Nasdaq-Listed SaaS Firm Posts First GAAP Profit of the Year, Raises Full-Year Outlook
Nasdaq-listed software-as-a-service (SaaS) company Freshworks reported a strong performance for the second quarter ended June 2026 (Q2 CY26), delivering 16% year-on-year revenue growth while achieving its first GAAP quarterly profit of the year. The company also improved its operating margins, generated robust cash flows, expanded its enterprise customer base, and raised its full-year revenue and profitability guidance.
According to its latest quarterly filing, Freshworks recorded $237.4 million in revenue during Q2 CY26, compared to $205.2 million in the corresponding quarter last year.
Freshworks Reports GAAP Profit After Loss Last Year
Freshworks posted a GAAP net profit of $3.2 million during the quarter, reversing a net loss of $1.7 million reported in Q2 CY25.
The company’s operating performance also improved significantly. It recorded a GAAP operating income of $6.1 million, compared to an operating loss of $8.7 million in the year-ago quarter, reflecting stronger operational efficiency despite continued investments in growth.
On a non-GAAP basis, operating income increased to $55.9 million, translating into an operating margin of 23.6%, up from 21.9% in the corresponding period last year.
The milestone marks another step in Freshworks’ journey toward sustained profitability as it continues balancing growth with disciplined spending.
Revenue Growth Driven by Enterprise Expansion
Freshworks continued expanding its customer base during the quarter, particularly among larger enterprise clients.
The number of customers contributing more than $100,000 in Annual Recurring Revenue (ARR) increased 25% year-on-year to 1,746.
Meanwhile, customers generating over $50,000 in ARR grew 18% to 4,091.
The company also maintained a Net Dollar Retention (NDR) rate of 104%, indicating continued expansion spending from its existing customer base.
The growth reflects increasing adoption of Freshworks’ customer experience, IT service management, CRM, and AI-powered enterprise software solutions across global businesses.
Operating Expenses Continue to Rise
While Freshworks improved profitability, it continued investing in product development and customer acquisition.
Its sales and marketing expenses, the largest cost component, rose nearly 12% to $106.5 million, compared to $95.2 million in the corresponding quarter last year.
Investment in innovation also remained strong, with research and development (R&D) expenses increasing to $43.8 million from $39.9 million.
On the other hand, general and administrative expenses declined to $37.9 million, compared to $47 million a year earlier.
During the quarter, Freshworks also incurred approximately $7 million in restructuring charges.
Overall, the company’s total operating expenses increased to $195.2 million, compared to $182.2 million in Q2 CY25.
Strong Cash Generation and Healthy Balance Sheet
Freshworks continued generating healthy cash flows during the quarter.
The company reported:
- Operating cash flow: $58.5 million
- Adjusted free cash flow: $57.7 million
As of June 30, 2026, Freshworks held:
- Cash, cash equivalents, restricted cash, and marketable securities: $665.3 million
The strong cash position provides the company with significant financial flexibility to continue investing in product innovation, artificial intelligence capabilities, enterprise sales, and potential strategic acquisitions.
Company Raises Full-Year Guidance
Following the better-than-expected quarterly performance, Freshworks raised its outlook for the full calendar year.
The company now expects:
- FY26 Revenue: $963.5 million to $966.5 million
- Non-GAAP Operating Income: $222 million to $228 million
The revised guidance reflects management’s confidence in continued demand for its SaaS offerings and improving operating leverage.
Outlook
Freshworks’ second-quarter performance highlights the company’s continued transition from a high-growth SaaS startup to a profitable enterprise software company. With double-digit revenue growth, expanding enterprise adoption, positive GAAP earnings, improving operating margins, and a strong cash position, the Nasdaq-listed firm enters the second half of CY26 on a stronger financial footing.
The raised annual guidance further signals management’s confidence in sustaining growth while improving profitability amid a competitive global SaaS market.
