Freshworks — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue reached $245.4 million, a 14% year-over-year increase compared to $215.1 million in Q3 2025, and 14% growth adjusting for constant currency.
• GAAP net income was $18.3 million, compared to a net loss of $4.7 million in Q3 2025.
• GAAP diluted net income per share was $0.07, compared to a loss of $0.02 per share in Q3 2025.
• Non-GAAP diluted net income per share was $0.22, an increase from $0.16 in Q3 2025.
• GAAP income from operations was $28.2 million (11.5% margin), compared to a loss of $7.5 million (-3.5% margin) in Q3 2025.
• Non-GAAP income from operations was $73.2 million (29.8% margin), compared to $45.2 million (21.0% margin) in Q3 2025.
• Net cash provided by operating activities was $77.7 million (31.7% margin), up from $63.5 million (29.5% margin) in Q3 2025.
• Adjusted free cash flow was $73.9 million (30.1% margin), representing a 29% year-over-year increase from $57.2 million in Q3 2025.
• Cash, cash equivalents, restricted cash, and marketable securities totaled $697.3 million as of September 30, 2026.
• Deferred revenue was $404.4 million as of September 30, 2026, compared to $385.3 million as of December 31, 2025.

Guidance and Future Outlook:

• Full year 2026 revenue is expected to be between $965.0 million and $966.0 million, representing approximately 15% year-over-year growth.
• Fourth quarter 2026 revenue is expected to be between $253.5 million and $254.5 million, representing approximately 14% year-over-year growth.
• Full year 2026 non-GAAP income from operations is projected to be between $238.0 million and $240.0 million.
• Fourth quarter 2026 non-GAAP income from operations is projected to be between $68.0 million and $70.0 million.
• Full year 2026 non-GAAP net income per share is estimated at approximately $0.71.
• Fourth quarter 2026 non-GAAP net income per share is estimated at approximately $0.21.
• Year-over-year growth for revenue adjusted for constant currency is expected to be 14% to 15% for both the fourth quarter and full year 2026.

Business Segments and Product Lines:

• New multi-product EX deals increased by over 35%.
• Partners participated in more than half of new business.
• The company reached a milestone of over $1 billion in annual recurring revenue (ARR) following the close of the third quarter, ahead of the previously estimated year-end target.
• Customers contributing more than $100,000 in ARR increased 25% year-over-year to 1,821.
• Customers contributing more than $50,000 in ARR increased 18% year-over-year to 4,257.
• Customers contributing more than $5,000 in ARR increased 5% year-over-year to 25,498.
• Net dollar retention rate was 104% for the quarter, compared to 105% in Q3 2025.
• New customers onboarded included Tata Technologies Limited, Texas Christian University, Unilabs (UK), and Jose Cuervo.
• The company was named a Leader in the IDC MarketScape: Worldwide AI-Enabled IT Service Management Software 2026 Vendor Assessment.

Market and Competitive Landscape:

• Freshworks was added to the S&P Small Cap 600 Index.
• Management highlighted that customers are increasingly choosing Freshworks for a unified platform and single data model for service operations.
• The upmarket strategy is driving momentum with increased participation from partners in new business.

Risks and Challenges:

• Forward-looking statements are subject to various cautionary factors including macroeconomic uncertainties, market volatility, foreign exchange rates, and inflation.
• Actual results may differ materially from estimates due to factors such as the ability to sustain growth and profitability, customer acquisition and retention, product development delays, and global economic conditions.
• Non-GAAP financial measures exclude stock-based compensation, employer payroll taxes on equity awards, amortization of acquired intangibles, restructuring charges, and acquisition expenses.

Management Commentary and Tone:

• CEO Dennis Woodside stated, "Our upmarket strategy delivered another strong quarter," citing a 30% non-GAAP operating margin and 29% growth in adjusted free cash flow.
• Management noted that momentum upmarket accelerated with significant growth in multi-product EX deals.
• The company achieved the 9th consecutive quarter of Rule of 40, demonstrating consistent growth and profitability.

Other Key Points:

• The company reported a GAAP operating loss of $7.5 million in Q3 2025, which turned into a GAAP operating income of $28.2 million in Q3 2026.
• Restructuring charges of $218,000 were recorded in Q3 2026, primarily consisting of employee severance and termination benefits associated with restructuring programs initiated in November 2024 and May 2026.
• The company acquired FireHydrant, with all 2026 financial numbers including its results.
• Stock-based compensation expense for the quarter was $38.8 million.
• The company repurchased common stock for $27.2 million in the quarter and $234.6 million in the first nine months of 2026.