Freshworks, Inc. Class A ((FRSH)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Freshworks, Inc. Shines in Q3 2025 Earnings Call with Strong Revenue and AI Growth
Freshworks, Inc. delivered a robust performance in the third quarter of 2025, showcasing strong revenue growth and significant advancements in AI adoption. The earnings call reflected a positive sentiment, emphasizing the company’s strategic investments and product launches, despite facing moderate growth in the Customer Experience segment and challenges with Device42.
Strong Revenue Growth
Freshworks reported a remarkable 15% year-over-year increase in Q3 revenue, reaching $215.1 million. This figure surpassed the high end of previous estimates by approximately 3 points, highlighting the company’s strong financial performance.
Expansion in Customer Base
The company ended the quarter with nearly 75,000 customers, adding significant new clients such as Stellantis, Societe Generale, and Travis Perkins plc. This expansion underscores Freshworks’ ability to attract and retain a diverse range of clients.
AI-Driven Growth
Freddy AI continues to be a strong growth driver for Freshworks, with AI ARR doubling year-over-year. Freddy Copilot’s ARR grew by an impressive 160% year-over-year, indicating substantial adoption of AI capabilities across the company’s offerings.
Employee Experience Segment Growth
The Employee Experience segment achieved over $480 million in ARR, representing a 24% year-over-year growth. This growth was significantly supported by Enterprise Service Management (ESM) and IT asset management.
Increased Operating Margin
Freshworks’ non-GAAP operating margin expanded to 21%, surpassing estimates by 5 points. Additionally, the free cash flow margin reached 27%, reflecting the company’s efficient financial management.
Strategic Product Launches
The company announced the expansion of Enterprise Service Management access and an upcoming unified Customer Experience product experience, aimed at driving further adoption and enhancing customer engagement.
Moderate CX Segment Growth
The Customer Experience segment experienced an 8% year-over-year growth, which, while positive, was slower compared to the Employee Experience segment.
Impact of Device42 on NRR
Device42 presented a small drag of 60 basis points to net dollar retention, highlighting challenges in scaling the business post-acquisition. This indicates a need for strategic adjustments to optimize this segment.
Q4 One-Time Investment Impact
A one-time increase in spending during Q4 for pipeline expansion and customer acquisition is anticipated to have a modest impact on operating margins, reflecting Freshworks’ commitment to long-term growth.
Forward-Looking Guidance
Looking ahead, Freshworks forecasts Q4 revenue between $217 million and $220 million, with a focus on reinvesting earnings to drive growth, particularly in the Employee Experience segment. The company aims to maintain its momentum in AI products and expand its customer base further.
In conclusion, Freshworks, Inc. has demonstrated strong performance in Q3 2025, with significant revenue growth and advancements in AI adoption. Despite some challenges, the company’s strategic investments and product launches position it well for future success. Investors and stakeholders can remain optimistic about Freshworks’ trajectory as it continues to expand its market presence.