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 full-year revenue growth of 16% driven by disciplined execution, product innovation, and AI-powered solutions.

• Surpassed top and bottom line expectations for five consecutive quarters, with strong momentum in mid-market and enterprise segments, especially in Employee Experience (EX), and over 60% of ARR from these segments.

• AI (Freddy) is a tangible revenue engine, with over 8,000 customers and $25M in ARR, expected to reach $100M by 2028, and significant product adoption across new capabilities.

• Customer base reached 74,500, with 3% year-over-year growth in Q4 2025, and notable expansion in large customer cohorts.

• EX business exceeded $500M in ARR, with ESM, Device42, and Freddy AI achieving significant ARR milestones.

Financial highlights

• Q4 2025 revenue: $222.7M, up 14% year-over-year; full-year revenue: $838.8M, up 16%.

• Full-year ARR: $907M, up 18% year-over-year; EX ARR: $510M, up 26%; CX ARR: $395M, up 9%.

• Q4 non-GAAP operating income: $41.6M (19% margin); Q4 GAAP operating income: $39.7M (18% margin); full-year non-GAAP operating income: $178M (21.2% margin).

• Q4 adjusted free cash flow: $56.2M (25.2% margin); full-year: $223.1M (26.6% margin); cash and equivalents at year-end: $843.7M.

• Net dollar retention: 108% as reported, 104–105% constant currency; customers with >$5K ARR grew 10% to 24,762; >$50K ARR grew 23% to 3,760.

Outlook and guidance

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

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

• Free cash flow expected at $55M for Q1 2026 and $250M for full-year 2026, with margins of 25–26%.

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

• Revenue growth acceleration expected in the second half of 2026, driven by EX momentum.