Freshworks Posts Strong Q1 2025 with 19% Revenue Growth to $196 Million

Freshworks Posts Strong Q1 2025 with 19% Revenue Growth to $196 Million

Software-as-a-Service (SaaS) leader Freshworks reported a solid performance in the first quarter of 2025, with revenue rising 19% year-over-year to $196.3 million, up from $165.1 million in Q1 2024. The growth was largely driven by increasing adoption of AI-powered solutions and an uptick in enterprise-level deals, supported by steady demand from small- and mid-sized businesses.

Despite a rise in total operating expenses to $176 million, compared to $171 million a year ago, Freshworks managed to narrow its GAAP operating loss to $10.4 million, a significant improvement from the $32.2 million loss reported in the same period last year.

“We had another strong quarter, exceeding our earlier financial projections,” said Dennis Woodside, CEO and President of Freshworks. “Our revenue grew 19% year-over-year, with an operating cash flow margin of 30% and adjusted free cash flow margin of 28%. Businesses continue to choose Freshworks for our intuitive and effective service solutions.”

Operational Highlights:

• Income from operations reached $46.4 million, more than double the $21.8 million from Q1 2024.

• Free cash flow stood at $55.4 million, up from $38.7 million a year earlier.

• The company’s net dollar retention rate (NDR) was 105%, reflecting strong customer engagement and upselling momentum.

• Cash and marketable securities totaled $1.0 billion as of March 31, 2025.

AI continues to be at the heart of Freshworks’ innovation strategy. Its Freddy AI Copilot, now used by 2,700 customers, handles around one million prompts per day, supporting helpdesk and IT workflows. "Freddy AI is proving highly valuable to our customers," Woodside remarked. “From just 1,700 paying users at the end of Q3 FY24, adoption has scaled rapidly—underscoring strong demand for AI-driven tools.”

Freshworks also reported a 13% year-over-year increase in customers contributing over $5,000 in annual recurring revenue (ARR), totaling 23,275 by the end of Q1 2025.

Looking ahead, Freshworks raised its full-year revenue outlook to a range of $815.3 million to $824.3 million, projecting 13–14% growth, slightly higher than its previous forecast.

In addition to financial gains, Freshworks expanded its customer base with new clients such as All3Media, Broad River Retail, Freudenberg Group, The Christie NHS Foundation Trust, and Veracode. The company also launched a new global partner program, enhancing opportunities for resellers and service providers.