Freshworks Reports $196.3 Million Revenue in Q1 2025, 19% Increase Year-Over-Year

Freshworks Inc. reported a revenue of $196.3 million for the first quarter of 2025, marking a 19% increase from $165.1 million in the same period last year. The company achieved a gross profit of $166.4 million, resulting in a gross margin of 85%, up from 84% in the prior year. Despite the revenue growth, Freshworks recorded a net loss of $1.3 million, a significant improvement compared to a net loss of $23.3 million in Q1 2024. The loss from operations also narrowed to $10.4 million from $32.2 million year-over-year, indicating a positive trend in operational efficiency.

The increase in revenue was primarily driven by new customer acquisitions and expansion within existing accounts, with the net dollar retention rate slightly decreasing to 105% from 106% a year earlier. The company attributed this decline to macroeconomic pressures affecting customer spending. Freshworks also reported a total of 23,275 customers contributing more than $5,000 in annual recurring revenue (ARR), a 13% increase from the previous year. The company’s customer base continues to expand, with a notable contribution from the acquisition of D42 Parent, Inc., which was completed in June 2024.

In terms of operational metrics, Freshworks' cash and cash equivalents stood at $594.2 million as of March 31, 2025, down from $620.3 million at the end of 2024. The company also reported a total of $401.1 million in marketable securities. Freshworks has been actively managing its expenses, with total operating expenses increasing only slightly by 3% to $176.8 million, despite rising costs in research and development and general administrative expenses. The company has implemented a restructuring plan aimed at improving operational efficiency, which resulted in $0.4 million in restructuring charges during the quarter.

Looking ahead, Freshworks remains cautious about the macroeconomic environment, which includes inflationary pressures and geopolitical uncertainties that could impact customer spending. The company anticipates that these factors may continue to affect its growth trajectory and revenue recognition in future periods. However, Freshworks is optimistic about its strategic initiatives, including the integration of D42 Parent, and plans to leverage its AI-driven solutions to enhance customer and employee experiences. The company believes its existing liquidity will be sufficient to meet its operational needs for at least the next 12 months, while also considering potential future investments and acquisitions.