Freshworks Inc. Q2 FY2025 earnings call

• Freshworks saw Q2 revenue of $204.7 million, up 18% Y/Y, with non-GAAP operating margin at 22% and adjusted free cash flow margin at 27%.
• Ended Q2 with over 74,600 customers, including major firms like Seagate, Covington & Burling LLP.
• EX segment has over $450M ARR (24% Y/Y growth), with growth in mid-market/enterprise, enterprise service management solutions, and Device42. Launched Freshservice for MSPs and key Freshservice features.
• AI copilot and agent products have $20M ARR, with over 5,000 customers paying for them. Launched Freddy AI Agent studio, etc.
• CX segment grew to over $380M ARR (11% Y/Y growth), with AI driving expansion, and product updates like CSAT versioning and analytics.
• Partner program touched over 1/3 of ARR, and partnership with McLaren Formula 1 team announced.

Freshworks delivered strong Q2 performance. Revenue grew 18% year-over-year to $204.7 million. The EX segment achieved over $450 million in ARR, representing 24% year-over-year growth on an as-reported basis. The CX segment grew to over $380 million in ARR, with 11% year-over-year growth on an as-reported basis. Non-GAAP operating margin expanded to 22% and adjusted free cash flow margin was 27%.

• Q3 2025 revenue expected $207M-$210M (11%-12% Y/Y growth), non-GAAP income from operations $31.2M-$33.2M, non-GAAP net income per share $0.12-$0.14.
• Full year 2025 revenue expected $822.9M-$828.9M (14%-15% Y/Y growth), non-GAAP income from operations $153M-$157M, non-GAAP net income per share $0.56-$0.58.
• Net dollar retention estimated ~105% as-reported and 104% constant currency for Q3.

• Uncertainties in macroeconomic environment and market volatility.
• Potential slow adoption of certain AI products impacting revenue.
• Device42 integration challenges affecting retention.

Q: Congrats on the quarter. Specifically with AI agent, how is consumption pacing relative to expectations?

A: Overall, AI is pacing at or slightly ahead of internal expectations. AI agent is early days, but seeing good traction with new products.

Q: On Q3 guidance, how does EX growth contribute?

A: EX growth is strong, but not to be overly parsed from guidance as there are other revenue components and reserves.

Q: About the global partner program, how does it contribute long-term?

A: Partners touch over 1/3 of ARR, equally distributed between EX and CX, with larger deals from new partners showing promise.

Q: Regarding AI copilot and agent revenue, any stakes in the ground for ARR evolution?

A: AI adoption is early, with 5,000 paying customers for 2 SKUs, and new Agentic agents in early access with pricing to be settled later.