Freshworks (FRSH) Q4 2025 earnings summary

Executive summary

• Achieved first full-year GAAP profitability and record free cash flow in 2025, with Q4 revenue of $222.7M, up 14% year-over-year, and 16% full-year revenue growth, marking a historic inflection point driven by disciplined execution and product innovation.

• Surpassed top and bottom line expectations for five consecutive quarters, with strong momentum in mid-market and enterprise, especially in Employee Experience (EX), and significant customer expansion.

• AI-powered solutions, including Freddy AI, drove product adoption, with over 8,000 customers and $25M in ARR, and are expected to reach $100M in ARR by 2028.

• Acquisition of FireHydrant expands IT operations management and AI-native ServiceOps capabilities, opening an $8B addressable market.

• Over 60% of total ARR now comes from mid-market and enterprise customers.

Financial highlights

• Q4 2025 revenue reached $222.7M, up 14% year-over-year; full-year 2025 revenue was $838.8M, up 16%; annual recurring revenue (ARR) ended at $907M, up 18% year-over-year.

• Q4 non-GAAP operating income was $41.6M (18.7%-19% margin); full-year non-GAAP operating income was $178M (21.2% margin).

• Q4 GAAP net income was $191.4M, including one-time benefits from stock-based compensation and income tax valuation allowance release; Q4 GAAP operating income was $39.7M (17.8% margin).

• Q4 adjusted free cash flow was $56.2M (25.2% margin); full-year was $223.1M (26.6% margin); ended Q4 with $843.7M in cash, cash equivalents, and marketable securities.

• Net dollar retention was 108% as-reported and 104%-105% constant currency; over 1,500 customers with >$100K ARR, up 28% year-over-year; customers with >$5K ARR grew 10% to 24,762.

Outlook and guidance

• Q1 2026 revenue expected between $222M-$225M (13%-15% growth); full-year 2026 revenue expected between $952M-$960M (13.5%-14.5% growth).

• Non-GAAP operating income for 2026 projected at $181M-$189M; non-GAAP net income per share $0.55-$0.57.

• Free cash flow expected to reach $250M in 2026, with margin of 26%.

• Net dollar retention expected to improve to 105% in Q1 2026.

• Operating margins expected to rise to 23.5% by Q4 2026; sustainable GAAP profitability targeted exiting 2026.