Freshworks Inc. reported a 16% year-on-year increase in revenue to $228.6 million for the first quarter ended March 31, 2026, as strong demand for its employee experience (EX) platform and AI-led offerings continued to fuel growth. The company had posted revenue of $196.3 million in the corresponding quarter last year. Moreover, on a sequential basis, revenue grew from $222.7 million in Q4 2025, indicating consistent and stable business momentum in the competitive SaaS industry.
“Freshworks began Q1 with strong momentum, building on our 2025 successes and achieving our sixth straight quarter of exceeding expectations,” said Dennis Woodside, CEO and President of Freshworks adding that demand for its EX platform and AI Copilot offerings continued to drive expansion. This reflects the increasing adoption of AI-powered customer and employee experience solutions across enterprises.
However, the company reported a GAAP operating loss of $8.1 million in Q1 2026, although it narrowed from a loss of $10.4 million a year earlier. At the same time, the company reversed its position from Q4 2025, when it had recorded a GAAP operating profit of $39.7 million, highlighting ongoing margin pressures in the cloud software market.
Meanwhile, Freshworks announced plans to reduce its global workforce by approximately 11%, impacting around 500 employees, as part of a broader restructuring strategy. This move comes as global SaaS companies face increasing pressure on growth efficiency and profitability. The layoffs will affect operations across India and the United States, signaling a shift toward leaner operational models.
The company expects to incur one-time restructuring charges of about $8 million, with most of these costs likely to be recognised in the second quarter of 2026, said Tyler Sloat during the company’s Q1 earnings call on May 6. This restructuring aligns with broader tech industry cost optimisation trends.
In terms of adjusted performance, non-GAAP operating income stood at $41 million, down from $46.4 million in the previous year, while margins contracted to 17.9% from 23.6%. Sequentially, the figure remained largely flat compared with $41.6 million in Q4, although margins declined, indicating cautious profitability trends despite steady revenues.
Additionally, GAAP net loss per share came in at $0.02, compared with breakeven ($0.00) a year ago. In contrast, the company had reported a profit of $0.67 per share in Q4 2025, reflecting a sharp sequential drop. On a non-GAAP basis, earnings per share declined to $0.11 from $0.18 a year earlier and also fell from $0.14 in the previous quarter. Despite this, the company maintained profitability on an adjusted basis, even as per-share earnings softened.
Furthermore, GAAP refers to standardised accounting principles that companies must follow, whereas non-GAAP metrics exclude items such as stock-based compensation or one-time expenses to provide a clearer view of underlying operating performance—an important distinction for investors tracking earnings analysis and financial performance metrics.
On the cash flow front, Freshworks maintained steady performance, with operating cash flow rising to $62.4 million from $58 million a year ago. Adjusted free cash flow stood at $55.8 million, while the company ended the quarter with a strong cash position of $780.4 million in cash and equivalents. This reinforces its financial stability amid evolving market conditions.
Following the earnings announcement, Freshworks’ shares rose about 2% to trade at around $0.19 apiece. However, the stock remains down roughly 26% year-to-date, reflecting broader volatility in technology stocks and investor sentiment around growth-oriented companies.
Importantly, the company secured two of the largest deals in its history during the quarter, including its first contract exceeding $1 million in annual recurring revenue (ARR). This milestone highlights increasing traction in the enterprise segment and strengthens its position in the enterprise SaaS market.
Among key operating metrics, the number of customers contributing over $100,000 in ARR increased 29% year-on-year. Meanwhile, net dollar retention stood at 106%, slightly lower than 108% in Q4 2025, indicating stable but moderating customer expansion trends.
Looking ahead, Freshworks expects Q2 2026 revenue to range between $232 million and $235 million. Additionally, the company raised its full-year revenue guidance to between $958 million and $964 million, signaling continued confidence in achieving double-digit growth in the global SaaS landscape.
“As we grow Freshworks to a $1 billion ARR company and beyond, our EX business represents the primary and largest growth opportunity,” Woodside said during the company’s earnings call. This outlook underscores the company’s strategic focus on scaling its EX platform and expanding its enterprise footprint.
The company also highlighted strong adoption of its AI offerings. “In Q1, Freddy AI Copilot customer growth exceeded 80% year-on-year, while the attach rate in new deals above $30,000 ARR was over 65%. Within its EX business, customer penetration for AI crossed 20%, nearly doubling from a year ago, and about one-third of all new EX customers adopted Copilot,” Woodside said.
Freshworks’ Q1 2026 results reflect a balanced narrative of steady revenue growth, rising enterprise adoption, and expanding AI capabilities, alongside profitability pressures and workforce restructuring. As the company continues to invest in AI innovation, employee experience platforms, and enterprise software solutions, it remains well-positioned to capitalise on long-term growth opportunities while navigating near-term market challenges.
