Business software provider Freshworks (NASDAQ: FRSH) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 16% year on year to $237.4 million. The company expects next quarter’s revenue to be around $245 million, close to analysts’ estimates. Its non-GAAP profit of $0.17 per share was 30.4% above analysts’ consensus estimates.
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Freshworks (FRSH) Q2 CY2026 Highlights:
- Revenue: $237.4 million vs analyst estimates of $233.6 million (16% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.17 vs analyst estimates of $0.13 (30.4% beat)
- Adjusted Operating Income: $55.93 million vs analyst estimates of $42.13 million (23.6% margin, 32.7% beat)
- The company slightly lifted its revenue guidance for the full year to $965 million at the midpoint from $961 million
- Management raised its full-year Adjusted EPS guidance to $0.67 at the midpoint, a 8.1% increase
- Operating Margin: 2.6%, up from -4.2% in the same quarter last year
- Free Cash Flow Margin: 24.3%, similar to the previous quarter
- Customers: 25,356 customers paying more than $5,000 annually
- Net Revenue Retention Rate: 104%, down from 106% in the previous quarter
- Billings: $245.8 million at quarter end, up 15.2% year on year
- Market Capitalization: $3.25 billion
Company Overview
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ: FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Freshworks grew its sales at a solid 24% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Freshworks’s annualized revenue growth of 17.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Freshworks reported year-on-year revenue growth of 16%, and its $237.4 million of revenue exceeded Wall Street’s estimates by 1.6%. Company management is currently guiding for a 13.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.6% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Freshworks’s billings punched in at $245.8 million in Q2, and over the last four quarters, its growth slightly outpaced the sector as it averaged 15.5% year-on-year increases. This performance aligned with its total sales growth and shows the company is successfully converting sales into cash. Its growth also enhances liquidity and provides a solid foundation for future investments. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Freshworks’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 104% in Q2. This means Freshworks would’ve grown its revenue by 4% even if it didn’t win any new customers over the last 12 months.
Freshworks has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.
Key Takeaways from Freshworks’s Q2 Results
We were impressed by how significantly Freshworks blew past analysts’ adjusted operating income expectations this quarter. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. On the other hand, its net revenue retention declined and its new large contract wins shrunk. Overall, this print was mixed but still had some key positives. The market seemed to be hoping for more, and the stock traded down 2.5% to $11.77 immediately after reporting.
So should you invest in Freshworks right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
