Freshworks raises FY25 growth guidance as Q2 revenue jumps 18% to $204.7 million

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.

Freshworks also raised its non-GAAP operating income guidance for the full year to $153–157 million, up from the prior estimate of $139.5–147.5 million provided after the first quarter.

"Freshworks delivered another strong quarter, exceeding our previously provided financial estimates," said CEO Dennis Woodside in a media statement on July 30. "Businesses are increasingly turning to Freshworks to reduce complexity and implement AI-powered employee and customer service solutions," he added.

The company’s second-quarter revenue growth stood at 18% year-on-year. Non-GAAP income from operations surged to $44.8 million from $13.1 million a year ago, while GAAP loss from operations narrowed sharply to $8.7 million from $43.8 million.

GAAP (Generally Accepted Accounting Principles) are standardized accounting rules and guidelines used by companies to prepare financial statements.

Freshworks’ GAAP net loss narrowed sharply to $2.94 million in Q2 2025 from $20.99 million a year ago, reflecting improved operational performance and tighter cost controls.

Operating cash flow rose 61% year-on-year to $58.6 million, translating to a 29% margin. Adjusted free cash flow jumped to $54.3 million, up from $32.8 million in the year-ago period.

Freshworks ended Q2 2025 with $926.2 million in cash, cash equivalents and marketable securities, down from $1 billion in the previous quarter.

AI demand push 

The company said the number of customers contributing more than $5,000 in annual recurring revenue grew 10% year-on-year to 23,975, while net dollar retention remained steady at 106%.

Interestingly, Freshworks also said its Freddy AI Copilot and Freddy AI Agent products have crossed $20 million in combined annual recurring revenue (ARR). 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

"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," Woodside said during the company’s earnings call.