What were the key takeaways from Freshworks’s earnings call?

What were the key takeaways from Freshworks's earnings call?

What is Freshworks's latest dividend and current dividend yield?

What is Freshworks's gross profit margin?

What guidance did Freshworks's management provide for the next earnings period?

What factors drove the changes in Freshworks's revenue and profit?

Did Freshworks beat or miss consensus estimates last quarter?

What does Freshworks do and what are its main business segments?

- **Revenue Surpass**: Q3 revenue of $215.1M (+15% YoY) exceeded expectations, driven by EX (+24% YoY) and CX (+8% YoY) segments.
- **AI Breakthrough**: AI ARR doubled YoY, with Freddy AI agents handling 650,000+ monthly sessions and deflecting 50-80% of tickets. Copilot ARR grew 160% YoY, attached to 60% of new deals.
- **EX Expansion**: EX ARR hit $480M, fueled by ESM ($35M ARR), Device 42 wins, and ITAM adoption. FreshService for Business Teams used by 25% of eligible customers.
- **Financial Strength**: Non-GAAP net income $45.2M (21% margin), free cash flow $57.2M (27% margin). Full-year 2025 billings +16% YoY.
- **Strategic Moves**: Launched standalone ESM product, increased AI pricing, and invested $10M in Q4 demand gen to accelerate EX pipeline.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 revenue reached $215.1 million, up 15% YoY on both as-reported and constant currency bases, driven by EX and CX segments.
- **AI Momentum**: AI ARR doubled YoY, with Freddy AI agents handling over 650,000 monthly sessions and deflecting 50-80% of tickets. Copilot ARR grew 160% YoY, with 60% of new deals over $30,000 including Copilot.
- **EX Expansion**: EX ARR hit $480 million (+24% YoY), fueled by ESM ($35M ARR), Device 42 wins (largest deal in Q3), and ITAM adoption. FreshService for Business Teams now used by 25% of eligible customers.
- **CX Strength**: CX ARR reached $390 million (+8% YoY), with Freshdesk adoption in mid-market and enterprise (e.g., University of Pennsylvania processed 30,000+ tickets in 6 months).
- **Customer Base**: 75,000+ customers, with 24,377 contributing >$5,000 ARR (+9% YoY) and 3,612 >$50,000 ARR (+20% YoY). Net retention 105% (as-reported), 104% (constant currency).

**【CFO Financial Commentary】**
- **Profitability**: Non-GAAP net income $45.2M (21% margin), up from $30.6M in Q2. Adjusted free cash flow $57.2M (27% margin), up 500bps YoY.
- **Billings**: Q3 calculated billings $224M (+14% YoY). Full-year 2025 billings expected +16% YoY. Q4 billings guidance $217-220M (+12-13% YoY).
- **Share Repurchase**: Completed $400M buyback, repurchasing 27.9M shares at $14.35 avg. Plan to net settle $58M in 2025 for dilution offset.
- **Margins**: Q4 operating margin ~21%, with 2026 exit margin >23%. Q1 2026 margin dip due to merit resets, followed by linear improvement.

**【Q&A Highlights】**
- **ESM Standalone Sales**: Launched FreshService for Business Teams as standalone product to target non-IT functions, preserving optionality for ITSM migration. Early traction with 1,000+ law firms and 17%+ YoY growth in ITAM.
- **AI Pricing**: AI agents will adopt industry-standard pricing, reflecting 80% deflection rates in early access. Copilot pricing remains per-seat, with 112% NRR for AI customers.
- **Government Impact**: No impact from U.S. shutdown; state/local gov and university wins continued (e.g., Pennsylvania Gaming Control Board).
- **Pipeline Visibility**: Q4 demand gen investment (+$10M) to accelerate EX pipeline. EX win rates highest in two years, with Device 42 cloud launch in Q1 2026 targeting mid-market cloud preference.
- **Share Repurchase Strategy**: Board evaluating future buybacks post-inaugural program. Focus on net settling to offset dilution, with $12M Q4 spend at current prices.

Freshworks Inc. (FRSH) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

FRSH

FRSH fundamentals

You can ask Aime