Freshworks Inc (FRSH) Q4 2025 Earnings Call Highlights: Record Revenue and Strategic AI Growth

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Wed, February 11, 2026 at 2:00 PM GMT+9 4 min read

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**Q4 Revenue:** $222.7 million, 14% year-over-year growth.

**Annual Recurring Revenue (ARR):** $907 million, 18% year-over-year growth.

**Non-GAAP Operating Margin:** 19%, nearly 5 points above estimates.

**Free Cash Flow Margin:** 25% in Q4.

**Net Dollar Retention Rate:** 108% as-reported, 104% constant currency.

**EX Business ARR:** $510 million, 26% year-over-year growth.

**CX Business ARR:** $395 million, 9% year-over-year growth.

**GAAP Net Income:** $191.4 million in Q4.

**Calculated Billings:** $259.6 million in Q4, 17% year-over-year growth.

**Free Cash Flow:** $56.2 million in Q4.

**Cash and Equivalents:** Nearly $844 million at the end of Q4.

**Q1 2026 Revenue Guidance:** $222 million to $225 million, 13% to 15% year-over-year growth.

**Full Year 2026 Revenue Guidance:** $952 million to $960 million, 13.5% to 14.5% year-over-year growth.

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Release Date: February 10, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Freshworks Inc (NASDAQ:FRSH) achieved profitability for the first time in its history for the full year 2025, along with record free cash flow.

The company reported a significant increase in annual recurring revenue (ARR), reaching $907 million, representing an 18% growth year over year.

Freshworks Inc (NASDAQ:FRSH) saw a strong performance in its Employee Experience (EX) business, crossing the $0.5 billion ARR milestone with 26% year-over-year growth.

Freddy AI, a key component of Freshworks Inc (NASDAQ:FRSH)'s strategy, ended 2025 with over $25 million in ARR and is on track to reach $100 million by 2028.

The company experienced a surge in upmarket momentum, with enterprise cohorts outpacing overall growth and over 1,500 customers contributing more than $100,000 in ARR, a 28% increase year over year.

Negative Points

The Customer Experience (CX) side of the business did not see the expected growth from AI, with growth remaining in the mid-single-digit range.

Freshworks Inc (NASDAQ:FRSH) faces challenges in fully integrating its product offerings, such as Device42, into a unified cloud platform.

The company anticipates a 1-point headwind on its Q1 and fiscal year 2026 non-GAAP operating margin due to the acquisition of FireHydrant.

There is a need for increased education and adoption of AI among customers, as some remain hesitant or require more understanding of AI benefits.

Freshworks Inc (NASDAQ:FRSH) is running its CX business lean to focus investments on the EX side, which may limit growth potential in the CX segment.

 






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Q & A Highlights

Q: Can you discuss the factors affecting the CX side of the business and what steps are being taken to address them? A: Dennis Woodside, CEO, explained that the focus has been on the EX side and AI investments. The recent unification of conversational and ticketing capabilities into a new platform is expected to drive retention and expansion. The CX business is managed to grow in the mid-single-digit range, aligning with expectations.

Q: How should we think about the attach rate of Device42 in 2026 and its impact on incremental ACV uplift? A: Dennis Woodside, CEO, noted that Device42 is integral to the broader platform strategy, enabling sustained growth in the EX segment. Tyler Sloat, CFO, added that the native cloud offering of Device42 is set to launch soon, which could enhance its market appeal. The ARPU for Device42 varies significantly based on the organization size.

Q: What are the expected growth tailwinds from Freddy AI in 2026, and how does Freshworks monetize alternative agentic solutions? A: Dennis Woodside, CEO, highlighted that Freddy AI has over 8,000 paying customers and $25 million in ARR. The AI agent studio launched recently, and pricing has increased, indicating potential ARR growth. Freshworks focuses on being the primary AI solution for midsized enterprises, with AI being a core sales motion.

Q: How does the guidance for 2026 compare to previous years, and what is the level of conservatism in the projections? A: Tyler Sloat, CFO, stated that the guidance reflects confidence in the EX opportunity and consistent execution. The revenue growth expectation has been increased from previous estimates, driven by strong EX performance and pipeline visibility.

Q: What are the key strategies to increase Freddy AI penetration among customers? A: Dennis Woodside, CEO, emphasized building out AI agent capabilities and prepackaged workflows for employee use cases. The focus is on scaling usage and demonstrating value through session-based pricing. Copilot adoption is also a priority, with proactive service delivery being a significant growth lever.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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