Freshworks Inc. Q3 2025 earnings call

Thank you. Good afternoon, and welcome to Freshworks Third Quarter 2025 Earnings Conference call. Joining me today are Dennis Woodside, Freshworks Chief Executive Officer and President, and Tyler Sloat, Freshworks Chief Operating Officer and Chief Financial Officer. 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. Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our management's beliefs about our business and industry, including our financial expectations and estimates, uncertainties in the macroeconomic environment in which we operate, and market volatility, and certain other assumptions made by the company, all of which are subject to change.

These statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. 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. For a discussion of additional material risks and other important factors that could affect our results, please refer to today's earnings release, our most recently filed Form 10-K, and other periodic filings with the SEC. Freshworks assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this call, except as required by law. During the course of today's call, we will refer to certain non-GAAP financial measures.

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. With that, let me turn it over to Dennis.

Thank you, Brian. 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. Non-GAAP operating margin expanded to 21%, five points above our estimate. Our free cash flow margin was 27%, and we added a fifth straight quarter of Rule of 40 Plus. We ended the quarter with nearly 75,000 customers, including new logos such as global auto manufacturer Stellantis, multinational bank Société Générale, the Pennsylvania Gaming Control Board, and Travis Perkins, the U.K.'s leading distributor of building materials. Our positive results also reflect significant expansion deals with existing customers like Wiley, The Access Group, and iRhythm Technologies.

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. At our Investor Day in September, we outlined our path to $1.3 billion in ARR in the next three years, and we continue to make progress towards our goal of ESM, AI, and ITAM, each generating over $100 million in ARR. Before we dive into the results, I want to speak to the transformative AI opportunity ahead for Freshworks. We have over 50 AI-driven applications in the hands of customers right now, and the direct monetization of these products demonstrates that we are driving incremental growth and that customers are realizing tangible outcomes from our AI.

The headline here is that businesses need the right foundation: workflow, data, and security that all work together, and that's what we provide. Companies will continue to rely on us because we have the operational context, data connections, and governance needed to manage full-service functions like customer support and IT service at scale. Security, privacy, and compliance are already built into our architecture. That's what makes our AI enterprise-ready compared to general-purpose AI. 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.

Enterprise service management continues to be an important expansion lever as customers increasingly use Freshservice in areas of their business outside of IT. Our ESM solution, Freshservice for Business Teams, has doubled its annual recurring revenue in the past year and exceeded $35 million in ARR in Q3. Customers like Databricks, RingCentral, and Qualcomm are using our ESM offering to automate workflows and deliver more personalized employee experiences at scale. As of Q3, one in every four eligible Freshservice customers are using Freshservice for Business Teams. To meet this surging customer demand today, we announced that we are expanding enterprise service management access by making Freshservice for Business Teams available as an independent product for non-IT functions.

With a standalone product, we are no longer limited to using IT as our entry point, and we can now sell directly to HR, finance, facilities, and legal, even if an organization is already locked into another ITSM tool. Second, we continue to move up market with mid-size and enterprise customers. In Q3, ARR from customers who spend more than $100,000 with us grew 25% year-over-year. The steady flow of new product innovations like Employee Journeys, our AI-powered onboarding and offboarding capability, and increased adoption of business teams contributed to the momentum of these larger customers. Freshworks is positioned as a clear alternative to legacy players, and we continue to displace incumbents. In Q3, we delivered our highest ITSM competitive win rates in two years as customers selected Freshservice for its ease of use, fast deployment, and lower total cost of ownership. Freshworks has an established track record in ITSM.

Mid-market and enterprise organizations want speed and simplicity, and Freshworks delivers. One example is HOLT CAT, the largest U.S. dealer of Caterpillar equipment, who saw significant improvement in efficiency and productivity as agents were able to handle nearly 10,000 tickets within six months and bring their average ticket resolution time to under five hours. The third growth lever in EX is our advanced IT asset management offering expansion with Device42. In Q3, we closed our biggest Device42 new deal to date with the largest U.S.-based sporting goods retailer. Device42's deep integration with Freshservice and its differentiated discovery engine made it the clear choice for enterprises that are seeking real-time visibility and control. The momentum is evident as half of our top 10 largest deals in the quarter included a Device42 component. In addition to these three growth drivers, we're deepening our presence across key verticals.

For example, in Q3, we doubled our law firm customer count, reaching over 1,000. In sports, we want to congratulate the Los Angeles Dodgers, one of several Major League Baseball teams that rely on Freshservice, on winning back-to-back World Series, and also the McLaren Formula team for winning back-to-back Constructors Championships. Finally, we continue to drive greater efficiency and focus on our go-to-market motion. On the leadership front, we welcomed Enrique Ortegon as Senior Vice President and General Manager of America Field Sales. Enrique's experience leading high-performing sales organizations will help sharpen our execution, accelerate growth, and strengthen our GTM discipline across North and South America. Now let's talk about our AI tailwind. Freddy AI continues to be a growth driver and expansion opportunity across EX and CX and is delivering exceptional results for thousands of customers who are seeing tangible business value and returns quickly after adoption.

As we stated before, we believe this can be a $100 million standalone revenue stream over the next three years. AI is becoming a core productivity engine for every team, not just for IT. Here is why Freshworks is winning. Our products sit where real work happens in customer support, IT, HR, and operations, helping businesses automate tasks, resolve issues faster, and deliver better experiences with less effort. Our AI is deeply embedded in how our customers work every day. It is writing replies, classifying tickets, generating insights, and increasingly taking action on behalf of employees and customers. The results speak for themselves. AI ARR has doubled year-over-year. Customers are now using Freddy AI to resolve millions of problems every week. Our new AI agents are performing real work across industries, from handling returns in e-commerce to managing employee requests in HR.

Thanks, Dennis, and thanks everyone for joining on the call and via webcast today.

We are very pleased that we continued our streak of outperforming across both growth and profitability during the third quarter. We once again exceeded our revenue, non-GAAP operating income, and adjusted free cash flow expectations. This strong overperformance reflects the continued demand for our AI-powered and uncomplicated EX and CX solutions. Our consistent execution and financial discipline position us well to capture the significant long-term opportunities ahead. For our call today, I'll cover the Q3 2025 financial results, provide background on the key metrics, and close with our forward-looking commentary and updated expectations for Q4 and full year 2025. As a reminder, most of our discussion will be focused on non-GAAP financial results, which exclude the impact of stock-based compensation expenses, restructuring charges, and other adjustments. We will also talk about our adjusted free cash flow, which excludes the cash outlay related to restructuring costs.

To provide greater transparency into our underlying business performance, we will also include constant currency comparisons throughout today's call. Starting with the income statement, Q3 total revenue increased to $215.1 million, growing 15% year-over-year on both an as-reported and constant currency basis. Revenue outperformance includes a one-time $1 million contribution coming from our on-premise Device 42 business. Professional services revenue modestly declined quarter to quarter to just over $2 million, consistent with our ongoing shift in leveraging our partner network as we scale our business. In 2025, we saw partner involvement expand significantly across our largest deals. Partners helped to lead implementations for over 1/2 of our ARR deals greater than $50,000, a notable increase from last year, underscoring the success of our robust and growing partner ecosystem.

Our EX business accelerated in Q3, growing to over $480 million in ARR, representing growth of 24% year-over-year on an as-reported basis and 23% year-over-year on a constant currency basis. Our faster growth was driven by strength across our entire EX portfolio, as we saw positive momentum in not only ITSM, but also meaningful progress in ESM, advanced ITAM, and AI, each of which we believe can eventually be $100 million ARR businesses. Our CX business increased to over $390 million in ARR, reflecting growth of 8% on an as-reported basis and 7% year-over-year on a constant currency basis. We continue to see healthy and predictable demand for our Freshdesk products. Moving to margins, we maintained a non-GAAP gross margin of 86% in Q3 as we continue to scale our business efficiently.

Our non-GAAP operating income for Q3 came in at $45.2 million, representing a non-GAAP operating margin of 21% and ahead of our prior expectations, reflecting our continued top-line momentum and effective cost management. Moving to operating metrics, our net dollar retention came in at 105% on an as-reported basis and 104% on a constant currency basis, both in line with our expectations. Just like last quarter, Device42 represented a small drag of 60 basis points to net dollar retention. We expect Device42 retention to improve gradually as we continue to scale the business with our ITSM offering. Looking ahead, we estimate net dollar retention of approximately 105% on an as-reported basis and 104% on a constant currency basis for Q4.

As of the end of Q3, the number of customers contributing more than $5,000 in ARR grew 9% year-over-year on both an as-reported and constant currency basis to 24,377 customers. This customer cohort continues to represent over 90% of our ARR. For our larger customer cohort, as of the end of Q3, the number of customers contributing more than $50,000 in ARR grew 20% year-over-year on an as-reported basis and 19% on a constant currency basis to 3,612 customers. This cohort represents over 50% of our ARR if we have continued to move up market successfully. For total customers, we added over 260 net new customers in the quarter and have nearly 75,000 customers as of the end of September 30th.

Given the continued success of our up-market strategy and our focus on mid-market and enterprise customers, we believe total customer count is no longer a meaningful indicator of our performance. Starting with the release of Q1 results next year, we would discontinue reporting this metric on a quarterly basis and shift our focus to larger customer measures that better reflect how we manage the business and its trajectory. Now let's turn to calculated billings, balance sheet, and cash items. Our calculated billings grew to $224 million in Q3, representing growth of 14% year-over-year on both an as-reported and constant currency basis, matching our prior expectation on an as-reported basis and coming in ahead of our constant currency forecast of 13%. Looking ahead to Q4 2025, our initial estimate for calculated billings growth is 17.5% year-over-year on an as-reported basis and 14% on a constant currency basis.

For the full year 2025, we expect calculated billings growth to be approximately 16% year-over-year on an as-reported basis and 14% on a constant currency basis, both of which are in line with our expectations from last quarter. Moving to our cash items, we generated $57.2 million in adjusted free cash flow in Q3, driven by continued operational discipline and strong collections. This resulted in an adjusted free cash flow margin of 27%, which represents an over 5 percentage point improvement year-over-year. For the full year 2025, we now expect to generate approximately $222 million of adjusted free cash flow, with approximately $55 million in Q4. As a reminder, we successfully completed our inaugural $400 million share repurchase program after buying back an additional 12 million shares in Q3 at an average price of $13.28 per share. In total, we repurchased approximately 27.9 million shares at an average price of $14.35.

Hi, everyone.

Really nice results here in the quarter. Dennis, I wanted to talk about the announcement today. You're selling ESM as a standalone solution. That's certainly not news to us that we're paying attention at the analyst day. Just want to hear kind of, I guess, how you're thinking about that solution. Is this going to be sold with a, I guess, separate Salesforce now? As you're selling it standalone, it's going to be sold with the same Salesforce that you're using and any changes to, I don't know, pricing or, I guess, whatever the marketing message looks like around that in the standalone environment.

Yeah, thanks, Scott. First of all, we launched Freshservice for Business Teams in 2022. We had a lot of demand outside of core IT departments for a service desk solution, and that, as you know, has been a huge driver for us.

We crossed $35 million in ARR. That business has doubled year-over-year. About a quarter of our customers now. For our Freshservice customers now are using Freshservice for Business Teams in some way, shape, or form. It is a really strong value proposition. What we have seen is some prospects where they might be locked into a contract for their core ITSM with a larger incumbent. They do not necessarily want to increase their vendor dependency on that incumbent. They want to preserve optionality to potentially move to us at a later date. They need a solution now for the teams outside of IT, and that is why we launched this. In those cases, we can sell to them now. We can preserve that optionality, get to know them a little bit.

When that contract does come up for renewal for core ITSM, we're there, and they've had a positive experience with us. There's no new Salesforce around this. We already have a pretty well-worn try-to-buy way of getting a lot of customers started. All of our typical outbound and inbound marketing methodologies apply here. It's going to be the same Salesforce we have, so we think we'll get a lot of scale out of that. This is on top of the core ESM business that we have, the product that is attached to Freshservice. We think that alone, when we talked about this at analyst day, that alone has a path to $100 million. This is additive to that. We're launching it today.

We'll have more next quarter in terms of early traction, but we're pretty positive about where this is going to go, just given the success of the products that we've had in the market already.

Excellent. Then from a follow-up perspective, maybe this is for Tyler, is it's around your buy-back program. It expired in the quarter. You've certainly been buying back some shares at higher levels. I didn't see that repeated here, which I kind of almost expected, I guess, in the quarter, or at least an expansion of those efforts. Should we take that as maybe an indication or a shift in your capital allocation strategy, or I don't know, maybe there's something more on just on a timing basis there? Any details there would be great. Thank you.

Yeah. Hey, thanks, Scott. Yeah. So we finished the inaugural buy-back in Q3.

We just finished it a month and a half ago. That was authorized a year ago for $400 million, and we completed that. We were happy to get that done. I think the weighted average price is just over $14. We are committed to working with the board on a continued capital allocation strategy. We've always said we've been open to M&A. If that comes forward, we're obviously going to invest in the business where that's needed, but we're producing a lot of cash flow now. We'll continue to talk with the board about other uses of capital, including other buy-backs. We are still doing our net settles, and we provide the data there. We're still spending money every single quarter on net settlements, and that's been outside of the buy-back. That will be a continual discussion that we will have with the board. Awesome.

Nice quarter again. Thank you.

Yeah.

Hi, how are you? This is Mark Keitzer going for Alex Zukin at Wolf. Congrats on the great results. Can you just give us a little bit more color on how you're balancing the monetization versus adoption play with the Freddy AI suite of tools? Any way we should think about how that might change with the new agent capabilities?

Yeah. Just to recap our strategy, we have a Freddy AI agent, which is a consumption-based model for CX, where our customers pay us on a per-session basis. We have Freddy Copilot, which is a per-seat license adder. Then we have our Freddy Insights, which is only available in the enterprise plan. Different products have different monetization levers and paths. For.

AI agents, we've historically priced those based on sessions with our agentic AI agents coming out in a matter of weeks. We have revisited pricing. We're not revealing that now, but we are going to be more in line with industry pricing, which is considerably higher than where our pricing historically has been. We think that the market will support that based on what we've seen in early access, with some customers seeing up to 80% deflection rates based on their use of AI agents. What's coming in a couple of weeks are agents that are focused on very specific verticals like fintech, like travel, logistics, e-commerce that take action on behalf of the end customer. We know that those interactions are quite valuable. We're not quite to the point to move to full resolution-based pricing, and frankly, neither are our customers.

The session-based pricing makes a lot of sense for where we are now. We're always open to evolving that as our customers ask us to and as customer demand warrants. You will see a meaningful price change with the launch of those products, which will allow us to monetize it quite well.

Great. Thanks, guys.

Oh, great. Thank you. Congratulations on the third quarter in a row this year. The big question I still get, Dennis, believe it or not, is for investors who are just looking at Freshworks, they still want to know, is it an AI winner or an AI loser? I see lots of evidence that it should be in the winner's camp, including your $100 million targets.

What you just talked about actually is really interesting about the specific verticals for agents. Just to make it easier for people, if you're going to boil it down to two or three key points that you would make on that topic, why Freshworks is an AI winner, what are they? What would you lay out?

First of all, look, we are the system of record for our customers in IT and in customer support. We have the native workflows that they're running their business off of. That is super important for all of what we're focused on. The products that we ship have ready-made skills, guardrails, governance, things that our customers all need in order to run their support and IT departments, and that's what they demand.

There's a meme that, oh, everybody's going to go directly to OpenAI or to Anthropic to build their solutions. That's just not going to happen. In such complex environments as Seagate's IT department or some of these others. The customers need the AI to be integrated into their workflow. They need the security. We can tap into the best-of-breed models as the LLMs evolve by tapping into Anthropic for coding or Gemini for image and so forth. We think that we're actually really well-positioned as the market evolves and as customers continue to adopt AI to succeed there.

Awesome. Thank you.

Yeah, Dennis. So we've seen no impact whatsoever. We do not have large federal government exposure. Our government business comes from state and local entities, municipalities, universities, none of which we've seen at least any kind of change. We actually landed quite a few governments and universities this last quarter, and we've seen quite a bit of expansion there. We really just have not seen any impact at all from the shutdown or any of the federal issues.

Thank you very much.

Great. Thank you. Tyler, I apologize if you covered this, but this one-time investment you're talking about in Q4, can you articulate a little more detail what that is?

Yeah. Hey, Brent. This is kind of reflecting on the fact that we've now strung together four really, really good quarters and really see a very strong demand environment for our EX products in the field specifically. And because we've also done really, really well on our efficiencies this year, where we've beat our operating kind of margin goals and consistently every quarter said, "Hey, part of it's timing.

We're going to reinvest, but just keep beating. We actually, at the beginning of this quarter, did release spend specific to building pipe for EX in the field because the market opportunity is there. We're still beating our goals, but we actually decided to release that spend for the year. It's more one-time, just for Q4. Not repeated. That is why we also kind of gave the linearity for operating margins for next year as well.

I'm sorry, where does that go into? Reps? Marketing? What's the—

Oh, yeah. Majority of it is marketing. And it's really pipe and demand gen efforts.

Okay. I got some good ideas. We can talk later about the campaign. It has to do with the Dodgers. Freddy Fresh. And just for Dennis, when you talk about that 25% growth above $100,000. It seems like the reference ability is building really well.

What are kind of the next milestones? It's been going well. It seems like it's headed in the right direction. What are the next kind of hurdle that you'd like to see crossed where you're like, "Okay, we're clearly on a continued trajectory"? Not that you aren't. It's just like, what's the next stop, if you will?

Yeah. Look, I think we've got a really good sweet spot in customers ranging from 5 to 20,000 employees. That's where there's a ton of business out there that's looking for a solution that is enterprise-grade, that is faster time to value, that's got AI built in. We're going to continue focusing there. I think in terms of where we're headed, we talked in the analyst day about continuing to drive our EX business in the low to mid-20s in terms of growth.

You saw a slight tick up in growth on a constant currency basis this quarter. We're going to keep pressing these larger and larger deals every single quarter. For us, the attach rate for Device42, that's an important metric that we look at, how many of our larger deals are including Device42. We have a big milestone coming up in Q1 where we expect to release Device42 on cloud. Once we do that, we'll be able to tap into another segment of the market that doesn't want to go on-prem with any solution. They want everything to be in cloud. It'll also make it easier for us to upsell our existing customers into Device42 as a product. That's going to be another accelerant to growth. We have a lot of positive, I would say, momentum and positive accelerants to that business.

Tyler was just talking about the demand gen investment we're making in Q4. That's all going into the EX business and into AI. That really is a huge driver for us as well. I think EX has a lot of kind of positive momentum behind it, and we're just going to keep leaning into it every single quarter.

Great. Thank you.

Hi, thank you. This is Jonathan McCarry on for Brian. I wanted to ask on some of the AI deployments in your customer base.

Can you talk about the appetite for that and how that may differ between the SMB and then the more mid-market enterprise customers? I'm curious specifically if you're seeing that it's a more important piece of the conversation in certain parts of the customer base or SMBs versus enterprises are moving from pilots to kind of forward deployments quickly. I'd be curious how that differs across the different customer sizes.

Yeah. As we look at our AI paid footprint, it's actually pretty even across SMB, mid-market, and enterprise. We've seen traction across all three. Different companies are in different stages of understanding AI and adopting. In terms of products, the product that clearly is leading for us has been Copilot. That's the product that for us is both most mature functionally and.

If you think from a customer standpoint, that's the first port of call where you still have a human in the loop. They still have some control, so they feel more comfortable going there first. What we've seen in the last couple of months is really an uptick in AI agent. We think with the launch of our agentic capabilities in CX in particular, that's really going to take off, and we're going to lean into it heavily. That plus the fact that we're going to monetize at a much higher rate than we have before. We've been, I would say, quite underpriced relative to the market when it comes to our AI agent capabilities. That we think is going to create a big opportunity for us going into next year. I think overall, the customers, there's not one vertical.

It's not an SMB or mid-market enterprise issue. It's relatively even across CX and EX in terms of the monetization opportunities today. We just think every one of our customers over time is going to need the AI that we offer. We're a little over 5,000 customers that are paying for AI now. That's just going to continue to grow. It's a core part of how we're selling now.

Very helpful. Thanks, Dennis. Maybe one for Tyler here. It's good to see the continued strength in EX, the slight acceleration there. Just hoping, can you unpack the growth algorithm a bit in terms of what's trending, how NRR is trending there versus net new, and kind of where you think that that should head longer term as you look to continue the low 20% growth profile? Thanks, guys.

Yeah.

I mean, we're growing across all segments of the business, right? We talked about how ITSM core is strong, but also ESM that we gave out the number of over $35 million now. Device42, we've talked about as well, and then the Copilot components within there. If you look at how that's going to trend, you asked about NRR. Our EX products have always had strong NRR. Device42 is a little bit of a drag because of the stuff we inherited when we made that acquisition. We also said, "Hey, we expect that to actually start coming up." We've also said that EX has kind of always had enterprise-grade net dollar retention numbers. I'm sorry, churn numbers, which is high single digits. That continues. It's just a very, very strong product.

Great. Hi. Good afternoon. Thanks for taking my question. Dennis, I wanted to go back to the ITSM win rates that you called out. I think the best in two years. That is also coming, I think, as you have really pivoted the business up towards that mid-market or upper end of mid-market. I just wanted to get a sense from you for kind of what the biggest key differentiators have been there in terms of repositioning for that opportunity. As you look at kind of your pipeline today, how you feel about the pipeline as it sets up relative to the competition and kind of what is winning when you go head to head with some potentially bigger players at the low end of their stack. I had a quick follow-up question.

Yeah, sure. So.

Look, what we've built over the last couple of years is a complete enterprise-grade solution that helps an IT department drive their operations, power their operations, and deliver great employee service. That's what we're selling. That's what's working in the marketplace. Enterprise-grade product that has the kind of security and extensibility that you'd expect and that can work in a large account. The kind of extensibility outside of core ITSM, that's why Device42 is super important for us. Typically, buyers are looking for their ITSM and their asset management solution all in one. That's what we provide now. The functionality outside of IT, that's also something that everybody looks for when they're making these decisions. Two years ago, two and a half years ago, the product wasn't there. A lot of this momentum has happened relatively recently.

A lot of customers are looking for choice in that market. There has not been a lot of choice. The largest provider is very focused on the biggest customers in the market or the biggest companies in the market. That leaves a lot of room for us to compete in that kind of lower end of enterprise, upper end of mid-market. Think of New Balance with 5,000 or 6,000 employees or Seagate with 20,000 employees. We had a customer this time through Flowserve with about 20,000 employees. These are sophisticated customers. They have got sophisticated IT departments, but they are looking for something that is more modern, more flexible, enterprise-grade, AI built in, and that is what we have. I think we are just going to continue to invest in our capabilities and functionality there. We have got our customer advisory board next week. We have got 40 customers coming in.

We are going to hear from them on what share our roadmap, talk about what can we do to move faster to solve more of their needs. We got a lot of ideas last year at our cab that we put into practice and launched in innovation that has delivered and that has helped us continue to move up market. At the same time, the whole go-to-market side of things has matured as well. That is why we are confident in investing more in Q4 in demand gen because we have a much better sense for how investment in demand gen connects to actual return. We feel if we do that now, we will just get a head start on Q1 because we have got a really good pipeline going into the last quarter. In terms of the pipeline, I would say that.

When we look at when I looked at pipeline, let's say 18 months ago. A $100,000 deal was a big deal, and we made a big deal about it. Now, we have tons of $100,000 deals. That's not an unusual deal anymore. The bigger deals are $500,000 lands. The other thing is that we would be invited into those $500,000 RFPs two years ago, and we would often lose. We'd win the $100,000 deal or the $30,000 deal. We'd lose the $500,000 deal. This last quarter, I can't recall a deal over $200,000 that we're involved in that got stopped. Now, it may have happened, but nothing that I was involved in was a loss. I think we're just getting better at competing and winning for those larger deals. The capability is there. The functionality is there.

All that's a winning combination for us.

Great. That's really helpful. Thanks, Dennis. Then, Tyler, I apologize if you touched on this at all, but that net revenue retention number is kind of really stabilized in that 104-105 range on a constant currency basis for the last three quarters. You guys are getting some market momentum. I realize trailing indicator, but how you think about that kind of leveling off and potentially starting to improve and what kind of visibility you have into that.

Yeah, we're pleased with the progress we've made there, both on the expansion products we've introduced. We think ESM is going to be a new land, but then have a much bigger expansion opportunity once we start landing that with that if we can bring in Freshservice. Obviously with Device42 and others.

On what we have been doing on churn. We have been talking about churn for a year now, how we have just been getting a little bit better incrementally. That is not something that moves really quickly. We guided essentially the same amount for Q4, which is stable. Obviously, at the end of the year, based on what we learned this quarter in terms of expansion, the pipe will guide for next year. Yes, I feel like it is heading in the right direction. We have been talking about this as the mix shift of our business continues to move more towards EX. That is the majority of our business now. The attributes of that business are much better. We will get a tailwind from that at some point.