Summary
Freshworks reported third quarter fiscal 2025 revenue of $215.1 million, up 15.3% from $186.6 million in the third quarter of 2024. Gross profit rose 16.2% to $182.2 million, and gross margin improved to 84.7% from 84.0%. The company still posted a GAAP operating loss of $7.5 million, but that loss narrowed from $38.9 million a year earlier. GAAP net loss was $4.7 million, or $0.02 per diluted share, compared with a net loss of $30.0 million, or $0.10 per diluted share, in the prior-year quarter. Operating margin improved to negative 3.5% from negative 20.8%. Year to date, revenue reached $616.1 million, up 17.2%, and gross profit was $522.1 million, up 18.1%. The year-to-date operating loss narrowed to $26.5 million from $114.8 million, and the year-to-date net loss narrowed to $7.7 million from $73.5 million. Year-to-date diluted EPS was a loss of $0.03, compared with a loss of $0.24.
Operating cash flow was $63.5 million in the quarter, up 49.9% from $42.3 million. Year-to-date operating cash flow was $180.0 million, up 50.9% from $119.3 million. Capital expenditures were $1.8 million in the quarter, up 69.7% from $1.1 million, while year-to-date capital expenditures were $3.5 million, down 15.6% from $4.1 million. Deferred revenue was $348.0 million at September 30, 2025, up 17.5% from $296.1 million a year earlier. Remaining performance obligations were $587.2 million, up 20.1% from $488.9 million. The company also reported adjusted free cash flow of $57.2 million, with an adjusted free cash flow margin of 26.6%, compared with $40.1 million and 21.5% in the prior-year quarter.
The number of customers contributing more than $5,000 in ARR was 24,377, up 9% year over year. Net dollar retention rate was 105%, down from 107% in the third quarter of 2024 and 106% in the second quarter of 2025. The company said lower expansion within existing customers, driven by macroeconomic pressures, caused the decline. Freddy AI products doubled year over year in annual recurring revenue. Enterprise Service Management annual recurring revenue surpassed $35 million in the third quarter of 2025. Freshworks added customers such as AllSaints John Varvatos, Apollo Tyres, Pennsylvania Gaming Control Board, Société Générale, Stellantis, and Travis Perkins plc. It appointed Enrique Ortegon as Senior Vice President and General Manager of Americas Field Sales.
For the fourth quarter of 2025, management guided revenue growth of 12% to 13% year over year, or 11% to 13% on a constant currency basis. It guided non-GAAP income from operations of $30.6 million to $32.6 million and non-GAAP net income per share of $0.10 to $0.12. For the full year 2025, management guided revenue growth of 16% year over year, or 16% on a constant currency basis, with non-GAAP income from operations of $167.0 million to $169.0 million and non-GAAP net income per share of $0.62 to $0.64. Risks include macroeconomic uncertainties, inflationary pressures, tariffs, trade tensions, and geopolitical developments. About 28% of revenue exposure is tied to the euro and British Pound. The company also has a history of net losses. The share repurchase program authorized up to $400 million is complete, with 26.9 million shares repurchased for $384.5 million in the first nine months of 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $215.1M | $204.7M | +5.1% | $186.6M | +15.3% |
| Gross profit | $182.2M | $173.5M | +5.0% | $156.8M | +16.2% |
| Gross margin | 84.7% | 84.8% | -0.1 pp | 84.0% | +0.7 pp |
| Research & development | $41.5M | $39.9M | +3.8% | $47.9M | -13.4% |
| Sales & marketing | $101.0M | $95.2M | +6.1% | $101.3M | -0.2% |
| General & administrative | $47.1M | $47.0M | +0.3% | $46.5M | +1.4% |
| Total operating expenses | $189.6M | $182.2M | +4.1% | $195.6M | -3.1% |
| Operating income (loss) | -$7.5M | -$8.7M | +13.9% | -$38.9M | +80.8% |
| Operating margin | -3.5% | -4.2% | +0.8 pp | -20.8% | +17.4 pp |
| Net income (loss) | -$4.7M | -$1.7M | -169.1% | -$30.0M | +84.4% |
| Net margin | -2.2% | -0.8% | -1.3 pp | -16.1% | +13.9 pp |
| Diluted EPS | -$0.02 | -$0.01 | -$0.01 | -$0.10 | +$0.08 |
| Net retention rate | 105.0% | 106.0% | -1.0 pp | 107.0% | -2.0 pp |
Risks
Net dollar retention rate decreased to 105% as of September 30, 2025 from 107% as of September 30, 2024, primarily due to lower expansion within existing customers driven by macroeconomic pressures, and the company expects these pressures to persist. Macroeconomic uncertainties including inflationary pressures, tariffs, trade tensions, and geopolitical developments could further reduce demand and make future results harder to predict.
Revenue exposure related to the euro and British Pound was approximately 28% for the quarter ended September 30, 2025, up from 27% for the quarter ended September 30, 2024. Foreign currency exchange rate fluctuations have negatively impacted revenue growth historically, and the quarter included a $4.7 million foreign exchange loss mostly from unfavorable changes in the Indian Rupee against the U.S. dollar.
The company initiated a restructuring plan in November 2024 and recorded $0.4 million of restructuring charges for the nine months ended September 30, 2025, with $2.2 million of restructuring costs paid during that period. Lower headcount following the restructuring reduced stock-based compensation and personnel-related costs but may create execution and retention risks.
The One Big Beautiful Bill Act was signed into law on July 4, 2025, introducing changes to U.S. tax code including immediate expensing of U.S. research and development costs and certain capital expenditures effective beginning in 2026. The company continues to evaluate the broader implications, and its effective tax rate is affected by foreign tax rates, non-deductible stock-based compensation, and valuation allowance changes.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Non-GAAP Operating Margin
Number of Customers Contributing More Than $5,000 in ARR
ARR from Customers Contributing More Than $5,000 in ARR as a Percentage of Total ARR
Total Customers
Net Dollar Retention Rate (constant currency)
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Operating Cash Flow Margin
Monthly subscriptions as % of ARR
Summary, forecast, risks and KPIs are extracted from Freshworks Inc.'s SEC filings for Q3 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.