Freshworks’ Q2 results topped Wall Street’s revenue and non-GAAP profit expectations, fueled by continued momentum in its employee experience (EX) platform and robust adoption of AI-powered solutions. Management highlighted large enterprise wins and strong growth in cross-selling advanced IT asset management and incident response modules. CEO Dennis Woodside credited this performance to the company’s ability to displace legacy providers, with customers like Seagate and American Oncology Network transitioning quickly to Freshworks’ unified service operations platform. Woodside noted, “Speed to value is what Freshworks delivers,” as large customers increasingly seek integrated, easy-to-use solutions.
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Freshworks (FRSH) Q2 CY2026 Highlights:
- Revenue: $237.4 million vs analyst estimates of $233.6 million (16% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.17 vs analyst estimates of $0.13 (30.4% beat)
- Adjusted Operating Income: $55.93 million vs analyst estimates of $42.13 million (23.6% margin, 32.7% beat)
- The company slightly lifted its revenue guidance for the full year to $965 million at the midpoint from $961 million
- Management raised its full-year Adjusted EPS guidance to $0.67 at the midpoint, a 8.1% increase
- Operating Margin: 2.6%, up from -4.2% in the same quarter last year
- Customers: 25,356 customers paying more than $5,000 annually
- Net Revenue Retention Rate: 104%, down from 106% in the previous quarter
- Annual Recurring Revenue: $971.7 million (16.6% year-on-year growth, beat)
- Billings: $245.8 million at quarter end, up 15.2% year on year
- Market Capitalization: $3.13 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Freshworks’s Q2 Earnings Call
- Lucas Morison (Canaccord Genuity) asked how Freshworks plans to maintain product simplicity as platform capabilities expand. CEO Dennis Woodside said maintaining ease of use is a core engineering focus, citing unified design and cloud migration efforts.
- Tamjid Md Moinuddin Chowdhury (Guggenheim Securities) inquired about runway for ITAM and ESM cross-sell in the EX base. Woodside described both as early-stage with significant growth potential, supported by recent cloud-based product launches.
- Taylor McGinnis (UBS) questioned drivers behind anticipated acceleration in EX ARR growth. CFO Tyler Sloat pointed to a strong pipeline, larger deal sizes, and new product integrations as key factors for confidence in sustained growth.
- Patrick Schulz (Baird) asked about the importance of ITAM for large enterprise wins and updates on cloud transition. Sloat explained that both on-prem and cloud ITAM are offered, with new cloud capabilities expanding addressable markets.
- Scott Berg (Needham & Company) probed the impact of partner channel evolution on retention and expansion. Woodside stated that partner involvement has led to higher retention, faster expansion, and improved win rates, especially in larger enterprise accounts.
Catalysts in Upcoming Quarters
In the coming quarters, key areas to watch include (1) further adoption and monetization of AI Agent Studio and other advanced AI modules, (2) sustained growth and cross-sell momentum in the EX business as ITAM and ESM products penetrate more accounts, and (3) the impact of Freshdesk Omni migration and CX organizational changes on customer retention and profitability. Execution in these areas will be central to Freshworks’ ability to maintain its current growth trajectory.
Freshworks currently trades at $11.97, in line with $12.04 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).
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