Nasdaq-listed SaaS company Freshworks reported a consolidated net profit of $18.3 million in the third quarter of calendar year 2026 (Q3 CY26), compared with a net loss of $4.7 million in the year-ago period, as revenue growth and lower operating expenses supported its profitability.
Revenue increased 14% YoY to $245.4 million from $215.1 million in Q3 CY25. The company also reported a 14% increase in revenue on a constant-currency basis, according to its November 3 earnings release.
Freshworks’ gross profit rose 15% to $209.4 million, while its gross margin improved to 85.3% from 84.7% a year earlier.
Operating performance also strengthened. The company recorded a GAAP operating profit of $28.2 million, compared with an operating loss of $7.5 million in the corresponding quarter last year. Its operating margin improved to 11.5% from a negative 3.5%.
Non-GAAP operating income increased 62% to $73.2 million, with the corresponding margin expanding to 29.8% from 21%.
Freshworks Sees Growth In Larger Enterprise Accounts
Freshworks CEO Dennis Woodside attributed the performance to the company’s strategy of moving upmarket and targeting larger enterprise customers.
The company said new deals involving multiple employee experience products increased more than 35% during the quarter. Partners participated in more than half of its new business.
Its customer base also recorded growth in higher-value accounts. Customers contributing more than $100,000 in annual recurring revenue (ARR) increased 25% YoY to 1,821. The number of customers generating over $50,000 in ARR rose 18% to 4,257.
Freshworks crossed $1 billion in ARR after the quarter ended, ahead of its earlier year-end target. However, its net dollar retention (NDR) rate stood at 104%, unchanged from the previous quarter and down from 105% in Q3 CY25.
NDR measures revenue expansion and contraction across an existing customer base, including upgrades, cross-selling, renewals and customer churn.
New customers onboarded during the quarter included Tata Technologies, Texas Christian University, Unilabs in the UK and Jose Cuervo.
Freshworks Improves Cash Generation, Raises 2026 Outlook
Freshworks’ operating expenses declined 4.4% to $181.2 million from $189.6 million in Q3 CY25. General and administrative expenses fell 19% to $38.2 million, while sales and marketing expenses declined 2.5% to $98.5 million. Research and development expenses, however, increased 7.8% to $44.7 million.
The company generated $77.7 million in cash from operating activities, up from $63.5 million a year earlier. Adjusted free cash flow rose 29% to a record $73.9 million, with its margin improving to 30.1% from 26.6%.
Freshworks had $697.3 million in cash, cash equivalents, restricted cash and marketable securities as of September 30, 2026.
For Q4 CY26, the company expects revenue between $253.5 million and $254.5 million, implying approximately 14% YoY growth. It has forecast full-year 2026 revenue of $965 million to $966 million, representing around 15% growth.
The company also raised its full-year non-GAAP operating income outlook to $238 million-$240 million, compared with its earlier guidance of $222 Mn-$228 Mn.
Founded in Chennai in 2010 by Girish Mathrubootham and Shan Krishnasamy, Freshworks provides cloud-based software across customer experience, employee experience and IT service management. It listed on Nasdaq in September 2021.
Under Woodside, who took over as CEO in 2024, Freshworks has increasingly focused on enterprise customers and AI-led service operations. In May 2026, the company announced plans to reduce its global workforce by approximately 11%, or around 500 employees, citing a realignment around growth priorities and the AI era.
Its latest results point to improving profitability and cash generation as it expands its enterprise business. However, the 104% NDR rate suggests that expansion within its existing customer base remains an area to watch as the company pursues its next phase of growth.
Also read: Girish Mathrubootham’s Freshworks Acquires AI Startup Robusta
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