Freshworks Inc. Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Freshworks Inc. provides AI-powered employee and customer experience software. In January 2026, the company acquired FireHydrant, Inc., an incident management software provider, for $88.7 million. The company operates as a single segment and is classified as a large accelerated filer.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Revenue | $237.4M | $204.7M | $466.0M | $401.0M |
| Gross Profit | $201.3M | $173.5M | $395.2M | $339.9M |
| Gross Margin | 85% | 85% | 85% | 85% |
| Operating Income (Loss) | $6.1M | $(8.7M) | $(2.0M) | $(19.1M) |
| Net Income (Loss) | $3.2M | $(1.7M) | $(1.6M) | $(3.0M) |
| Operating Cash Flow (YTD) | $120.9M (2026) vs $116.6M (2025) | |||
| Free Cash Flow (YTD) | $107.1M (2026) vs $107.4M (2025) | |||
| Cash & Equivalents | $494.7M (as of June 30, 2026) | |||
| Marketable Securities | $169.4M (as of June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 16% year-over-year (YoY) for both the quarter and the six-month period, driven by $16.7M in new customer revenue and $16.0M from existing customers in Q2.
- Profitability: The company returned to GAAP operating profitability in Q2 2026 ($6.1M) compared to an operating loss of $8.7M in Q2 2025. This improvement was driven by lower General and Administrative (G&A) expenses and higher operating leverage.
- Restructuring: The company incurred $7.0M in restructuring charges in Q2 2026 related to a plan announced in May to streamline operations and increase AI/automation leverage. No such charges were recorded in Q2 2025.
- Expense Management: G&A expenses decreased 19% YoY in Q2, primarily due to a $11.3M reduction in stock-based compensation following the departure of the former Executive Chairman in late 2025.
- FX Impact: Unfavorable foreign exchange rates, particularly the Indian Rupee, resulted in a $4.2M unrealized loss in Q2, negatively impacting other income.
Guidance, Outlook, and Risks
- Share Repurchases: In February 2026, the Board approved a new $400M share repurchase program. The company repurchased 24.0M shares for $204.5M in the first six months of 2026. Approximately $195.5M remains available under this program.
- Non-GAAP Performance: Non-GAAP operating income was $55.9M for Q2 2026, up from $44.8M in Q2 2025. Non-GAAP net income was $45.7M for Q2 2026.
- Key Risks:
- Macroeconomic Conditions: Inflation, geopolitical uncertainty, and high interest rates may impact business spending.
- Foreign Exchange: Approximately 29% of revenue exposure is tied to the Euro and British Pound; volatility in these currencies and the Indian Rupee impacts results.
- Legal Proceedings: An ongoing securities class action regarding the IPO remains on appeal after a summary judgment was granted in the company's favor in April 2025.
- Outlook: Management expects net dollar retention to fluctuate due to macroeconomic conditions and FX volatility. The company anticipates continued investment in R&D and sales/marketing.
Investor Verification Checklist
- Restructuring Completion: Verify the status of the May 2026 restructuring plan and confirm no additional material charges are expected beyond the $7.0M recognized.
- FX Sensitivity: Review the impact of the Indian Rupee and Euro fluctuations on future margins, given the $15.9M sensitivity to a 10% currency change.
- Share Repurchase Pace: Monitor the remaining $195.5M authorization and the average repurchase price ($8.50-$8.67 in H1 2026) relative to current market prices.
- Acquisition Integration: Assess the financial contribution of the FireHydrant acquisition (closed Jan 2026) to the 16% revenue growth.
- Legal Appeal: Track the status of the plaintiff's appeal regarding the IPO securities class action.