Freshworks Reports Q1 2026 Revenue of $228.6 Million, Announces Restructuring Measures Amid Margin Decline

Freshworks Sees 16% Revenue Growth in Q1 2026

Freshworks Inc., a Nasdaq-listed company, has reported a 16% year-on-year increase in revenue to $228.6 million for the first quarter ended March 31, 2026. This growth is driven by continued demand for its employee experience (EX) platform and AI-led offerings.

The company's revenue has consistently shown a positive trend, with a 16% increase compared to the same quarter last year, and a sequential rise from $222.7 million in Q4 2025. This indicates stable growth momentum for the company.

Freshworks' strong Q1 performance can be attributed to the growing demand for its EX platform and AI Copilot offerings. The company has achieved its sixth straight quarter of exceeding expectations, according to CEO and President Dennis Woodside.

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Freshworks reported a GAAP operating loss of $8.1 million in Q1 2026, which is a significant improvement from a loss of $10.4 million a year ago. However, the company posted a GAAP operating profit of $39.7 million in Q4 2025, indicating a reversal in profitability.

As part of a restructuring exercise, Freshworks will reduce its global workforce by approximately 11% or around 500 jobs. This decision is in line with the company's efforts to navigate the current market conditions, where SaaS companies are facing pressure on growth and profitability.

The company expects to incur one-time restructuring charges of around $8 million, which will be recognized in the second quarter of 2026.

Key Performance Indicators (KPIs)

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Freshworks' cash flow remained steady, with operating cash flow at $62.4 million, up from $58 million a year ago. Adjusted free cash flow stood at $55.8 million, and the company ended the quarter with $780.4 million in cash and equivalents.

The company's shares rose about 2% on the day of the results to trade at around $0.19 a piece, though the stock remains down roughly 26% year-to-date.

During the quarter, Freshworks landed the two largest deals in its history, including its first contract with over $1 million in annual recurring revenue (ARR). This signals increasing traction in the enterprise segment.

Among operating metrics, the number of customers contributing more than $100,000 in annual recurring revenue (ARR) rose 29% year-on-year. Net dollar retention stood at 106%, slightly lower than 108% in Q4 2025.

Looking ahead, Freshworks expects Q2 2026 revenue between $232 million and $235 million and raised its full-year revenue guidance to $958–$964 million, indicating continued double-digit growth.

The company's focus on growing its EX business represents the primary and largest growth opportunity, with AI offerings showing significant traction. Freshworks expects to continue its growth momentum in the coming quarters.