Freshworks (NASDAQ:FRSH) Posts Earnings Results, Beats Estimates By $0.04 EPS

Freshworks (NASDAQ:FRSH) posted its quarterly earnings results on Tuesday. The company reported $0.17 earnings per share for the quarter, topping the consensus estimate of $0.13 by $0.04, FiscalAI reports. Freshworks had a return on equity of 5.42% and a net margin of 20.49%.The company had revenue of $237.38 million during the quarter, compared to the consensus estimate of $233.62 million. During the same quarter in the prior year, the company earned $0.18 EPS. The firm’s quarterly revenue was up 16.0% compared to the same quarter last year. Freshworks updated its FY 2026 guidance to 0.660-0.680 EPS and its Q3 2026 guidance to 0.180-0.180 EPS.

Here are the key takeaways from Freshworks’ conference call:

• GAAP profitability arrived ahead of schedule: Freshworks reported $3.2 million in Q2 GAAP net income, alongside 16% year-over-year revenue growth to $237.4 million and a 24% non-GAAP operating margin. Management expects to sustain GAAP profitability while continuing to invest in employee experience (EX) and AI.
• EX remains the primary growth engine: EX ARR increased 24% on a constant-currency basis to $567 million, or roughly 59% of total ARR, supported by larger enterprise deals and cross-selling of ITAM, ESM, ITOM and AI. The company reiterated expectations for mid-20s EX ARR growth and more than $600 million in EX ARR exiting 2026.
• AI monetization and adoption are gaining traction: More than 7,000 customers now pay for an AI SKU, Copilot attach rates exceeded 70% on new deals above $30,000, and AI Agent Studio had more than 1,000 early-access customers. Freshworks plans to introduce usage-based pricing for Agent Studio in the fall.
• Capital efficiency strengthened: Q2 adjusted free cash flow was $57.7 million, and the company repurchased approximately $159 million of stock during the quarter, reducing shares outstanding by 7% year to date. Freshworks ended Q2 with $665 million in cash and investments and no debt.
• CX growth remains subdued: CX ARR grew only 4% on a constant-currency basis to $400 million, with full-year growth expected in the low single digits. Management is restructuring the CX organization and focusing on profitability, retention and higher-quality customer acquisition rather than rapid expansion.

Freshworks Stock Performance

FRSH traded up $0.07 during trading on Thursday, reaching $11.60. The stock had a trading volume of 3,441,161 shares, compared to its average volume of 11,359,343. The stock has a market cap of $3.21 billion, a PE ratio of 18.09 and a beta of 0.86. Freshworks has a one year low of $6.79 and a one year high of $14.06. The business has a 50-day moving average of $10.15 and a 200-day moving average of $9.18.

Analyst Ratings Changes

A number of analysts recently commented on FRSH shares. UBS Group upped their price target on shares of Freshworks from $11.00 to $14.00 and gave the company a “buy” rating in a research note on Wednesday. Robert W. Baird set a $13.00 price objective on shares of Freshworks in a research report on Wednesday. Cantor Fitzgerald raised their price target on shares of Freshworks from $12.00 to $15.00 and gave the company an “overweight” rating in a report on Wednesday. Zacks Research cut shares of Freshworks from a “strong-buy” rating to a “hold” rating in a report on Friday, July 10th. Finally, Piper Sandler lifted their price objective on Freshworks from $10.00 to $12.00 and gave the company a “neutral” rating in a research note on Wednesday. One equities research analyst has rated the stock with a Strong Buy rating, six have issued a Buy rating, eight have assigned a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat, the stock currently has a consensus rating of “Hold” and a consensus target price of $14.17.

Trending Headlines about Freshworks

Here are the key news stories impacting Freshworks this week:

• Positive Sentiment: FedRAMP progress expands the public-sector opportunity. Freshservice received “In Process” status for FedRAMP Class C (Moderate) certification and was added to the FedRAMP Marketplace. Full authorization could improve Freshworks’ ability to win contracts with U.S. federal agencies, while its partnership with Coalfire supports the compliance process. Freshworks Achieves FedRAMP In Process Designation
• Positive Sentiment: Q2 results exceeded expectations. Revenue increased 16% year over year to $237.4 million, topping the $233.6 million consensus estimate, while adjusted EPS of $0.17 exceeded expectations of $0.13. Freshworks also posted $3.2 million in GAAP net income, marking its first GAAP-profitable quarter of 2026. Freshworks Reports Record Second Quarter 2026 Results
• Positive Sentiment: Management raised its outlook. FY2026 EPS guidance was set at $0.66-$0.68, above the $0.50 consensus estimate, with revenue guidance of $963.5-$966.5 million. Third-quarter EPS guidance of $0.18 also exceeds the $0.15 consensus, reinforcing expectations for sustained profitability. Freshworks 2026 Revenue and Profitability Outlook
• Positive Sentiment: Growth in employee experience and AI remains a key catalyst. Employee-experience annual recurring revenue reportedly grew about 22%-23% year over year and now represents roughly 60% of ARR. Analysts also highlighted AI monetization, share buybacks, strong free-cash-flow potential, and an attractive valuation. Cantor Fitzgerald raised its price target to $15 from $12 and maintained an overweight rating. FRSH Q2 Earnings Call Highlights
• Neutral Sentiment: Analyst views are not uniformly bullish. Piper Sandler raised its target to $12 from $10 but kept a neutral rating, implying limited upside based on its assessment. This may temper enthusiasm following the earnings-driven rally. Analyst Price Target Changes

Insiders Place Their Bets

In other news, Director Jennifer H. Taylor sold 6,618 shares of the company’s stock in a transaction dated Thursday, July 2nd. The stock was sold at an average price of $10.44, for a total value of $69,091.92. Following the completion of the transaction, the director directly owned 62,673 shares in the company, valued at approximately $654,306.12. This represents a 9.55% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Barry L. Padgett sold 6,618 shares of the stock in a transaction dated Wednesday, July 1st. The shares were sold at an average price of $10.49, for a total value of $69,422.82. Following the transaction, the director owned 47,270 shares in the company, valued at $495,862.30. This trade represents a 12.28% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 27,236 shares of company stock valued at $270,331 over the last 90 days. Insiders own 8.54% of the company’s stock.

Institutional Investors Weigh In On Freshworks

Hedge funds have recently made changes to their positions in the business. Cibc World Markets Corp bought a new stake in Freshworks in the 4th quarter worth approximately $163,000. Principal Securities Inc. increased its holdings in Freshworks by 174.8% in the 4th quarter. Principal Securities Inc. now owns 11,867 shares of the company’s stock valued at $145,000 after acquiring an additional 7,549 shares during the last quarter. Vise Technologies Inc. grew its stake in shares of Freshworks by 16.1% in the 4th quarter. Vise Technologies Inc. now owns 16,283 shares of the company’s stock worth $199,000 after buying an additional 2,253 shares in the last quarter. Numerai GP LLC bought a new stake in Freshworks in the third quarter worth about $135,000. Finally, Focus Partners Wealth bought a new position in shares of Freshworks during the 3rd quarter worth $176,000. 75.58% of the stock is currently owned by institutional investors.

About Freshworks

Freshworks, Inc is a global provider of cloud-based customer engagement software designed to help businesses streamline customer support, sales, marketing, and IT service operations. The company’s integrated suite of solutions enables organizations of all sizes to deliver seamless experiences across multiple channels, including email, chat, phone, and social media. Freshworks’ platform is built on modern, user-friendly interfaces and offers native automation, AI-powered insights, and analytics to improve efficiency and customer satisfaction.

The company’s flagship product, Freshdesk, serves as a helpdesk solution for customer support teams, while Freshservice addresses IT service management needs.