Freshworks turns profitable in Q2, revenue up 16%

Software-as-a-service company Freshworks reported 16% year-on-year growth in revenue for the second quarter, and turned profitable again, as it continued to benefit from growing adoption of its enterprise AI offerings.

The Nasdaq-listed company reported revenue of $237.4 million for the quarter ended June 30, compared with $204.7 million a year earlier. Operating income stood at $6.1 million in the quarter under US GAAP (generally accepted accounting principles), compared to a loss of $8.7 million in the year-ago quarter.

This translates to an operating margin of 2.6% in Q2, compared to a negative margin of 4.2% in the year-ago quarter. The company follows calendar-year accounting.


Guidance raised
Encouraged by the strong quarterly results, which surpassed its own Q2 outlook, Freshworks has raised its full-year guidance for revenue and net income. The company now expects full-year revenue to range between $963.5 million and $966.5 million, up from the previous forecast of $958-$964 million.

Chief executive Dennis Woodside said the company has hit the GAAP profitability milestone months ahead of schedule. He added that annual recurring revenue (ARR) from its flagship product EX grew 24% year on year, while Freddy AI Copilot, an AI assistant built into its software suite, was attached to more than 71% of new enterprise deals, signalling stronger customer adoption of its AI platform.

“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,” he said in a statement.

The company had briefly turned profitable in the fourth quarter of 2025, posting an operating profit of $39.7 million, helped by a one-time tax gain as well as a one-off accounting reversal of stock-based compensation expense following the departure of founder Girish Mathrubootham as executive chairman.

Customer base
Freshworks continued to report strong traction among larger customers. The company said more than 60% of its total ARR comes from mid-market and enterprise customers.

The number of customers contributing more than $100,000 in ARR increased 25% year on year to 1,746, while customers contributing over $50,000 in ARR rose 18% to 4,091. Customers generating more than $5,000 ARR increased 6% to 25,356.

North America continued to be the company's largest market with 47% revenue share, followed by Europe, the Middle East and Africa at 38%.

Last quarter, the company said it would lay off 11% of its global workforce, affecting nearly 500 employees, as it ramps up the use of artificial intelligence across its business. The June quarter included a restructuring fee of $7 million related to this announcement.

For the third quarter, the company forecast revenue to range between $244.5 million and $245.5 million.