Freshworks (NASDAQ:FRSH) Posts Quarterly Earnings Results, Beats Expectations By $0.04 EPS

Freshworks (NASDAQ:FRSH) issued its quarterly earnings data on Tuesday. The company reported $0.17 EPS for the quarter, beating the consensus estimate of $0.13 by $0.04, FiscalAI reports. The firm had revenue of $237.38 million during the quarter, compared to analyst estimates of $233.62 million. Freshworks had a return on equity of 4.27% and a net margin of 20.69%.The business’s revenue for the quarter was up 16.0% compared to the same quarter last year. During the same quarter in the prior year, the business posted $0.18 EPS. Freshworks updated its FY 2026 guidance to 0.660-0.680 EPS and its Q3 2026 guidance to 0.180-0.180 EPS.

Here are the key takeaways from Freshworks’ conference call:

• GAAP profitability arrived ahead of schedule: Freshworks reported $3.2 million in Q2 GAAP net income, alongside 16% year-over-year revenue growth to $237.4 million and a 24% non-GAAP operating margin. Management expects to sustain GAAP profitability while continuing to invest in employee experience (EX) and AI.
• EX remains the primary growth engine: EX ARR increased 24% on a constant-currency basis to $567 million, or roughly 59% of total ARR, supported by larger enterprise deals and cross-selling of ITAM, ESM, ITOM and AI. The company reiterated expectations for mid-20s EX ARR growth and more than $600 million in EX ARR exiting 2026.
• AI monetization and adoption are gaining traction: More than 7,000 customers now pay for an AI SKU, Copilot attach rates exceeded 70% on new deals above $30,000, and AI Agent Studio had more than 1,000 early-access customers. Freshworks plans to introduce usage-based pricing for Agent Studio in the fall.
• Capital efficiency strengthened: Q2 adjusted free cash flow was $57.7 million, and the company repurchased approximately $159 million of stock during the quarter, reducing shares outstanding by 7% year to date. Freshworks ended Q2 with $665 million in cash and investments and no debt.
• CX growth remains subdued: CX ARR grew only 4% on a constant-currency basis to $400 million, with full-year growth expected in the low single digits. Management is restructuring the CX organization and focusing on profitability, retention and higher-quality customer acquisition rather than rapid expansion.

Freshworks Price Performance

Freshworks stock traded up $0.27 during trading hours on Tuesday, hitting $12.04. 8,356,077 shares of the stock traded hands, compared to its average volume of 11,424,372. The firm’s 50 day moving average price is $10.03 and its 200-day moving average price is $9.18. The stock has a market capitalization of $3.33 billion, a price-to-earnings ratio of 19.42 and a beta of 0.86. Freshworks has a 1 year low of $6.79 and a 1 year high of $14.06.

Insider Transactions at Freshworks

In related news, Director Jennifer H. Taylor sold 6,618 shares of the company’s stock in a transaction that occurred on Thursday, July 2nd. The stock was sold at an average price of $10.44, for a total value of $69,091.92. Following the sale, the director owned 62,673 shares in the company, valued at $654,306.12. This represents a 9.55% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Philippa Lawrence sold 10,530 shares of the stock in a transaction that occurred on Wednesday, June 17th. The stock was sold at an average price of $9.18, for a total transaction of $96,665.40. Following the completion of the transaction, the chief accounting officer owned 465,823 shares in the company, valued at approximately $4,276,255.14. This trade represents a 2.21% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold a total of 27,236 shares of company stock worth $270,331 over the last three months. 8.54% of the stock is currently owned by insiders.

Institutional Trading of Freshworks

Large investors have recently made changes to their positions in the business. Wellington Management Group LLP raised its holdings in shares of Freshworks by 9.2% during the fourth quarter. Wellington Management Group LLP now owns 5,359,784 shares of the company’s stock worth $65,657,000 after purchasing an additional 453,627 shares during the last quarter. Geode Capital Management LLC boosted its holdings in Freshworks by 1.9% in the fourth quarter. Geode Capital Management LLC now owns 5,126,112 shares of the company’s stock valued at $62,805,000 after purchasing an additional 95,720 shares during the last quarter. State Street Corp boosted its holdings in Freshworks by 1.2% in the fourth quarter. State Street Corp now owns 4,904,684 shares of the company’s stock valued at $60,082,000 after purchasing an additional 56,935 shares during the last quarter. Fuller & Thaler Asset Management Inc. grew its position in Freshworks by 11.2% during the 4th quarter. Fuller & Thaler Asset Management Inc. now owns 4,748,985 shares of the company’s stock worth $58,175,000 after purchasing an additional 478,473 shares during the period. Finally, Dimensional Fund Advisors LP grew its position in Freshworks by 8.5% during the 3rd quarter. Dimensional Fund Advisors LP now owns 3,316,920 shares of the company’s stock worth $39,052,000 after purchasing an additional 260,078 shares during the period. 75.58% of the stock is owned by hedge funds and other institutional investors.

Wall Street Analyst Weigh In

A number of research firms have commented on FRSH. Wall Street Zen cut Freshworks from a “buy” rating to a “hold” rating in a research note on Saturday, May 9th. Guggenheim began coverage on shares of Freshworks in a report on Wednesday, July 22nd. They set a “buy” rating and a $25.00 price objective on the stock. Zacks Research lowered shares of Freshworks from a “strong-buy” rating to a “hold” rating in a research report on Friday, July 10th. Morgan Stanley lowered their target price on shares of Freshworks from $15.00 to $13.00 and set an “equal weight” rating for the company in a research note on Monday, May 11th. Finally, Citigroup reissued a “market outperform” rating on shares of Freshworks in a research report on Tuesday, June 2nd. One equities research analyst has rated the stock with a Strong Buy rating, six have assigned a Buy rating, eight have given a Hold rating and one has assigned a Sell rating to the company’s stock. According to MarketBeat, Freshworks presently has a consensus rating of “Hold” and an average target price of $13.25.

About Freshworks

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.