Freshworks Announces Job Cuts Amid AI Industry Shift
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 19 2026
0mins
Source: seekingalpha
Freshworks Inc. saw its stock decline by 6.80% as it crossed below the 5-day SMA, reflecting investor concerns following the announcement of cutting approximately 500 jobs, which is about 11% of its workforce. This decision is part of a broader trend in the industry, as companies like Atlassian also implement layoffs in response to the challenges posed by artificial intelligence. Despite these challenges, Freshworks reported a strong first-quarter revenue growth of 16% year-over-year, with expectations for the second quarter revenue to exceed analysts' estimates, indicating potential for future growth amid restructuring efforts.
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Analyst Views on FRSH
Wall Street analysts forecast FRSH stock price to rise
9 Analyst Rating
6 Buy
3 Hold
0 Sell
Moderate Buy
Current: 9.000
Low
13.00
Averages
18.88
High
25.00
Current: 9.000
Low
13.00
Averages
18.88
High
25.00
About FRSH
Freshworks Inc. provides people-first AI service software that organizations use to deliver employee and customer experience. The Company's employee experience (EX) products include Freshservice, Freshservice for Business Teams, Device42 and FireHydrant. Its customer experience (CX) products include its Freshdesk suite of products. Its AI offerings include Freddy AI Agents, Freddy AI Copilot, and Freddy AI Insights. Freshservice is its unified IT and enterprise service management platform that brings together IT Service Management, IT Operations Management, and IT Infrastructure Management. Freshservice for Business Teams extends these capabilities to departments such as HR, Facilities, Finance, and Legal and can be used independently by individual business units. Device42 adds advanced discovery, inventory, and dependency mapping across complex IT environments. FireHydrant unifies alerting, on-call coordination, major-incident response, and post-incident analytics in a single system.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Defensive Stock Recommendations: Burry identifies Freshworks and Paycom Software as relatively defensive against AI disruption, with the former rated “Chapel” due to internal AI initiatives and budget-friendly strategies, while the latter is seen as a strong defense rated “Stone” due to its database interfacing with regulatory agencies.
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See More
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- Capital Return Strategy: The board authorized a new $400 million share repurchase program, reducing shares outstanding by approximately 2% in Q1, signaling management's confidence in the company's future performance while also providing returns to shareholders.
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Freshworks (FRSH) Q1 2026 Earnings Transcript
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- Software Stock Series: Noted investor Michael Burry is conducting a series of analyses on the software industry, with the first focusing on office software companies, emphasizing unique perspectives on AI threats that are expected to impact market evaluations of related stocks.
- Defensive Stock Recommendations: Burry identifies Freshworks and Paycom Software as relatively defensive against AI disruption, with the former rated “Chapel” due to internal AI initiatives and budget-friendly strategies, while the latter is seen as a strong defense rated “Stone” due to its database interfacing with regulatory agencies.
- Risk Warnings: Burry cautions investors to avoid HubSpot and Workday, with the former facing significant risks due to its core SMB customer base being heavily disrupted by AI, and the latter being extremely vulnerable due to its legacy business model amid AI-driven seat losses.
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See More
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- Stock Price Surge: Freshworks' share price increased by 6.41% on Friday, closing at $8.96 per share, as investor sentiment was boosted by a significant upgrade to its AI platform, reflecting market confidence in its future growth.
- AI Platform Upgrade: The new upgrade orchestrates autonomous service through Freddy AI Agent Studio, allowing businesses to flexibly deploy AI according to their needs, thereby enhancing efficiency and employee satisfaction even outside working hours.
- Employee Satisfaction Measurement: This upgrade not only focuses on the quick closure of tickets but also enables managers to measure employee satisfaction with the support provided, emphasizing that the true value of AI lies in saving time and energy for teams to foster innovation.
- Rapid Deployment Capability: Freshworks' unified ServiceOps foundation reduces AI deployment time from quarters to weeks, enabling customers to transform their services quickly to meet rapidly changing business demands, thereby enhancing competitive advantage.
See More
Freshworks Raises 2028 Targets, Focuses on Employee Experience and AI
- 2028 Target Increase: Freshworks raised its 2028 revenue target to over $1.3 billion and Annual Recurring Revenue (ARR) to over $1.4 billion during its user event, reflecting strong confidence in Employee Experience (EX) and AI, with expectations of sustained mid-20s growth in EX.
- Improved Profitability Outlook: The company increased its FY28 Free Cash Flow (FCF) margin outlook to 32-34%, up from 28-30%, indicating enhanced confidence in the sustainability of EX growth, although analysts remain cautious about the achievability of these targets amid macro uncertainties.
- Product Innovation and Market Feedback: Freshworks' new products like Agent Studio and MCP Gateway aim to unify workflows and data, with broadly positive customer feedback, particularly among smaller organizations, highlighting its competitive edge in a crowded market.
- Pricing Model Transformation: Freshworks emphasized its emerging hybrid pricing model, including session-based AI agent pricing at $0.49 per session, set to launch in October, aiming to enhance market competitiveness and cater to diverse customer needs.
See More
Freshworks Sees Improvement in Employee and Customer Experience Business
- Employee Experience Growth: Freshworks successfully closed its two largest Employee Experience deals in Q1, indicating that its enterprise sales motion and platform depth are beginning to scale simultaneously, which is expected to create a repeated pattern and enhance market competitiveness.
- Customer Experience Outlook: While management anticipates low-single-digit growth in the Customer Experience segment in the near term, the average revenue per account from new customers has now exceeded historical levels by more than two times, showcasing the potential in the high-end SMB market.
- AI Adoption and Pricing Strategy: Management emphasized a cautious approach to AI pricing evolution to prioritize customer adoption and usage, thereby enhancing long-term predictability and driving further business growth.
- Market Confidence and Target: Needham analyst has assigned a Buy rating with a $15 price target for Freshworks, reflecting confidence in the company's future growth potential, particularly in the context of its unified platform architecture and streamlined product organization.
See More
Freshworks Exceeds Q1 2026 Expectations with Strong Growth Metrics
- Significant Revenue Growth: Freshworks reported total revenue of $228.6 million for Q1 2026, reflecting a 16% year-over-year increase that surpassed market expectations, demonstrating the company's robust growth momentum in a competitive landscape and further solidifying its market position.
- Employee Experience Driving Growth: The employee experience annual recurring revenue (EX ARR) grew by 27% year-over-year, indicating the company's success in enhancing employee satisfaction and customer service quality, which is expected to drive future customer retention and revenue growth.
- Capital Return Strategy: The board authorized a new $400 million share repurchase program, reducing shares outstanding by approximately 2% in Q1, signaling management's confidence in the company's future performance while also providing returns to shareholders.
- Restructuring for Efficiency: Freshworks announced a global headcount reduction of approximately 11%, anticipating one-time restructuring charges of about $8 million, aimed at consolidating go-to-market strategies and enhancing product development efficiency to strengthen operational capabilities.
See More
Freshworks (FRSH) Q1 2026 Earnings Transcript
See More
