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Freshworks (FRSH) FY Conference Summary Company Overview - Freshworks is a software company founded in 2010, primarily known for its Freshdesk product line, which has evolved to include AI-powered software for employee-facing (EX) and customer-facing (CX) products [3][4] - The company serves over 74,000 customers, focusing on IT and customer support teams to enhance efficiency and effectiveness [4] Financial Performance - The EX business has surpassed $450 million in revenue, growing over 22% year-over-year in constant currency, with approximately 19,000 customers [5] - The CX business has an annual recurring revenue (ARR) of over $380 million, growing 8% in the last quarter, up from 7% previously, with around 60,000 customers [6] Strategic Focus - The company is prioritizing the EX segment for growth, leveraging its competitive advantages against established players like ServiceNow [12][29] - AI integration across all products is a key strategy, with $20 million in ARR attributed to AI capabilities [13][36] - Freshworks aims to enhance its CX business by improving execution and focusing on the SMB and mid-market segments [14] Competitive Positioning - Freshworks differentiates itself by providing user-friendly, easy-to-implement software at competitive prices, targeting both SMBs and larger enterprises [15][16] - The company sees a significant opportunity in the underserved upmarket, primarily dominated by ServiceNow, which offers complex and expensive solutions [50][51] Sales and Marketing Strategy - Freshworks has two distinct sales motions: one for CX, primarily managed from India, and another for EX, focusing on enterprise sales [28][29] - The company is investing in building its enterprise sales capabilities and optimizing its marketing strategies to drive demand across both segments [30][31] AI Integration and Impact - AI is viewed as an accelerant for Freshworks, enhancing product utility and customer experience while potentially reducing the need for additional hiring among customers [36][46] - The company is focused on integrating AI features that improve agent productivity and customer engagement [41][43] Customer Base and Market Opportunities - Freshworks is expanding its customer base, targeting organizations of various sizes, from small businesses to large enterprises [58] - The company is also exploring adjacent markets, such as employee service management (ESM), to capture additional growth opportunities [60] M&A Strategy - Freshworks is open to pursuing mergers and acquisitions to enhance its product offerings, particularly in areas like security operations and IT operations [62][66] - The acquisition of Device 42 is highlighted as a successful example of entering a new market segment [64] Upcoming Events - Freshworks will hold an Investor Day on September 11, 2025, to provide updates on product strategy, financial goals, and market positioning [70][74] Conclusion - Freshworks is strategically positioned for growth in the EX market, leveraging AI and a strong customer base while addressing the competitive landscape effectively. The focus on execution, product innovation, and market expansion will be critical for its continued success.

SAN MATEO, Calif., Aug. 05, 2025 (GLOBE NEWSWIRE) -- Freshworks Inc. (NASDAQ: FRSH) today announced that it will host its Investor Day 2025 on Thursday, September 11 at 8:30 a.m. Pacific Time in San Francisco. Members of the Freshworks executive leadership team will provide in-depth insights about the company's vision, long-term strategy, product innovation, go-to-market priorities, and financial outlook— discussing how the company's uncomplicated, AI-assisted customer and employee service software will dri ...

Investor Relations Contact: Brian Lan IR@freshworks.com Media Relations Contact: Jayne Gonzalez PR@freshworks.com SAN MATEO, Calif., Aug. 04, 2025 (GLOBE NEWSWIRE) -- Freshworks Inc. (NASDAQ: FRSH) today announced that Tyler Sloat, Chief Operating Officer and Chief Financial Officer, is scheduled to participate in a fireside chat at the Oppenheimer 28th Annual Technology, Internet & Communications Conference on August 11, 2025 at 9:25 a.m. Pacific Time (12:25 p.m. Eastern Time). Freshworks Inc. (NASDAQ: FRS ...

Core Viewpoint - Freshworks reported strong Q2 2025 financial results, exceeding revenue and earnings expectations, driven by operational improvements and AI product adoption [1][5][14] Financial Performance - GAAP revenue reached $204.7 million, surpassing estimates of $198.8 million, marking a 17.6% year-over-year increase from $174.1 million [2][5] - Non-GAAP earnings per share were $0.18, significantly above the expected $0.11 and up 125% from $0.08 in Q2 2024 [2][5] - Non-GAAP income from operations was $44.8 million, a 241.2% increase from $13.1 million in the same quarter last year [2][6] - Adjusted free cash flow increased by 65.5% year-over-year to $54.3 million, with operating cash flow climbing to $58.6 million, up 61.4% [2][6] Profitability Metrics - Gross margin improved to 84.8%, up from 83.8% a year ago, while non-GAAP operating margin reached 21.9%, up from 7.5% [7][6] - Free cash flow margin improved to 26.5%, reflecting effective cost control relative to revenue [6] Customer Growth - The number of customers generating over $5,000 in annual recurring revenue increased by 10% year-over-year to 23,975, indicating strong long-term revenue retention potential [8] - Net dollar retention remained steady at 106%, reflecting stable customer spending [8] AI Developments - The Freddy AI suite surpassed $20 million in annual recurring revenue, showcasing the success of AI-driven solutions [9] - Freshworks launched the Freddy AI Agent Studio, a no-code tool for businesses to create AI-powered automation agents [9] Market Positioning - Freshworks secured a multi-year partnership with McLaren Racing, enhancing its visibility in enterprise sales and competing against larger SaaS vendors [10][11] - The company continues to focus on integrating AI features across its software offerings, utilizing a product-led growth strategy [4] Future Guidance - Management raised revenue guidance for Q3 2025 to between $207.0 million and $210.0 million, projecting 11-12% year-over-year growth [14] - Full-year revenue is expected to be in the range of $822.9 million to $828.9 million, indicating 14-15% growth [14] - Non-GAAP operating income is anticipated to rise to $153.0–$157.0 million, with earnings per share forecasted at $0.56–$0.58 [14] Competitive Landscape - The company faces competitive dynamics as larger software firms introduce their own AI features, which may impact customer adoption rates of Freshworks' AI modules [16]

Core Insights - Freshworks Inc. reported quarterly earnings of $0.18 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and showing an increase from $0.08 per share a year ago, resulting in an earnings surprise of +50.00% [1] - The company achieved revenues of $204.68 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.99% and up from $174.13 million year-over-year [2] - Freshworks has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $207.73 million, and for the current fiscal year, it is $0.57 on revenues of $818.93 million [7] - The estimate revisions trend for Freshworks was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Freshworks belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Freshworks reported Q2 revenue of $204.7 million, an 18% year-over-year increase, with a non-GAAP operating margin of 22%, up over 14 percentage points from the previous year [6][28][30] - Adjusted free cash flow grew 65% year-over-year to $54.3 million, resulting in a free cash flow margin of 27% [27][34] - Total customers increased to over 74,600, with a net addition of over 1,300 customers in the quarter [32][33] Business Line Data and Key Metrics Changes - Employee Experience (EX) business achieved over $450 million in ARR, representing 24% year-over-year growth [8][28] - Customer Experience (CX) business grew to over $380 million in ARR, reflecting an 11% year-over-year increase [18][29] - Professional services revenue contributed $2.7 million in Q2, driven by strong bookings and project completions [28] Market Data and Key Metrics Changes - The company experienced healthy demand across its diversified customer base, with no specific industry overrepresented [67] - The global partner program contributed to over one-third of ARR in Q2, with 130 new partners onboarded [24][55] Company Strategy and Development Direction - Freshworks focuses on three key growth drivers: investing in employee experience, delivering AI capabilities, and enhancing customer experience [7][13] - The company aims to expand its enterprise service management solutions, which could represent a $100 million opportunity [11][12] - Freshworks is actively integrating AI into its products, with over 5,000 customers now paying for AI-related offerings, resulting in an ARR of over $20 million [14][72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business's momentum and the strong demand for their products, despite macroeconomic uncertainties [68] - The company anticipates continued growth in the second half of the year, supported by investments in sales and marketing [40] Other Important Information - Freshworks repurchased 8.2 million shares at an average price of $13.89 per share, totaling nearly 15.9 million shares repurchased to date [35][36] - The company expects to generate approximately $215 million in adjusted free cash flow for the full year 2025 [34] Q&A Session Summary Question: AI agent consumption relative to expectations - Management indicated that AI is pacing at or slightly ahead of internal expectations, with good traction seen in AI products introduced recently [42][43] Question: Q3 guidance and EX growth expectations - Management clarified that while EX growth is strong, the comparison to previous quarters is affected by the anniversary of the Device 42 acquisition [46][50] Question: Long-term contribution of the global partner program - Management noted that the partner channel is expected to contribute a greater percentage of business over the next few years, with a balanced impact across EX and CX [55][57] Question: Macro environment impact on customer conversations - Management reported strong demand across the board, with a diversified revenue base mitigating risks from tariffs and economic uncertainties [66][68] Question: AI Copilot and agents revenue evolution - Management highlighted that AI adoption is still early, with significant growth potential as more customers begin to utilize AI capabilities [71][72] Question: Device 42's impact on net dollar retention - Management acknowledged that Device 42 had a negative impact on net dollar retention due to expected churn, but overall expansion trends remain positive [87][89]

Financial Data and Key Metrics Changes - Freshworks reported Q2 revenue of $204.7 million, an 18% year-over-year increase, with a non-GAAP operating margin of 22%, up over 14 percentage points from the previous year [4][25][27] - Adjusted free cash flow grew 65% year-over-year to $54.3 million, resulting in a free cash flow margin of 27% [26][34] - Total calculated billings reached $213.1 million, representing a 15% year-over-year growth [33] Business Line Data and Key Metrics Changes - Employee Experience (EX) business achieved over $450 million in ARR, reflecting a 24% year-over-year growth [7][27] - Customer Experience (CX) business increased to over $380 million in ARR, showing an 11% year-over-year growth [17][28] - Professional services revenue contributed $2.7 million in Q2, driven by strong bookings and project completions [27] Market Data and Key Metrics Changes - Freshworks ended Q2 with over 74,600 customers, adding more than 1,300 net new customers in the quarter [5][33] - The number of customers contributing more than $5,000 in ARR grew 10% year-over-year to 23,975 [32] - The cohort of customers contributing more than $50,000 in ARR grew 22% year-over-year to 3,460 [32] Company Strategy and Development Direction - Freshworks focuses on three key growth drivers: investing in employee experience, delivering AI capabilities, and enhancing customer experience [6][12] - The company aims to expand its enterprise service management solutions, which could represent a $100 million opportunity [10] - Freshworks is also enhancing its AI offerings, with over 5,000 customers now paying for AI products, resulting in an ARR of over $20 million [12][72] Management's Comments on Operating Environment and Future Outlook - Management expressed strong demand across the board, with a diversified revenue base and no significant exposure to industries affected by tariffs [70] - The company remains optimistic about maintaining momentum in the second half of the year, supported by a solid pipeline [70] - Freshworks anticipates continued growth in both EX and CX segments, with AI expected to be a significant growth catalyst moving forward [80][96] Other Important Information - Freshworks has onboarded over 130 new partners in 2025, with partners contributing to over one-third of ARR in Q2 [23][56] - The company is preparing for an Investor Day on September 11, where it will share more about its long-term vision and strategic priorities [40] Q&A Session Summary Question: AI agent consumption relative to expectations - Management indicated that AI is pacing at or slightly ahead of internal expectations, with good traction seen in AI products introduced in June [42][44] Question: Q3 guidance and EX growth expectations - Management clarified that while EX growth is strong, the growth rate is expected to moderate due to anniversary effects from previous acquisitions [46][51] Question: Contribution of the global partner program - Management noted that the partner program is contributing equally across EX and CX, with larger partners generating larger deals [54][56] Question: Changes in sales leadership and team performance - Management expressed satisfaction with the new sales leadership and noted that all regions exceeded internal targets in Q2 [62][65] Question: Macro environment and customer conversations - Management reported strong demand and a diversified revenue base, indicating resilience against macroeconomic challenges [68][70] Question: AI Copilot and agents revenue growth - Management highlighted the significant growth potential in AI, with a long way to go in customer adoption and monetization [72][96] Question: Device 42 integration timeline - Management confirmed plans to release a cloud version of Device 42 in 2026, with ongoing integration efforts [102]

Financial Performance - Revenue for Q2 2025 reached $204.7 million, representing an 18% year-over-year growth[26] - Non-GAAP income from operations for Q2 2025 was $44.8 million[42] - Free cash flow for Q2 2025 amounted to $54.3 million[46] Customer Metrics - The company has over 74,000 customers across more than 120 countries[12] - Customers contributing more than $5,000 in ARR reached 23,975 in Q2 2025[35] - The number of customers with >$50K ARR was 3,460 in Q2 2025[36] Regional Revenue Distribution - North America accounts for 47% of the company's revenue[30] - Europe, Middle East, and Africa (EMEA) contribute 12% to the revenue[30] - Asia-Pacific represents 39% of the revenue[30] - Rest of World accounts for 3% of the revenue[30] Future Outlook - The company projects revenue between $207 million and $210 million for Q3 2025, indicating an 11%-12% year-over-year growth[50] - The company anticipates non-GAAP income from operations to be between $31.2 million and $33.2 million for Q3 2025[50]

Table of Contents (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 001-40806 Freshworks Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Exact name of registrant as specified in its charter) Delaware 2950 S ...