Freshworks (NASDAQ:FRSH) Releases Earnings Results, Meets Estimates

Key Points

• Freshworks reported Q1 EPS of $0.11 (in line with estimates) and revenue of $228.6M (beat), up 16.5% year‑over‑year, and raised FY2026 EPS guidance to $0.61–$0.63 with Q2 EPS guided at $0.13.
• The company showed strong profitability and cash generation with a non‑GAAP operating margin of 18%, adjusted free cash flow margin of 24%, and the board authorized a $400M buyback (≈$45M repurchased in Q1).
• Management highlighted AI and upmarket momentum—EX ARR reached ~$540M (+27% YoY) and Freddy AI Copilot customers grew >80% YoY—but flagged an ~11% workforce reduction with roughly $8M of one‑time restructuring charges that may pressure near‑term execution.

Freshworks (NASDAQ:FRSH - Get Free Report) issued its quarterly earnings results on Tuesday. The company reported $0.11 EPS for the quarter, hitting analysts' consensus estimates of $0.11, Briefing.com reports. Freshworks had a return on equity of 4.69% and a net margin of 21.90%.The company had revenue of $228.63 million for the quarter, compared to analysts' expectations of $223.64 million. During the same quarter last year, the business earned $0.18 earnings per share. Freshworks's revenue was up 16.5% on a year-over-year basis. Freshworks updated its FY 2026 guidance to 0.610-0.630 EPS and its Q2 2026 guidance to 0.130-0.130 EPS.

Here are the key takeaways from Freshworks' conference call:

• Q1 beat and strong cash generation: Revenue grew 16% year‑over‑year to $228.6M, non‑GAAP operating margin reached 18%, adjusted free cash flow margin was 24%, and the board authorized a $400M buyback (Q1 repurchases ~$45M).
• EX is driving upmarket traction: EX ARR topped $540M, up 27% year‑over‑year, and the company closed its two largest-ever deals including its first seven‑figure EX ARR contract, with customers >$100K ARR up 29%.
• AI monetization momentum: Freddy AI Copilot customers grew >80% YoY with >65% attach rates on new deals >$30K and EX AI penetration ~20%, while the company completed the FireHydrant acquisition and is launching an MCP gateway to enable/monetize third‑party AI agents.
• CX growth is more muted as migrations continue: CX ARR rose 6% YoY and management expects low single‑digit CX growth in 2026, though new Freshdesk Omnichannel customers show ~2.5x ARPA versus the prior platform.
• Workforce restructuring announced: ~11% headcount reduction with roughly $8M of one‑time restructuring charges (mostly in Q2), which may cause near‑term disruption despite targeting longer‑term efficiency gains.

Freshworks Stock Performance

Shares of NASDAQ:FRSH traded down $0.35 during midday trading on Wednesday, hitting $8.85. 21,206,050 shares of the stock were exchanged, compared to its average volume of 7,175,225. The stock has a market capitalization of $2.51 billion, a price-to-earnings ratio of 13.82 and a beta of 0.83. The business's 50-day moving average price is $8.14 and its 200 day moving average price is $10.15. Freshworks has a 12 month low of $6.79 and a 12 month high of $16.14.

Key Freshworks News

Here are the key news stories impacting Freshworks this week:

• Positive Sentiment: Q1 revenue topped estimates and the company highlighted two of the largest deals in its history, including its first $1M+ ARR contract — supporting topline momentum and deal quality. Freshworks Reports First Quarter 2026 Results
• Positive Sentiment: Company raised guidance materially: FY2026 EPS guide (0.61–0.63) and Q2 EPS guide (0.13) were above street consensus, and full‑year revenue guidance sits slightly above estimates — a constructive signal for forward profitability. Freshworks Reports First Quarter 2026 Results
• Neutral Sentiment: Earnings were inline with expectations: GAAP/non‑GAAP EPS of $0.11 met consensus while revenue of $228.6M beat estimates — steady execution but not a blowout. Transcripts of the call are available for further color on product adoption and margin drivers. Q1 2026 Earnings Call Transcript
• Neutral Sentiment: The company will host a Financial Analyst Session at its Refresh 2026 event (May 14) — an opportunity for management to expand on guidance assumptions and AI strategy, which could influence near‑term sentiment. Analyst Session Announcement
• Negative Sentiment: Freshworks announced a workforce reduction of about 11% (~500 roles) as it restructures amid an AI-driven industry shift — a near‑term negative catalyst that can spook investors concerned about demand trends or execution risk even if it improves margins longer term. Reuters: Freshworks to cut 11% of jobs

Insider Buying and Selling at Freshworks

In other news, insider Mika Yamamoto sold 32,577 shares of the business's stock in a transaction dated Wednesday, March 4th. The stock was sold at an average price of $8.45, for a total transaction of $275,275.65. Following the sale, the insider directly owned 1,127,723 shares in the company, valued at approximately $9,529,259.35. The trade was a 2.81% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is accessible through the SEC website. Company insiders own 8.54% of the company's stock.

Institutional Trading of Freshworks

Hedge funds and other institutional investors have recently made changes to their positions in the company. Summit Securities Group LLC bought a new stake in shares of Freshworks during the fourth quarter worth about $26,000. EverSource Wealth Advisors LLC grew its holdings in shares of Freshworks by 427.6% during the second quarter. EverSource Wealth Advisors LLC now owns 4,479 shares of the company's stock worth $67,000 after purchasing an additional 3,630 shares during the last quarter. Shay Capital LLC bought a new stake in shares of Freshworks during the third quarter worth about $118,000. One68 Global Capital LLC bought a new stake in shares of Freshworks during the third quarter worth about $118,000. Finally, Mercer Global Advisors Inc. ADV bought a new stake in shares of Freshworks during the third quarter worth about $122,000. 75.58% of the stock is currently owned by institutional investors.

Analyst Upgrades and Downgrades

A number of research analysts recently commented on FRSH shares. UBS Group set a $11.00 price target on Freshworks in a research report on Wednesday, February 11th. Robert W. Baird set a $10.00 price target on Freshworks in a research report on Wednesday, February 11th. Jefferies Financial Group cut Freshworks from a "buy" rating to a "hold" rating and decreased their target price for the company from $20.00 to $8.00 in a research report on Monday, February 23rd. Citigroup reiterated an "outperform" rating on shares of Freshworks in a research report on Wednesday, February 11th. Finally, Citizens Jmp decreased their target price on Freshworks from $27.00 to $16.00 and set a "market outperform" rating on the stock in a research report on Wednesday, February 11th. Six investment analysts have rated the stock with a Buy rating, eight have given a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat, Freshworks currently has an average rating of "Hold" and an average target price of $12.45.

Freshworks Company Profile

Freshworks, Inc is a global provider of cloud-based customer engagement software designed to help businesses streamline customer support, sales, marketing, and IT service operations. The company's integrated suite of solutions enables organizations of all sizes to deliver seamless experiences across multiple channels, including email, chat, phone, and social media. Freshworks' platform is built on modern, user-friendly interfaces and offers native automation, AI-powered insights, and analytics to improve efficiency and customer satisfaction.

The company's flagship product, Freshdesk, serves as a helpdesk solution for customer support teams, while Freshservice addresses IT service management needs.

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