Freshworks Achieves First-Time Profitability in Q4 2025 Earnings Call
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy FRSH?
Source: seekingalpha
- Historic Profitability: Freshworks achieved its first full-year profitability in FY 2025, generating record free cash flow, which reflects the company's disciplined execution and operational excellence, thereby boosting investor confidence.
- Significant Customer Growth: By the end of 2025, annual recurring revenue (ARR) reached $907 million, an 18% year-over-year increase, with over 1,500 customers exceeding $100,000 in ARR, a 28% growth, indicating strong traction in the mid-market and enterprise segments.
- AI-Driven Business Performance: Freddy AI is described as a 'tangible revenue engine,' with customers like iPostal1 using it to automatically resolve 54% of queries, resulting in a 99% improvement in interaction speed, which not only enhances customer experience but also drives substantial revenue growth for the company.
- Optimistic 2026 Outlook: Freshworks projects Q1 2026 revenue between $222 million and $225 million, with full-year revenue expected to reach $952 million to $960 million, reflecting a year-over-year growth rate of 13.5% to 14.5%, showcasing the company's confidence in future growth.
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Analyst Views on FRSH
Wall Street analysts forecast FRSH stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for FRSH is 18.88 USD with a low forecast of 13.00 USD and a high forecast of 25.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
9 Analyst Rating
6 Buy
3 Hold
0 Sell
Moderate Buy
Current: 8.630
Low
13.00
Averages
18.88
High
25.00
Current: 8.630
Low
13.00
Averages
18.88
High
25.00
About FRSH
Freshworks Inc. is a software company. Its software-as-a-service (SaaS) solutions fall into two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams, and Device42. The Company's generative artificial intelligence (AI) solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience.
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.
Freshworks Achieves First-Time Profitability in Q4 2025 Earnings Call
- Historic Profitability: Freshworks achieved its first full-year profitability in FY 2025, generating record free cash flow, which reflects the company's disciplined execution and operational excellence, thereby boosting investor confidence.
- Significant Customer Growth: By the end of 2025, annual recurring revenue (ARR) reached $907 million, an 18% year-over-year increase, with over 1,500 customers exceeding $100,000 in ARR, a 28% growth, indicating strong traction in the mid-market and enterprise segments.
- AI-Driven Business Performance: Freddy AI is described as a 'tangible revenue engine,' with customers like iPostal1 using it to automatically resolve 54% of queries, resulting in a 99% improvement in interaction speed, which not only enhances customer experience but also drives substantial revenue growth for the company.
- Optimistic 2026 Outlook: Freshworks projects Q1 2026 revenue between $222 million and $225 million, with full-year revenue expected to reach $952 million to $960 million, reflecting a year-over-year growth rate of 13.5% to 14.5%, showcasing the company's confidence in future growth.
See More
Analysis of After-Hours Trading Performance of Multiple Companies
- Robinhood Revenue Decline: Robinhood's Q4 revenue of $1.28 billion fell short of the $1.34 billion expected by analysts, with transaction revenue also missing at $776 million, leading to a 7% drop in stock price, reflecting market concerns over its profitability.
- Lyft's Poor Performance: Lyft's stock dropped 15%, as its Q4 bookings of $5.07 billion met expectations, but its first-quarter adjusted EBITDA guidance of $120 million to $140 million fell short of the $139.8 million consensus, indicating pressure on profitability.
- Mattel's Disappointing Guidance: Mattel's stock plummeted 25%, with full-year adjusted earnings guidance ranging from $1.18 to $1.30 per share, significantly below the $1.77 expected by the market, and Q4 results also missed expectations, highlighting weakness in the toy market.
- Cloudflare's Strong Outlook: Cloudflare's stock surged 10% after projecting Q1 revenue between $620 million and $621 million, exceeding the $614 million consensus, and its Q4 results also surpassed analyst expectations, showcasing strong growth potential in the cloud networking market.
See More
Freshworks Set to Announce Q4 Earnings on February 10th
- Earnings Announcement: Freshworks (FRSH) is set to release its Q4 earnings on February 10th after market close, with consensus EPS estimate at $0.11, reflecting a 21.4% year-over-year decline, while revenue is expected to reach $218.76 million, indicating a 12.4% year-over-year growth, showcasing resilience in revenue generation.
- Strong Historical Performance: Over the past two years, Freshworks has consistently beaten both EPS and revenue estimates 100% of the time, highlighting the company's reliability in financial forecasting and bolstering market confidence.
- Upward Revision Trends: In the last three months, EPS estimates have seen three upward revisions with no downward adjustments, and revenue estimates have also experienced three upward revisions, reflecting analysts' optimistic outlook on the company's future performance, which could positively impact stock prices.
- Market Sentiment: Despite Freshworks being perceived as undervalued, concerns over slowing growth have intensified, leading Piper Sandler to downgrade its rating, indicating a cautious sentiment among investors regarding the company's future growth potential.
See More
Wall Street Analysts Adjust Ratings
- Analyst Rating Changes: Top Wall Street analysts have adjusted their ratings on several companies, reflecting varying market perspectives that could influence investor decisions and market trends.
- Overview of Updates: The rating changes include upgrades, downgrades, and new initiations, showcasing analysts' keen responses to market dynamics, which may lead to short-term volatility in the affected stocks.
- Investor Considerations: Investors considering purchasing VERX stock should pay attention to the latest insights from analysts to make more informed investment decisions, especially amid increasing market uncertainties.
- Market Impact Analysis: The adjustments in analysts' ratings not only affect the performance of individual stocks but may also influence overall market sentiment, prompting investors to closely monitor these changes to seize investment opportunities.
See More
Piper Sandler Downgrades Three Software Stocks Amid Sector Pessimism
- Rating Downgrade: Piper Sandler downgraded Adobe, Freshworks, and Vertex from Overweight to Neutral, cutting their price targets from $479, $20, and $32 to $330, $12, and $20 respectively, reflecting ongoing pessimism in the software sector.
- Growth Slowdown Forecast: Analysts predict that 2026 will mark the fifth consecutive year of decelerating growth rates for software, citing AI efficiencies as a pressure on headcount growth, which poses significant challenges for software companies that sell on a per-seat basis.
- Price Target Adjustments: In addition to the three companies, Piper Sandler also lowered price targets for several others including Amplitude and Asana, indicating a cautious outlook for the entire software industry amid continued investor apathy.
- Future Outlook: Despite the negative sentiment surrounding software, analysts remain bullish on Microsoft and ServiceTitan, viewing Microsoft as a top play on AI adoption and highlighting ServiceTitan's multiple growth drivers as potential revenue upside in FY27.
See More
Freshworks Explores AI Acquisitions with Over $800 Million Cash Reserves
- Acquisition Strategy Initiated: Freshworks CEO Dennis Woodside announced that the company is exploring acquisitions in AI and employee experience software, backed by over $800 million in cash reserves, aiming to drive revenue growth in the coming years, indicating a proactive stance towards M&A in the tech sector.
- Market Environment Analysis: Despite uncertainties from U.S. tariffs, global M&A volumes rose 39% to $4.3 trillion in 2025, reflecting that the adoption of artificial intelligence is fueling deal-making activity across the technology industry.
- Target Market Positioning: Freshworks has engaged in discussions with potential partners from Israel, Europe, the U.S., and India, with the CEO mentioning conversations with about 50 companies over the past six months, showcasing its intent to pursue acquisitions on a global scale.
- Ongoing Investment and Growth Outlook: Freshworks forecasts double-digit revenue growth over the next three years and, following its acquisition of FireHydrant, plans to continue hiring in India for engineering, product development, and design roles to support its expansion strategy.
See More
Freshworks Achieves First-Time Profitability in Q4 2025 Earnings Call
- Historic Profitability: Freshworks achieved its first full-year profitability in FY 2025, generating record free cash flow, which reflects the company's disciplined execution and operational excellence, thereby boosting investor confidence.
- Significant Customer Growth: By the end of 2025, annual recurring revenue (ARR) reached $907 million, an 18% year-over-year increase, with over 1,500 customers exceeding $100,000 in ARR, a 28% growth, indicating strong traction in the mid-market and enterprise segments.
- AI-Driven Business Performance: Freddy AI is described as a 'tangible revenue engine,' with customers like iPostal1 using it to automatically resolve 54% of queries, resulting in a 99% improvement in interaction speed, which not only enhances customer experience but also drives substantial revenue growth for the company.
- Optimistic 2026 Outlook: Freshworks projects Q1 2026 revenue between $222 million and $225 million, with full-year revenue expected to reach $952 million to $960 million, reflecting a year-over-year growth rate of 13.5% to 14.5%, showcasing the company's confidence in future growth.
See More
Analysis of After-Hours Trading Performance of Multiple Companies
- Robinhood Revenue Decline: Robinhood's Q4 revenue of $1.28 billion fell short of the $1.34 billion expected by analysts, with transaction revenue also missing at $776 million, leading to a 7% drop in stock price, reflecting market concerns over its profitability.
- Lyft's Poor Performance: Lyft's stock dropped 15%, as its Q4 bookings of $5.07 billion met expectations, but its first-quarter adjusted EBITDA guidance of $120 million to $140 million fell short of the $139.8 million consensus, indicating pressure on profitability.
- Mattel's Disappointing Guidance: Mattel's stock plummeted 25%, with full-year adjusted earnings guidance ranging from $1.18 to $1.30 per share, significantly below the $1.77 expected by the market, and Q4 results also missed expectations, highlighting weakness in the toy market.
- Cloudflare's Strong Outlook: Cloudflare's stock surged 10% after projecting Q1 revenue between $620 million and $621 million, exceeding the $614 million consensus, and its Q4 results also surpassed analyst expectations, showcasing strong growth potential in the cloud networking market.
See More
Freshworks Set to Announce Q4 Earnings on February 10th
- Earnings Announcement: Freshworks (FRSH) is set to release its Q4 earnings on February 10th after market close, with consensus EPS estimate at $0.11, reflecting a 21.4% year-over-year decline, while revenue is expected to reach $218.76 million, indicating a 12.4% year-over-year growth, showcasing resilience in revenue generation.
- Strong Historical Performance: Over the past two years, Freshworks has consistently beaten both EPS and revenue estimates 100% of the time, highlighting the company's reliability in financial forecasting and bolstering market confidence.
- Upward Revision Trends: In the last three months, EPS estimates have seen three upward revisions with no downward adjustments, and revenue estimates have also experienced three upward revisions, reflecting analysts' optimistic outlook on the company's future performance, which could positively impact stock prices.
- Market Sentiment: Despite Freshworks being perceived as undervalued, concerns over slowing growth have intensified, leading Piper Sandler to downgrade its rating, indicating a cautious sentiment among investors regarding the company's future growth potential.
See More
Wall Street Analysts Adjust Ratings
- Analyst Rating Changes: Top Wall Street analysts have adjusted their ratings on several companies, reflecting varying market perspectives that could influence investor decisions and market trends.
- Overview of Updates: The rating changes include upgrades, downgrades, and new initiations, showcasing analysts' keen responses to market dynamics, which may lead to short-term volatility in the affected stocks.
- Investor Considerations: Investors considering purchasing VERX stock should pay attention to the latest insights from analysts to make more informed investment decisions, especially amid increasing market uncertainties.
- Market Impact Analysis: The adjustments in analysts' ratings not only affect the performance of individual stocks but may also influence overall market sentiment, prompting investors to closely monitor these changes to seize investment opportunities.
See More
Piper Sandler Downgrades Three Software Stocks Amid Sector Pessimism
- Rating Downgrade: Piper Sandler downgraded Adobe, Freshworks, and Vertex from Overweight to Neutral, cutting their price targets from $479, $20, and $32 to $330, $12, and $20 respectively, reflecting ongoing pessimism in the software sector.
- Growth Slowdown Forecast: Analysts predict that 2026 will mark the fifth consecutive year of decelerating growth rates for software, citing AI efficiencies as a pressure on headcount growth, which poses significant challenges for software companies that sell on a per-seat basis.
- Price Target Adjustments: In addition to the three companies, Piper Sandler also lowered price targets for several others including Amplitude and Asana, indicating a cautious outlook for the entire software industry amid continued investor apathy.
- Future Outlook: Despite the negative sentiment surrounding software, analysts remain bullish on Microsoft and ServiceTitan, viewing Microsoft as a top play on AI adoption and highlighting ServiceTitan's multiple growth drivers as potential revenue upside in FY27.
See More
Freshworks Explores AI Acquisitions with Over $800 Million Cash Reserves
- Acquisition Strategy Initiated: Freshworks CEO Dennis Woodside announced that the company is exploring acquisitions in AI and employee experience software, backed by over $800 million in cash reserves, aiming to drive revenue growth in the coming years, indicating a proactive stance towards M&A in the tech sector.
- Market Environment Analysis: Despite uncertainties from U.S. tariffs, global M&A volumes rose 39% to $4.3 trillion in 2025, reflecting that the adoption of artificial intelligence is fueling deal-making activity across the technology industry.
- Target Market Positioning: Freshworks has engaged in discussions with potential partners from Israel, Europe, the U.S., and India, with the CEO mentioning conversations with about 50 companies over the past six months, showcasing its intent to pursue acquisitions on a global scale.
- Ongoing Investment and Growth Outlook: Freshworks forecasts double-digit revenue growth over the next three years and, following its acquisition of FireHydrant, plans to continue hiring in India for engineering, product development, and design roles to support its expansion strategy.
See More
