Freshworks Inc.

Good day and thank you for standing by. Welcome to the Freshworks third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Brian Long, Director of Ambassador Relations. Please go ahead.

Thank you. Good afternoon, and welcome to FreshWorks' third quarter 2025 earnings conference call. Joining me today are Dennis Woodside, FreshWorks' Chief Executive Officer and President, and Tyler Sloat, FreshWorks' Chief Operating Officer and Chief Financial Officer. The primary purpose of today's call is to provide you with information regarding our third quarter 2025 performance and our financial outlook for our fourth quarter and full year 2025. Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our management's beliefs about our business and industry including our financial expectations and estimates, uncertainties in the macroeconomic environment in which we operate and market volatility, and certain other assumptions made by the company, all of which are subject to change. These statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. Such risks include, but are not limited to, our ability to sustain our growth to innovate, to reach our long-term revenue goals, to meet customer demand, and to control costs and improve operating efficiency. For a discussion of additional material risks and other important factors that could affect our results, please refer to today's earnings release, our most recently filed Form 10-K, and other periodic filings with the SEC. Freshworks assume no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this call, except as required by law. During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures for historical periods are included in our earnings release, which is available on our investor relations website at ir.freshworks.com. I encourage you to visit our investor relations site to access our earnings release, supplemental earnings slides, periodic SEC reports, and a replay of today's call or to learn more about Freshworks. And with that, let me turn it over to Dennis.

Thank you, Brian. Freshworks delivered an outstanding Q3, marking the third consecutive quarter this year that we surpassed our estimates across growth and profitability metrics. We grew Q3 revenue 15% year over year to $215.1 million on both an as-reported and constant currency basis. approximately three points above the high end of our previously issued estimates. Non-GAAP operating margin expanded to 21%, five points above our estimate. Our free cash flow margin was 27%, and we added a fifth straight quarter of rule of 40 plus. We ended the quarter with nearly 75,000 customers, including new logos such as global auto manufacturer Stellantis, multinational bank Societe Generale, the Pennsylvania Gaming Control Board, and Travis Perkins PLC, the UK's leading distributor of building materials. Our positive results also reflect significant expansion deals with existing customers like Wiley, the Access Group, and iRhythm Technologies. In Q3, we saw a more than 40% year-over-year increase in the number of new and expansion deals with greater than $50,000 in ARR. Our strategy has focused on three key growth drivers, investing in employee experience, delivering AI capabilities across our products and accelerating adoption, and driving continued expansion in customer experience. At our investor day in September, we outlined our path to $1.3 billion in ARR in the next three years, and we continue to make progress towards our goal of ESM, AI, and ITAM, each generating over $100 million in ARR. Before we dive into the results, I want to speak to the transformative AI opportunity ahead for Freshworks. We have over 50 AI-driven applications in the hands of customers right now, and the direct monetization of these products demonstrates that we are driving incremental growth and that customers are realizing tangible outcomes from our AI. The headline here is that businesses need the right foundation, workflow, data, and security that all work together, and that's what we provide. Companies will continue to rely on us because we have the operational context, data connections, and governance needed to manage full service functions like customer support and IT service at scale. Security, privacy, and compliance are already built into our architecture. That's what makes our AI enterprise ready compared to general purpose AI. Employee experience continues to lead in durable growth, achieving over 480 million in ARR. That represents 24% year-over-year growth on an as-reported basis and 23% year-over-year growth on a constant currency basis and acceleration from Q2. Three primary growth drivers that contributed to these results include expansion into departments outside of IT, continued growth upmarket, and deepening our foothold in IT asset management with Device 42. Enterprise service management continues to be an important expansion lever as customers increasingly use fresh service in areas of their business outside of IT. Our ESM solution, Fresh Service for Business Teams, has doubled its annual recurring revenue in the past year and exceeded $35 million in ARR in Q3. Customers like Databricks, RingCentral, and Qualthon are using our ESM offering to automate workflows and deliver more personalized employee experiences at scale. As of Q3, one in every four eligible fresh service customers are using fresh service for business teams. To meet this surging customer demand, today we announced that we are expanding enterprise service management access by making fresh service for business teams available as an independent product for non-IT functions. With a standalone product, we are no longer limited to using IT as our entry point, and we can now sell directly to HR, finance, facilities, and legal, even if an organization is already locked into another ITSM tool. Second, we continue to move upmarket with midsize and enterprise customers. In Q3, ARR from customers who spend more than $100,000 with us grew 25% year-over-year. The steady flow of new product innovations like employee journeys, our AI-powered onboarding and offboarding capability, and increased adoption of business teams contributed to the momentum of these larger customers. Freshworks is positioned as a clear alternative to legacy players, and we continue to display its incumbents. In Q3, we delivered our highest ITSM competitive win rates in two years as customers selected FreshService for its ease of use, fast deployment, and lower total cost of ownership. Freshworks has an established track record in ITSM. Mid-market and enterprise organizations want speed and simplicity, and Freshworks delivers. One example is HoltCat, the largest US dealer of Caterpillar equipment, who saw significant improvement in efficiency and productivity as agents were able to handle nearly 10,000 tickets within six months and bring their average ticket resolution time to under five hours. The third growth lever in EX is our advanced IT asset management offering expansion with Device 42. In Q3, we closed our biggest Device 42 new deal to date with the largest US-based sporting goods retailer. Device 42's deep integration with Fresh Service and its differentiated discovery engine made it the clear choice for enterprises that are seeking real-time visibility and control. The momentum is evident as half of our top 10 largest deals in the quarter included a device 42 component. In addition to these three growth drivers, we're deepening our presence across key verticals. For example, in Q3, we doubled our law firm customer count, reaching over 1,000. In sports, we want to congratulate the Los Angeles Dodgers, one of several major league baseball teams that rely on fresh service, a winning back-to-back World Series, and also the McLaren Formula One team for winning back-to-back Constructors Championships. Finally, we continue to drive greater efficiency and focus on our go-to-market motion. On the leadership front, we welcomed Enrique Artigan as Senior Vice President and General Manager of America Field Sales. Enrique's experience leading high-performing sales organizations will help sharpen our execution, accelerate growth, and strengthen our GTM discipline across North and South America. Now let's talk about our AI tailwind. Freddie AI continues to be a growth driver and expansion opportunity across EX and CX, and is delivering exceptional results for thousands of customers who are seeing tangible business value and returns quickly after adoption. As we stated before, we believe this can be a $100 million standalone revenue stream over the next three years. AI is becoming a core productivity engine for every team, not just for IT. And here's why Freshworks is winning. Our products sit where real work happens in customer support, IT, HR, and operations, helping businesses automate tasks, resolve issues faster, and deliver better experiences with less effort. Our AI is deeply embedded in how our customers work every day. It's writing replies, classifying tickets, generating insights, and increasingly taking action on behalf of employees and customers. The results speak for themselves. AI ARR has doubled year over year. Customers are now using Freddie AI to resolve millions of problems every week. And our new AI agents are performing real work across industries, from handling returns in e-commerce to managing employee requests in HR. As a testament to our AI momentum, we have seen AI agent usage expand more than six-fold in the past seven months, while our existing AI co-pilot solutions continue to double in usage year over year. Pretty Copilot ARR grew 160% year-over-year and was included in over 60% of our new customer deals over $30,000, a five-point increase from the prior quarter. We also saw double-digit attach rates again for new SMB customers in Q3. The number of customers using Copilot grew significantly, too, by over 130% year-over-year. Travis Perkins PLC upgraded from legacy complexities to service efficiency with Fresh Service and Freddie AI Copilot. Travis Perkins is now able to provide best-in-class IT service management to 17,000 employees across 1,400 locations while improving operational execution, optimizing costs, and increasing productivity for HR and IT teams. These Freddie Copilot customers stick with us. Their net retention rate is 112%. in Q3 for both CX and EX, higher than our overall base and a tangible sign that AI is driving deeper engagement and long-term value. We believe this tailwind will continue to strengthen our growth trajectory. The number of Freddie AI agent sessions grew over 70% in Q3 and we have seen 650,000 sessions per month since launch. Freddie AI agent deflected more than 50% of tickets for CX and EX customers. Those who had early access to agentic workflows that we launched in June are seeing their average deflection rate jump to 65%, with a handful of customers seeing 80% of service issues resolved by AI agents. We're seeing positive feedback from customers who have had early access in Q3 to several products we announced at our June refresh event. For example, Gale's Bakery, a mid-sized UK cafe chain with over 170 locations, used Freddie AI Agent Studio for Freshdesk to build AI agents. These Freddie AI agents now handle 1,000 inquiries per month to deflect more than one-third of total volume. Employees are freed from repetitive work and can dedicate more time to more complex customer cases like allergies, ingredients, or complaints that require personal care. Next week, we'll share new product announcements across our entire portfolio at Refresh North America on November 13th in San Francisco, and at our virtual summit on November 18th. This includes new vertical agentic AI agents that bring our growth strategy to life, demonstrating how we're executing through AI innovation that expands our addressable market and deepens customer value. Our third imperative, customer experience, grew to over 390 million in ARR, representing 8% growth year over year on an as-reported basis and 7% on a constant currency basis. Q3 growth was driven by deeper product adoption and customer sentiment that Freshdesk is easier to implement and use than the legacy alternatives. To build momentum, we refocused our CX products and we'll be announcing a new unified experience at Refresh next week, a single workspace that consolidates Freshdesk, FreshChat, and all of our Freddie AI products for customer support teams. This hub centralizes all conversations, context, and tools to help agents resolve inquiries and get work done more efficiently. This will be a force multiplier for frontline support teams, helping them improve the speed and quality of customer service. Freddie AI continues to be an expansion driver for CX, with measurable impact for customers using Freddie AI agents in FreshDesk. For example, Bergzeit, a leading German outdoor retailer, uses Freddie AI agents to automatically retrieve real-time order data and provide status, updates, return label, and invoices with customers in seconds. This has significantly reduced ticket volume and improved response times, driving higher satisfaction and greater trust in the Bergsite brand. The potential of agentic workflows is tremendous. Traditionally, building AI agents like this took months, designing customer support workflows, training data, and endless testing. Our pre-built AI agents help our customers deploy on day one to handle tasks like expediting orders, processing returns, or checking delivery status. That means faster setup, faster results, and a better customer experience from the start. While SMB and commercial segments continue to turn to Freshdesk, we are also seeing larger implementations with midsize and enterprise organizations, like the University of Pennsylvania, who consolidated its finance support into a single hub with Freshworks. In just six months, the university processed more than 30,000 service tickets, streamlining workflows and improving stakeholder satisfaction. We believe customers of all sizes continue to choose Freshworks CX solutions for its AI-driven efficiency and uncomplicated customer support experience. Around the world, businesses are choosing software that delivers real outcomes, speed, simplicity, and measurable ROI, and that's exactly where we stand out. Our enterprise-grade products deliver faster time to value and lower total cost of ownership, aligning perfectly with what today's buyers demand. With solid momentum behind us, we're leaning into the global opportunity ahead to expand our pipeline, acquire new customers, and fuel durable growth. Thank you to our customers, partners, employees, and shareholders for your ongoing support. Now let me turn it over to Tyler to go through the operational and financial details.