Freshworks passes US$1bn ARR: IT service software up 22%, customer service up 4%
Freshworks’ results for the quarter to 30 September and its earnings call: where its US$1bn of annual recurring revenue comes from, how fast each half grows, and what AI agents add.
Freshworks passed US$1bn of annual recurring revenue (ARR) after the quarter closed, “ahead of our previously-given estimate of year end”, it said on 3 November. Revenue for the quarter to 30 September was US$245.4m, up 14%.1 On the call the company split its ARR in two. Employee experience (EX), the IT service software led by Freshservice, was “$588 million, or 59% of total ARR”, up 22%. Customer experience (CX), the Freshdesk suite, was US$404m, up 4%.4
US$588m
EX ARR, up 22% (Freshservice and IT operations)
Q3 call
US$404m
CX ARR, up 4% (Freshdesk suite)
Q3 call
US$2.5m
new ARR from CX AI Agent Studio in the quarter
Q3 call
01Two businesses, growing at different speeds
EX is Freshservice, Freshservice for Business Teams, Device42 and FireHydrant, an incident-management company bought on 1 January for US$88.7m whose results Freshworks calls “not material”. CX is the Freshdesk suite.3 A year earlier EX ARR was “over $480 million”, up 24%, and CX “over $390 million”, up 8%.5
Freshworks' IT service software grows 22% a year; customer-service growth halved to 4%
Year-on-year growth, %, as reported: ARR by business, and revenue, quarters to 30 September 2025 and 2026
- Quarter to Sep 2025
- Quarter to Sep 2026
Show tableHide table
| Quarter to Sep 2025 | Quarter to Sep 2026 | Change | |
|---|---|---|---|
| EX ARR (Freshservice) | 24 | 22 | -2 pts |
| CX ARR (Freshdesk) | 8 | 4 | -4 pts |
| Total revenue | 15 | 14 | -1 pts |
Source: Freshworks Q3 2025 and Q3 2026 earnings calls (transcripts); Q3 2026 earnings presentation · as of 3 November 2026 · Constant currency: EX 23% and 22%, CX 7% and 4%; ARR growth is as stated on the calls
The customers differ too. Mid-market and enterprise firms, 251 employees and up, hold 81% of EX ARR; small businesses hold 52% of CX ARR.2 Customers above US$100,000 of ARR rose 25% to 1,821; those above US$5,000 rose 5% to 25,498. Net dollar retention, what last year’s customers pay now per dollar they paid then, was 104%, against 105% a year earlier and 108% in the December quarter.12 The chief executive, Dennis Woodside, said “EX customers who purchase AI have a net dollar retention rate of greater than 115%.”4
02AI agents: usage tripled, revenue is small so far
Woodside said “CX AI Agent sessions up more than 3x and conversations up more than 4x” on a year earlier. The chief financial officer, Tyler Sloat, put “over $2.5 million in new ARR” in the quarter on CX AI Agent Studio.4
Margins rose faster than revenue. Non-GAAP operating income went from US$41.0m in the March quarter to US$73.2m, 30% of revenue,2 after a restructuring announced in May to streamline the organisation and product development and use more AI and automation, as the 10-Q describes it, now complete at US$6.8m of charges, mostly severance.3 Freshworks expects 2026 revenue of US$965.0–966.0m.1 After hours on 3 November its shares fell 7.7% to US$13.06, Investing.com reported.4
Sources
- Freshworks, Freshworks Reports Record Third Quarter 2026 Results (8-K, Exhibit 99.1) — 3 November 2026
- Freshworks, Q3 2026 Earnings Presentation — 3 November 2026
- Freshworks, quarterly report on Form 10-Q, quarter to 30 September 2026 — 3 November 2026
- Investing.com, Earnings call transcript: Freshworks Q3 2026 (Dennis Woodside, Tyler Sloat) — 4 November 2026
- The Motley Fool, Freshworks (FRSH) Q3 2025 earnings call transcript — 5 November 2025
Disclosure. TechBag is a software reseller: it earns a margin when a reader buys through it, including from vendors named here. The analysis is TechBag’s own; no vendor paid for or saw this piece before publication. Facts are labelled reported, TechBag count or our view.
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