Freshworks Posts Third-Quarter Revenue of $245.4 Million, Up 14%
Key Facts
Freshworks reported on November 3 revenue of $245.4 million for the third quarter ended September 30, 2026, up 14% year over year and at the same rate on a constant-currency basis, according to the company’s filing. GAAP net income rose to $18.3 million, while diluted earnings per share were $0.07. Adjusted operating income was $73.2 million, with a margin of 29.8%, compared with $45.2 million and a margin of 21% a year earlier. Revenue was within the company’s prior range of $244.5 million to $245.5 million, slightly above its midpoint. The results combined continued revenue growth with improved operating profitability, while investors focused after the announcement on the expected growth rate for the coming quarter.
Revenue growth was slower than in the second quarter, when revenue reached $237.4 million, up 16% year over year, according to the company’s results for that quarter. GAAP net income rose from $3.2 million in the second quarter to $18.3 million in the third quarter. Year-over-year, revenue increased from $215.1 million in the third quarter of 2025 to $245.4 million in the current period. At the same time, adjusted operating margin expanded from 21% to 29.8%, and adjusted operating income rose from $45.2 million to $73.2 million. The company had forecast third-quarter adjusted operating income of $59 million to $61 million, putting the reported result above its prior range.
The company strengthened its cash-generation metrics during the quarter, with adjusted free cash flow reaching a record $73.9 million and a margin of 30.1%. Freshworks compared that with $57.2 million and a margin of 26.6% in the third quarter of 2025. Chief Executive Dennis Woodside said adjusted free cash flow grew 29% year over year and adjusted operating margin reached 30%. Net cash from operating activities was also $77.7 million, with a margin of 31.7%, compared with $63.5 million and a margin of 29.5% a year earlier. These figures place operating and free cash flow performance alongside the period’s margin improvement.
Net dollar retention remained at 104%, unchanged from the second quarter of 2026 and below the 105% recorded a year earlier. On a constant-currency basis, the retention rate was 105%, compared with 104% in the third quarter of 2025. The number of customers each contributing more than $100,000 in annual recurring revenue reached 1,821, up 25% year over year, or 26% on a constant-currency basis. Woodside said new multi-product employee experience deals increased by more than 35%. He added that partners were involved in more than half of new business, pointing to a broader role for partner channels alongside growth in the number of high-spending customers.
After the quarter ended, Freshworks’ annual recurring revenue surpassed $1 billion, ahead of the company’s prior estimate that it would reach that level by year-end. But its guidance published on November 3 put fourth-quarter revenue at $253.5 million to $254.5 million and fiscal 2026 revenue at $965 million to $966 million. Those ranges imply year-over-year growth of about 14% for the fourth quarter and about 15% for the full year. The company also estimated adjusted operating income of $68 million to $70 million for the fourth quarter and $238 million to $240 million for the year. Its prior full-year revenue guidance was $963.5 million to $966.5 million, making the new range higher at the low end and narrower overall.
Freshworks shares fell 7.7% in after-hours trading on November 3 to $13.06, according to Investing.com coverage. The report said adjusted earnings per share of $0.22 topped the market estimate of $0.18, and revenue of $245.4 million slightly exceeded expectations. It attributed the pressure on the shares to fourth-quarter revenue guidance, which was close to the analyst consensus of about $253.9 million. Before the announcement, the stock had closed at $14.21 on November 2, according to EL7 data. In a separate development, Freshworks announced on October 12 a definitive agreement to acquire Tori to expand Freshservice into software management and AI spending governance, with the deal expected to close in the fourth fiscal quarter of 2026, subject to customary closing conditions.