Freshworks Cuts Q1 Loss By 94% YoY To $1 Mn

Nasdaq-listed homegrown SaaS company Freshworks’ consolidated net loss reduced sharply by 94.4% to $1.3 Mn in the first quarter of the calendar year 2025 (Q1 2025) from $23.3 Mn in the year-ago quarter, helped by increased customer adoption and operating efficiency due to AI.

On a quarter-on-quarter basis, losses narrowed 94.1% from $21.9 Mn.

Revenue jumped 19% to $196.3 Mn during the quarter under review from $165.1 Mn in Q1 2025. Sequentially, it grew marginally by 0.8% from $194.6 Mn.

In a statement, the company said the number of customers contributing more than $5,000 in annual recurring revenue (ARR) rose 13% year-over-year (YoY) to 23,275 in the reported quarter.

“Freshworks had another fantastic quarter, outperforming our previously provided financial estimates in Q1 with revenue growing 19% YoY to $196.3 Mn, operating cash flow margin of 30% and adjusted free cash flow margin of 28%. We continue to outperform because businesses are choosing Freshworks for our uncomplicated customer and employee service solutions,” said Freshworks CEO and president Dennis Woodside.

Founded in 2010 by Girish Mathrubootham and Shanmugam Krishnasamy, Freshworks initially targeted small and medium businesses with its customer relationship management platform. However, in recent quarters, it has shifted its focus to mid-market and enterprise customers.

In its Q1 2025 investor presentation, Freshworks said that over 60% of the total ARR came from mid-market and enterprise customers.

The AI service provider offers a comprehensive suite of employee experience solutions, which includes IT service management and enterprise service management, along with customer experience solutions such as customer service, sales and marketing products.

It must be noted that Mathrubootham announced his resignation as CEO and transitioned to the role of executive chairman at Freshworks. Following his departure, the company saw several C-suite exits, including that of its CTO, CPO and CRO.

While the company did not disclose how much revenue it generated from its India operations, it said the Asia Pacific region (APAC) contributed 12% to its revenue during the quarter under review.

The growth in the top line outpaced the rise in expenditure for the enterprise tech unicorn. Overall, its operating expenses rose 3% to $176.8 Mn in the first quarter of 2025 from $171.4 Mn in the same quarter last year. Of this, it spent $40 Mn on R&D initiatives, $89.1 Mn on sales and marketing and $47.2 Mn on general corporate purposes

Total customers on the platform rose 9% to 73.3 Mn in Q1 2025 from 67.5 Mn in the year-ago period. 

Net dollar retention rate, which represents the ability of a business to retain revenue from its existing customers, rose to 105% in the reported period, as compared to 103% in Q4 2024, but it slid from 106% in Q1 2024.

In its investor presentation, Freshworks projected its revenue will grow 13-15% to $197.2- $200.3 Mn in Q2 2025. For the calendar year 2025, its revenue is expected to grow in the range of 13-14% to $815.3-824.3 Mn.