Freshworks Inc.

Previous wording

Our customer base and operations have scaled over time. Our total revenue was $228.6 million and $196.3 million in the three months ended March 31, 2026 and 2025, respectively, representing year-over-year growth of 16%. We incurred operating losses of $8.1 million and $10.4 million for three months ended March 31, 2026 and 2025, respectively.

Current wording

Our customer base and operations have scaled over time. Our total revenue was $237.4 million and $204.7 million in the three months ended June 30, 2026 and 2025, respectively, representing year-over-year growth of 16%; and $466.0 million and $401.0 million in the six months ended June 30, 2026 and 2025, respectively, representing year-over-year growth of 16%. Our income (loss) from operations was $6.1 million and $(8.7) million for three months ended June 30, 2026 and 2025, respectively; and $(2.0) million and $(19.1) million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future. Additionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market still exist. For the quarters ended March 31, 2026, December 31, 2025, and March 31, 2025, we had approximately 29%,28% and 27%, respectively, of revenue exposure related to the euro and British pound. If adverse conditions arise, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Current wording

Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future. Additionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market still exists. For the quarters ended June 30, 2026, March 31, 2026, and June 30, 2025, we had approximately 29%, 29% and 27%, respectively, of revenue exposure related to the euro and British pound. If adverse conditions persist, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Previous wording

Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods. The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, future results of operations, and financial condition. See the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of the challenges and risks we have encountered and could encounter related to these macroeconomic events.

Current wording

Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods. The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, future results of operations, and financial condition. See the section titled “Risk Factors” in our Annual Report on

Previous wording

We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses. For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR. While monthly subscribers as a group have historically maintained or increased their subscriptions over time, there is no guarantee that any particular customer on a monthly subscription will renew its subscription in any given month, and therefore the calculation of ARR for these monthly subscriptions may not accurately reflect revenue to be received over a 12-month period from such customers, and net dollar retention rate may reflect a higher rate than the actual rate if customers on monthly subscriptions choose not to renew during the course of the 12 months. Monthly subscriptions represented 12% and 14% of ARR as of March 31, 2026 and 2025, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate. In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate.

Current wording

We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses. For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR. While monthly subscribers as a group have historically maintained or increased their subscriptions over time, there is no guarantee that any particular customer on a monthly subscription will renew its subscription in any given month, and therefore the calculation of ARR for these monthly subscriptions may not accurately reflect revenue to be received over a 12-month period from such customers, and net dollar retention rate may reflect a higher rate than the actual rate if customers on monthly subscriptions choose not to renew during the course of the 12 months. Monthly subscriptions represented 12% and 13% of ARR as of June 30, 2026 and 2025, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate. In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate.

Previous wording

Our net dollar retention rate increased to 106% as of March 31, 2026, compared to 105% as of March 31, 2025, remained relatively flat. We expect our net dollar retention rate may fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Current wording

Our net dollar retention rate was 104% as of June 30, 2026, compared to 106% as of June 30, 2025. This decrease was primarily due to unfavorable fluctuations in foreign exchange rates. We expect our net dollar retention rate may fluctuate more in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, volatility in foreign exchange rates, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Previous wording

We define non-GAAP income from operations as GAAP loss from operations, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, restructuring charges and acquisition expenses.

Current wording

We define non-GAAP income from operations as GAAP income (loss) from operations, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, restructuring charges and acquisition expenses.

Previous wording

We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges, amortization of acquired intangibles, acquisition expenses and income tax adjustments.

Current wording

We define non-GAAP net income as GAAP net income (loss), excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges, amortization of acquired intangibles, acquisition expenses and income tax adjustments.

Previous wording

The following tables present a reconciliation of our GAAP loss from operations to our non-GAAP income from operations and our GAAP net loss to our non-GAAP net income for each of the periods presented (in thousands):

Current wording

The following tables present a reconciliation of our GAAP income (loss) from operations to our non-GAAP income from operations and our GAAP net income (loss) to our non-GAAP net income for each of the periods presented (in thousands):

Previous wording

(1) Free cash flow includes $0.7 million of acquisition expenses paid during the three months ended March 31, 2026 and $1.5 million of restructuring costs paid during the three months ended March 31, 2025.

Current wording

(1) Free cash flow includes $0.7 million of acquisition costs paid during the six months ended June 30, 2026 and $5.6 million of restructuring costs paid during the three and six months ended June 30, 2026. There were no acquisition costs paid during the three months ended June 30, 2026. Additionally, free cash flow includes $0.7 million and $2.2 million of restructuring costs paid during the three and six months ended June 30, 2025, respectively.

Previous wording

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs primarily granted to the Executive Chairman of $11.3 million for the three months ended March 31, 2025.

Current wording

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs primarily granted to the former Executive Chairman of $10.4 million and $21.7 million for the three and six months ended June 30, 2025, respectively.

Previous wording

Revenue increased by $32.4 million, or 16%, for the three months ended March 31, 2026 compared to thethree months ended March 31, 2025. Of the total increase in revenue, approximately $14.2 million was attributable to revenue from existing customers as of March 31, 2025, net of contraction and churn, and approximately $18.2 million was attributable to revenue from new customers acquired during the three months ended March 31, 2026, net of contraction and churn.

Current wording

Total revenue increased by $32.7 million, or 16%, for thethree months ended June 30, 2026 compared to thethree months ended June 30, 2025. Of the total increase in revenue, approximately $16.0 million was attributable to revenue from existing customers as of June 30, 2025, net of contraction and churn, and approximately $16.7 million was attributable to revenue from new customers acquired during the twelve months ended June 30, 2026, net of contraction and churn.

Previous wording

Cost of revenue increased by $4.8 million, or 16%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by a $2.5 million increase in third-party hosting costs and cloud software fees, which was driven by the increased capacity and volume required to support new customers. Additionally, the increase was driven by $0.9 million in amortization of internally capitalized software and $0.7 million in personnel-related costs, primarily due to annual compensation adjustment. Our gross margin remained flat at 85% for the three months ended March 31, 2026 and 2025.

Current wording

Cost of revenue increased by $5.0 million, or 16%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily driven by a $4.6 million increase in third-party hosting costs, which was driven by the increased capacity and volume required to support new customers. . Our gross margin remained flat at 85% for the three months ended June 30, 2026 and 2025.

Previous wording

The $25.2 million or 14%, increase in our operating expenses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, was primarily driven by higher personnel related costs due to annual compensation adjustments and marketing sponsorship costs, partially offset by lower stock-based compensation expense from the departure of our former Executive Chairman in December 2025.

Current wording

The $13.0 million or 7%, increase in our operating expenses for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to restructuring charges, higher marketing sponsorship costs, and merit-driven salary increases, partially offset by lower stock-based compensation expense from the departure of our former Executive Chairman in December 2025.

Previous wording

Sales and marketing expense increased by $23.2 million, or 26%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily due to increases in personnel-related costs of $12.7 million primarily from higher headcount and annual compensation adjustment, $6.7 million in marketing sponsorship costs, $1.4 million in reseller commissions and $1.1 million in software license fees.

Current wording

Sales and marketing expense increased by $11.2 million, or 12%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily due to $5.3 million in marketing sponsorship costs, $3.1 million in personnel-related costs primarily from annual compensation adjustment partially offset by lower average headcount resulting from the impacts of restructuring, and $1.2 million in professional service fees.

Previous wording

General and administrative expense decreased by $6.8 million, or 14%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily driven by a decrease of $10.5 million in stock-based compensation expense primarily due to the departure of our former Executive Chairman in December 2025; partially offset by increases of $2.7 million in personnel-related costs primarily due to annual compensation adjustments.

Current wording

General and administrative expense decreased by $9.1 million, or 19%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily driven by $11.3 million in stock-based compensation expense primarily due to the departure of our former Executive Chairman in December 2025 partially offset by an increase of $1.6 million in personnel-related costs primarily due to annual compensation adjustments and lower average headcount resulting from the impacts of restructuring.

Previous wording

Interest income decreased by $4.3 million, or 38%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to reduction in average balances held in our marketable securities portfolios used for share repurchases and decrease in interest rates.

Current wording

Interest income decreased by $3.9 million, or 39%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to reduction in average balances held in our marketable securities portfolios used for share repurchases.

Previous wording

Other income (expense), net changed by $7.3 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a $7.1 million foreign exchange loss during the period, mostly from unfavorable changes in foreign exchange rates in Indian rupee against the U.S. dollar.

Current wording

Other income (expense), net changed by $4.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to a $4.2 million unrealized foreign exchange loss during the period, mostly from unfavorable changes in foreign exchange rates in the Indian rupee against the U.S. dollar.

Previous wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the three months ended March 31, 2026 and 2025, we recorded a provision for (benefit from) income taxes of $(1.8) million and $3.9 million on income (loss) before taxes of $(6.6) million and $2.6 million, respectively. The decrease in the provision for income taxes for the three months ended March 31, 2026, was largely driven by a pre-tax loss in the current quarter compared to pre-tax income in the corresponding quarter of 2025. In addition, following the release of the valuation allowance on U.S. federal and state deferred tax assets in the fourth quarter of 2025, we are able to recognize tax benefits associated with pre-tax losses incurred in 2026.

Current wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the three months ended June 30, 2026 and 2025, we recorded a provision for income taxes of $7.0 million and $5.6 million on income before taxes of $10.3 million and $3.9 million, respectively. The increase in the provision for income taxes for the three months ended June 30, 2026, was largely driven by higher income before income taxes in the period compared to the same quarter of 2025 and lower excess tax benefits from stock-based compensation during the three months period ended June 30, 2026.

Previous wording

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents of $548.2 million and marketable securities of $231.1 million, which were primarily held for working capital resources.

Current wording

As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $494.7 million and marketable securities of $169.4 million, which were primarily held for working capital resources.

Previous wording

As of March 31, 2026, we had an accumulated deficit of $3.6 billion. Our operating activities resulted in cash inflows of $62.4 million for the three months ended March 31, 2026. In May 2026, we committed to a restructuring plan that is expected to incur charges in the second quarter of 2026, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs. See Note 14—Subsequent Events.

Current wording

As of June 30, 2026, we had an accumulated deficit of $3.6 billion. Our operating activities resulted in cash inflows of $120.9 million for the six months ended June 30, 2026. In May 2026, we announced a restructuring plan that incurred restructuring charges of $7.0 million in the second quarter of 2026, consisting primarily of cash expenditures for separation-related and other employee benefits costs. See Note 12—Restructuring Charges.

Previous wording

In February 2026, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock. For the three months ended March 31, 2026, we repurchased a total of 5.7 million shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $45.4 million. As of March 31, 2026, $354.6 million remained available for future share repurchases under the current program.

Current wording

In February 2026, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400.0 million of our outstanding Class A common stock. For the six months ended June 30, 2026, we repurchased a total of 24.0 million shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $204.5 million. As of June 30, 2026, $195.5 million remained available for future share repurchases under the current program.

Previous wording

Net cash provided by operating activities of $62.4 million for the three months ended March 31, 2026 reflects our net loss of $4.8 million, adjusted for non-cash items such as stock-based compensation of $43.9 million, amortization of deferred contract acquisition costs of $8.6 million, depreciation and amortization of $7.9 million, non-cash lease expense of $2.9 million and $7.8 million of other items, primarily related to foreign currency gains and losses; offset by $5.9 million change in deferred tax provision and $0.9 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $2.9 million. The net cash inflows from changes in operating assets and liabilities were primarily due to a decrease of $24.9 million in accounts receivable and increases of $6.9 million in accounts payable and $1.0 million in deferred revenue; offset by increases of $12.6 million in prepaid expenses and other assets, $10.2 million in deferred contract acquisition costs, and decreases of $3.7 million in operating lease liabilities and $3.4 million in accrued expenses and other liabilities.

Current wording

Net cash provided by operating activities of $120.9 million for the six months ended June 30, 2026 reflects our net loss of $1.6 million, adjusted for non-cash items such as stock-based compensation of $81.8 million, amortization of deferred contract acquisition costs of $17.5 million, depreciation and amortization of $16.1 million, non-cash lease expense of $5.6 million and $9.4 million of other items, primarily related to effects of exchange rate changes on cash, cash equivalents and restricted cash; offset by $2.6 million change in deferred tax provision and $1.2 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $4.1 million. The net cash inflows from changes in operating assets and liabilities were primarily due to a decrease of $14.6 million in accounts receivable and increases of $15.6 million in accounts payable and $9.5 million in deferred revenue; offset by increases of $21.3 million in deferred contract acquisition costs, $10.3 million in prepaid expenses and other assets, and decreases of $6.4 million in operating lease liabilities and $5.7 million in accrued expenses and other liabilities.

Previous wording

Net cash provided by operating activities of $58.0 million for the three months ended March 31, 2025 reflects our net loss of $1.3 million, adjusted for non-cash items such as stock-based compensation of $51.7 million, amortization of deferred contract acquisition costs of $7.6 million, depreciation and amortization of $6.4 million and non-cash lease expense of $2.3 million; offset by $1.9 million from discount amortization of marketable securities and $0.5 million from changes in deferred income taxes. Additionally, net cash outflows from changes in operating assets and liabilities were $6.3 million. The net cash outflows from changes in operating assets and liabilities were due to an increase of $15.3 million in prepaid expenses and other assets, an increase of $8.7 million in deferred contract acquisition costs; offset by a decrease of $10.6 million in accounts receivable and an increase of $7.0 million in deferred revenue.

Current wording

Net cash provided by operating activities of $116.6 million for the six months ended June 30, 2025 reflects our net loss of $3.0 million, adjusted for non-cash items such as stock-based compensation of $100.9 million, amortization of deferred contract acquisition costs of $15.4 million, depreciation and amortization of $12.6 million and non-cash lease expense of $4.6 million; offset by $3.7 million from discount amortization of marketable securities. Additionally, net cash outflows from changes in operating assets and liabilities were $10.3 million. The net cash outflows from changes in operating assets and liabilities were due to increases of $22.7 million in prepaid expenses and other assets and $18.8 million in deferred contract acquisition costs; offset by increases of $15.4 million in deferred revenue and $7.8 million in accrued and other liabilities, and a decrease of $7.0 million in accounts receivable.

Previous wording

Net cash used in investing activities of $82.3 million for the three months ended March 31, 2026 consisted of $56.9 million paid for business combinations, net of cash acquired, $18.1 million in purchases of marketable securities, net of maturities, $3.9 million in purchases of property and equipment, which primarily include construction and improvements at our major offices, and $3.4 million in capitalized internal-use software.

Current wording

Net cash used in investing activities of $27.6 million for the six months ended June 30, 2026 consisted of $56.9 million paid for business combinations, net of cash acquired, $8.9 million in purchases of property and equipment, which primarily include construction and improvements at our major offices, and $4.9 million in capitalized internal-use software, partially offset by $43.1 million in maturities and redemption of marketable securities, net of purchases.

Previous wording

Net cash provided by investing activities of $46.2 million for the three months ended March 31, 2025 consisted of $50.3 million in maturities and redemptions of marketable securities, net of purchases; offset by $2.8 million in capitalized internal-use software and $1.3 million in purchases of property and equipment.

Current wording

Net cash provided by investing activities of $3.4 million for the six months ended June 30, 2025 consisted of $12.5 million in maturities and redemptions of marketable securities, net of purchases; offset by $7.4 million in capitalized internal-use software and $1.7 million in purchases of property and equipment.

Previous wording

Net cash used in financing activities of $55.5 million for the three months ended March 31, 2026 consisted of $48.4 million cash paid to repurchase shares of our common stock and $7.2 million in payment of withholding taxes on net share settlement of equity awards.

Current wording

Net cash used in financing activities of $221.3 million for the six months ended June 30, 2026 consisted of $207.4 million cash paid to repurchase shares of our common stock and $17.0 million in payment of withholding taxes on net share settlement of equity awards, partially offset by $3.1 million receipt of ESPP proceeds.

Previous wording

Net cash used in financing activities of $130.3 million for the three months ended March 31, 2025 consisted of $113.6 million cash paid to repurchase shares of our common stock and $16.7 million in payment of withholding taxes on net share settlement of equity awards.

Current wording

Net cash used in financing activities of $254.3 million for the six months ended June 30, 2025 consisted of $227.2 million cash paid to repurchase shares of our common stock, including $1.8 million of unsettled stock repurchases as of December 31, 2024, and $30.5 million in payment of withholding taxes on net share settlement of equity awards; offset by $3.3 million of proceeds from the issuance of common stock under our employee stock purchase plan, net of taxes withheld.

Previous wording

There have been no changes to our critical accounting policies and estimates during the three months ended March 31, 2026 as compared to those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K filed with the SEC on February 26, 2026.

Current wording

There have been no changes to our critical accounting policies and estimates during the three and six months ended June 30, 2026 as compared to those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K filed with the SEC on February 26, 2026.