Summary
Freshworks opened fiscal 2025 with total revenue of $196.3 million, up 18.9% from $165.1 million in the first quarter a year ago. Gross profit reached $166.4 million, up from $139.3 million. The company still reported a GAAP operating loss of $10.4 million, much narrower than the $32.2 million loss in the prior-year quarter. Net loss came to $1.3 million, an improvement from $23.3 million. Diluted EPS was $0.00, against a loss of $0.08 a year earlier.
Profits improved across the board. Gross margin rose to 84.8% from 84.3%, and operating margin moved to negative 5.3% from negative 19.5%. Management credited economies of scale on third-party hosting costs for the margin lift. Cash generation also strengthened. Operating cash flow was $58.0 million, up from $40.6 million, while capital expenditures were $1.3 million versus $0.7 million. Adjusted free cash flow, a non-GAAP measure, was $55.4 million compared with $38.7 million. The balance sheet held $1.0 billion in cash, cash equivalents and marketable securities as of March 31, 2025. Deferred revenue was $330.5 million, up from $275.9 million, and remaining performance obligations were $541.9 million versus $435.4 million.
Non-GAAP income from operations was $46.4 million, up from $21.8 million. Non-GAAP diluted net income per share was $0.18, up from $0.10. The customer base kept expanding at the higher end. The number of customers contributing more than $5,000 in ARR reached 23,275, up 13% year over year. Net dollar retention rate slipped to 105% from 106%. Management attributed the decline to lower expansion within existing customers under macroeconomic pressure, partly offset by the addition of Device42 and a slight improvement in churn. Monthly plans made up 14% of ARR, down from 16% a year ago.
Operating expenses grew 3% in total. Research and development spending rose 15%, and general and administrative costs climbed 12%, both pushed higher by personnel costs and stock-based compensation. Sales and marketing fell 6% as the company cut stock-based compensation and advertising spend after last year's restructuring. Freshworks also recorded a restructuring charge tied to the plan it began in November 2024. During the quarter the company repurchased 6.7 million Class A shares for $111.8 million, leaving $272.7 million available under its $400 million buyback program.
Guidance covers both the next quarter and the full fiscal year. For the second quarter of 2025, the top line is guided to $197.3 million to $200.3 million, growth of 13% to 15%. For the full year 2025, the top line is guided to $815.3 million to $824.3 million, growth of 13% to 14%. Second-quarter non-GAAP income from operations is pegged at $27.8 million to $29.8 million, with non-GAAP net income per share of $0.10 to $0.12. Full-year non-GAAP income from operations is guided to $139.5 million to $147.5 million, and full-year non-GAAP net income per share to $0.56 to $0.58. The outlook uses exchange rates as of April 25, 2025.
The risks are familiar. Management pointed to macroeconomic uncertainty, tariffs, trade tensions and currency swings. Roughly 27% of revenue is exposed to the euro and British Pound. Net dollar retention pressure is expected to persist for the foreseeable future. Freshworks also carries an accumulated deficit of $3.7 billion, and it continues to run GAAP operating losses even as the non-GAAP picture improves.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $196.3M | $194.6M | +0.9% | $165.1M | +18.9% |
| Gross profit | $166.4M | $165.1M | +0.8% | $139.3M | +19.5% |
| Gross margin | 84.8% | 84.9% | -0.1 pp | 84.3% | +0.5 pp |
| Research & development | $40.0M | $41.0M | -2.5% | $34.7M | +15.3% |
| Sales & marketing | $89.2M | $90.7M | -1.7% | $94.6M | -5.8% |
| General & administrative | $47.2M | $47.5M | -0.6% | $42.1M | +12.2% |
| Total operating expenses | $176.8M | $188.9M | -6.4% | $171.4M | +3.1% |
| Operating income (loss) | -$10.4M | -$23.8M | +56.2% | -$32.2M | +67.6% |
| Operating margin | -5.3% | -12.2% | +6.9 pp | -19.5% | +14.2 pp |
| Net income (loss) | -$1.3M | -$21.9M | +94.0% | -$23.3M | +94.4% |
| Net margin | -0.7% | -11.3% | +10.6 pp | -14.1% | +13.5 pp |
| Diluted EPS | $0.00 | -$0.32 | +$0.32 | -$0.08 | +$0.08 |
| Net retention rate | 105.0% | 103.0% | +2.0 pp | 106.0% | -1.0 pp |
Risks
Current macroeconomic uncertainties, including inflationary pressures, tariffs, the threat of new or increased tariffs, escalating trade tensions, and geopolitical developments, have impacted and may continue to impact business spending. The company's net dollar retention rate was 105% as of March 31, 2025, which was a decrease from 106% as of March 31, 2024 primarily due to lower expansion within existing customers driven by macroeconomic pressures, and the company expects these pressures to persist for the foreseeable future.
Foreign currency exchange rate fluctuations negatively impacted revenue growth historically and volatility in the foreign currency market still exists. For each of the quarters ended March 31, 2025, December 31, 2024 and March 31, 2024, the company had approximately 27%, 27% and 28%, respectively, of revenue exposure related to the euro and British Pound.
Monthly subscriptions represented 14% and 16% of ARR as of March 31, 2025 and 2024, respectively, and the net dollar retention rate for customers on monthly contracts has generally been lower than the overall net dollar retention rate. There is no guarantee that any particular customer on a monthly subscription will renew in any given month, so ARR and net dollar retention rate may overstate actual revenue to be received over a 12-month period.
Restructuring charges of $0.4 million for the three months ended March 31, 2025 consisted of employee severance and termination benefits related to the restructuring plan initiated in November 2024. The restructuring reduced headcount and contributed to a $5.5 million, or 6%, decrease in sales and marketing expense for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, which may disrupt operations or fail to achieve intended cost savings.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Non-GAAP Operating Margin
Number of Customers Contributing More Than $5,000 in ARR
Non-GAAP Gross Margin
ARR from Customers Contributing More Than $5,000 in ARR as a Percentage of Total ARR
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Operating Cash Flow Margin
Summary, forecast, risks and KPIs are extracted from Freshworks Inc.'s SEC filings for Q1 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.