Business software provider Freshworks (NASDAQ: FRSH) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 14.5% year on year to $222.7 million. Guidance for next quarter’s revenue was better than expected at $223.5 million at the midpoint, 1.3% above analysts’ estimates. Its non-GAAP profit of $0.14 per share was 23.8% above analysts’ consensus estimates.
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Freshworks (FRSH) Q4 CY2025 Highlights:
- Revenue: $222.7 million vs analyst estimates of $218.7 million (14.5% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.14 vs analyst estimates of $0.11 (23.8% beat)
- Adjusted Operating Income: $41.62 million vs analyst estimates of $32.15 million (18.7% margin, 29.4% beat)
- Revenue Guidance for Q1 CY2026 is $223.5 million at the midpoint, above analyst estimates of $220.7 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.56 at the midpoint, missing analyst estimates by 19%
- Operating Margin: 17.8%, up from -12.2% in the same quarter last year
- Free Cash Flow Margin: 25.2%, down from 26.6% in the previous quarter
- Customers: 24,762 customers paying more than $5,000 annually
- Net Revenue Retention Rate: 104%, down from 105% in the previous quarter
- Billings: $259.6 million at quarter end, up 16.7% year on year
- Market Capitalization: $2.43 billion
“Freshworks had an outstanding Q4 and fiscal 2025, outperforming our estimates across growth and profitability metrics for the fifth consecutive quarter,” said Dennis Woodside, Chief Executive Officer & President of Freshworks.
Company Overview
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ: FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Freshworks’s 27.4% annualized revenue growth over the last five years was impressive. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Freshworks’s annualized revenue growth of 18.6% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Freshworks reported year-on-year revenue growth of 14.5%, and its $222.7 million of revenue exceeded Wall Street’s estimates by 1.8%. Company management is currently guiding for a 13.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 12.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Freshworks’s billings punched in at $259.6 million in Q4, and over the last four quarters, its growth slightly outpaced the sector as it averaged 15.2% year-on-year increases. This performance aligned with its total sales growth and shows the company is successfully converting sales into cash. Its growth also enhances liquidity and provides a solid foundation for future investments. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Freshworks’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 105% in Q4. This means Freshworks would’ve grown its revenue by 5% even if it didn’t win any new customers over the last 12 months.
Freshworks has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.
Key Takeaways from Freshworks’s Q4 Results
It was good to see Freshworks provide revenue guidance for next quarter that slightly beat analysts’ expectations. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 4.7% to $8.41 immediately following the results.
The latest quarter from Freshworks’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
