Freshworks (FRSH) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 revenue of $237.4M, up 16% year-over-year, and delivered first GAAP profitable quarter with net income of $3.2M.

• EX (Employee Experience) ARR grew 24% year-over-year, now 59% of total ARR, with strong AI monetization and Copilot attach rates above 70% on large deals.

• Customer base expanded to 25,356 customers with >$5K ARR and 1,746 customers with >$100K ARR; large customers now drive over 60% of ARR.

• Completed FireHydrant acquisition for $88.7M in January 2026 and executed a $7M restructuring plan in May 2026.

• Recognized as a leader in Gartner's 2026 Magic Quadrant for ITSM and launched new AI products, including Freddy AI Agent Studio and MCP Gateway.

Financial highlights

• Q2 2026 revenue: $237.4M, up 16% year-over-year; non-GAAP operating income: $55.9M (24% margin); GAAP operating income: $6.1M (3% margin); net income: $3.2M.

• Adjusted free cash flow: $57.7M (24% margin); net cash from operating activities: $58.5M.

• Cash, cash equivalents, and marketable securities totaled $665.3M at quarter end; no debt.

• Repurchased $159M–$204.5M in shares in Q2 2026; fully diluted share count reduced by 8.3% since IPO.

• Gross margin steady at 85%–86%; non-GAAP EPS: $0.17; GAAP EPS: $0.01.

Outlook and guidance

• Q3 2026 revenue expected at $244.5M–$245.5M (~14% YoY growth); full-year 2026 revenue guided to $963.5M–$966.5M (~15% YoY growth).

• Non-GAAP operating income for 2026: $222M–$228M; adjusted free cash flow target: $265M (27.5% margin).

• Non-GAAP net income per share projected at $0.18 for Q3 and $0.66–$0.68 for 2026.

• EX ARR expected to grow in the mid-20s% and exceed $600M by year-end 2026; CX ARR expected to grow in low single digits.

• Management expects macroeconomic pressures, including inflation and FX volatility, to persist and potentially impact results.