10-Q · May 5, 2026
Freshworks (FRSH) reported a strong performance for Q1 2026, with revenue of $228.6 million, representing a 16% increase year-over-year. The company also achieved a non-GAAP EPS of $0.11, exceeding estimates and…
Earnings analysis · 10-Q
FRSH earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Freshworks delivered 16% year-over-year Q2 revenue growth to $237.377 million, maintained an 85% gross margin, and moved to $6.060 million of GAAP operating income from an $8.656 million loss a year ago. Cash generation…
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Freshworks delivered 16% year-over-year Q2 revenue growth to $237.377 million, maintained an 85% gross margin, and moved to $6.060 million of GAAP operating income from an $8.656 million loss a year ago. Cash generation remained strong, with $52.011 million of quarterly free cash flow, although it was modestly below the prior-year quarter and retention declined 2 percentage points to 104%. The filing emphasizes persistent macroeconomic and foreign-exchange uncertainty, while confirming that liquidity of $664.1 million across cash and marketable securities is expected to fund needs for at least 12 months.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.01
- Segment
- Freshworks has no reportable segment revenue disclosure. Subscription services, software licenses and maintenance: $234.588 million, up 16% year over year from $201.982 million.
- Segment
- Professional services: $2.789 million, up 3% year over year from $2.696 million.
What stood out
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Revenue growth remained in the mid-teens
Q2 revenue rose 16% year over year to $237.377 million from $204.678 million and increased 3.8% sequentially from implied Q1 revenue of $228.633 million. Subscription/software-license/maintenance revenue increased 16% to $234.588 million.
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GAAP operating profitability achieved
GAAP operating income improved to $6.060 million (2.6% margin) from a $8.656 million operating loss (4.2% negative margin) a year earlier; it also reversed Q1's implied $8.060 million operating loss. GAAP diluted EPS was $0.01, versus a $0.01 loss in Q2 2025.
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Gross margin remained stable at 85%
Gross margin held at 85% as gross profit grew to $201.281 million from $173.536 million. Cost of revenue rose 16% to $36.096 million, matching revenue growth despite a $4.6 million increase in third-party hosting costs.
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Cash generation stayed resilient
Operating cash flow was $58.523 million in Q2, essentially flat with $58.591 million a year ago; free cash flow was $52.011 million after $6.512 million of capex and capitalized software, a 2.8% decline from $53.535 million.
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Larger-customer base continued to expand
Customers contributing more than $5,000 of ARR increased 6% to 25,356, while their ARR represented 92% of total ARR, up from 91%. Revenue growth included $16.0 million from existing customers and $16.7 million from new customers, each net of contraction and churn.
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Liquidity remains substantial after buybacks
The company held $494.7 million of cash and cash equivalents plus $169.4 million of marketable securities at June 30, 2026. It repurchased 24.0 million shares for $204.5 million during the first six months, leaving $195.5 million authorized.
What to watch
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Retention softened amid FX pressure
Net dollar retention declined to 104% from 106%, which management primarily attributed to unfavorable foreign-exchange movements. Approximately 29% of Q2 revenue had euro and British-pound exposure, versus 27% a year earlier.
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Restructuring costs weigh on reported results
Q2 included $7.032 million of restructuring charges and $5.6 million of restructuring cash payments during the first half. The restructuring plan was initiated in May 2026, and these charges reduced reported operating income.
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FX volatility and lower interest income
Interest and other income fell 66% to $4.204 million from $12.547 million, including a $4.2 million unrealized FX loss tied mostly to the Indian rupee. A hypothetical 10% change in foreign-currency rates would produce an estimated $15.9 million gain or loss on non-USD monetary assets and liabilities.
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No material risk-factor updates reported
Item 1A states there were no material changes from the risk factors in the December 31, 2025 Form 10-K. Management nonetheless says inflation, market volatility and geopolitical developments may persist for the foreseeable future and could affect demand.
Management's outlook
The 10-Q contains no explicit quantitative revenue or EPS guidance. Management states that existing liquidity should cover working-capital and capital-expenditure needs for at least the next 12 months.
Earlier filings 4
10-K · February 26, 2026
Freshworks Inc. reported a solid performance for the year ended December 31, 2025, with total revenue reaching $838.8 million, a 16% increase year-over-year. Notable was the achievement of net income of $183.7 million,…
10-Q · November 5, 2025
Freshworks Inc. reported strong revenue growth in Q3 2025, with revenue of $215.1 million, a 15% increase year-over-year and beating expectations by approximately $4.4 million. Notably, the company also recorded a…
10-Q · July 29, 2025
Freshworks (FRSH) reported strong Q2 2025 results with significant revenue growth of 18% year-over-year, reaching $204.7 million, alongside a notable improvement in EPS to $0.18, exceeding consensus estimates. The…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.