Snapshot
Freshworks Inc. reported $229M of revenue in Q1 2026, up 16.5% year over year, with diluted EPS of $-0.02 and an operating margin of -3.5%.
- Revenue
- $229M
- YoY growth
- +16.5%
- Diluted EPS
- $-0.02
- Operating margin
- -3.5%
$229M
Revenue
+16.5%
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 first quarter 2026 performance and our financial outlook for our second 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 to learn more about Freshworks.
- •Freshworks delivered a strong start to 2026, exceeding expectations across revenue, profitability, and free cash flow.
- •Our Q1 revenue grew 16% year-over-year, above the high end of our estimates.
- •Non-GAAP operating margin was 18%, nearly 3 points above our estimate, and adjusted free cash flow margin was 24%.
- •Customers with more than $100,000 in ARR grew 29% year-over-year, and customers with more than $50,000 in ARR grew 22% year-over-year.
- •Freshworks is the AI-enabled unified service operations platform that is fast to deploy, intuitive to use, and enables every employee to be more productive.
- •As we grow Freshworks to a $1 billion ARR company and beyond, our EX business represents the primary and largest growth opportunity.
- •In Q1, EX ARR grew 27% year-over-year, with both new and expansion business coming in ahead of our expectations.
- •We also completed the acquisition of FireHydrant, which advances our vision for an AI-enabled service ops platform that unifies service, asset, and operational data.
What went well
- •Q1 revenue reached $228.6 million, up 16% year-over-year as reported and 14% on a constant currency basis, above the high end of estimates.
- •EX ARR ended at over $540 million, growing 27% year-over-year as reported and 25% on a constant currency basis.
- •Signed the two largest deals in Freshworks' history, including the first seven-figure EX ARR deal, with the largest new customer deal being a global leader in nutrition replacing the largest competitor.
- •Non-GAAP operating margin reached approximately 18%, nearly 3 points above estimate; non-GAAP operating income was $41 million.
- •Adjusted free cash flow was $55.8 million, a 24% margin and slightly better than expectations; Rule of 40 achieved again.
- •Customers with more than $100,000 in ARR grew 29% year-over-year as reported; customers with more than $50,000 grew 22% as reported.
- •Net dollar retention was 106% as reported and 105% constant currency, a 1-point acceleration from the prior quarter; EX NDR was 111% as reported and 109% constant currency.
- •Freddy AI Copilot customer growth exceeded 80% year-over-year; attach rate growth in new deals over $30,000 ARR was above 65%; EX AI customer penetration surpassed 20%, nearly doubling year-over-year.
- •Over 80% of the CX customer base migrated to the new Freshdesk Omni platform, with ARPA 2.5x higher for new Freshdesk Omni customers versus the prior platform.
- •Board authorized a new $400 million share repurchase program in February; shares outstanding reduced by approximately 2% in Q1.
What went wrong
- •Announced a reduction of global headcount by approximately 11% in Q2 to consolidate overlapping go-to-market efforts and streamline product development.
- •Anticipating one-time restructuring charges of approximately $8 million, with the vast majority in Q2.
- •CX ARR grew only 6% year-over-year as reported and 4% on a constant currency basis, with management adopting a prudent outlook of low single-digit CX growth for 2026.
- •Continued headwind from Device42 legacy churn affecting net dollar retention, as those are multi-year contracts.
- •Calculated billings constant currency growth of 13.5% trailed the as-reported figure due to currency effects.
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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