Freshworks Inc.

Freshworks Inc. (Nasdaq: FRSH) sells subscription software for employee and customer service. Its Freshservice platform helps IT and other teams manage service operations; products including Freshdesk support customer-service work. Customers can expand subscriptions through more users and additional products.

A stronger profit quarter

Adjusted operating income removes stock compensation, payroll taxes on employee share transactions, acquired-intangible amortization, restructuring and acquisition costs. Adjusted net income also accounts for investment gains and related tax effects. Current-quarter stock compensation was $38.8 million, down from $48.5 million, helping the GAAP improvement.

Customers contributing more than $100,000 in annual recurring revenue numbered 1,821, up 25% from a year earlier. Net dollar retention was 104%, versus 104% in June and 105% a year earlier. The measure follows the same existing customers, including expansion, contraction and churn.

What changed in the forecast?

February's annual adjusted operating-profit range was $181 million to $189 million. By August it was $222 million to $228 million; November lifted it to $238 million to $240 million. Annual revenue is now expected at $965 million to $966 million, compared with August's $963.5 million to $966.5 million.

Our document comparison finds that Q3 profit exceeded August's midpoint by $13.2 million, about 94% of the latest annual midpoint increase. After accounting for profit already earned, the implied Q4 midpoint moved from roughly $68.1 million to $69 million. The new issuer Q4 forecast is $68 million to $70 million; August did not publish a separate Q4 forecast.

Annual adjusted EPS is now expected at about $0.71, versus August's $0.66 to $0.68. Q4 revenue guidance is $253.5 million to $254.5 million.

The recurring-revenue goal and completed acquisitions

In February, management described a company-wide ambition to reach $1 billion in annual recurring revenue during 2026. Freshworks says it passed that milestone after September's quarter-end, ahead of its year-end estimate. ARR is an annualized subscription measure, separate from recognized annual revenue. The filings do not break out the October acquisitions' contribution to ARR.

FireHydrant was acquired on January 1 for $88.7 million of consideration. Its results are included in 2026 reporting. In October, Freshworks completed two more acquisitions: Torii, which adds software-management and AI spend-governance capabilities, and Robusta, which adds IT incident investigation and automation. Preliminary combined consideration was approximately $102.5 million, paid primarily in cash.

Torii's agreement was announced October 12 with closing expected in Q4; the November filing confirms it closed during October. The October 28 Robusta announcement already described that acquisition as completed.

Cash and capital allocation

Nine-month operating cash was $198.6 million, versus $180.0 million. Adjusted free cash flow was $187.4 million, versus $166.9 million. That measure subtracts cash property purchases and capitalized software, then adds back acquisition and restructuring costs paid.

At September 30, Freshworks held $466.7 million of cash and $229.5 million of marketable securities, plus $1.1 million of restricted cash. The balance sheet listed no borrowings. Those balances preceded the October acquisitions. Cash share repurchases totaled $234.6 million over nine months, and $168.3 million of program capacity remained.

Read our analysis of the profit upgrade for the forecast comparison and the quarter that delivered most of it.