Nasdaq-listed software-as-a-service major Freshworks swung into black in the October - December quarter and reported profitability for fiscal 2025, driven by growing demand for its AI-powered software, better margins and tax benefits.

For the quarter ended December 31, the company reported GAAP operating profit of USD 39.7 million compared to an operating loss of USD 23.8 million in the corresponding quarter last year. Total revenue during the quarter increased 14.4% on year to USD 222.7 million from USD 194.6 million in year ago period.

For fiscal 2025, Freshworks posted GAAP operating profit of USD 13.2 million, reversing an operating loss of USD 138.6 million year ago. Total revenue stood at USD 838.8 million, a growth of 16.4% from USD 720.4 million in 2024.

Describing fourth quarter as a "historic inflection point", Freshworks CEO and President Dennis Woodside in a post earnings conference call said the company remains on track for sustained growth and profitability in 2026. "For the first time in our company's history, we achieved profitability for the full year and generated record free cash flow, a testament to our disciplined execution, product innovation and operational excellence," he said.

Emphasising AI as a tangible revenue engine, Woodside said Freddy AI is a strategic priority for the company with over 8,000 customers using it. "AI is not just a feature in our products. It's a stand-alone revenue line, delivering measurable value to our customers, which ended 2025 with over USD 25 million in ARR and remains on a path to reach USD 100 million in ARR by 2028," he said.

Freddy AI is Freshworks generative AI-powered customer service and IT support solution designed to boost efficiency through Agentic AI agents, Copilot assistance, and Insights analytics.  

As of December quarter, Freshworks reported a 10% year-on-year increase in number of customers who contributed over USD 5,000 in annual recurring revenue (ARR) at 24,762. Customers contributing over USD 50,000 in ARR grew 23% on year to 3,760.

"For our larger customer cohorts, the number of customers contributing more than USD 100,000 in ARR grew meaningfully to over 1,500 customers, representing 28% year-over-year growth on an as-reported basis and 22% on a constant currency basis," said Tyler Sloat, CFO & COO.

Woodside expressed confidence of Freshworks achieving USD 1 billion in ARR this year, and USD 1.3 billion by 2028.  

Strong Guidance

For the January - March quarter, Freshworks has guided non-GAAP operating profit of USD 33-35 million. It has projected revenue at USD 222-225 million, a growth of 13-15% on year from the same period last year.

For the full year 2026, the outlook for non-GAAP operating profit is in the range of $181 million to $189 million. The company expects revenue to grow 13.5-14.5% year-over-year to $952 million to $960 million.     

Sloat said free cash flow for the first quarter and full year is forecast at $55 million, and around $250 million respectively.