Freshworks Inc.

Hello everyone. Thank you for joining us and welcome to the Freshworks fourth quarter and full year 2025 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Kate Skolnick, VP of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Freshworks fourth quarter and full year 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 fourth quarter and full year 2025 performance and our financial outlook for our first quarter and full year 2026. 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 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 assumes 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.

Thanks, Kate. I am thrilled to share that Q4 marks a historic inflection point for Freshworks. For the first time in our company's history, we achieved profitability for the full year and generated record-free cash flow, a testament to our disciplined execution, product innovation, and operational excellence. I'm also happy that we remain on track for sustained growth and profitability exiting 2026. First, I'll start by summarizing the year. Our business performed exceptionally well in 2025. Quarter after quarter, we achieved or exceeded our top and bottom line expectations throughout the year. In employee experience, we continued winning in the mid-market and enterprise. We successfully are evolving fresh service into a world-class unified service platform. By natively integrating device 42 and acquiring fire hydrants, We have brought ITSM, ITOM, ITAM, and ESM under one cohesive roof. This one platform advantage has enabled us to aggressively win bigger deals. We're winning the mid-market with a continued roster of displacements. Whether it's equipment shares high growth debut on NASDAQ or a global sustainability consultancy's global scale, we are winning. Most notably, a global semiconductor company recently abandoned a decade-long ServiceNow environment for fresh service, projecting a 30% cost savings and 20 to 30% faster resolution times powered by Freddie AI. Freddie AI is proving that AI at Freshworks is a tangible revenue engine. Customers like iPostal1 are using Freddie AI Agent Studio to resolve 54% of queries automatically. and seeing a 99% improvement in interaction speed. When Vermeer Corporation cut their resolution times by 50% using Freddie AI, they drove customer satisfaction up to 95% and sparked enterprise-wide adoption. We brought stabilization to the CX business. We did this by continuing to simplify our core Freshdesk product experience to make it easier to implement and maintain. We improved time to value, customer retention, and our customers are also staying longer because they are seeing tangible results with AI features in Freshdesk. Now let's recap Q4. Q4 was a significant capstone to our fiscal year. Freshworks delivered an outstanding quarter with results that surpassed expectations once again. We have outperformed our estimates across growth and profitability metrics for five consecutive quarters. And in Q4, we also achieved profitability. We grew Q4 revenue over 14% year over year on an as reported basis, nearly 3 million above the high end of our estimates. We ended the year at 907 million in annual recurring revenue, which represents 18% growth year over year on an as reported basis. and over 14% growth on a constant currency basis. Non-GAAP operating margin expanded to 19%, nearly five points above our estimate. Our free cash flow margin was 25%, and this was the sixth straight quarter we achieved Rule of 40. We saw an upmarket momentum surge with our enterprise cohorts outpacing overall growth, proving our ability to consistently win and scale within the world's most complex organizations. As of Q4, we now have over 1,500 customers with greater than $100,000 in ARR, an increase of 28% year over year, and over 3,700 customers with greater than $50,000 in ARR, an increase of 23% year over year. For our first strategic priority in employee experience, we crossed the half-billion-dollar milestone as of the end of 2025, reaching $510 million in ARR. That represents 26% year-over-year growth on an as-reported basis and 22% year-over-year on a constant currency basis. Now, we are witnessing a generational shift where midsize and larger enterprise organizations expect sophisticated software that can handle their complex needs and get fast time to value. FreshService is uniquely positioned to fill this gap left by legacy providers like ServiceNow. We are capturing a growing share of organizations that demand robust AI native service management that can be deployed in weeks, not years. We believe this is a massive and growing opportunity for us. We saw great success in our Device 42 offering as a solution for larger enterprises with complex IT asset management needs. Device 42 ended 2025 with over 40 million in ARR as a result of quality new deals and expansion including cross-sell from our fresh service customer base. In Q4, we saw a 30% attach rate of device 42 to our top 50 new EX deals, including our three largest deals in the quarter. We have a wide range of customers like Holiday Inn Club Vacation, Dell EMC, and SoftBank Group, who use our fresh service advanced ITAM platform to provide them with a detailed and unified view of their entire infrastructure. supporting their most critical IT services. Our ESM product, known as Fresh Service for Business Teams, contributed greatly to our Q4 success. ESM continues to be one of our fastest growing businesses and exceeded 40 million in ARR in Q4, nearly doubling ARR year over year. Today, one in four eligible Fresh Service customers also uses Fresh Service for Business Teams for their non-IT needs. We believe both our IPAM and ESM businesses are well on track to achieve our target of over 100 million in ARR. We are bolstering the scope of our EX business with the acquisition of FireHydrant in early January of 2026. FireHydrant, a leader in AI-powered IT incident management and response software, brings large customers like British Petroleum, Palo Alto Networks, and SNCC Limited into the fresh service ecosystem. This acquisition opens an $8 billion addressable market in IT operations management, or ITOM, and sets the groundwork for our expansion into AIOps. We will provide updates as we progress through integration of FireHydrant into fresh service unified platform over the course of this year. With all these components, we provide a unified service operations platform for sophisticated global IT teams and beyond. Our ITSM is enterprise-grade for service management, Device 42 provides world-class asset management capabilities, soon to be in the cloud. Press service for business teams enables any department in any company to deliver amazing service. And Fire Hydrant forms the basis for growth in ITOM. We are really excited to have all these pieces of the puzzle together now. Our second strategic priority, Freddie AI, continued to advance in 2025 with over 8,000 customers using Freddie AI. AI is not just a feature in our products. It's a standalone revenue line delivering measurable value to our customers, which ended 2025 with over 25 million in ARR and remains on a path to reach 100 million in ARR by 2028. Freddie AI agent conversations were up over 80% to 3.5 million in Q4 in CX. And Freddie AI agent deflected more than 50% of tickets for CX and EX customers. Since Freddie Insights became generally available to EX customers in June of 2025, 1,000 customers have already adopted and are active on the product. In customers with more than $30,000 in ARR, we continue to see Freddie AI Copilot attach rates of over 50% and Copilot customer growth more than doubled year over year. Another clear indication that AI is driving long-term value for our customers is the net dollar retention rate for co-pilot customers in Q4, which improved significantly from 112% last quarter to 116% and remains significantly higher than our overall base for both EX and CX. For our last strategic priority, we drove continued execution in our customer experience business and our AI-driven Freshdesk Omni platform roadmap. In Q4, we continued to see healthy demand in our flagship Freshdesk business. We ended the year with $395 million in ARR and 9% year-over-year growth on an as-reported basis and 5% growth on a constant currency basis. We continued to improve retention quarter-over-quarter as a result of product simplification, adoption efforts, and innovation. We believe Freshdesk Command Center, the unified Freshdesk Omni workspace we launched in December, positions us well to sustain growth, quickly deliver new AI native capabilities across our entire customer base, and deliver increasing value for all customer service needs. We enter 2026 with clear goals that are built upon our three strategic pillars. First, expanding EX. Continue to increase our 20 plus percent ARR growth rate in EX, fueled by continued focus and investment in our unified employee experience service platform. Second, monetizing AI at scale. Continue disciplined innovation in AI as a current revenue driver and stay on track to deliver $100 million in AI-driven ARR over the next three years. And third, improving retention in CX. Focus on our unified platform to drive retention and efficiency in our customer service business. Freshworks 2025 results bring me confidence in our march towards $1 billion in annual recurring revenue this year and $1.3 billion by 2028. The opportunity ahead of us is tremendous, and I want to thank our customers, partners, and employees for an incredible 2025 and for the collaboration ahead in 2026. The best is yet to come. Now, I'll hand it over to Tyler to walk through the financial results in detail.