Freshworks’ AI products cross $20 mn in annual recurring revenue as monetisation picks up

Dennis Woodside- CEO-Freshworks

Freshworks’ artificial intelligence offerings, Freddy AI Copilot and Freddy AI Agent, have crossed $20 million in combined annual recurring revenue (ARR), reflecting rising demand from enterprise and SMB (small and medium business) customers for AI-powered service automation tools.

“On AI adoption. Customers have moved from AI experimentation to realizing tangible business value and returns on their investments. Freddy Copilot was included in three of the top-10 new deals in Q1. Nearly half of all new large deals over $30,000 ARR had Copilot attached in Q1,” Dennis Woodside said during the company’s second quarter earnings call on July 30.

Freshworks also ended the quarter with more than 2,700 Copilot customers, quarterly net adds of more than 500, or 23% growth quarter-over-quarter.

ARR is a key metric for software-as-a-service (SaaS) companies as it reflects the predictable revenue the business can expect to generate annually from existing subscriptions.

Also Read: Freshworks is now an AI company, not just SaaS, says CEO Dennis Woodside

In terms of monetising AI, Woodside clarified that the AI agent is monetized via consumption-based session packs (CX) or as a $29/seat/month add-on license (EX). Freddy AI Insights is being integrated into the enterprise plan to drive higher-tier adoption

Freddy AI Agent, which became available for customer experience (CX) customers in Q1, reached over 1,600 customers by quarter-end, and Freshworks plans to extend availability to employee experience (EX) customers this year. The company also launched Freddy AI Insights, an AI-powered analytics tool for managers, in public beta.

AI has also become a critical differentiator in winning new business. Freshworks’ CEO Dennis Woodside said that over 80% of RFPs now include AI requirements, calling AI capabilities “table stakes” in service automation software decisions.

Nasdaq-listed Freshworks has raised its full-year 2025 revenue and profit forecast for the second consecutive quarter, following an 18% year-over-year jump in revenue to $204.7 million for the three months ended June 30, driven by AI-driven demand.

The San Mateo and Chennai-headquartered software company now expects full-year revenue between $822.9 million and $828.9 million, implying 14–15% growth. This is higher than its previous forecast of $815.3 million–$824.3 million issued last quarter.