Freshworks starts landing bigger deals in Q1

Freshworks reported strong first quarter results and said it landed the two largest deals in its history due to competitor displacements. Freshworks also raised its outlook for the second quarter and 2026.

The company, which focuses on mid-sized enterprises, reported a first quarter net loss of $4.8 million, or 2 cents a share, on revenue of $228.63 million, up 16% from a year ago. Non-GAAP earnings were 11 cents a share.

Wall Street was expecting Freshworks to deliver first quarter non-GAAP earnings of 11 cents a share on revenue of $223.18 million.

The company said it was seeing high demand for its Employee Experience (EX) platform and grew its AI Copilot revenue. "We are strategically investing in the EX opportunity as our approach continues to resonate with our customers," said Freshworks CEO Dennis Woodside.

By the numbers:

• Freshworks said the number of customers contributing more than $100,000 in annual recurring revenue (ARR) was up 29% from a year ago.
• The company added its first deal worth more than $1 million in ARR.
• Freshworks ended the quarter with $780.4 million in cash, cash equivalents, and marketable securities.

As for the outlook, Freshworks projected second quarter revenue of $232 million to $235 million, up 13% to 15% with non-GAAP earnings of 13 cents a share. For 2026, Freshworks projected revenue of $958 million to $964 million, up 14% to 15%. Non-GAAP earnings for the year will be 61 cents a share to 63 cents a share.

• Freshworks acquires FireHydrant, eyes AI-native IT operations management
• Constellation ShortList™ Digital Customer Service and Support

Freshworks will hold its Refresh Summit next week. We caught up with Woodside to talk about the quarter and what customers are doing.

The EX business, which includes IT Service Management, Enterprise Service Management and IT Asset Management, grew 27% in the first quarter. EX also drove Freshworks' largest deals. "We are showing that the upmarket motion is working and we're winning larger and larger deals," said Woodside. The biggest deal in the quarter was with a nutrition company that left a 10-year rival and a complex deployment.

AI choice. Woodside said Freshworks AI strategy revolves around being a flexible layer for customers so they have choice in models and providers. "We are in a little bit of a different place than, let's say, Salesforce, ServiceNow, Workday. We're not in the position of defending the incumbency," said Woodside. "Our customers are going to want choice. In some cases, they're going to choose our AI. In some cases, they're going to build their own. In some cases, they're going to choose someone else's, and we're going to provide them with that choice."

Avoiding lock-in. Woodside said customers are in experimentation mode with AI and looking for shorter contracts. "I think there's a lot of shorter term experimentation that's happening. So, customers aren't saying, I'm going to commit to one platform forever. It's too early," said Woodside.

Typically, customers are looking for one-year deals to try Freshworks AI offerings to evaluate returns. "Nobody is saying we're committing for the next 10 years to any specific platform," said Woodside.

Customers and AI agent plans. Woodside said Freshworks' core customer is a midmarket agile enterprise of about 5,000 to 10,000 employees that need enterprise-grade capabilities without big company IT staffing. These firms are adopting multiple AI agents. "They have enterprise grade problems but don't have the staff of a much larger company. New Balance is a good example since it's a mid-sized company that has to compete with Nike," said Woodside.

Freshworks said it is positioning its AI agents as offerings that work out of the box and are easy to deploy. Freshworks' AI agents will be able to orchestrate other agents or simply work with them. "We are not believers in the forward deployed engineer," said Woodside.