Snapshot
Freshworks Inc. reported $215M of revenue in Q3 2025, up 15.3% year over year, with diluted EPS of $-0.02 and an operating margin of -3.5%.
- Revenue
- $215M
- YoY growth
- +15.3%
- Diluted EPS
- $-0.02
- Operating margin
- -3.5%
$215M
Revenue
+15.3%
YoY growth
$-0.02
Diluted EPS
-3.5%
Operating margin
01 Key takeaways
What management said
- •The primary purpose of today's call is to provide you with information regarding our Third Quarter 2025 performance and our financial outlook for our Fourth Quarter and Full Year 2025.
- •Such risks include, but are not limited to, our ability to sustain our growth, to innovate, to reach our long-term revenue goals, to meet customer demand, and to control costs and improve operating efficiency.
- •Reconciliations between GAAP and non-GAAP financial measures for historical periods are included in our earnings release, which is available on our Investor Relations website at ir.freshworks.com.
- •I encourage you to visit our Investor Relations site to access our earnings release, supplemental earnings slides, periodic SEC reports, and a replay of today's call, or to learn more about Freshworks.
- •Freshworks delivered an outstanding Q3, marking the third consecutive quarter this year that we surpassed our estimates across growth and profitability metrics.
- •We grew Q3 revenue 15% year-over-year to $215.1 million on both an as-reported and constant currency basis, approximately three points above the high end of our previously issued estimates.
- •Our free cash flow margin was 27%, and we added a fifth straight quarter of Rule of 40 Plus.
- •In Q3, we saw a more than 40% year-over-year increase in the number of new and expansion deals with greater than $50,000 in ARR.
- •Our strategy has focused on three key growth drivers: investing in employee experience, delivering AI capabilities across our products and accelerating adoption, and driving continued expansion in customer experience.
- •Employee experience continues to lead in durable growth, achieving over $480 million in ARR.
- •That represents 24% year-over-year growth on an as-reported basis and 23% year-over-year growth on a constant currency basis, an acceleration from Q2.
- •Three primary growth drivers that contributed to these results include expansion into departments outside of IT, continued growth up market, and deepening our foothold in IT asset management with Device42.
What went well
- •Q3 revenue grew 15% year-over-year to $215.1 million on both an as-reported and constant currency basis, approximately three points above the high end of estimates.
- •Third consecutive quarter surpassing estimates across growth and profitability metrics; fifth straight quarter of Rule of 40 Plus.
- •Non-GAAP operating margin expanded to 21%, five points above estimate; non-GAAP operating income was $45.2 million.
- •Free cash flow margin of 27% (over 5 percentage point improvement YoY); adjusted free cash flow of $57.2 million.
- •EX accelerated to over $480 million in ARR, 24% YoY as reported and 23% constant currency, an acceleration from Q2.
- •More than 40% year-over-year increase in the number of new and expansion deals with greater than $50,000 in ARR.
- •Delivered the highest ITSM competitive win rates in two years; closed the biggest Device42 new deal to date with the largest U.S.-based sporting goods retailer.
- •ESM (Freshservice for Business Teams) exceeded $35 million in ARR, doubling year-over-year; announced ESM as a standalone product sellable to HR, finance, facilities, and legal.
- •AI ARR has doubled year-over-year, with over 50 AI-driven applications in customers' hands and Freddy AI resolving millions of problems weekly.
- •Completed the inaugural $400 million share repurchase program, buying back ~27.9 million shares at an average price of $14.35 (12 million in Q3 at an average of $13.28).
- •New logos including Stellantis, Societe Generale, the Pennsylvania Gaming Control Board, and Travis Perkins; doubled law firm customer count to over 1,000.
What went wrong
- •Device42 represented a small drag of 60 basis points to net dollar retention, similar to the prior quarter.
- •Professional services revenue modestly declined quarter-over-quarter to just over $2 million amid the shift to leveraging the partner network.
- •Net dollar retention has stabilized in the 104%-105% constant currency range for three quarters without yet inflecting higher.
- •CX growth remained modest at 8% as reported (7% constant currency).
- •Inaugural $400 million buyback completed with no immediate replacement program announced, prompting analyst questions on capital allocation.
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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