# Freshworks Inc. (FRSH) Q2 2025 Financial Results Summary
Freshworks Inc. (Nasdaq: FRSH) released its financial results for the second quarter of 2025 on July 29, 2025. The company continues to demonstrate growth and resilience in the competitive AI service software industry.
## Second Quarter 2025 Financial Summary Results
– **Revenue**:
– Total revenue reached **$204.7 million**, with an **18%** increase compared to **$174.1 million** in Q2 2024.
– Adjusted for constant currency, revenue growth was **17%**.
– **GAAP (Loss) from Operations**:
– Recorded a GAAP loss from operations of **$(8.7) million**, an improvement from **$(43.8) million** in Q2 2024.
– **Non-GAAP Income from Operations**:
– Non-GAAP income from operations surged to **$44.8 million**, compared to **$13.1 million** in the same quarter last year.
– **GAAP Net (Loss) Per Share**:
– GAAP basic and diluted net loss per share stabilized at **$(0.01)**, improving from **$(0.07)** in Q2 2024, based on **294.4 million** weighted-average shares outstanding.
– **Non-GAAP Net Income Per Share**:
– Non-GAAP diluted net income per share increased to **$0.18** from **$0.08**, based on **297.3 million** weighted-average shares outstanding.
– **Net Cash Provided by Operating Activities**:
– Net cash provided reached **$58.6 million**, compared to **$36.3 million** in Q2 2024.
– **Adjusted Free Cash Flow**:
– Adjusted free cash flow was **$54.3 million**, an increase from **$32.8 million** a year ago.
– **Cash, Cash Equivalents, and Marketable Securities**:
– Totaled **$926.2 million** as of June 30, 2025.
## Key Operating Metrics and Highlights
– **Customer Base**:
– The number of customers contributing more than **$5,000** in annual recurring revenue (ARR) rose to **23,975**, reflecting a **10%** increase year-over-year.
– On a constant currency basis, this growth was **9%**.
– **Net Dollar Retention Rate**:
– The company reported a net dollar retention rate of **106%**, which remains consistent with **106%** for Q2 2024 but reflects a slight decrease from **105%** in the previous quarter.
– Adjusting for constant currency, the rate was **104%**.
– **New Customers**:
– Freshworks welcomed several new customers, including AEP Energy, California Franchise Tax Board, and Seagate Technology.
– **Leadership Changes**:
– Ian Tickle was appointed as Chief of Global Field Operations.
– **Product Innovations**:
– Launched new features, including the Freddy AI Agent Studio and Freshservice Journeys.
– **Partnerships**:
– Announced a multi-year partnership with McLaren Racing as an Official Partner of the McLaren Formula 1 Team.
– **Investor Day Announcement**:
– Freshworks will host its Investor Day on **September 11, 2025**, at 8:30 a.m. PT in San Francisco.
## Financial Outlook
– For Q3 and full year 2025, Freshworks expects:
– **Revenue**:
– Q3: **$207.0 – $210.0 million**, indicating a year-over-year growth of **11% – 12%**.
– Full Year: **$822.9 – $828.9 million**, reflecting an **14% – 15%** growth.
– **Non-GAAP Income from Operations**:
– Q3: **$31.2 – $33.2 million**.
– Full Year: **$153.0 – $157.0 million**.
– **Non-GAAP Net Income Per Share**:
– Q3: **$0.12 – $0.14**.
– Full Year: **$0.56 – $0.58**.
## Share Repurchase and Dividends
– Freshworks did engage in share repurchase activity, with a total of **$113.6 million** worth of stock repurchased during Q2 2025.
– No quarterly dividend was declared during this period.
Freshworks continues to show promising growth metrics and operational efficiencies providing a positive outlook as it progresses through the remainder of 2025.
| Three Months Ended | Six Months Ended | |||
|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| Revenue | $ 204,678 | $ 174,131 | $ 400,951 | $ 339,274 |
| Cost of revenue(1) | $ 31,142 | $ 28,175 | $ 61,020 | $ 54,065 |
| Gross profit | $ 173,536 | $ 145,956 | $ 339,931 | $ 285,209 |
| Operating expense: | ||||
| Research and development(1) | $ 39,943 | $ 40,993 | $ 79,944 | $ 75,677 |
| Sales and marketing(1) | $ 95,223 | $ 104,248 | $ 184,381 | $ 198,890 |
| General and administrative(1) | $ 47,026 | $ 44,502 | $ 94,273 | $ 86,596 |
| Restructuring charges | $ — | $ — | $ 405 | $ — |
| Total operating expenses | $ 182,192 | $ 189,743 | $ 359,003 | $ 361,163 |
| Loss from operations | $ -8,656 | $ -43,787 | $ -19,072 | $ -75,954 |
| Interest and other income, net | $ 12,547 | $ 13,247 | $ 25,516 | $ 26,042 |
| Income (loss) before income taxes | $ 3,891 | $ -30,540 | $ 6,444 | $ -49,912 |
| Provision for (benefit from) income taxes | $ 5,630 | $ -10,356 | $ 9,487 | $ -6,403 |
| Net loss | $ -1,739 | $ -20,184 | $ -3,043 | $ -43,509 |
| Net loss per share – basic and diluted | $ -0.01 | $ -0.07 | $ -0.01 | $ -0.15 |
| Weighted average shares used in computing net loss per share – basic and diluted | 294,435 | 299,805 | 297,839 | 298,836 |
—
(1) Includes stock-based compensation expense as follows (in thousands):
| Three Months Ended | Six Months Ended | |||
|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| Cost of revenue | $ 1,437 | $ 1,682 | $ 2,955 | $ 3,203 |
| Research and development | $ 8,618 | $ 10,355 | $ 17,831 | $ 19,021 |
| Sales and marketing | $ 11,819 | $ 18,376 | $ 25,228 | $ 35,677 |
| General and administrative | $ 27,406 | $ 24,726 | $ 54,930 | $ 49,680 |
| Total stock-based compensation expense, net of amounts capitalized | $ 49,280 | $ 55,139 | $ 100,944 | $ 107,581 |
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### CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| June 30, 2025 | December 31, 2024 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 485,970 | $ 620,315 |
| Marketable securities | $ 440,226 | $ 449,750 |
| Accounts receivable, net | $ 115,864 | $ 122,910 |
| Deferred contract acquisition costs | $ 27,508 | $ 26,106 |
| Prepaid expenses and other current assets | $ 66,942 | $ 46,346 |
| Total current assets | $ 1,136,510 | $ 1,265,427 |
| Property and equipment, net | $ 30,894 | $ 25,893 |
| Operating lease right-of-use assets | $ 32,358 | $ 36,891 |
| Deferred contract acquisition costs, noncurrent | $ 24,459 | $ 22,534 |
| Goodwill | $ 146,676 | $ 147,014 |
| Intangible assets, net | $ 83,818 | $ 90,840 |
| Deferred tax assets | $ 8,980 | $ 8,499 |
| Other assets | $ 17,131 | $ 14,786 |
| Total assets | $ 1,480,826 | $ 1,611,884 |
| Liabilities and Stockholders’ Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 4,899 | $ 1,619 |
| Accrued liabilities | $ 86,714 | $ 81,933 |
| Deferred revenue | $ 339,210 | $ 323,435 |
| Income tax payable | $ 1,796 | $ 728 |
| Total current liabilities | $ 432,619 | $ 407,715 |
| Operating lease liabilities, non-current | $ 26,815 | $ 30,221 |
| Other liabilities | $ 36,750 | $ 36,027 |
| Total liabilities | $ 496,184 | $ 473,963 |
| Stockholders’ equity: | ||
| Common stock | $ 3 | $ 3 |
| Additional paid-in capital | $ 4,723,457 | $ 4,874,133 |
| Accumulated other comprehensive income (loss) | $ 102 | $ -338 |
| Accumulated deficit | $ -3,738,920 | $ -3,735,877 |
| Total stockholders’ equity | $ 984,642 | $ 1,137,921 |
| Total liabilities and stockholders’ equity | $ 1,480,826 | $ 1,611,884 |
