Financial Data and Key Metrics Changes - Freshworks reported Q3 2025 revenue of $215.1 million, a 15% year-over-year increase on both an as-reported and constant currency basis, exceeding previous estimates by approximately three points [5][20] - Non-GAAP operating margin expanded to 21%, five points above estimates, with a free cash flow margin of 27% [5][22] - Adjusted free cash flow for Q3 was $57.2 million, resulting in a 27% margin, an improvement of over 5 percentage points year-over-year [26] Business Line Data and Key Metrics Changes - Employee Experience (EX) business grew to over $480 million in ARR, representing 24% year-over-year growth [7][21] - Customer Experience (CX) business increased to over $390 million in ARR, reflecting 8% growth year-over-year [16][21] - The number of customers contributing more than $50,000 in ARR grew 20% year-over-year to 3,612 customers, representing over 50% of total ARR [23] Market Data and Key Metrics Changes - The number of new and expansion deals exceeding $50,000 in ARR increased by over 40% year-over-year [6] - The company added nearly 75,000 customers by the end of Q3, with over 260 net new customers added in the quarter [23] Company Strategy and Development Direction - Freshworks aims to reach $1.3 billion in ARR in the next three years, focusing on Employee Service Management (ESM), AI, and IT Asset Management (ITAM), each targeting over $100 million in ARR [6][12] - The company is expanding its ESM solution, FreshService for Business Teams, as a standalone product to target non-IT functions, which has already doubled its ARR to exceed $35 million [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformative AI opportunity, highlighting over 50 AI-driven applications currently in use by customers [6][12] - The company anticipates a one-time increase in spending during Q4 to expand its pipeline and drive customer acquisition, which may modestly impact operating margins [30] Other Important Information - Freshworks completed its inaugural $400 million share repurchase program, buying back approximately 27.9 million shares at an average price of $14.35 [26][27] - The company plans to discontinue reporting total customer count quarterly, shifting focus to larger customer measures that better reflect business trajectory [24] Q&A Session Summary Question: Discussion on selling ESM as a standalone solution - Management confirmed that FreshService for Business Teams has seen significant demand outside core IT departments, with a strong value proposition and no new Salesforce required for sales [34][36] Question: Insights on the buy-back program - Management completed the inaugural buy-back program and is open to discussing future capital allocation strategies, including potential M&A opportunities [37] Question: Balancing monetization versus adoption of Freddy AI tools - Management explained the different monetization models for Freddy AI products, indicating a shift towards higher pricing aligned with industry standards [39][41] Question: Government exposure and impact from the government shutdown - Management reported no impact from the government shutdown, noting continued success in landing government and university contracts [45] Question: Details on one-time investment in Q4 - Management clarified that the one-time investment is primarily for marketing and demand generation efforts to capitalize on strong demand for EX products [46] Question: Key differentiators in ITSM win rates - Management highlighted the enterprise-grade solution and flexibility of their offerings as key differentiators in winning larger deals against competitors [56][58]

Core Viewpoint - Freshworks forecasts fourth-quarter revenue exceeding Wall Street estimates, driven by increasing demand for its AI-powered software tools [1] Group 1 - Freshworks is betting on the growing demand for its artificial intelligence-powered software tools [1]

Financial Performance - Freshworks' Q3 2025 revenue reached $215.1 million, representing a year-over-year growth of 15% [24] - The company's non-GAAP income from operations for Q3 2025 was $45.2 million [38] - Freshworks generated $57.2 million in free cash flow during Q3 2025 [42] - The company anticipates revenue between $217.0 million and $220.0 million for Q4 2025, projecting a full-year 2025 revenue of $833.1 million to $836.1 million [44] Customer Base and Retention - Freshworks has nearly 75,000 paying customers across over 120 countries [13] - Net dollar retention rate for Q3 2025 was 104% [36] - Customers contributing more than $5,000 in ARR reached 24,377 in Q3 2025 [32] - The number of customers with >$50K ARR was 3,612 in Q3 2025 [32] Regional Revenue Distribution - North America accounts for 39% of Freshworks' revenue [27] - Europe, the Middle East, and Africa (EMEA) contribute 47% to the company's revenue [27]

Revenue Performance - Total revenue for the three months ended September 30, 2025, was $215.1 million, a 15% increase from $186.6 million in the same period of 2024[111] - The company generated $616.1 million in revenue for the nine months ended September 30, 2025, reflecting a 17% increase from $525.8 million in 2024[111] - Revenue for the three months ended September 30, 2025, was $215,118 thousand, representing a 15% increase from $186,575 thousand in the same period of 2024[148] - Subscription services, software licenses, and maintenance revenue increased by $28,575 thousand, or 15%, for the three months ended September 30, 2025, compared to the same period in 2024[148] - Total revenue increased by $90.2 million, or 17%, for the nine months ended September 30, 2025, with approximately $51.5 million from existing customers and $38.7 million from new customers[161] Customer Metrics - The number of customers contributing more than $5,000 in annual recurring revenue (ARR) increased to 24,377, representing a 9% growth from 22,359 in 2024[116] - The net dollar retention rate decreased to 105% as of September 30, 2025, down from 107% in the same period of 2024, primarily due to lower expansion within existing customers[120] - The net dollar retention rate decreased to 105% as of September 30, 2025, down from 107% in the prior year, primarily due to lower expansion within existing customers driven by macroeconomic pressures[148] Operating Performance - The company incurred operating losses of $7.5 million for the three months ended September 30, 2025, compared to $38.9 million for the same period in 2024[111] - Non-GAAP income from operations for the three months ended September 30, 2025, was $45.2 million, compared to $24.0 million in 2024[125] - Operating expenses for the three months ended September 30, 2025, totaled $189,620 thousand, a decrease from $195,633 thousand in the same period of 2024[144] - Operating expenses decreased by $6.0 million, or 3%, for the three months ended September 30, 2025, primarily due to lower headcount following restructuring[151] Profitability and Cash Flow - Non-GAAP net income for the nine months ended September 30, 2025, was $155.2 million, an increase from $87.5 million in 2024[126] - Free cash flow for the nine months ended September 30, 2025, was $164,649 thousand, compared to $111,600 thousand for the same period in 2024[128] - The net loss for the three months ended September 30, 2025, was $4,680 thousand, compared to a net loss of $29,959 thousand in the same period of 2024[144] - The company reported a net loss of $7.7 million for the nine months ended September 30, 2025, adjusted for non-cash items including stock-based compensation of $149.5 million[179] Expenses - Cost of revenue for the three months ended September 30, 2025, was $32,955 thousand, an increase of $3,149 thousand, or 11%, from $29,806 thousand in the same period of 2024[149] - Gross margin improved to 85% for the three months ended September 30, 2025, up from 84% in the same period of the prior year, due to increased revenue and economies of scale[150] - Research and development expenses for the three months ended September 30, 2025, were $41,462 thousand, down from $47,885 thousand in the same period of 2024[144] - Research and development expenses decreased by $6.4 million, or 13%, for the three months ended September 30, 2025, mainly driven by lower stock-based compensation expenses[152] - General and administrative expenses increased by $8.3 million, or 6%, for the nine months ended September 30, 2025, primarily due to higher personnel-related costs[166] Cash and Liquidity - Cash inflows from operating activities amounted to $180.0 million for the nine months ended September 30, 2025[173] - As of September 30, 2025, the company had cash and cash equivalents of $420.9 million and marketable securities of $392.3 million[173] - The company expects existing liquidity sources to meet working capital and capital expenditure needs for at least the next 12 months[177] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $180.0 million, compared to $119.3 million for the same period in 2024[178][181] Share Repurchase and Financing Activities - The company repurchased a total of 26.9 million shares of Class A common stock for an aggregate purchase price of $384.5 million under the share repurchase program[175] - Net cash used in financing activities for the nine months ended September 30, 2025, was $428.3 million, primarily due to $386.3 million for share repurchases[184] Foreign Currency Exposure - Approximately 28% of revenue exposure was related to the euro and British Pound as of September 30, 2025, which may impact future results due to foreign currency fluctuations[112] - A hypothetical 10% adverse foreign currency exchange rate change could result in a gain or loss of approximately $12.3 million[190] - The total notional amount of outstanding designated foreign currency forward contracts was $69.6 million as of September 30, 2025[191] Interest Income - Interest income decreased by $9.8 million, or 25%, for the nine months ended September 30, 2025, primarily due to lower balances in marketable securities portfolios[169] - A hypothetical 100 basis points movement in interest rates would not have a material effect on the combined market value of cash and cash equivalents and marketable securities[194]

Revenue Performance - Total revenue for Q3 2025 was $215.1 million, a 15% increase from $186.6 million in Q3 2024[6] - Freshworks reported Q3 2025 revenue of $215,118,000, a 15% increase from $186,575,000 in Q3 2024[27] - For Q4 2025, revenue is expected to be between $217.0 million and $220.0 million, reflecting a year-over-year growth of 12% to 13%[9] - Full year 2025 revenue guidance is raised to between $833.1 million and $836.1 million, indicating a 16% year-over-year growth[9] Profitability Metrics - Non-GAAP income from operations was $45.2 million, with a non-GAAP operating margin of 21.0%, compared to $24.0 million and 12.8% in Q3 2024[6] - Gross profit for Q3 2025 was $182,163,000, compared to $156,769,000 in Q3 2024, reflecting a gross margin improvement[27] - Non-GAAP net income for Q3 2025 was $46,776, compared to $33,573 in Q3 2024, representing a 39.2% increase[34] - GAAP gross margin for Q3 2025 was 84.7%, slightly up from 84.0% in Q3 2024[33] - Non-GAAP operating margin for Q3 2025 was 21.0%, compared to 12.8% in Q3 2024, showing a significant improvement[34] Cash Flow and Operating Activities - Net cash provided by operating activities was $63.5 million, representing an operating cash flow margin of 29.5%, up from $42.3 million and 22.7% in Q3 2024[6] - The company reported a net cash provided by operating activities of $63,472,000 for Q3 2025, up from $42,329,000 in Q3 2024[31] - Adjusted free cash flow was $57.2 million, with an adjusted free cash flow margin of 26.6%, compared to $40.1 million and 21.5% in Q3 2024[6] - Adjusted free cash flow for Q3 2025 was $57,209, compared to $40,105 in Q3 2024, marking a 42.6% increase[35] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $180,036, up from $119,284 in the same period of 2024, a 51.0% increase[35] Customer Metrics - The number of customers contributing more than $5,000 in ARR increased by 9% year-over-year to 24,377[11] - The net dollar retention rate was 105%, slightly down from 107% in Q3 2024[11] Cost Management - Operating expenses totaled $189,620,000 in Q3 2025, down from $195,633,000 in Q3 2024, indicating cost management efforts[27] - Stock-based compensation expense for Q3 2025 was $48,529,000, down from $58,709,000 in Q3 2024[32] Asset and Liability Overview - Cash and cash equivalents decreased to $420,934,000 as of September 30, 2025, from $620,315,000 at the end of 2024[29] - Total assets decreased to $1,371,959,000 as of September 30, 2025, down from $1,611,884,000 at the end of 2024[29] - Deferred revenue increased to $348,001,000 as of September 30, 2025, compared to $323,435,000 at the end of 2024, indicating strong future revenue potential[29] Management Changes - The company appointed Enrique Ortegon as Senior Vice President and General Manager of Americas Field Sales[11] Currency Impact - Freshworks' revenue adjusted for constant currency also showed a 15% growth, indicating stable performance despite currency fluctuations[32]

Core Insights - Freshworks Inc. has launched Freshservice for Business Teams as a standalone product, allowing non-IT departments to enhance service delivery without needing an existing IT Service Management (ITSM) implementation [1] - The product has seen significant growth, doubling its annual recurring revenue to over $35 million as of September 30, 2025, with one in four eligible ITSM customers utilizing it [2] Product Features and Benefits - Freshservice for Business Teams enables non-IT functions to utilize AI for automating processes, improving efficiency, and enhancing ticket resolution [4] - The solution connects fragmented tools and workflows, allowing organizations to scale service delivery efficiently across various departments [5] - Prebuilt workflows and templates simplify complex HR processes like onboarding and offboarding, facilitating faster adoption [6] - The platform offers an intuitive user interface and no-code automation, making it accessible for teams without technical resources [7] - It provides a cost-effective alternative to traditional IT suites, focusing on rapid deployment and low total cost of ownership [8] Market Demand and Trends - There is a growing demand for solutions that improve employee experiences and streamline processes across multiple departments without extensive customization [9]

Core Insights - Freshworks Inc. reported strong financial results for Q3 2025, exceeding previous estimates in growth and profitability metrics, driven by the integration of AI into their software solutions [2][6]. Financial Summary - Total revenue for Q3 2025 was $215.1 million, a 15% increase from $186.6 million in Q3 2024, with the same growth rate when adjusted for constant currency [6]. - GAAP loss from operations was $(7.5) million, improving from $(38.9) million in Q3 2024, resulting in an operating margin of (3.5)% compared to (20.8)% [6]. - Non-GAAP income from operations was $45.2 million, with a non-GAAP operating margin of 21.0%, up from $24.0 million and 12.8% in Q3 2024 [6]. - GAAP net loss per share was $(0.02) based on 286.2 million weighted-average shares outstanding, compared to $(0.10) based on 302.1 million shares in Q3 2024 [6]. - Non-GAAP diluted net income per share was $0.16, compared to $0.11 in Q3 2024 [6]. - Net cash provided by operating activities was $63.5 million, representing a margin of 29.5%, up from $42.3 million and 22.7% in Q3 2024 [6]. - Adjusted free cash flow was $57.2 million, with a margin of 26.6%, compared to $40.1 million and 21.5% in Q3 2024 [6]. Customer Metrics - The number of customers contributing more than $5,000 in ARR reached 24,377, a 9% year-over-year increase [7]. - The net dollar retention rate was 105%, slightly down from 107% in Q3 2024 [7]. Business Highlights - Freshworks onboarded several new customers, including AllSaints/John Varvatos and Société Générale, expanding its market presence [7]. - The company appointed Enrique Ortegon as Senior Vice President and General Manager of Americas Field Sales [14]. Financial Outlook - For Q4 2025, Freshworks expects revenue between $217.0 million and $220.0 million, with year-over-year growth of 12% to 13% [9]. - The full-year revenue forecast is between $833.1 million and $836.1 million, reflecting a 16% growth [9].

Core Viewpoint - Freshworks Inc. is expected to report a year-over-year increase in earnings and revenues for the quarter ended September 2025, with a consensus outlook indicating potential stock price movement based on actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is anticipated to be released on November 5, with expected earnings of $0.13 per share, reflecting an 18.2% increase year-over-year, and revenues projected at $208.62 million, up 11.8% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 11.11% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [12]. Historical Performance - Freshworks has a history of beating consensus EPS estimates, having done so in the last four quarters, including a notable surprise of +50.00% in the last reported quarter [13][14]. Zacks Rank - The stock currently holds a Zacks Rank of 1 (Strong Buy), which typically increases the likelihood of a positive earnings surprise, although the lack of a positive Earnings ESP reading makes predictions uncertain [12][10].

Core Thesis - Freshworks Inc. presents a compelling growth story despite recent volatility, with a clear path toward profitability and strong fundamentals [2][5] Financial Performance - As of October 8th, Freshworks' share was trading at $11.18, with a forward P/E of 17.15 [1] - Non-GAAP operating income more than tripled year-over-year in Q2 2025, while GAAP operating losses shrank by 80% [2] - The company holds $926 million in cash and equivalents, forecasting GAAP profitability by 2026 [2] Analyst Sentiment - Analysts maintain a consensus "Buy" rating, with 12-month price targets ranging from $20.07 to $23.25, and some targets reaching $27.00 [3] - A key growth driver is the Freddy AI platform, generating over $20 million in ARR from more than 5,000 paying customers [3] Market Challenges - The stock recently dropped over 10% due to downgrades from major institutions, including a $13.00 price target from Wells Fargo [4] - Q2 2025 revenue grew 18% year-over-year, but full-year guidance projects a deceleration to 14–15% growth, contributing to near-term uncertainty [4] Investment Opportunity - Despite short-term pressures, the recent correction may represent an attractive entry point for investors, with accelerating profitability and successful enterprise expansion [5]

Core Viewpoint - Freshworks Inc. is set to announce its financial results for the third quarter of 2025 on November 5, 2025, with a live audio webcast to discuss the results and business highlights [1][2]. Group 1: Financial Results Announcement - The financial results for the third quarter ended September 30, 2025, will be announced after market close on November 5, 2025 [1]. - A live audio webcast will take place at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on the same day [2]. - The webcast will be accessible via Freshworks' investor relations website, and a replay will also be available [2]. Group 2: Company Overview - Freshworks Inc. specializes in uncomplicated service software aimed at enhancing customer and employee experiences [3]. - The company offers enterprise-grade solutions that are powerful yet user-friendly, designed to deliver quick results [3]. - Over 74,000 companies, including notable names like Bridgestone, New Balance, Nucor, S&P Global, and Sony Music, utilize Freshworks' customer experience (CX) and employee experience (EX) software [3].