Snapshot
Freshworks Inc. reported $223M of revenue in Q4 2025, up 14.5% year over year, with diluted EPS of $0.67 and an operating margin of 17.8%.
- Revenue
- $223M
- YoY growth
- +14.5%
- Diluted EPS
- $0.67
- Operating margin
- 17.8%
$223M
Revenue
+14.5%
YoY growth
$0.67
Diluted EPS
17.8%
Operating margin
01 Key takeaways
What management said
- •The primary purpose of today's call is to provide you with information regarding our fourth quarter and full year 2025 performance and our financial outlook for our first quarter and full year 2026.
- •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.
- •For the first time in our company's history, we achieved profitability for the full year and generated record free cash flow, a testament to our disciplined execution, product innovation, and operational excellence.
- •I'm also happy that we remain on track for sustained growth and profitability exiting 2026.
- •Whether it's EquipmentShare's high-growth debut on Nasdaq, or a global sustainability consultancy's global scale, we are winning.
- •Freddy AI is proving that AI at Freshworks is a tangible revenue engine.
- •We have outperformed our estimates across growth and profitability metrics for five consecutive quarters, and in Q4, we also achieved profitability.
- •We grew Q4 revenue over 14% year-over-year on an as-reported basis, nearly $3 million above the high end of our estimates.
- •We ended the year at $907 million in annual recurring revenue, which represents 18% growth year-over-year on an as-reported basis and over 14% growth on a constant currency basis.
- •Non-GAAP operating margin expanded to 19%, nearly five points above our free cash flow margin was 25%, and this was the sixth straight quarter we achieved Rule of 40.
What went well
- •Achieved profitability for the full year and generated record free cash flow for the first time in company history; GAAP net income for Q4 was $191.4 million.
- •Q4 revenue grew over 14% year-over-year as reported (13% constant currency) to $222.7 million, nearly $3 million above the high end of estimates.
- •Ended the year at $907 million in total ARR, representing 18% growth year-over-year as reported and over 14% constant currency.
- •EX crossed the $500 million ARR milestone, reaching $510 million (26% YoY as reported, 22% constant currency).
- •Non-GAAP operating margin expanded to nearly 19%; non-GAAP operating income was $41.6 million; free cash flow margin was 25%, the sixth straight quarter of Rule of 40.
- •Over 1,500 customers with greater than $100,000 ARR (up 28% YoY) and over 3,700 (3,760) customers with greater than $50,000 ARR (up 23% YoY); 15 customers paying over $1 million in ARR.
- •A global semiconductor company abandoned a decade-long ServiceNow environment for Freshservice, projecting 30% cost savings and 20%-30% faster resolution times.
- •ESM (Freshservice for Business Teams) exceeded $40 million in ARR, nearly doubling year-over-year; Advanced ITAM (Device42) ended 2025 with over $40 million in ARR with a 30% attach rate to top 50 new EX deals.
- •Over 8,000 customers using Freddy AI, with AI ending 2025 at over $25 million in ARR; net dollar retention improved to 108% as reported.
What went wrong
- •CX grew only 9% year-over-year as reported (5% constant currency) to $395 million, with AI not yet driving faster CX growth in Q4 as some had hoped.
- •Constant currency NDR of 104% reflected a Device42 headwind of around 70 basis points, similar to prior quarters.
- •Calculated billings were impacted by slightly lower contract duration from Device42 and fewer multi-year renewals than historically seen in Q4.
- •Lapping the prior-year Free to Paid initiative accounted for some of the CX growth change.
- •Management is being relatively conservative on CX growth expectations until customers complete migration to the Freshdesk Omni platform.
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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