Freshworks Q3 Revenue Rises 14% as Non-GAAP Margin Reaches 30%

Freshworks Inc. reported stronger third-quarter profitability as revenue increased 14% year over year, with growth among larger customers continuing to outpace the broader customer base. The software company also issued a 2026 outlook calling for about 15% annual revenue growth.

Revenue for the quarter ended September 30, 2026, rose to $245.4 million from $215.1 million a year earlier. Growth was also 14% on a constant-currency basis. North America accounted for 48% of quarterly revenue, followed by Europe, the Middle East and Africa at 38%, Asia-Pacific at 11%, and the rest of the world at 3%.

GAAP income from operations was $28.2 million, representing an 11% operating margin, compared with a GAAP operating loss of $7.5 million and a negative 3% margin in the prior-year quarter. Non-GAAP income from operations increased to $73.2 million from $45.2 million, while the corresponding margin expanded to 30% from 21%.

The non-GAAP calculation excluded $38.8 million of stock-based compensation expense for employee awards, $4.3 million of acquired-intangible amortization, $1.4 million of acquisition expenses and $0.7 million of employer taxes on employee stock transactions, partly offset by a $0.2 million restructuring adjustment.

Adjusted free cash flow reached $73.9 million, up from $57.2 million a year earlier. Freshworks generated $77.7 million of operating cash flow during the quarter. Its adjusted free cash flow measure added back $1.1 million of restructuring costs paid under a plan initiated in May 2026.

Larger customers drive account growth

Freshworks ended the quarter with 25,498 customers generating more than $5,000 in annual recurring revenue, up 5% year over year. Growth was more pronounced among higher-value accounts: customers exceeding $50,000 in ARR increased 18% to 4,257, while those above $100,000 rose 25% to 1,821. On a constant-currency basis, the respective growth rates were 5%, 19% and 26%.

More than 60% of total ARR came from mid-market and enterprise customers, which Freshworks defines as organizations with at least 251 employees. The company also said Freshservice, its AI-powered service operations platform, is used by more than 20,000 customers across over 120 countries.

Net dollar retention was 105% in the third quarter, both as reported and on a constant-currency basis. The metric includes renewals, upsells, cross-sells and acquisition-related expansion, net of customer contraction and attrition.

Freshworks presented its product portfolio around employee-experience and customer-experience offerings, including Freshservice, Freshdesk Omni, Freshdesk and Freshchat, supported by Freddy AI agents, copilots and insights. The portfolio also includes Device42, FireHydrant and Freshcaller.

2026 outlook targets about 15% growth

For the fourth quarter, Freshworks expects revenue of $253.5 million to $254.5 million, representing approximately 14% year-over-year growth and 14% to 15% growth in constant currency. Non-GAAP income from operations is projected at $68 million to $70 million, with non-GAAP net income of about $0.21 per share.

For full-year 2026, management expects revenue of $965 million to $966 million, or approximately 15% growth. Constant-currency growth is projected at 14% to 15%. The company forecast non-GAAP operating income of $238 million to $240 million and non-GAAP net income of about $0.71 per share.

The outlook uses foreign-exchange rates as of October 31, 2026, for currencies other than the U.S. dollar. Freshworks cautioned that its forward-looking statements remain subject to risks and uncertainties, including competition and changes in its rapidly evolving operating environment. It also noted that its non-GAAP measures may not be directly comparable with similarly named metrics used by other companies.