Summary
Freshworks reported second quarter fiscal 2025 revenue of $204.68 million, up 17.5% from $174.13 million in the prior-year quarter. Gross profit was $173.54 million, up 18.9%, and gross margin reached 84.8%, up 1.0 percentage point. The company narrowed its GAAP operating loss to $8.66 million from $43.79 million. GAAP net loss was $1.74 million, or $0.01 per diluted share, compared with a net loss of $20.18 million, or $0.07 per diluted share, in the second quarter of 2024. Operating cash flow rose 61.2% to $58.59 million. Capital expenditures fell 83.6% to $0.38 million. Deferred revenue was $339.21 million, up 17.9%, and remaining performance obligations were $568.90 million, up 21.1%.
For the first six months of fiscal 2025, revenue was $400.95 million, up 18.2% from $339.27 million. Gross profit was $339.93 million, up 19.2%. The GAAP operating loss narrowed to $19.07 million from $75.95 million. GAAP net loss narrowed to $3.04 million from $43.51 million, and diluted EPS improved to a loss of $0.01 from a loss of $0.15. Operating cash flow for the six months was $116.56 million, up 51.5%. Capital expenditures were $1.68 million, down 45.1%. Gross margin for the six months was 84.8%, up 0.7 percentage points, and operating margin was negative 4.8%, up 17.6 percentage points.
Non-GAAP income from operations was $44.8 million, compared with $13.1 million in the prior-year quarter. Non-GAAP net income per diluted share was $0.18, compared with $0.08. Adjusted free cash flow was $54.3 million, compared with $32.8 million. Operating cash flow margin was 28.6%, and adjusted free cash flow margin was 26.5%.
Customers contributing more than $5,000 in annual recurring revenue reached 23,975, up 10% year over year and 9% on a constant currency basis. Net dollar retention rate was 106%, flat versus 106% in the second quarter of 2024 and up from 105% in the first quarter of 2025. On a constant currency basis, net dollar retention was 104%, compared with 105% in the first quarter and 106% in the prior-year quarter. Freddy AI Copilot and Freddy AI Agent crossed $20 million in combined annual recurring revenue. New customers included AEP Energy, California Franchise Tax Board, Covington Burling LLP, Manchester Metropolitan University, Reed, and Seagate Technology. The company appointed Ian Tickle as Chief of Global Field Operations and announced a multi-year partnership with McLaren Racing.
Guidance for the third quarter of 2025 calls for revenue growth of 11% to 12%, or 11% to 12% on a constant currency basis. Non-GAAP income from operations is expected at $31.2 million to $33.2 million, and non-GAAP net income per share at $0.12 to $0.14. For the full year 2025, revenue growth guidance is 14% to 15%, and 14% to 16% on a constant currency basis. Full-year non-GAAP income from operations is guided to $153.0 million to $157.0 million, with non-GAAP net income per share of $0.56 to $0.58. Management flagged macroeconomic uncertainties, inflationary pressures, tariffs, trade tensions, and geopolitical developments as risks. About 27% of revenue has exposure to the euro and British Pound. Net dollar retention has been hurt by lower expansion within existing customers due to macroeconomic pressures, and the company expects those pressures to persist. Freshworks also noted its history of net losses and the need to sustain profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $204.7M | $196.3M | +4.3% | $174.1M | +17.5% |
| Gross profit | $173.5M | $166.4M | +4.3% | $146.0M | +18.9% |
| Gross margin | 84.8% | 84.8% | ±0.0 pp | 83.8% | +1.0 pp |
| Research & development | $39.9M | $40.0M | -0.1% | $41.0M | -2.6% |
| Sales & marketing | $95.2M | $89.2M | +6.8% | $104.2M | -8.7% |
| General & administrative | $47.0M | $47.2M | -0.5% | $44.5M | +5.7% |
| Total operating expenses | $182.2M | $176.8M | +3.0% | $189.7M | -4.0% |
| Operating income (loss) | -$8.7M | -$10.4M | +16.9% | -$43.8M | +80.2% |
| Operating margin | -4.2% | -5.3% | +1.1 pp | -25.1% | +20.9 pp |
| Net income (loss) | -$1.7M | -$1.3M | -33.4% | -$20.2M | +91.4% |
| Net margin | -0.8% | -0.7% | -0.2 pp | -11.6% | +10.7 pp |
| Diluted EPS | -$0.01 | $0.00 | -$0.01 | -$0.07 | +$0.06 |
| Net retention rate | 106.0% | 105.0% | +1.0 pp | 106.0% | ±0.0 pp |
Risks
Macroeconomic pressures are suppressing expansion within the existing customer base. Net dollar retention rate was flat at 106% as of June 30, 2025 compared with 106% as of June 30, 2024, and management expects these pressures to persist for the foreseeable future, with the effect on the primarily subscription-based model potentially not fully reflected in revenue until future periods.
Customers are concentrated in currencies outside the U.S. dollar: roughly 27% of revenue exposure was tied to the euro and British Pound in each of the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024. FX volatility has negatively impacted revenue growth historically and remains a live risk.
Tariffs, the threat of new or increased tariffs, escalating trade tensions and geopolitical developments are called out as pressures on business spending and the broader economy that could reduce demand for the company's products and services.
The customer mix includes monthly subscribers, who represented 13% of ARR as of June 30, 2025 (down from 15% as of June 30, 2024). Monthly contracts carry no renewal guarantee and have generally had lower net dollar retention than the overall base, so the reported ARR and net dollar retention rate may overstate expected revenue if those customers do not renew. Adjustments to customer attribution data could also shift the reported metrics.
A restructuring plan initiated in November 2024 drove $0.4 million of charges in the six months ended June 30, 2025 and $0.7 million of related cash payments. The headcount reduction lowered stock-based compensation and personnel costs but the associated transition and execution risk remains.
The One Big Beautiful Bill Act signed into law on July 4, 2025 introduces significant U.S. tax code changes, including immediate expensing of domestic research and development costs and of certain capital expenditures effective in 2026. The company is still evaluating the overall impact on its financial statements.
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
Net Dollar Retention Rate (constant currency)
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 Q2 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 1, 2026.