Nasdaq-listed Freshworks has increased its full-year 2025 revenue and profit outlook for the second straight quarter, following a strong 18% year-on-year revenue growth in Q2, reaching $204.7 million for the quarter ending June 30. The company attributed this growth to rising demand for its AI-powered solutions.
Headquartered in San Mateo and Chennai, the software firm now projects full-year revenue between $822.9 million and $828.9 million, reflecting a 14–15% increase—up from its previous forecast of $815.3 million to $824.3 million.
Freshworks also revised its non-GAAP operating income guidance for the year to $153–157 million, compared to its earlier estimate of $139.5–147.5 million shared after Q1.
“Freshworks delivered another strong quarter, exceeding our previously provided financial estimates,” said CEO Dennis Woodside in a statement on July 30. He added that more businesses are choosing Freshworks to simplify operations and adopt AI-enabled employee and customer service solutions.
In Q2 FY25, non-GAAP operating income surged to $44.8 million, up from $13.1 million a year earlier, while GAAP operating loss narrowed significantly to $8.7 million from $43.8 million. The company’s GAAP net loss also reduced sharply to $2.94 million, down from $20.99 million in the same period last year—highlighting better operational efficiency and cost management.
Operating cash flow grew by 61% year-over-year to $58.6 million, with a 29% margin. Adjusted free cash flow climbed to $54.3 million, up from $32.8 million in Q2 2024.
Freshworks closed the quarter with $926.2 million in cash, cash equivalents, and marketable securities, slightly down from $1 billion in the previous quarter.
Freshworks reported that the number of customers generating over $5,000 in annual recurring revenue (ARR) grew 10% year-over-year, reaching 23,975. Meanwhile, net dollar retention held steady at 106%, indicating strong customer retention and expansion.
Notably, the company shared that its Freddy AI Copilot and Freddy AI Agent products have together surpassed $20 million in combined ARR. This milestone highlights the growing adoption of Freshworks’ AI-driven offerings, which are playing a key role in its revenue growth.
ARR is a critical performance indicator for SaaS businesses, as it reflects predictable, recurring revenue from ongoing customer subscriptions.
“On AI adoption. Customers have moved from AI experimentation to realizing tangible business value and returns on their investments. Freddy Copilot was included in three of the top 10 new deals in Q1. Nearly half of all new large deals over $30,000 ARR had Copilot attached in Q1,” Woodside said during the company’s earnings call.
