Freshworks Reports Profitability in Q2, Revenue Grows 16%

Software provider Freshworks announced a significant financial turnaround in its second quarter, ending June 30, reporting a net profit of $3.2 million. This marks a shift from a net loss of $1.7 million recorded in the corresponding quarter of the previous year. The company attributed improved performance in part to the growing adoption of its AI products.

Revenue for the quarter rose 16% to $237.4 million, compared to $204.7 million in the second quarter of last year. Sequentially, revenue saw a 3.8% increase. Freshworks highlighted that this performance represents its seventh consecutive quarter exceeding revenue expectations and its eighth consecutive quarter meeting the "Rule of 40" benchmark.

Operating expenses remained largely stable year-over-year at $204.6 million. However, sales and marketing expenses increased by 19% to $113 million. The company noted increased attachment of its Freddy AI Copilot in new enterprise deals.

Customer growth remained robust, with the number of clients contributing over $100,000 in annual recurring revenue (ARR) increasing by 25% to 1,746. Following the strong results, Freshworks raised its full-year revenue guidance to between $963.5 million and $966.5 million.

The quarterly results follow an earlier announcement by the company regarding layoffs of approximately 500 employees, part of a reorganization aimed at streamlining operations and reallocating investments toward AI and employee experience initiatives.