Freshworks Inc. Q1 FY2026 earnings

Freshworks reported first quarter fiscal 2026 revenue of $228.6 million, up 16.5% from $196.3 million in the prior-year quarter. Gross profit was $193.9 million, up 16.6% from $166.4 million. The company posted a GAAP operating loss of $8.1 million against a $10.4 million loss in the first quarter of 2025; the loss narrowed, and the block records that change as up 22.6%. Net loss was $4.8 million, which widened from a loss of $1.3 million. Diluted EPS swung to -$0.02 from $0.00 a year earlier. Gross margin was 84.8%, flat with the prior-year quarter, while operating margin was -3.5%, up from -5.3%.

Operational momentum centered on the employee experience platform. Customers contributing more than $100,000 in ARR reached 1,646, an increase of 29% year over year. Net dollar retention was 106%, compared with 108% in the fourth quarter of 2025 and 105% in the first quarter of 2025. Freshworks closed the two largest deals in its history, including its first $1 million-plus ARR deal. It integrated Device42's infrastructure discovery and mapping capabilities into Freshservice. The January 2026 acquisition of FireHydrant, an AI-powered incident management provider, is included in the results. The company also named Ian Tickle as Chief Revenue Officer and Kuntal Vahalia as Senior Vice President of Global Channels and Alliances. New customers included Eagle Materials, Everbridge, G4S, Outreach, and University of Connecticut.

Cash generation stayed positive. Operating cash flow was $62.4 million, up 7.6% from $58.0 million in the prior-year quarter. Capital expenditures were $3.9 million, up 201.0% from $1.3 million. Deferred revenue was $392.1 million, up 18.6%, and remaining performance obligations were $665.3 million, up 22.8%. Cash, cash equivalents, restricted cash and marketable securities totaled $780.4 million as of March 31, 2026. The quarter also included $56.9 million paid for business combinations, net of cash acquired, and $48.4 million paid to repurchase shares of common stock.

Non-GAAP profitability moved the other way. Non-GAAP income from operations was $41.0 million, a non-GAAP operating margin of 17.9%, compared with $46.4 million and 23.6% a year earlier. Non-GAAP diluted net income per share was $0.11, compared with $0.18. Adjusted free cash flow was $55.8 million, against $55.4 million, with adjusted free cash flow margin of 24.4%. The softer non-GAAP operating margin sits alongside the narrower GAAP operating loss, a gap driven by stock-based compensation, which fell to $43.9 million from $51.7 million.

Management provided estimates for the second quarter and for the full fiscal year 2026. For the second quarter of 2026, it guided to top-line growth of 13% to 15%, non-GAAP income from operations of $41.0 million to $43.0 million, and non-GAAP net income per share of $0.13. For the full fiscal year 2026, it guided to top-line growth of 14% to 15%, non-GAAP income from operations of $207.0 million to $215.0 million, and non-GAAP net income per share of $0.61 to $0.63. The estimates use exchange rates as of May 1, 2026 for currencies other than the U.S. dollar and assume 280 million weighted-average shares for the second quarter and 281 million for the full year. Management has not reconciled these non-GAAP estimates to GAAP.

Risks include macroeconomic uncertainty, inflationary pressures, and foreign currency volatility. About 29% of first quarter revenue exposure was tied to the euro and British pound. Net dollar retention may fluctuate because of macroeconomic conditions, expansion trends, and churn, and monthly subscriptions can dilute that rate. Freshworks carries a history of net losses. In May 2026, the company committed to a restructuring plan expected to incur charges in the second quarter of 2026, consisting mostly of separation-related payments and employee benefits. Management also flagged the chance that sales cycles lengthen and that customer purchasing and renewal decisions come under pressure.