Q2 2025 Freshworks Inc Earnings Call Transcript
Key Points
- Freshworks Inc (FRSH) reported a strong Q2 2025 with revenue growth of 18% year over year, reaching $204.7 million.
- The company expanded its non-GAAP operating margin to 22% and delivered a robust adjusted free cash flow margin of 27%.
- Freshworks Inc (FRSH) ended the quarter with over 74,600 customers, including notable names like Seagate and AEP Energy.
- The company introduced significant product innovations, particularly in AI, with over 5,000 customers now paying for AI copilot and AI agent products.
- Freshworks Inc (FRSH) saw strong momentum in its Employee Experience (EX) business, achieving over $450 million in ARR, representing 24% year-over-year growth.
- Net dollar retention was affected by churn in the Device42 partner business, impacting retention by over two-thirds of a percentage point.
- The company's guidance for Q3 2025 indicates a slowdown in revenue growth to 11-12% year over year.
- Freshworks Inc (FRSH) anticipates increased spending in the second half of the year, driven by personnel and brand-related expenses.
- The company is still in the early stages of integrating Device42, with full cloud integration expected in the first quarter of the following year.
- Despite strong AI adoption, the AI products currently represent a small portion of the overall ARR, indicating room for growth but also highlighting current limitations.
Good day, and thank you for standing by. Welcome to the Freshworks second-quarter 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Brian Lan, Director of Investor Relations. Please go ahead.
Thank you. Good afternoon, and welcome to Freshworks' second-quarter 2025 earnings conference call. Joining me today are Dennis Woodside, Freshworks' Chief Executive Officer and President; and Tyler Sloat, Freshworks' Chief Operating Officer and Chief Financial Officer. The primary purpose of today's call is to provide you with information regarding our second-quarter 2025 performance and our financial estimates for our third quarter and full year 2025.
Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on
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