The primary purpose of today's call is to provide you with information regarding our second quarter 2026 performance and our financial outlook for our third quarter and full year 2026. Such risks include, but are not limited to, our ability to sustain 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.
It's large, fragmented, and no single player in this segment holds more than a 20% share. Our fifth key message, we are committed to capital efficiency and prudent capital management. EX ARR grew 24% on a constant currency basis, ending the quarter at $567 million and representing approximately 59% of total ARR. Customers contributing more than $100,000 in ARR grew 25% year-over-year and now represent roughly 40% of total ARR.
Our offering is powered by Device42, a company we acquired a little over two years ago, and today we offer both on-prem and cloud-native Advanced ITAM products. ESM continues to be a major long-term growth vector for Freshworks as one-fifth of new EX seats are coming from outside IT. We are seeing steady ARR growth and significant progress on our platform migration. CX ARR grew 4% on a constant currency basis, ending the quarter at $400 million.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2026 | $244.5M-$245.5M (~14% YoY); includes a $0.5M FX headwind |
| Non-GAAP income from operations / EPS | Q3 2026 | $59M-$61M operating income; ~$0.18 non-GAAP EPS (~266M shares) |
| Revenue | FY2026 | $963.5M-$966.5M (~15% YoY); includes a $2M FX headwind (a ~$6M underlying raise) |
| Non-GAAP income from operations / EPS | FY2026 | $222M-$228M operating income; $0.66-$0.68 non-GAAP EPS (~273M shares) |
| Adjusted free cash flow | FY2026 | ~$265M (27.5% margin); FCF per share $0.94 (up 24% vs 2025) |
| EX / CX ARR growth | FY2026 | EX mid-20s% (exiting >$600M ARR); CX low single digits |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +16% to $237.4M | Above the high end of estimates, driven by EX; +15% on a constant-currency basis, a slight sequential acceleration. |
| EX ARR | +24% cc to $567M | Large-deal traction displacing incumbents plus platform breadth (ESM, ITAM, ITOM); ~59% of total ARR. |
| CX ARR | +4% cc to $400M | Deliberate profitability-focused operating plan; over 90% of Freshdesk customers migrated to Freshdesk Omni. |
| Non-GAAP operating income | $55.9M (24% margin) | Top-line leverage plus partial restructuring savings; non-GAAP gross margin 86%. |
| GAAP net income | $3.2M (first positive) | Operating leverage and lower stock-based comp (16% of revenue vs 19% in Q1) as IPO grants rolled off; GAAP EPS $0.01. |
| >$100K ARR customers | +25% (~40% of ARR) | Sustained up-market shift toward mid-market and agile enterprises with multi-product EX motions. |
| Adjusted free cash flow | $57.7M (24% margin) | $0.21 per share; on track to meet or exceed the $0.94 full-year FCF-per-share target. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| EX-first strategy | 35% of ARR at IPO | EX now ~59% of ARR (expected >60% by year-end), targeting a ~$45B TAM (ITSM/ITAM/ITOM/ESM) in the under-20,000-employee segment where no vendor holds more than 20% share, sustaining mid-20s% growth. | — |
| Platform breadth and cross-sell | Core ITSM (Freshservice) | ESM (+67%, >$50M ARR, one-fifth of new seats from outside IT), ITAM (Device42 Advanced ITAM Cloud launched, best quarter ever, in ~1/3 of large lands), and FireHydrant (first six-figure expansion) broaden the EX flywheel, each targeted to become $100M businesses. | — |
| AI monetization | AI embedded across the platform | Multi-model pricing (embedded, add-on Copilot, consumption-based AI Agent), 7,000+ AI-SKU customers, 70%+ Copilot attach on larger new deals, 50-80% agent deflection, and Freddy AI Agent Studio to be monetized on usage in the fall; AI is central to competitive RFPs and drives higher NDR. | — |
| CX repositioning | Broad SMB acquisition | CX consolidated into a single India-based go-to-market team focused on higher-end SMB/mid-market retention, with 90%+ of Freshdesk customers migrated to Freshdesk Omni, positioning CX for steady-state profitable growth. | — |
| Capital efficiency and SBC discipline | Higher stock-based comp | SBC fell to 16% of revenue (from 19% in Q1) as IPO grants rolled off and equity is managed as a scarce resource; over $200M of buybacks year to date, with free-cash-flow-per-share the 'North Star' metric and a $1.4B ARR ambition over the next couple of years. | — |
| AI as an internal productivity driver | Manual development/support | AI is embedded across the business (Figma-to-code, automated QA cutting cycle times ~30% to ~two-week releases; an internal AI email agent resolving ~30% of billing questions), contributing to the profitability inflection. | — |