Financial Data and Key Metrics Changes - Freshworks achieved profitability for the first time in its history, generating record free cash flow in 2025, with a free cash flow margin of 25% [5][24][29] - Q4 total revenue increased to $222.7 million, growing 14% year-over-year on an as-reported basis and 13% on a constant currency basis [20] - Annual recurring revenue (ARR) ended at $907 million, representing 18% growth year-over-year on an as-reported basis [9] Business Line Data and Key Metrics Changes - Employee Experience (EX) business reached approximately $510 million in ARR, representing 26% year-over-year growth on an as-reported basis [21][10] - Customer Experience (CX) business ended the year with $395 million in ARR, reflecting year-over-year growth of 9% on an as-reported basis [21][16] - Device42 ended 2025 with over $40 million in ARR, with a 30% attach rate to top new EX deals [11][21] Market Data and Key Metrics Changes - Over 1,500 customers now contribute more than $100,000 in ARR, representing a 28% year-over-year growth [9] - The number of customers contributing more than $50,000 in ARR grew 23% year-over-year [26] - Net dollar retention rate was 108% on an as-reported basis, with expectations to improve to approximately 105% in Q1 2026 [25][44] Company Strategy and Development Direction - Freshworks aims to expand its EX business and monetize AI at scale, targeting $100 million in AI-driven ARR by 2028 [17][14] - The acquisition of FireHydrant is expected to enhance IT operations management capabilities and open an $8 billion addressable market [12][34] - The company is focused on integrating its product offerings to provide a unified service operations platform for IT teams [13][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth and profitability, projecting revenue growth of approximately 13.5%-14.5% for the full year 2026 [33][32] - The company anticipates continued demand for its EX solutions, particularly in the mid-market segment [72][73] - Management highlighted the importance of AI in driving customer satisfaction and operational efficiency [15][59] Other Important Information - Freshworks generated $56.2 million in free cash flow in Q4, outperforming expectations due to strong cash collections [28] - The company ended the year with nearly $844 million in cash, cash equivalents, marketable securities, and restricted cash [30] Q&A Session Summary Question: What factors are creating headwinds on the CX side of the business? - Management noted that the focus has been on EX, and the unification of conversational and ticketing capabilities is expected to drive faster growth in CX [39][40] Question: How should we think about the attach rate for Device42 trending? - Management indicated that Device42 is integral to the growth of the EX business and is expected to drive retention and expansion [50][51] Question: What are the expectations for Freddy AI's contribution to growth? - Management reported that Freddy AI has crossed $25 million in ARR and is expected to continue driving growth as capabilities improve [58][60] Question: How does the company view its guidance compared to previous years? - Management expressed confidence in the current guidance, reflecting strong momentum in the EX market and a clear strategy for growth [62][63]

Freshworks (NasdaqGS:FRSH) Q4 2025 Earnings call February 10, 2026 05:00 PM ET Company ParticipantsDennis Woodside - CEO and PresidentKate Skolnick - VP of Investor RelationsTyler Sloat - COO and CFOConference Call ParticipantsAlex Zukin - AnalystAustin Cole - AnalystBilly Fitzsimmons - AnalystDavid Hynes - AnalystJonathan Macari - AnalystOscar Saavedra - AnalystRob Oliver - AnalystScott Berg - AnalystTaylor McGinnis - AnalystOperatorHello, everyone. Thank you for joining us, and welcome to the Freshworks f ...

Financial Data and Key Metrics Changes - Freshworks achieved profitability for the first time in its history, generating record free cash flow in 2025, with a free cash flow margin of 25% in Q4 [5][21] - Q4 total revenue increased to $222.7 million, growing 14% year-over-year on an as-reported basis and 13% on a constant currency basis [19] - Annual recurring revenue (ARR) ended at $907 million, representing 18% growth year-over-year on an as-reported basis [9] Business Line Data and Key Metrics Changes - Employee Experience (EX) business crossed the $500 million ARR mark, reaching approximately $510 million, representing 26% year-over-year growth [20] - Customer Experience (CX) business reached $395 million in ARR, reflecting year-over-year growth of 9% on an as-reported basis [20] - Device42 ended 2025 with over $40 million in ARR, with a 30% attach rate to top new EX deals [11] Market Data and Key Metrics Changes - Over 1,500 customers now contribute more than $100,000 in ARR, representing a 28% year-over-year growth [9] - The number of customers contributing more than $50,000 in ARR grew 23% year-over-year [25] - Net dollar retention was 108% on an as-reported basis, with expectations to improve to approximately 105% in Q1 2026 [24] Company Strategy and Development Direction - Freshworks aims to expand its EX business and monetize AI at scale, targeting $100 million in AI-driven ARR by 2028 [16][13] - The acquisition of FireHydrant is expected to enhance IT operations management capabilities and open an $8 billion addressable market [12] - The company is focused on integrating its product offerings to provide a unified service operations platform for IT teams [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth and profitability, projecting revenue growth of approximately 13.5%-14.5% for the full year 2026 [31][32] - The company anticipates continued demand in the EX market, with a clear strategy to drive top-line growth [18][60] - Management highlighted the importance of AI as a revenue driver, with significant growth potential in the coming years [56] Other Important Information - Freshworks generated $56.2 million in free cash flow in Q4, outperforming expectations due to strong cash collections [27] - The company ended the year with cash, cash equivalents, and marketable securities of nearly $844 million [28] - Freshworks is on track to achieve sustainable GAAP profitability by Q4 of 2026 [23] Q&A Session Summary Question: What factors are creating headwinds on the CX side of the business? - Management noted that the focus has been on EX, and the recent unification of conversational and ticketing capabilities is expected to drive faster growth in CX [37] Question: How should we think about the attach rate for Device42 trending in 2026? - Management indicated that Device42 is integral to sustaining growth in EX, with expectations for continued success in larger organizations [48] Question: What are the expectations for Freddy AI's contribution to growth in 2026? - Management expressed confidence in Freddy AI's growth potential, with expectations for significant upside as capabilities improve [56] Question: How does the company view its guidance compared to last year? - Management stated that the current guidance reflects increased confidence in the EX opportunity and the execution of their strategy [60] Question: What is the strategy for penetrating the customer base with Freddy AI? - The focus is on building out agentic capabilities and prepackaged workflows for both CX and EX, which are expected to drive increased usage [84]

Group 1 - Freshworks Inc. (NASDAQ:FRSH) is recognized as a strong software application stock by hedge funds, with Wells Fargo maintaining an Equal Weight rating and a target price of $13, indicating a potential upside of nearly 15% for investors [1] - Recent price increases for Freshdesk plans have resulted in double-digit percentage hikes across all tiers, which could contribute an additional 3% growth for the business in FY26 [2] - Needham has a bullish outlook on Freshworks, assigning a Buy rating with a target price of $25, suggesting a significant upside potential of 121% [2] Group 2 - There is strong demand anticipated for Freshservice, Freshworks' IT service management platform, due to its user-friendly features and competitive pricing, particularly in up-market segments [3] - Freshdesk, the customer service software, is experiencing stable demand, while early adoption of Freddy AI across both platforms is expected to provide automation benefits and a competitive advantage [3] - Freshworks specializes in cloud-based SaaS solutions, focusing on AI-enabled offerings for IT service management, customer experience, and sales & marketing, serving a wide range of clients from startups to large enterprises [4]

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 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 Insights - Freshworks has appointed Enrique Ortegon as the new Senior Vice President and General Manager of Americas Field Sales to enhance growth and customer expansion across North and South America [1][2] - Ortegon brings over two decades of experience in enterprise SaaS and go-to-market strategy, having previously held senior roles at DocuSign and Salesforce [2][3] - Freshworks aims to deliver exceptional customer and employee experiences through its uncomplicated service software, which is trusted by over 74,000 companies [4] Company Strategy - The company focuses on a growth strategy that emphasizes operational excellence and strategic vision to accelerate regional growth [2] - Freshworks' value proposition is centered around simplicity and superior return on investment, distinguishing it from competitors in the employee and customer experience markets [3] Leadership Background - Enrique Ortegon has a strong track record in scaling businesses from SMB to enterprise levels and has significant operating experience across the Americas [2] - His previous roles include leading North America Majors, Mid-Market, and SMB businesses at DocuSign, and various senior leadership positions at Salesforce [2] Community Engagement - Beyond corporate roles, Ortegon advises startups and an investment fund focused on empowering Latin entrepreneurs and supporting underrepresented communities [3]

Core Insights - The article highlights ten lesser-known companies that leverage artificial intelligence (AI) to address specific industry challenges, providing investment opportunities without the high valuations seen in major players like Nvidia and Microsoft [1][2][3] Company Summaries - **Freshworks**: A SaaS platform offering customer support and CRM solutions, with over 68,000 global customers. Its Freddy AI features enable automation for small and midsize businesses, showing mid-teens revenue growth and improving margins [5]. - **Oscar Health**: A tech-enabled health insurer aiming to simplify interactions in the healthcare sector. Its Superagent AI assistant is designed to reduce service costs and improve efficiency, potentially capturing significant market share [6]. - **Nerdy**: Operates Varsity Tutors and an AI-powered platform for education services, tapping into the $100 billion tutoring market. The company combines human expertise with AI to offer personalized learning experiences [8]. - **Lemonade**: A digital insurance company utilizing AI bots for underwriting and claims processing. Its automation could enhance margins if loss ratios stabilize, although it faces challenges in proving AI's effectiveness in underwriting [9]. - **Recursion Pharmaceuticals**: A biotech firm using AI and large datasets for drug discovery. Its partnership with Nvidia positions it as a potential leader in AI-driven therapeutics, with a market cap around $2 billion [10]. - **BigBear.ai**: Provides decision intelligence platforms for the U.S. Department of Defense. Its AI-based systems are well-suited for the growing demand in defense digitization, though it faces revenue volatility [11]. - **Amplitude**: Offers product analytics software that enhances user engagement through AI-generated insights. Despite competition, its focus on product optimization helps maintain differentiation [12]. - **PagerDuty**: A platform for IT incident management that uses AI to improve response times, delivering measurable ROI for enterprises. Its shift towards AI-driven operations aligns with the demand for faster issue resolution [13]. - **Sprinklr**: Operates a customer experience management platform with AI tools for engagement and insights, serving major brands like McDonald's and Nike, positioning it well for AI adoption in marketing [14]. - **Innodata**: Provides data engineering and AI training datasets, benefiting from the increasing demand for high-quality training data as AI adoption grows [15]. Investment Perspective - These ten companies apply AI to solve specific business problems, creating defensible niches in large markets. While they do not compete directly with Nvidia, they represent practical applications of AI across various industries [16].

Freshworks Investor Day 2025 Summary Company Overview - **Company**: Freshworks (NasdaqGS:FRSH) - **Event**: Investor Day 2025 - **Date**: September 11, 2025 - **Focus**: Uncomplicated AI-native service platform for customer and employee experiences Core Industry Insights - **Industry**: Software as a Service (SaaS) focusing on IT and customer service - **Market Size**: Total addressable market for EX (Employee Experience) and CX (Customer Experience) software is estimated at **$80 billion** [22] - **Target Market**: Mid-market and lower-end enterprise customers, which account for over **$10 trillion** in economic activity in the U.S. alone [22] Key Company Highlights - **Growth Metrics**: - Recurring revenue increased from approximately **$560 million** to **$840 million** in two years [10] - Achieved Rule of 45 milestone ahead of schedule [10] - AI monetization grew to **$20 million**, doubling in the last year [10] - 25% revenue growth from customers spending over **$100,000** [12] - Majority of revenue now from mid-market and enterprise customers [11] - **Product Portfolio**: - **Freshservice**: AI-powered platform for IT and employee services - **Freshdesk**: AI-powered customer service solution - **Freddy AI**: Includes Freddy AI Copilot, Freddy Insights, and Freddy AI Agents for enhanced customer and employee support [9] Strategic Focus Areas - **AI Integration**: Continuous infusion of AI across core products to enhance value and solve more problems [57] - **Vertical Expansion**: Focus on sectors like education, healthcare, and government [57] - **Add-on Products**: Scaling IT asset management and enterprise service management (ESM) products [58] - **Adjacency Expansion**: Exploring areas like AI Ops and SecOps for future growth [59] Customer Base and Testimonials - **Diverse Customer Base**: Over **74,000** companies including Fortune 500 firms like Panasonic and various government entities [6][7] - **Customer Success Stories**: - **Big Bus Tours**: Transformed customer service center into a profit center using Freddy AI [63] - **Modamax**: Unified IT operations and improved onboarding processes through Freshservice [51][52] Financial Outlook - **Future Projections**: On track to achieve over **$1.3 billion** in recurring revenue by 2028 with strong cash flow and operating margins [21] - **Sustained Growth**: EX business expected to sustain **20% growth** for years [21] Conclusion - Freshworks is positioned to capitalize on the growing demand for uncomplicated, AI-driven solutions in the SaaS market, with a clear strategy for growth and a strong commitment to customer success. The company aims to continue its upward trajectory by leveraging its innovative product offerings and expanding into new market segments.

Financial Performance & Growth - Freshworks' ARR exceeded $840 million[24], with a 2-year CAGR of 20%[24] - The company achieved 18% YoY revenue growth and a 27% adjusted FCF margin in Q2 2025[24] - Freshworks is on track for $1.3 billion+ ARR by 2028[34] - The company projects revenue between $822.9 million and $828.9 million for 2025, representing 14%-15% YoY growth[232] - Non-GAAP income from operations is projected between $153 million and $157 million for 2025[232] Customer Base & AI - Freshworks has 74,000+ paying customers across 120+ countries[21] - Mid-market and Enterprise customers account for >60% of total ARR[24] - Freddy AI is now a >$20 million ARR business[24, 96] Employee Experience (EX) - EX remains a durable 20%+ growth engine[34] - EX customers with >$100K ARR increased by 32% YoY[58] - Databricks achieved 23% ticket deflection via self-service using Freshworks[61]