--- title: "Freshworks passes US$1bn ARR: IT service software up 22%, customer service up 4%" summary: "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." url: https://www.thetechbag.com/blog/freshworks-1bn-arr-it-desk-22-customer-service-4 format: Note desk: "Markets & the AI economy" region: Global published: 2026-11-04 facts_checked: 2026-11-04 author: TechBag (The TechBag Journal) tags: ["Freshworks","earnings","ARR","Freshservice","Freshdesk","ITSM","customer service software","AI agents","Freddy AI","net dollar retention","restructuring","India"] cover: https://www.thetechbag.com/blog/covers/freshworks-1bn-arr-it-desk-22-customer-service-4.png --- # 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.* Note · Markets & the AI economy · By TechBag · Published 2026-11-04 · Facts checked 2026-11-04 · Canonical: https://www.thetechbag.com/blog/freshworks-1bn-arr-it-desk-22-customer-service-4 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 ## Two 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] **Figure: 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 | 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.[1][2] The chief executive, Dennis Woodside, said “EX customers who purchase AI have a net dollar retention rate of greater than 115%.”[4] ## AI 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] TechBag countHow big is US$2.5m About 0.25% of US$1bn of ARR, and 0.6% of CX’s US$404m. Freshworks gave no total for AI revenue. What a Freshdesk AI conversation costs is in [our Freshdesk pricing Analysis](https://www.thetechbag.com/blog/revolutionizing-customer-support-smbs-exploring-latest-trends). 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] India: where Freshdesk is now sold and supported from Woodside: “We moved all of our servicing and selling for our CX business to India.” Sloat said all CX go-to-market efforts moved there.[4] Freshworks reports no Indian revenue: Asia Pacific was US$27.7m, 11% of the quarter. Its long-lived assets in Asia Pacific “are primarily located in India”, and it hedges rupee expenses.[3] By that account, a Freshdesk customer anywhere is now sold to and served from India. How we did this Figures as of 4 November 2026, 7pm IST Revenue, customers, retention, margins and outlook are from Freshworks’ release, presentation and 10-Q. EX and CX ARR, AI figures and India quotes were said on the calls; we read them in published transcripts, not a company document. Shares of ARR are our arithmetic. Not used: premarket trading on 4 November. Spotted an error? Write to us; corrections are published at the foot of the piece. Sources 1. [Freshworks, Freshworks Reports Record Third Quarter 2026 Results (8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001544522/000154452226000170/q326quarterlyearningsrelea.htm) — 3 November 2026 2. [Freshworks, Q3 2026 Earnings Presentation](https://s21.q4cdn.com/987526491/files/doc_earnings/2026/q3/presentation/Presentation-Q3-2026.pdf) — 3 November 2026 3. [Freshworks, quarterly report on Form 10-Q, quarter to 30 September 2026](https://www.sec.gov/Archives/edgar/data/1544522/000154452226000172/frsh-20260930.htm) — 3 November 2026 4. [Investing.com, Earnings call transcript: Freshworks Q3 2026 (Dennis Woodside, Tyler Sloat)](https://ph.investing.com/news/stock-market-news/earnings-call-transcript-freshworks-beats-q3-2026-eps-but-shares-fall-after-hours-93CH-2672133) — 4 November 2026 5. [The Motley Fool, Freshworks (FRSH) Q3 2025 earnings call transcript](https://www.fool.com/earnings/call-transcripts/2025/11/05/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. **Read this next:** [Three Freshdesk agents cost US$57 a month; 1,000 AI chats cost US$490](https://www.thetechbag.com/blog/revolutionizing-customer-support-smbs-exploring-latest-trends) — Three Freshdesk agents cost US$57 a month; 1,000 AI chats cost US$490: per-agent and AI prices for Zoho Desk, Freshdesk, Hiver and Intercom. Go deeper on TechBag - [Freshservice](https://www.thetechbag.com/freshworks/freshservice) — the core of Freshworks' EX business, tier by tier - [Freshdesk](https://www.thetechbag.com/freshworks/freshdesk) — the CX suite and Freddy AI agents - [ITSM and service desk guide](https://www.thetechbag.com/browse/endpoint-management/itsm-service-desk) — Freshservice against the other service desks, by depth and per-agent price