Freshworks Inc. Q1 FY2026 earnings call

• Freshworks had strong Q1 2026 performance with revenue, profitability, and free cash flow exceeding expectations. • EX business showed significant growth with large deals signed, including the largest in company history. • AI progress with Credit AI embedded and Freddie AI Copilot as a fast-growing product. • CX business delivered durable growth with migration to Freshdesk Omni platform. • Workforce changes announced in Q2 to consolidate go-to-market efforts, streamline product development, and apply AI/automation. • Completion of FireHydrant acquisition to advance AI-enabled service ops platform.

EX ARR grew 27% year over year, ending at over $540 million; CX ARR ended Q1 at over $395 million, up 6% year-over-year. EX customers with over $100,000 in ARR grew 29% year-over-year, and those with over $50,000 in ARR grew 22% year-over-year. EX represents the primary growth opportunity, with Q1 revenue growth of 16% year over year, non-GAAP operating margin of 18%, and adjusted free cash flow margin of 24%.

• Q2 2026 revenue expected to be in range of $232 million to $235 million, growing 13% to 15% year-over-year. Non-GAAP income from operations expected to be in range of $41 million to $43 million. Non-GAAP net income per share expected to be approximately 13 cents. • Full year 2026 revenue expected to be in range of $958 million to $964 million, growing 14% to 15% year over year. Non-GAAP income from operations expected to be in range of $207 million to $215 million. Non-GAAP net income per share expected to be in range of $0.61 to $0.63. • Full year 2026 adjusted free cash flow expected to be approximately $265 million, with $57 million expected in Q2.

• Ability to sustain growth, innovate, reach long-term revenue goals, meet customer demand, and control costs and improve operating efficiency. • Risks include those related to macroeconomic environment, market volatility, and other factors affecting results, as detailed in earnings release, Form 10-K, and other SEC filings.

Q: On the employee experience, what drove the variance to the high end of implied year-over-year constant currency revenue growth in Q1?

A: Strong momentum on EX business, upmarket move with growth in accounts spending over $100,000, large deals like with a nutrition company and healthcare provider, and platform expansions.

Q: On fresh service wins against largest competitor, how is pipeline building?

A: Pipeline going into the quarter looked fantastic, with strong momentum in larger end of deal cycle and building pipeline muscle.

Q: Why the decision to restructure now and where are optimizations focused?

A: Building agile company to deliver free cash per share growth while fueling EX business. Reasons include rebalancing go-to-market strategy towards EX, investing in product AI resulting in shorter cycle times, and investing in automation/AI to streamline business. Optimizations focused on consolidating go-to-market efforts, streamlining product development, and applying AI/automation.

Q: On financials, any one-time nature in Q1 and thoughts on competitors?

A: No one-time events in Q1, good execution. On competitors, no major changes in competitive dynamics on EX side with primary competitors being ServiceNow and Atlassian, and on CX side being fragmented.

Q: On channel efforts, size of bookings/pipeline generation and impact of expanding EX suite?

A: Most channel partners are regional service providers driving meaningful business, with nascent GSI efforts and interest in expanding base as customers look for choice in EX suite.

Q: On monetization of third-party agents and repeatability of large deals?

A: MCP gateway to be revealed next week for opening platform to third-party agents. Large deals are repeatable with growing customer count of over $100,000 customers and increasing ARPA.