Freshworks 2025 Q2 Earnings Improved Net Income with 91.4% Reduction in Losses

Freshworks Inc reported its fiscal 2025 Q2 earnings on July 29th, 2025, showcasing a remarkable reduction in net losses and surpassing revenue expectations. The company recorded an 18% year-over-year revenue growth to $204.7 million, outpacing analyst estimates by 2.9%. Freshworks also raised its full-year revenue guidance, projecting figures between $822.9 million and $828.9 million, which aligns with market expectations. The company anticipates adjusted EPS for the year to be between $0.56 and $0.58, indicating a strong outlook. These results reflect Freshworks' strategic focus on enhancing its AI service offerings, with promising future growth potential.

Revenue

Freshworks reported a total revenue increase of 17.5% year-over-year, reaching $204.68 million in Q2 2025 from $174.13 million in Q2 2024. Subscription services, software licenses, and maintenance contributed $201.98 million, while professional services added $2.70 million, culminating in the total revenue figure of $204.68 million.

Earnings/Net Income

Freshworks significantly narrowed its losses in Q2 2025, reporting a net loss of $1.74 million, a 91.4% improvement from the $20.18 million loss in Q2 2024. Earnings per share improved from a loss of $0.07 in 2024 to $0.01 in 2025, showcasing positive financial progress.

Post Earnings Price Action Review

The investment strategy of purchasing Freshworks shares following a revenue increase quarter-over-quarter and holding for 30 days has yielded poor results. Over the past three years, this approach resulted in a return of -74.18%, significantly underperforming the benchmark return of 39.60%. This strategy's compounded annual growth rate (CAGR) was -29.81%, reflecting substantial losses. Despite achieving a maximum drawdown of 0.00%, indicating no additional losses during the holding period, the initial loss was considerable. These outcomes highlight the difficulties of relying solely on quarterly revenue increases without considering broader market dynamics or company fundamentals. Investors should be cautious and evaluate multiple factors before making investment decisions based on short-term earnings reports.

CEO Commentary

Freshworks delivered an outstanding Q2, with CEO Dennis M. Woodside highlighting an 18% year-over-year revenue growth to $204.7 million and a non-GAAP operating margin expansion to 22%. He emphasized the strategic focus on three growth drivers: investing in Employee Experience (EX), delivering AI capabilities, and enhancing Customer Experience (CX). Woodside noted the successful introduction of innovations within their AI platform and the strong demand for Freshservice, particularly in the mid-market and enterprise sectors. He expressed optimism about the long-term growth potential, citing strong customer adoption and the ability to displace legacy competitors as key factors driving the company's momentum.

Guidance

For Q3 2025, Freshworks expects revenue in the range of $207 million to $210 million, reflecting year-over-year growth of 11% to 12%. The company anticipates non-GAAP income from operations between $31.2 million and $33.2 million, with a non-GAAP net income per share estimated between $0.12 and $0.14. For the full year 2025, revenue guidance is set between $822.9 million and $828.9 million, representing a year-over-year growth of 14% to 15%. The company also expects adjusted free cash flow of approximately $215 million for the year, with approximately $55 million in Q3.

Additional News

Freshworks Inc has made several strategic moves beyond its earnings report in recent weeks. The company announced the appointment of Ian Tickle as Chief of Global Field Operations, aiming to strengthen its leadership team. Furthermore, Freshworks has entered into a multi-year partnership with McLaren Racing, becoming an Official Partner of the McLaren Formula 1 Team, which integrated Freshworks' ITSM solution, Freshservice. These developments highlight Freshworks' commitment to expanding its market presence and leveraging high-profile collaborations to enhance brand visibility and business growth.