Freshworks reported Q3 2025 earnings on November 5, 2025, posting earnings per share of $0.16 versus consensus of $0.13, a 23% beat, and revenue of $215.1 million, up 15% year‑over‑year and 3.1% above the $208.6 million estimate. The results were driven by a 22% increase in recurring revenue from its Freddy AI suite and a 35% rise in enterprise service management contracts, offsetting a modest decline in legacy product sales.
The company’s non‑GAAP operating income rose to $45.2 million, a 91% jump from $24.0 million in Q3 2024, lifting the non‑GAAP operating margin to 21.0% from 12.8% a year earlier. The margin expansion reflects higher mix of high‑margin AI‑enabled subscriptions and improved operational leverage as the customer base scales, while the GAAP loss from operations narrowed to $7.5 million from $38.9 million.
Freshworks raised its guidance for the fourth quarter and full year 2025, now projecting revenue of $833.1 – $836.1 million versus the prior $823 – $826 million range. Management cited sustained demand in mid‑market and enterprise segments, particularly in the U.S. and EMEA, and the continued acceleration of Freddy AI adoption as key drivers of the upward revision.
CEO Dennis Woodside highlighted that “business leaders are realizing that AI belongs in the software their teams use every day,” underscoring the company’s strategic pivot toward AI‑powered solutions. He also noted that the firm’s focus on operational efficiency has allowed it to maintain profitability even as it invests heavily in product development and sales expansion.
While the company celebrated strong growth, management acknowledged headwinds such as pricing pressure in legacy product lines and the need to balance investment in new AI capabilities with cost discipline. The guidance lift signals confidence that the company can sustain momentum while navigating these challenges.
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