55.9 million, representing a non-GAAP operating margin of 23.6%, compared to $44.8 million, representing a non-GAAP operating margin of 21.9%, in the second quarter of 2025. GAAP Net Income (Loss) Per Share: GAAP diluted net income (loss) per share was $0.01 based on 273.0 million weighted-average shares outstanding, compared to $(0.01) based on 294.4 million weighted-average shares outstanding in the second quarter of 2025. Non-GAAP Net Income Per Share: Non-GAAP diluted net income per share was $0.17 based on 273.0 million weighted-average shares outstanding, compared to $0.18 based on 297.3 million weighted-average shares outstanding in the second quarter of 2025. Net Cash Provided by Operating Activities: Net cash provided by operating activities was $58.5 million, representing an operating cash flow margin of 24.7%, compared to $58.6 million, representing an operating cash flow margin of 28.6%, in the second quarter of 2025. Adjusted Free Cash Flow: Adjusted free cash flow was $57.7 million, representing an adjusted free cash flow margin of 24.3%, compared to $54.3 million, representing an adjusted free cash flow margin of 26.5%, in the second quarter of 2025 . Cash, Cash Equivalents, Restricted Cash and Marketable Securities: Cash, cash equivalents, restricted cash and marketable securities were $665.3 million as of June 30, 2026. All financial numbers for 2026 include the results of our FireHydrant business. A description of non-GAAP financial measures is contained in the section titled “Explanation of Non-GAAP Financial Measures” below and a reconciliation of GAAP to non-GAAP financial measures is detailed in the tables below. Second Quarter Metrics and Recent Business Highlights Number of customers contributing more than $100,000 in ARR was 1,746, an increase of 25% year-over-year and 26% adjusting for constant currency. Number of customers contributing more than $50,000 in ARR was 4,091, an increase of 18% year-over-year and 19% adjusting for constant currency. Number of customers contributing more than $5,000 in ARR was 25,356, an increase of 6% year-over-year and 6% adjusting for constant currency. Net dollar retention rate was 104%, compared to 106% in the first quarter of 2026 and 106% in the second quarter of 2025. Adjusted for constant currency, net dollar retention rate was 105%, compared to 105% in the first quarter of 2026 and 104% in the second quarter of 2025. Announced AI Agent Studio and MCP Gateway for Freshservice. Welcomed and onboarded many new customers to the Freshworks community including Van Marcke, Hydrite Chemical, Simpar, Upland Software, Paddle, and Open Health Communications. Appoints Ryan Manning as Chief Product and Technology Officer. Named a Leader in the 2026 Gartner® Magic Quadrant™ for IT Service Management Platforms. Financial Outlook We are providing estimates for the third quarter and for the full year 2026. We emphasize that these estimates are subject to various important cautionary factors referenced in the section entitled “Forward-Looking Statements” below. For the third quarter and full year 2026, we currently expect the following results: (1) Revenue and non-GAAP income from operations are based on exchange rates as of August 1, 2026 for currencies other than USD.(2) Non-GAAP net income per share was estimated assuming 265.8 million and 272.8 million weighted-average shares outstanding for the third quarter and full year 2026, respectively. These statements are forward-looking and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements. We have not reconciled our third quarter and full year 2026 estimates for non-GAAP financial measures to GAAP due to the uncertainty and potential variability of expenses that may be incurred in the future. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to address the probable significance of the unavailable information. We have provided a reconciliation of other GAAP to non-GAAP financial measures in the financial statement tables for our second quarter 2026 and 2025 non-GAAP results included in this press release. Webcast and Conference Call Information We will host a conference call for investors on August 4, 2026 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the Company’s financial results and business highlights. Investors are invited to listen to a live audio webcast of the conference call by visiting the investor relations website at ir.freshworks.com. A replay of the audio webcast will be available shortly after the call on the Freshworks Investor Relations website and will be available for twelve months thereafter. Explanation of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including revenue adjusted for constant currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income per share, non-GAAP net income, adjusted free cash flow, and adjusted free cash flow margin. This press release and the accompanying tables also contain certain other metrics, including annual recurring revenue, net dollar retention rates, revenue growth rates, and related presentation thereof adjusted for constant currency. We adjust revenue and related growth rates for constant currency to provide a framework for assessing business performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for currencies other than USD are converted into USD at the average exchange rates in effect during the comparison period (for Q2 2025, the average exchange rates in effect for our major currencies were 1 EUR to 1.05 USD and 1 GBP to 1.26 USD), rather than the actual average exchange rates in effect during the current period (for Q2 2026, the average exchange rates in effect for our major currencies were 1 EUR to 1.16 USD and 1 GBP to 1.34 USD). We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures provide investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results. We believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Investors, however, are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. We exclude the following items from one or more of our non-GAAP financial measures: Stock-based compensation expense. We exclude stock-based compensation, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this expense provides meaningful supplemental information regarding operational performance. In particular, stock-based compensation expense is not comparable across companies given the variety of valuation methodologies and assumptions. Employer payroll taxes on employee stock transactions. We exclude the amount of employer payroll taxes on equity awards from certain of our non-GAAP financial measures because they are dependent on our stock price at the time of vesting or exercise and other factors that are beyond our control and do not believe these expenses have a direct correlation to the operation of our business. Amortization of acquired intangibles. We exclude amortization of acquired intangibles, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business. Restructuring charges. We exclude restructuring charges, which primarily consists of employee severance and other employee termination benefits associated with the restructuring program initiated in November 2024 and May 2026, from our non-GAAP financial measures, because we do not believe these expenses have a direct correlation to the operating performance of our business. Acquisition expenses. We exclude acquisition expenses, which primarily consist of legal fees and due diligence costs, from our non-GAAP financial measures because we do not believe these expenses have a direct correlation to the operating performance of our business. Income tax effect and adjustments. Starting January 1, 2026, we utilize a long-term projected non-GAAP tax rate to compute our non-GAAP income tax provision in order to provide better consistency across interim reporting periods. Our non-GAAP tax rate reflects our estimated long-term effective tax rate based on our anticipated geographic earnings mix and statutory tax regimes. For fiscal year 2026, we determined the projected non-GAAP tax rate to be 24%. The difference between our GAAP income tax provision and our non-GAAP income tax provision is presented as non-GAAP income tax reconciling adjustments. Prior to 2026, we excluded the income tax effect of the above adjustments, income tax effect associated with acquisitions and tax charges or benefits that are a result of a change in valuation allowance on deferred tax assets and its related impacts, from our non-GAAP financial measures. We excluded these costs because we do not believe these expenses have a direct correlation to the operating performance of our business. We define adjusted free cash flow as net cash provided by operating activities, less purchases of property and equipment, capitalized internal-use software, plus acquisition costs and restructuring charges. We believe that adjusted free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Adjusted free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses. We define adjusted free cash flow margin as adjusted free cash flow as a percentage of revenue. We believe that adjusted free cash flow margin is a useful indicator of how efficiently we convert revenue into adjusted free cash flow. Operating Metrics Number of Customers Contributing More Than $5,000, $50,000 and $100,000 in ARR. We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses. We define our total customers contributing more than $5,000, $50,000 and $100,000 in ARR as of a particular date as the number of business entities or individuals, represented by a unique domain or a unique email address, with one or more paid subscriptions to one or more of our products that contributed ARR above the applicable threshold. Net Dollar Retention Rate. To calculate net dollar retention rate as of a given date, we first determine Entering ARR, which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the Ending ARR from the same set of customers as of the end of the reporting period. We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, renewals and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period. We also adjust the above operating metrics, growth rates of customers contributing more than $5,000, $50,000 and $100,000 in ARR and related presentation thereof for constant currency to provide a framework for assessing our business performance excluding the effects of foreign currency rates fluctuations. To present this information, the Ending ARR of the current period in currencies other than USD is converted into USD at the exchange rates in effect at the end of the comparison period (for Q2 2025, the period end exchange rates in effect for our major currencies were 1 EUR to 1.17 USD and 1 GBP to 1.37 USD), rather than the actual exchange rates in effect at the end of the current period (for Q2 2026, the period end exchange rates in effect for our major currencies were 1 EUR to 1.14 USD and 1 GBP to 1.32 USD). Forward-Looking Statements This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our GAAP and non-GAAP estimates for the third quarter and full year 2026, our financial outlook, our ability to sustain profitability, and our expectations regarding impact of new product capabilities and our AI-powered software. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, including our financial outlook and macroeconomic uncertainties, management’s beliefs and certain assumptions made by the company, all of which are subject to change. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, “future,” “believe,” “expectation,” “may,” “will,” “outlook,” “estimate,” “continue,” “anticipate,” “could,” “would,” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, many of which involve factors or circumstances that are beyond our control, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include our ability to achieve our long-term plans and key initiatives; our ability to sustain or manage any future growth and profitability effectively; our ability to attract and retain customers or expand sales to existing customers; delays in product development or deployments or the success of such products; the impact to the economy, our customers and our business due to uncertain global economic conditions, including market volatility, foreign exchange rates, and impact of inflation, as well as the other potential factors described under “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025 as such factors may be updated from time to time in our periodic and other documents of Freshworks Inc. filed with the Securities and Exchange Commission from time to time (available at www.sec.gov). We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof and are based on information available to us at the time the statements are made and/or management’s good faith belief as of that time with respect to future events. We assume no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law. About Freshworks Inc. Freshworks is the AI-powered, unified service operations platform that is fast to deploy, intuitive to use, and enables every employee to be more productive. We offer powerful governance and scale, without the operational drag of legacy platforms. Organizations including Bridgestone, New Balance, S&P Global, and Sony Music trust Freshworks to deliver quality employee and customer service and manage efficient technology operations. For the latest updates, visit freshworks.com and follow Freshworks on LinkedIn, X, and Facebook. © 2026 Freshworks Inc. All Rights Reserved. Freshworks, Freshservice and any associated logo are trademarks of Freshworks Inc. All other company, brand and product names may be trademarks or registered trademarks of their respective companies. Nothing in this press release should be construed to the contrary, or as an approval, endorsement or sponsorship by any third parties of Freshworks Inc. or any aspect of this press release. Gartner Source Citation Gartner, Magic Quadrant for IT Service Management Platforms, Rich Doheny, Ankita Hundal, et al., 27 July 2026 Gartner Disclaimer Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s business and technology insights research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and is not a representation of fact. Gartner Content speaks as of its original publication date and not as of the date of this press release, and the opinions expressed in the Gartner Content are subject to change without notice. Investor Relations Contact:[email protected] Media Relations Contact:[email protected] ______________________        (1) Includes stock-based compensation expense as follows (in thousands): (1) Diluted net income (loss) per share attributable to common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result. The company considers its stock options and RSUs as potential common stock equivalents but excluded them from the computation of GAAP diluted net income (loss) per share attributable to common stockholders, as their effect was antidilutive. For the three months ended June 30, 2026 and 2025, potentially dilutive shares of 1.0 million and 2.8 million shares, respectively, were included in the weighted average shares used in computing non-GAAP diluted net income per share. For the six months ended June 30, 2026 and 2025, potentially dilutive shares of 1.0 million and 4.1 million shares, respectively, were included in the weighted average shares used in computing non-GAAP diluted net income per share.

Freshworks Inc. (FRSH) came out with quarterly earnings of $0.17 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +30.77%. A quarter ago, it was expected that this company would post earnings of $0.11 per share when it actually produced earnings of $0.11, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Freshworks, which belongs to the Zacks Internet - Software industry, posted revenues of $237.38 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.65%. This compares to year-ago revenues of $204.68 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Freshworks shares have lost about 3.9% since the beginning of the year versus the S&P 500's gain of 11%. While Freshworks has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Freshworks was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.17 on $245.19 million in revenues for the coming quarter and $0.62 on $961.01 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the bottom 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. First Advantage (FA), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This provider of background screening services is expected to post quarterly earnings of $0.29 per share in its upcoming report, which represents a year-over-year change of +7.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. First Advantage's revenues are expected to be $417.08 million, up 6.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshworks Inc. (FRSH) : Free Stock Analysis Report First Advantage Corporation (FA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Freshworks Inc. FRSH is set to report its second-quarter 2026 results on Aug. 4, after market close. The Zacks Consensus Estimate for revenues is pinned at $233.5 million, up 14.1% from the prior-year reported number. The consensus estimate for earnings is pegged at 13 cents per share, down 27.8% year over year. The estimate has remained unchanged in the past 60 days.For the June quarter, management expects revenues in the range of $232 million to $235 million, implying year-over-year growth of 13% to 15%. Non-GAAP earnings per share (EPS) are expected to be 13 cents. FRSH’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched once, delivering an average surprise of 25.1%. Image Source: Zacks Investment Research In the past year, shares of the company have lost 11.2% compared with the Zacks Internet Software industry’s decline of 20.4%. Our proven model does not predict an earnings beat for Freshworks this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. This is not the case here.Freshworks has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Freshworks entered second-quarter 2026 against a backdrop of increasing momentum in its Employee Experience (EX) segment and cost discipline. In the first quarter, EX ARR grew 27% year over year, supported by strong new customer wins and existing business expansion. The company is benefiting from increasing adoption among mid-market and enterprise customers. Management expects this momentum to sustain, with EX ARR anticipated to grow in the mid-20% range and contribute more than 60% of total ARR by 2026-end. At the Refresh event, held on May 14, management further stressed continued investment in capabilities and platform expansion to capture a larger opportunity of the EX market.The company is embedding AI across the portfolio. Freshworks’ AI capabilities, particularly through its Freddy AI platform, are emerging as an important differentiator. Management highlighted Freddy AI Copilot as one of its fastest-growing products, with strong customer growth, business attach rates and accelerating traction among AI clients on the first quarter earnings call. This is likely to have cushioned performance in the quarter to be reported. Freshworks Inc. price-consensus-chart | Freshworks Inc. Quote Freshworks remains focused on driving profitability alongside growth. The company is executing on cost-cutting initiatives, including workforce trimming and accelerating use of AI and automation internally. Non-GAAP operating income is projected to be between $41 million and $43 million for the second quarter. While EX remains robust, the Customer Experience (CX) segment is projected to grow at a more modest pace. In the last reported quarter, CX ARR increased 6% year over year, and management expects low single-digit growth for 2026. The company is focused on improving efficiency and profitability in this segment through platform consolidation (Freshdesk Omni), better customer alignment and disciplined go-to-market execution. Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season. Arista Networks ANET currently has an Earnings ESP of +3.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. ANET is scheduled to report quarterly earnings on Aug. 4. The Zacks Consensus Estimate for ANET’s to-be-reported quarter’s earnings and revenues is pegged at 89 cents per share and $2.83 billion, respectively. Shares of ANET have gained 45.5% in the past year.Caterpillar CAT presently has an Earnings ESP of +4.96% and a Zacks Rank #3. CAT is scheduled to report quarterly numbers on Aug. 4. The Zacks Consensus Estimate for Caterpillar’s to-be-reported quarter’s earnings and revenues is pegged at $6.25 per share and $19.31 billion, respectively. Shares of CAT have risen 89% in the past year. Advanced Micro Devices, Inc. AMD has an Earnings ESP of +1.56% and a Zacks Rank #2 at present. AMD is scheduled to report quarterly figures on Aug. 4. The Zacks Consensus Estimate for AMD’s to-be-reported quarter’s earnings and revenues is pegged at $1.61 per share and $11.32 billion, respectively. Shares of AMD have skyrocketed 185.3% in the past year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshworks Inc. (FRSH) : Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report Caterpillar Inc. (CAT) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Freshworks stock is facing a valuation tension, with the share price down around 42% over the last three years while the current market multiples suggest the stock leans expensive rather than clearly cheap. Freshworks has declined 41.7% over the past three years, which raises the question of whether the market is still adjusting its expectations for the business. Expectations for Freshworks to translate its product footprint into more durable revenue and cash generation can support the current valuation, while any disappointment on profitability or cash flow timing may weigh heavily on what investors are willing to pay. With a value score of 4 out of 6, Freshworks screens as a mixed picture rather than a clear bargain or clear overvaluation on the broader checks. The issue now is whether Freshworks' current price already builds in most of the achievable upside, or if the recent weakness has left enough margin of safety for new investors. Find out why Freshworks' -27.6% return over the last year is lagging behind its peers. The P/E ratio is the most straightforward way to see what you are paying today for each dollar of Freshworks earnings. On this measure, Freshworks trades on about 15.8x earnings, which is well below the broader software industry average of roughly 27.8x and also below the peer group average of around 49.5x. However, the tailored fair P/E ratio for Freshworks, which blends factors like growth profile, margins, size and risk, is estimated at about 8.3x. That is a meaningful gap to the current 15.8x. This suggests that, even after allowing for the company specific characteristics, the stock is pricing in more optimism than this framework supports. On this P/E yardstick, Freshworks stock appears overvalued relative to what the fair multiple model suggests would be reasonable. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where this Freshworks valuation puzzle leaves off by spelling out which paths for growth, margins and earnings would need to play out for the stock to look meaningfully stronger or weaker than its current pricing. Each narrative links its number to a clear view on how Freshworks' growth, profitability and risks might evolve, giving you a reference point you can revisit as new information comes through. The Freshworks community is split between a scenario where AI and mid market execution reset the stock higher and one where tougher competition and customer mix keep the brakes on. Bull case: 51% undervalued Read the full Bull Case to see why Freshworks could be undervalued Bear case: 28% overvalued Read the full Bear Case to see why Freshworks could be overvalued Do you think there's more to the story for Freshworks? Head over to our Community to see what others are saying! Freshworks screens as overvalued on current earnings multiples, which means the market is already paying up for a stronger profitability and cash generation story than the tailored fair P/E implies. With broader valuation checks landing in mixed territory, the stock does not stand out as either a clear bargain or a clear excess. What matters most from here is whether Freshworks can convert its product and AI momentum into more durable margins and cash flow. That is the single assumption that will decide whether today’s premium multiple holds or proves too rich. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include FRSH. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]