Highlights

  • Second quarter revenue rose 16% to $237.4 million, and GAAP net income was $3.2 million versus a $1.7 million loss.
  • GAAP income from operations was $6.1 million, against an $8.7 million loss, after $7.0 million of restructuring charges.
  • The company repurchased 24.0 million Class A shares for $204.5 million in the first half under a $400 million program.
  • Remaining performance obligations were $680.6 million at June 30, 2026, with $493.3 million expected as revenue within 12 months.

Freshworks (NASDAQ:FRSH) shares were trading near their 52-week high at USD 14.89 on October 21, 2026, up 0.24%. The AI service software company completed the FireHydrant acquisition in January, announced a restructuring plan in May, and filed its second quarter 2026 report on August 4.

Based in San Mateo, California, Freshworks is a Delaware corporation that describes its business as people-first AI service software for employee and customer experiences. Its employee experience products include Freshservice, Freshservice for Business Teams, Device42 and FireHydrant, while its customer experience products center on the Freshdesk suite. Revenue comes mainly from subscriptions, along with Device42 licenses and professional services. The company operates as a single segment, and its fiscal year ends December 31.

Revenue Growth and a Swing to Quarterly Profit

Revenue for the three months ended June 30, 2026 was $237.4 million, up 16% from $204.7 million. North America contributed $112.3 million, Europe, the Middle East and Africa $91.2 million and Asia Pacific $27.0 million.

Gross profit rose to $201.3 million, holding gross margin at 85%. Total operating expenses grew 7% to $195.2 million, led by a 12% increase in sales and marketing to $106.5 million, which included higher marketing sponsorship costs, and by the restructuring charge. General and administrative expense fell 19% to $37.9 million, helped by lower stock-based compensation after the departure of the former Executive Chairman in December 2025.

GAAP income from operations was $6.1 million, compared with a loss of $8.7 million a year earlier. GAAP net income was $3.2 million, or $0.01 per diluted share, against a net loss of $1.7 million, or $0.01 per share. Non-GAAP income from operations was $55.9 million versus $44.8 million, while non-GAAP net income was $45.7 million versus $52.5 million, reflecting a new long-term non-GAAP tax rate of 24% applied from 2026.

For the six months, revenue was $466.0 million, up 16%, with a GAAP net loss of $1.6 million. Operating cash flow was $120.9 million, and non-GAAP free cash flow was $107.1 million, nearly level with a year earlier.

Restructuring, Acquisition and Customer Metrics

In May 2026, the company announced a restructuring plan to streamline its organization and product development and to lean more on AI and automation. It recognized $7.0 million of charges, mostly severance and benefits, and paid $5.6 million by quarter end. The plan was substantially complete at June 30, and no additional material charges are expected.

On January 1, 2026, it acquired FireHydrant, an AI-powered incident management software provider, for $88.7 million in cash including $4.3 million of acquired cash. Its results are not material to the consolidated statements.

Customers contributing more than $5,000 in annual recurring revenue (ARR) numbered 25,356, up 6%, and accounted for 92% of total ARR. Net dollar retention was 104%, down from 106%, which the company attributed mainly to unfavorable foreign exchange rates. The filing also describes a securities class action over the company's initial public offering and a related stayed derivative case, which it is defending, and says no pending proceeding is expected to have a material adverse impact.

Balance Sheet, Buybacks and Forward Indicators

Cash and cash equivalents were $494.7 million and marketable securities $169.4 million at June 30, 2026, against an accumulated deficit of $3.6 billion. In February 2026, the board approved a repurchase program of up to $400 million of Class A stock. Through June 30, the company repurchased 24.0 million shares for $204.5 million, leaving $195.5 million available. Management believes liquidity is sufficient for at least 12 months.

The 10-Q contains no numerical revenue or earnings guidance. Remaining performance obligations stood at $680.6 million, with $493.3 million expected to be recognized within 12 months. The company said macroeconomic uncertainty and currency volatility may continue to affect spending and retention, and that net dollar retention may fluctuate.