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What changed in Freshworks Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Freshworks Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+426 added−521 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-20)

Top changes in Freshworks Inc.'s 2025 10-K

426 paragraphs added · 521 removed · 296 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCurrently, over 72,000 companies use Freshworks' uncomplicated solutions to increase employee efficiency and customer loyalty. Our solutions and platform are enterprise-grade without the enterprise complexity. Our fresh approach to EX and CX software is designed to be easy to use and ready to scale and to deliver rapid time to value to companies of all sizes.
Biggest changeOur AI offerings, which include Freddy AI Agents, Freddy AI Copilot and Freddy AI Insights, further enhance the employee and customer experience and are designed to boost productivity. Currently, nearly 75,000 companies use Freshworks' uncomplicated solutions to increase employee efficiency and customer loyalty. Our enterprise-grade solutions are powerful, yet easy to use, and quick to deliver results.
We run our SaaS service with the built-in redundancy of independent ‘pods’ across multiple data centers within an AWS region, to provide continuity of service in the face of infrastructure disruptions in individual data centers. Every new version of our software undergoes stringent functional, security, and regression testing, and is deployed through controlled processes to production.
We run our SaaS service with the built-in redundancy of independent ‘pods’ across multiple data centers within an AWS region, designed to provide continuity of service in the face of infrastructure disruptions in individual data centers. Every new version of our software undergoes stringent functional, security, and regression testing, and is deployed through controlled processes to production.
We have continually increased investments in our outbound sales and marketing efforts globally. Our sales teams are organized by customer size, targeting SMBs with a highly efficient, cost-effective sales organization based in Chennai, in region sales teams focused on our larger customers, and partner-selling teams supporting our partners in other geographies.
We have continually increased investments in our outbound sales and marketing efforts globally. Our sales teams are organized by customer size, targeting SMBs with a highly efficient, cost-effective sales organization based in India, in region sales teams focused on our larger customers, and partner-selling teams supporting our partners in other geographies.
We deliver these product features and capabilities through Freshwave, our adaptation of the agile software development methodology, balancing development velocity, roadmap predictability and product quality. Our internal ‘Idea-To-Product’ process for rapid solutioning of product requirements is a key enabler of innovation and collaborative development.
We deliver these product features and capabilities through the agile software development methodology, balancing development velocity, roadmap predictability and product quality. Our internal ‘Idea-To-Product’ process for rapid solutioning of product requirements is a key enabler of innovation and collaborative development.
We focus on serving divisions or departments within enterprises. We have three go-to-market motions to attract customers: • Inbound motion : Our inbound motion is the primary way we sell to organizations, regardless of the organization’s size or industry.
We focus on serving divisions or departments within enterprises. We have three go-to-market motions to attract customers: • Inbound motion : Our inbound motion is the primary way we sell our CX solutions to organizations, regardless of the organization’s size or industry.
Freshchat provides agents with a modern conversational experience to proactively engage customers across digital messaging channels such as WhatsApp, Google Business Messages, SMS, and more. Freshchat enables automated and personalized self-service for fast resolutions. When an issue requires agent support, a customer is seamlessly transferred to an agent.
Freshchat provides agents with a modern conversational experience to proactively engage customers across digital messaging channels such as WhatsApp, Google Business Messages, SMS, and more. Freshchat enables automated and personalized self-service for fast resolutions. When an issue requires agent support, a customer is 7 Table of Contents seamlessly transferred to an agent.
We rely on efficient search marketing and word of mouth to encourage individual users or small teams 4 Table of Contents within an organization to discover, try, and purchase our products.
We rely on efficient search marketing and word of mouth to encourage individual users or small teams within an organization to discover, try, and purchase our products.
We utilize our outbound motion in conjunction with our inbound efforts to help accelerate the adoption of our products, and the increased usage of our products within existing customers. • Partner ecosystem : Our growing partner ecosystem enriches our offerings, scales our geographic coverage, and helps us reach more EX and CX buyers, thus amplifying our go-to-market investments.
We utilize our outbound motion in 4 Table of Contents conjunction with our inbound efforts to help accelerate the adoption of our products, and the increased usage of our products within existing customers. • Partner ecosystem : Our growing partner ecosystem enriches our offerings, scales our geographic coverage, and helps us reach more buyers, thus amplifying our go-to-market investments.
Securities and Exchange Commission (SEC) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
We file electronically with the U.S. Securities and Exchange Commission (SEC) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
In the United States, we are subject to data security and privacy rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act of 2018 (CCPA), the California Privacy Rights Act (together with the CCPA, collectively, the California Privacy Regulations), and other state and federal laws relating to privacy and data security.
In the United States, we are subject to data security and privacy rules and regulations, including those promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (CCPA) and other state and federal laws relating to privacy and data security.
We believe we compete favorably based on the following competitive factors: • designed for the user; • lesser time to realize value of investment; • unified experience; • modern, end-to-end, and extensible platform; • designed for businesses of all sizes; • intelligent, automation-first and AI/ML-powered solutions; • product-led go-to-market motion; 9 Table of Contents • fast to go-live; • easy and intuitive; and • affordable pricing.
We believe we compete favorably based on the following competitive factors: • complete set of multi-product platform solutions; • designed for the user in an easy and intuitive manner; • fast to go-live and thus lesser time to realize value of investment; • unified experience; • Enterprise-grade capabilities; • modern, end-to-end, and extensible platform; • designed for businesses of all sizes; 9 Table of Contents • intelligent, automation-first and AI/ML-powered solutions; and • product-led go-to-market motion.
Products and Capabilities Freshworks provides solutions that serve the needs of users in the CX and EX categories. These product offerings enable organizations to acquire, engage, and better serve their customers and employees. For customer-facing teams, we offer our AI-powered, CX family of products, including Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer.
Products and Capabilities Freshworks provides solutions that serve the needs of users in the EX and CX categories. These product offerings enable organizations to acquire, engage, and better serve their customers and employees. For IT and employee-facing teams, we offer our AI-powered EX family of products, including Freshservice, Freshservice for Business Teams, Device42 and FireHydrant.
Agents are equipped with a full customer context and AI productivity tools to deliver fast resolutions. Leaders gain unified dashboards and reports to drive team performance. Freshchat is commonly included as part of the complete CS, Sales & Marketing, and ITSM offerings.
Agents are equipped with a full customer context and AI productivity tools to deliver fast resolutions. Leaders gain unified dashboards and reports to drive team performance. Freshchat is commonly included as part of both our employee experience and customer experience offerings. • Freshcaller.
Item 1. Business Overview We provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences. We provide our solutions in two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams and Device42.
Item 1. Business Overview We provide people-first AI service software that organizations use to deliver exceptional employee and customer experiences. Our employee experience (EX) products include Freshservice, Freshservice for Business Teams, Device42 and FireHydrant. Our customer experience (CX) products include our Freshdesk suite of products.
For our CX products, with regards to CS, we primarily face competition from CS suites, such as Salesforce, Zendesk, and legacy vendors, such as Oracle and SAP, and with regards to customer relationship management, we primarily face competition from full-featured vendors, such as Salesforce, HubSpot, and Microsoft Dynamics, legacy vendors, such as Oracle, SAP, and Sage.
For our customer experience products, we primarily face competition from customer service suites such as Salesforce, Zendesk, Intercom, and legacy vendors, such as Oracle and SAP, and from customer relationship management vendors, such as Salesforce, HubSpot, Microsoft Dynamics, and Sage.
We drive potential customers to our website as the primary channel to learn about our solutions and we offer 14-day free trials of our products, giving potential customers flexibility to try before they buy. • Outbound motion : This approach is focused on mid-market and enterprise organizations.
We drive potential customers to our website as the primary channel to learn about our solutions and we offer 14-day free trials of our products, giving potential customers flexibility to try before they buy. • Outbound motion : We have significantly strengthened our outbound motion in recent years in response to demand from mid-market and enterprise organizations.
We have registered trademark rights in “Freshworks,” our logos and multiple product names in the United States and targeted foreign jurisdictions. We also have registered domain names for websites that we use in our business, such as freshworks.com and similar variations.
We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective. We have registered trademark rights in “Freshworks,” our logos and multiple product names in the United States and targeted foreign jurisdictions. We also have registered domain names for websites that we use in our business, such as freshworks.com and similar variations.
Freshsales is an easy-to-use, AI-powered sales CRM that helps businesses enhance productivity and drive revenue growth. The powerful CRM transforms the sales experience with 360-degree customer context, equipping sales teams with real-time relevant information. It offers personalized engagement, accurate forecasting, and intelligent workflows to improve sales performance and deliver exceptional customer experiences.
Freshsales is an easy-to-use, AI-powered sales CRM that helps businesses enhance productivity and drive revenue growth for businesses of varying sizes. It offers personalized engagement, accurate forecasting, and intelligent workflows to improve sales performance and deliver exceptional customer experiences.
Following the infrastructure-as-code allows for repeatable and reliable infrastructure provisioning. Our products are monitored for performance and anomalies 24x7 by a Network Operations Center to provide for system availability and prevent abuse. • Security : We are ISO 27001 certified and SOC 2 Type 2 certified.
Following the infrastructure-as-code allows for repeatable and reliable infrastructure provisioning. Our products are monitored for performance and anomalies 24x7 by a Network Operations Center designed to provide for system availability and prevent abuse. • Security : We maintain a cybersecurity and cloud-security program designed to protect the confidentiality, integrity, and availability of our systems and customer data.
Our failure to comply with the laws of each jurisdiction may subject us to significant penalties. For example, the data protection landscape in Europe, including with respect to cross-border data transfers, is currently unstable and other countries outside of Europe have enacted or are considering enacting cross-border data transfer restrictions and laws requiring local data residency.
For example, the data protection landscape in Europe imposes a range of requirements, including with respect to cross-border data transfers, and other countries outside of Europe have enacted or are considering enacting cross-border data transfer restrictions (including, in certain instances, laws requiring local data residency).
This includes Freddy AI, our generative AI-powered suite of services, that enable organizations to more efficiently deliver customer and employee delight at scale.
Our products leverage the Freshworks platform, which provides shared services that enable us to rapidly innovate and release new capabilities. This includes Freddy AI, our generative AI-powered suite of services, that enable organizations to more efficiently deliver customer and employee delight at scale.
The California Privacy Regulations require covered businesses to provide new disclosures to California residents and to provide them new ways to opt-out of the sale of personal information, and provide a private right of action and statutory damages for data breaches. Other jurisdictions in the United States are beginning to propose laws similar to the California Privacy Regulations.
The CCPA requires covered businesses to provide disclosures to California residents and to respond to requests to opt-out of the sale of personal information, and provide for a private right of action and statutory damages for data breaches. Numerous jurisdictions in the United States have enacted or proposed similar comprehensive consumer privacy laws.
For a discussion of the various risks we face from regulation and compliance matters, see the sections titled “Risk Factors—Risks Related to Our Business” and “Risk Factors—Risks Related to International Operations.” Intellectual Property Intellectual property is an important component of our business.
For a discussion of the various risks we face from regulation and compliance matters, see the sections titled “Risk Factors—Risks Related to Our Business” and “Risk Factors—Risks Related to International Operations.” Intellectual Property We rely on a combination of patents, trademarks, copyrights, trade secrets as well as contractual provisions and restrictions to establish and protect our proprietary rights.
Organizations can also use the Freshworks developer platform and marketplace to extend and integrate Freshworks into their existing systems and advanced analytics to gain insights that help them run their business more efficiently. 5 Table of Contents Freshworks Solutions Overview Customer Experience Offerings Freshworks has a unified platform for CX that includes products for Customer Service (CS) and Sales & Marketing automation (S&M).
Organizations can also use the Freshworks developer platform and marketplace to extend and integrate Freshworks into their existing systems and advanced analytics to gain insights that help them run their business more efficiently. 5 Table of Contents Freshworks Solutions Overview IT and Employee Service Management (ITSM) Product Offerings Freshservice is a unified, AI-powered solution with essential IT and employee service management capabilities that empower our customers to provide reliable and consistent services company-wide. • Freshservice .
With its built-in AI capabilities and reporting, Device42 helps customers get answers fast and insights that help them solve problems faster, maintain compliance requirements, reduce risk, and ensure business continuity. 7 Table of Contents The Freshworks Platform The Freshworks platform is the AI-powered, enterprise-grade foundation for all Freshworks products.
Device42 is designed to continuously discover, map, and provide complete visibility across on-premises and cloud IT environments. With its built-in AI capabilities and reporting, Device42 helps customers get answers fast and accurate insights about their IT infrastructure that help them solve problems faster, maintain compliance requirements, reduce risk, and ensure business continuity. 6 Table of Contents • FireHydrant.
As of December 31, 2024, over 60% of our annual recurring revenue (ARR) was from customers with more than 250 employees. We provide products across multiple markets in order to address the needs of businesses of all sizes that need to digitally transform to delight their customers and employees.
We provide products across multiple markets in order to address the needs of businesses of all sizes that need to digitally transform to delight their customers and employees. Our business has grown significantly in recent periods as our customer base and operations have scaled.
While we believe our patents and patent applications in the aggregate are important to our competitive position, no single patent or patent application is material to us as a whole. We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective.
As of December 31, 2025, we had twenty issued U.S. patents that expire between 2036 and 2044, and twenty pending patent applications. While we believe our patents and patent applications in the aggregate are important to our competitive position, no single patent or patent application is material to us as a whole.
This flexible approach capitalizes on the strong user-driven adoption and user love for our products with a dedicated focus on driving successful adoption and expansion within organizations and divisions of large organizations. We offer our products under both free and paid subscription plans, further reducing friction to adoption and accelerating our go-to-market motion.
Our nimble go-to-market approach capitalizes on the strong user-driven adoption and user love for our products with a dedicated focus on driving successful adoption and expansion within organizations. We continue to innovate, bringing new products to market to solve important customer pain points.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective. 10 Table of Contents Our Culture and Employees Our mission is to help businesses create delightful customer and employee experiences.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective. Our Culture and Employees Our people and culture are at the heart of how we innovate, support customers, and execute our long-term strategy.
With powerful AI capabilities, Freshsales helps sales teams prioritize high-intent leads, scale personalized outreach, and identify critical deals to take the next best action to accelerate sales cycles. Freshsales is a trusted choice for businesses of varying sizes, offering the flexibility and scalability necessary to adapt to dynamic market conditions and excel in today's competitive landscape. • Freshmarketer .
With powerful AI capabilities, Freshsales helps sales teams prioritize high-intent leads, scale personalized outreach, and identify critical deals to take the next best action to accelerate sales cycles. • Freshmarketer . Freshmarketer is an easy-to-use marketing automation platform designed to help businesses attract, nurture, convert, and retain customers.
Major areas of focus in this region include engineering, product design, customer support, in-bound sales and general and administrative personnel. Available Information Our website address is located at freshworks.com , and our investor relations website is located at ir.freshworks.com . We file electronically with the U.S.
We’re headquartered in San Mateo, CA, with 11 additional offices globally. A majority of our employees are based in India, where major teams support engineering, product design, customer support, in-bound sales, and general and administrative functions. Available Information Our website address is located at freshworks.com , and our investor relations website is located at ir.freshworks.com .
Freddy AI Copilot acts as a coach and collaborator that 6 Table of Contents helps boost agent productivity and performance by summarizing tickets and conversations, suggesting responses, and providing quality coaching and feedback after every interaction Sales and Marketing Automation Offerings Freshworks also offers a sales automation product Freshsales and a marketing automation product called Freshmarketer. • Freshsales .
Freddy AI Agents provide always-on, conversational assistance to customers and employees, enabling them to resolve issues quickly and efficiently across channels. Freddy AI Copilot acts as a coach and collaborator that helps boost agent productivity and performance by summarizing tickets and conversations, suggesting responses, and providing quality coaching and feedback after every interaction.
For our EX products, we primarily face competition from traditional vendors, such as ServiceNow, BMC, Ivanti/Cherwell, and modern pure-play vendors, such as Atlassian.
For our employee experience products, we face competition from traditional IT service management vendors such as ServiceNow, BMC, and Ivanti, as well as modern cloud-based providers, including Atlassian and various mid-market and emerging ITSM platforms.
With AI-driven campaign creation, advanced segmentation and personalization, real-time automated journeys, and in-depth analytics and reporting, Freshmarketer enables businesses to maximize their marketing ROI. Additionally, it offers conversational marketing tools like live chat and chatbots, along with features for landing page customization and conversion rate optimization, making it a complete solution for all marketing requirements.
It empowers businesses to connect with customers across their preferred channels—email, SMS, WhatsApp, or social media — driving higher engagement. With AI-driven campaign creation, advanced segmentation and personalization, conversational marketing tools, real-time automated journeys, and in-depth analytics and reporting, Freshmarketer enables businesses to maximize their marketing ROI.
Freshservice delivers the capabilities IT leaders need to manage the entire IT estate, including IT Service Management (ITSM), IT Operations Management (ITOM), and IT Asset Management (ITAM), on the same platform, enabling collaboration across teams without complexity. Freshservice streamlines IT service delivery, providing a unified approach to incident, request, knowledge, change, and problem management.
Freshservice provides a modern IT and enterprise service management platform that enables organizations to manage the full IT estate, including IT Service Management (ITSM), IT Operations Management (ITOM), and IT Infrastructure Management (ITIM). The platform streamlines service delivery by supporting incident, request, knowledge, change, and problem management within a unified system.
Our business has grown significantly in recent periods as our customer base and operations have scaled. Our total revenue was $720.4 million, $596.4 million and $498.0 million in the years ended December 31, 2024, 2023 and 2022, respectively, representing year-over-year growth rates of 21% and 20%, respectively.
Our total revenue was $838.8 million, $720.4 million and $596.4 million in the years ended December 31, 2025, 2024 and 2023, respectively, representing year-over-year growth rates of 16% and 21%, respectively. Our Business Models Freshworks provides solutions that enable organizations to acquire, engage, and better serve their customers and employees.
Our cybersecurity program encompasses product security, security architecture and engineering, cloud security, penetration testing, third-party risk management, and customer support. Our production network and systems are accessible only to authorized Freshworks personnel. • Efficiency : Our multi-tenant architecture delivers economies of scale, ensuring improved utilization of cloud infrastructure as businesses and customer usage grows.
Security and privacy are built into our product design and operations, reinforcing customer trust in how we build, deliver, and support our services. • Efficiency : Our multi-tenant architecture delivers economies of scale, ensuring improved utilization of cloud infrastructure as businesses and customer usage grows.
As of December 31, 2024, we had a hybrid workforce of approximately 4,400 employees in North America, Europe, Asia and Australia. We’re headquartered in San Mateo, CA and have 13 other offices across the globe with a majority of employees based in India, where we were founded.
We also support community initiatives in the regions where we operate, including the Freshworks STS Software Academy, which provides free software-skills training to youth in India. Where we're located and how we work As of December 31, 2025, we had a hybrid workforce of approximately 4,500 full-time employees in North America, Europe, Asia and Australia.
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Our generative AI offerings, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience. Freddy AI Agent offers always-on, autonomous, personalized resolutions to customer and employee queries. Freddy AI Copilot provides always-on contextual assistance for customer support, employee support, marketing and sales use cases, designed to boost productivity.
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Our people-first approach to AI is designed to eliminate friction, making employees more effective and organizations more productive. Businesses from approximately 170 countries around the world use Freshworks products to delight their customers and employees every day. As of December 31, 2025, over 60% of our annual recurring revenue (ARR) was from customers with more than 250 employees.
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With an increased ability to delight customers and employees, Freshworks' customers have improved retention, achieved higher customer satisfaction scores and better business outcomes. Our secure and native AI enables businesses to stay ahead of the curve with the latest technologies and is designed to deliver a tangible return on investment.
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Our value proposition to customers is clear - powerful and modern solutions that are simple and intuitive to implement and that were built to provide rapid time to value and compelling ROI. We focus on meeting customers where they are, with transparent pricing and a go-to-market strategy that allows us to efficiently serve organizations of all sizes.
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Built to deliver exceptional customer experiences and employee experiences, Freddy AI has helped users in customer support and IT autonomously resolve service requests. Businesses from approximately 170 countries around the world use Freshworks products to delight their customers and employees every day.
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These solutions give our sellers more ways to land new customers with bigger deals, and a healthy pipeline of incremental expansion opportunities for our existing customers. We offer our products under both free trial and paid subscription plans, further reducing friction to adoption and accelerating our go-to-market motion.
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Our Business Model Product-led growth (PLG) is the core foundation of Freshworks and has helped us serve organizations of all sizes. The simplicity and powerful functionality underpinning our Freshworks solutions act as the primary driver of customer acquisition, conversion, and expansion by driving trials of our products that we supplement with our inbound and outbound sales motions.
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Freshservice is our unified IT and enterprise service management platform that brings together IT Service Management, IT Operations Management, and IT Infrastructure Management. The platform provides automation, conversational support, and AI-driven insights for employees, agents, and organizational leaders.
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Our pricing is transparent, affordable, and easy to understand, reducing the length of sales cycles and increasing the efficiency of marketing and sales. This enables us to disrupt the traditional top-down sales motion, letting users, not executives, designate Freshworks as their software of choice. Our go-to-market approach allows us to respond to how businesses want to buy our products.
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Freshservice for Business Teams extends these capabilities to departments such as HR, Facilities, Finance, and Legal and can be used independently by individual business units. Device42 adds advanced discovery, inventory, and dependency mapping across complex IT environments. FireHydrant unifies alerting, on-call coordination, major-incident response, and post-incident analytics in a single system.
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These products allow businesses to deliver effortless, self-service resolutions for their customers, a unified workspace for their agents, and performance insights for their leaders. For IT and employee-facing teams, we offer our AI-powered EX family of products, including Freshservice, Freshservice for Buisness Teams and Device42.
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For customer-facing teams, our AI-powered CX family of products are designed to streamline customer service, sales, and marketing operations.
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Freshservice is our unified IT Management platform that combines IT Service management, IT Operations management, IT Asset Management and Employee Service Management on the same platform. Freshservice provides both the intelligence and automation organizations need to give employees the “consumer” like experience they now expect.
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Our Freshdesk Omni product is a comprehensive omnichannel customer service platform that unifies every customer interaction, simplifies support operations to enable self-service resolutions for their customers, empowers agents to deliver exceptional experiences by bringing together all support channels into a single workspace and provides performance insights for their leaders.
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With Freshservice for Business Teams, this platform also extends to non-IT departments like HR, Facilities and Legal. All of our products leverage the Freshworks platform, which provides shared services that enable us to rapidly innovate and release new capabilities.
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Our CX portfolio also includes Freshdesk, an AI-powered ticketing and case management solution for fast issue resolution; Freshchat, a customer messaging platform enabling live chat, and engagement across messaging channels; Freshcaller, a cloud-based contact center solution for scalable voice operations; Freshsales, a sales CRM for pipeline management and deal closure; and Freshmarketer, a marketing automation platform for campaign orchestration and lead nurturing.
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Customer Service Product Offerings Freshworks offers various products to address specific use cases across CS. These are: • Freshdesk Omni . Freshdesk Omni, formerly known as Customer Service Suite, brings everything businesses need to deliver seamless omnichannel support into a single solution that is quick to deploy, easy to use, and simple to manage.
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Freshservice also offers service-aware operations capabilities, including integrated alert management, major incident management, on-call management, and service health monitoring. Freshservice incorporates AI capabilities to improve the productivity of employees, service agents, and organizational leaders by providing insights that support faster, data-driven decision-making.
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Plus, powerful AI capabilities help deliver exceptional support at scale by quickly solving customer issues, supercharging agent productivity, and providing proactive insights to managers and leaders. Businesses can transform the customer experience and resolve issues faster than ever before with Freshdesk Omni. • Freshdesk. Freshdesk is a comprehensive ticketing and case management solution that lets businesses resolve customer issues fast.
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Its AI agents, powered by Freddy AI, help employees resolve issues, make requests, and access information through conversational interfaces without requiring direct interaction with the service desk. Freshservice also provides Freddy AI Copilot for EX which includes AI-assisted tools designed to help agents summarize tickets, generate responses, automate routine tasks, and enhance consistency and accuracy in service delivery.
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Businesses can delight customers with easy email experiences and self-service across dedicated portals and their websites, all powered by a robust knowledge base. They can intelligently route tickets and collaborate seamlessly with team members to ensure quick and accurate resolutions. Freshworks' powerful AI means customer service agents get more done, and customers get exceptional service every time. • Freshchat.
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In addition, the platform offers Freddy AI Insights, which includes AI-driven insights that help organizations identify operational trends, detect anomalies, and analyze underlying drivers of service performance. These capabilities support proactive decision-making and enable teams to investigate issues, visualize key metrics, and derive insights without manual reporting.
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Freddy AI Agent for CS provides always-on, conversational assistance to customers, enabling customers to resolve issues quickly and efficiently across channels. Available in multiple languages, Freddy AI Agent is designed to be easy to deploy and manage.
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Freshservice also includes dashboards and analytics that enable organizations to monitor performance and optimize service operations across on-premises, hybrid, and cloud environments. • Freshservice for Business Teams . Freshservice for Business Teams provides a unified employee service experience while maintaining secure separation of departmental data.
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Businesses can simply connect their knowledge sources (documents, PDFs, public URLs) to get started, with no requirement for complex decision tree flows or heavy setup efforts.
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The offering enables non-IT departments such as HR, Finance, Facilities, and Legal to implement service management and workflow automation. In addition to supporting cross-functional use cases within organizations, Freshservice for Business Teams is also available for deployment by individual business units to address their specific service management needs. • Device42 .
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Freshmarketer is an easy-to-use marketing automation platform designed to help businesses attract, nurture, convert, and retain customers. It empowers businesses to connect with customers across their preferred channels—email, SMS, WhatsApp, or social media — driving higher engagement.
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D42 Parent, Inc., a Freshworks company, provides advanced IT discovery and dependency mapping, as well as capabilities for asset and inventory management, application dependency mapping, compliance management, data center infrastructure management (DCIM), IP address management (IPAM), IT asset management (ITAM), resource utilization tracking, and software license management.
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IT and Employee Service Management (ITSM) Product Offerings Freshservice is a unified, AI-powered solution with essential IT and employee service management capabilities that empower our customers to provide reliable and consistent services company-wide. • Freshservice .
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FireHydrant Inc. , a Freshworks company, is a modern incident management platform that enables engineering and operations teams to manage the full incident lifecycle, from initial alerting through post-incident review.
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Our service-aware IT operations management provides integrated alert management by processing large amounts of machine-based system monitoring data to put the focus on critical areas and drive fast resolution. It also helps our customers manage major incidents, get on-call management and track service health.
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The platform unifies alert ingestion and routing, on-call scheduling and escalation policies, major-incident coordination, automated runbooks, collaboration capabilities, and post-incident analytics in a single system, helping organizations resolve service disruptions efficiently and continuously improve operational resilience. The Freshworks Platform The Freshworks platform is the AI-powered, enterprise-grade foundation that unifies customer experience and employee experience product lines.
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Asset management helps gain infrastructure visibility and optimize the assets used to provide services on-premises, hybrid, and cloud. Freshservice also offers powerful dashboards and analytics functionality to improve service delivery. Freshservice harnesses the power of AI to transform the way employees, service agents, and business leaders work by replacing forms, lists, and queries with conversational, collaborative, and omnichannel experiences.
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It provides common data, workflow, analytics, AI tools, and administration services that are used across applications and can be extended by customers and partners. • Native AI products. Our AI products include Freddy AI, embedded across our EX and CX products to assist, automate, and analyze service workflows.
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Freshservice can leverage virtual agents called Freddy AI Agents designed to provide always-on, trustworthy and conversational service to help employees resolve issues, make requests, and answer questions without contacting the service desk.
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Freddy AI comprises AI Agents capable of reasoning and autonomous support actions, assistive AI Copilots for workflow guidance and acceleration, and AI Insights for proactive insights and conversational insight generation. These capabilities are designed to help resolve requests, provide contextual assistance, and surface insights within product experiences across the service lifecycle.
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Freshservice also utilizes Freddy AI Copilot and is designed to increase agent productivity by automating routine work like summarizing tickets, generating responses, and creating consistent tone and clarity of responses. • Freshservice for Business Teams . Freshservice for Business Teams provides a unified employee service experience while ensuring the secure separation of departmental data.
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Freddy AI Insights automatically monitors key support metrics, detects anomalies, and delivers proactive insights with visual root cause analysis—helping leaders identify and fix issues before they impact satisfaction or revenue.
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Freshservice for Business Teams enables non-IT departments like HR, Finance, Facilities, and Legal to benefit from service management and workflow automation. • Device42 . D42 Parent, Inc., a Freshworks company, provides advanced IT discovery and dependency mapping. Device42 is designed to continuously discover, map, and provide complete visibility across on-premises and cloud IT environments.
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Leaders can also ask plain-English questions to instantly generate charts and reports through a conversational interface, making data-driven decisions faster and easier within our products. • Unified data and shared services.
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Key components of our platform include an AI engine, a Developer platform, the Freshworks Marketplace, analytics service and unified customer experience services. • Freddy AI is Freshworks' native AI engine that brings the power of generative AI to all Freshworks products.
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Shared services provide a consistent foundation for applications, including a unified customer record that consolidates relevant context across products, Custom Objects to represent business-specific data within application workflows, and a centralized Admin Center for organization-wide identity, security, and governance across Freshworks products, and Conversation services that unify B2B and B2C interactions across supported channels (e.g., email, chat, voice, and messaging).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf there is no lawful manner for us to transfer personal information from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business to Processing activities to other jurisdictions (such as Europe) at significant expense, and increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our Processing or transferring of personal information necessary to operate our business.
Biggest changeIf we cannot lawfully transfer personal information or if compliance requirements become too onerous, we could face adverse consequences such as operational interruptions, the need to relocate business activities to other jurisdictions at significant expense, regulatory actions, substantial fines, and injunctions against data processing necessary to operate our business.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • attract new customers; • grow or maintain our net dollar retention rate, expand usage within organizations, and sell additional subscriptions; • gain continued acceptance and use of our products both inside and outside of the United States; • expand the features and capabilities of our products, including artificial intelligence (AI) and machine learning features; • provide excellent customer experience and customer service; • price our subscription plans effectively; • continue to successfully expand our sales force; • maintain the security and reliability of our products; • successfully compete against and withstand competitive pressure from established companies and new market entrants; • increase awareness of our brand on a global basis; and • comply with existing and new applicable laws and regulations.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • attract new customers; • grow or maintain our net dollar retention rate, expand usage within organizations, and sell additional subscriptions; • gain continued acceptance and use of our products both inside and outside of the United States; • expand the features and capabilities of our products, including artificial intelligence (AI) and machine learning features; • increase awareness of our brand on a global basis; • provide excellent customer experience and customer service; • price our subscription plans effectively; • continue to successfully expand our sales force; • maintain the security and reliability of our products; • successfully compete against and withstand competitive pressure from established companies and new market entrants; and • comply with existing and new applicable laws and regulations.
Numerous factors may impede our ability to add new customers, convert customers using our free trial versions into paying customers, expand usage within organizations, and sell subscriptions to our products, including but not limited to, our failure to attract, retain, and effectively train and motivate new sales and marketing personnel, develop or expand relationships with our partners, compete effectively against alternative products or services, successfully deploy new features and integrations, provide a quality customer experience and customer support, or ensure the effectiveness of our marketing programs.
Numerous factors may impede our ability to add new customers, convert customers using free trial versions into paying customers, expand usage within organizations, and sell subscriptions to our products, including but not limited to, our failure to attract, retain, and effectively train and motivate new sales and marketing personnel, develop or expand relationships with our partners, compete effectively against alternative products or services, successfully deploy new features and integrations, provide a quality customer experience and customer support, or ensure the effectiveness of our marketing programs.
In such cases, if our users are not able to access our products or encounter slowdowns when doing so, we may lose customers or partners. Some of our subscriptions include standard service-level commitments.
In such cases, we may lose customers or partners if our users are not able to access our products or encounter slowdowns when doing so. Some of our subscriptions include standard service-level commitments.
As we increase our international sales and business further, our risks under these laws may increase especially given our substantial reliance on sales to and through resellers and other intermediaries.
Our risks under these laws may increase as we increase our international sales and business further, especially given our substantial reliance on sales to and through resellers and other intermediaries.
Corporate action might be taken even if other stockholders oppose them. This concentration of ownership could also delay or prevent a change of control of us that other stockholders may view as beneficial. Even if Mr.
Corporate action might be taken even if other stockholders oppose them. This concentration of ownership could also delay or prevent a change of control of us that other stockholders may view as beneficial. Mr.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; 39 Table of Contents • sales of shares of our Class A common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors, particularly in light of the significant portion of our revenue derived from a limited number of customers; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed, or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products, applications, features, or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, applications, products, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; and • general political and economic conditions and slow or negative growth of our markets.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; 34 Table of Contents • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors, particularly in light of the significant portion of our revenue derived from a limited number of customers; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed, or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products, applications, features, or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, applications, products, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; and • general political and economic conditions and slow or negative growth of our markets.
In addition, we will face risks in doing business internationally that could adversely affect our business and results of operations, including: • data privacy laws that impose different and potentially conflicting obligations with respect to how personal information is Processed or require that customer data be stored in a designated territory; • difficulties in staffing and managing foreign operations; • regulatory and other delays and difficulties in setting up and maintaining foreign operations; • different pricing environments, longer sales cycles, longer accounts receivable payment cycles, and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting, and changing governmental laws and regulations, including employment, tax, privacy, and data protection laws and regulations; • increased financial accounting and reporting burdens and complexities; • declines or increases in the values of foreign currencies, primarily the Indian rupee, British pound, and euro, relative to the U.S. dollar; • restrictions on the transfer of funds; • potentially adverse tax consequences; • the cost of and potential outcomes of any claims or litigation; • future accounting pronouncements and changes in accounting policies; • changes in tax laws or tax regulations; • the request to localize and adapt our products for specific countries, including translation into foreign languages and associated expenses; • public health or similar issues, such as a pandemics or epidemics; and 30 Table of Contents • regional and local economic and political conditions, including the evolving events in Russia, Ukraine, Israel, Gaza, and/or surrounding regions.
In addition, we will face risks in doing business internationally that could adversely affect our business and results of operations, including: • data privacy laws that impose different and potentially conflicting obligations with respect to how personal information is processed or require that customer data be stored in a designated territory; • difficulties in staffing and managing foreign operations; • regulatory and other delays and difficulties in setting up and maintaining foreign operations; • different pricing environments, longer sales cycles, longer accounts receivable payment cycles, and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting, and changing governmental laws and regulations, including employment, tax, privacy, and data protection laws and regulations; • increased financial accounting and reporting burdens and complexities; 27 Table of Contents • declines or increases in the values of foreign currencies, primarily the Indian rupee, British pound, and euro, relative to the U.S. dollar; • restrictions on the transfer of funds; • potentially adverse tax consequences; • the cost of and potential outcomes of any claims or litigation; • future accounting pronouncements and changes in accounting policies; • changes in tax laws or tax regulations; • the request to localize and adapt our products for specific countries, including translation into foreign languages and associated expenses; • public health or similar issues, such as a pandemics or epidemics; and • regional and local economic and political conditions, including the evolving events in Russia, Ukraine, Israel, Gaza, and/or surrounding regions.
If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
If such a challenge, disagreement or assertion were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
We have invested substantial time and resources in building out our team with an emphasis on shared values and a commitment to diversity and inclusion. As we continue to develop the infrastructure to support our growth, we will need to maintain our culture among a larger number of employees dispersed across the globe.
We have invested substantial time and resources in building our team with an emphasis on shared values and a commitment to diversity and inclusion. As we continue to develop the infrastructure to support our growth, we will need to maintain our culture among a larger number of employees dispersed across the globe.
In addition, generative AI may create content that appears correct but is factually inaccurate or flawed, or contains copyrighted or other protected material, and if our customers or others use this flawed content to their detriment, we may be exposed to brand or reputational harm, competitive harm, and/or legal liability.
In addition, generative and agentic AI may create content that appears correct but is factually inaccurate or flawed, or contains copyrighted or other protected material, and if our customers or others use this flawed content to their detriment, we may be exposed to brand or reputational harm, competitive harm, and/or legal liability.
The rapid evolution of AI and the use of generative AI may lead to challenges, concerns and risks that are significant or that we may not be able to predict, especially if our use of these technologies in our products and services becomes more important to our operations over time.
The rapid evolution of AI and the use of generative and agentic AI may lead to challenges, concerns and risks that are significant or that we may not be able to predict, especially if our use of these technologies in our products and services becomes more important to our operations over time.
Generative AI in our products and services may be difficult to deploy successfully due to operational issues inherent to the nature of such technologies. Moreover, known risks of generative AI currently include risks related to accuracy, bias, toxicity, privacy and security and data provenance.
Generative and agentic AI in our products and services may be difficult to deploy successfully due to operational issues inherent to the nature of such technologies. Moreover, known risks of generative and agentic AI currently include risks related to accuracy, bias, toxicity, privacy and security and data provenance.
As a result of expected investments and expenditures related to the growth of our business, we may experience increasing losses in future periods and these losses may be significantly greater than the losses we would incur if we developed our business more slowly.
As a result of expected investments and expenditures related to the growth of our business, we may experience losses in future periods and these losses may be significantly greater than the losses we would incur if we developed our business more slowly.
We expect to grant equity awards to employees, officers, directors and other service providers under our equity incentive plans and to the extent stock options to purchase our stock are exercised or restricted stock units settle, there will be further dilution.
We expect to grant equity awards to employees, officers, directors and other service providers under our equity incentive plans and to the extent stock options to purchase our stock are exercised or restricted stock units settle, there will be dilution.
For example, deficient or inaccurate recommendations, summaries, or analyses that generative AI features assist in producing could lead to customer rejection or skepticism of our products, affect our reputation or brand, and negatively affect our financial results.
For example, deficient or inaccurate recommendations, summaries, or analyses that generative or agentic AI features assist in producing could lead to customer rejection or skepticism of our products, affect our reputation or brand, and negatively affect our financial results.
In addition, changes in tax laws or regulations could be enacted or existing tax laws or regulations could be applied to us or our customers in a manner that could increase the costs of our products and harm our business. Further, existing tax laws and regulations could be interpreted, modified or applied adversely to us.
Changes in tax laws or regulations could be enacted or existing tax laws or regulations could be applied to us or our customers in a manner that could increase the costs of our products and harm our business. Further, existing tax laws and regulations could be interpreted, modified or applied adversely to us.
Further, unauthorized use or misuse of generative AI by our employees or others may result in disclosure of confidential company and customer data, reputational harm, privacy law violations and legal liability.
Further, unauthorized use or misuse of generative or agentic AI by our employees or others may result in disclosure of confidential company and customer data, reputational harm, privacy law violations and legal liability.
Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of customers may be impaired, and our business and results of operations will be harmed.
Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to attract and expand our base of customers may be impaired, and our business and results of operations will be harmed.
Although we maintain disaster response plans, such events could require significant time to resume operations to deliver our services to our customers, could decrease demand for our services, could cause us to incur substantial expense and may cause reputational harm, delays in our sales efforts, delays in our products’ development, breaches of data security, and loss of critical 45 Table of Contents data, all of which would harm our business, results of operations, and financial condition.
Although we maintain disaster response plans, such events could require significant time to resume operations to deliver our services to our customers, could decrease demand for our services, could cause us to incur substantial expense and may cause reputational harm, delays in our sales efforts, delays in our products’ development, breaches of data security, and loss of critical 41 Table of Contents data, all of which would harm our business, results of operations, and financial condition.
For the avoidance of doubt, this provision is intended to benefit and 44 Table of Contents may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
For the avoidance of doubt, this provision is intended to benefit and 40 Table of Contents may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
In addition, following Russia’s military invasion of Ukraine in February 2022, the United States, EU, and other nations announced various sanctions and export restrictions against Russia and Belarus. Such restrictions include blocking sanctions on some of the largest state-owned and private Russian financial institutions, and their removal from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system.
In addition, following Russia’s military invasion of Ukraine in February 2022, the United States, EU, and other nations announced various sanctions and export restrictions against Russia and Belarus. Such restrictions included blocking sanctions on some of the largest state-owned and private Russian financial institutions, and their removal from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system.
Data integrity problems or other issues may also be discovered during or as a result of the implementation which, if not corrected, could impact our business or financial results. If we are unable to successfully design and implement our information system enhancements, our financial position, 42 Table of Contents results of operations and cash flows could be negatively impacted.
Data integrity problems or other issues may 38 Table of Contents also be discovered during or as a result of the implementation which, if not corrected, could impact our business or financial results. If we are unable to successfully design and implement our information system enhancements, our financial position, results of operations and cash flows could be negatively impacted.
These losses reflect, among other things, the significant investments we made to develop and commercialize our products, serve our existing customers, and broaden our customer base.
Our losses reflect, among other things, the significant investments we made to develop and commercialize our products, serve our existing customers, and broaden our customer base.
As we rely in part on brand names and trademark protection to enforce our intellectual property rights, efforts by third parties to limit use of our brand names or trademarks and barriers to the registration of brand names and trademarks in various countries may restrict our ability to promote and maintain a cohesive brand throughout our key markets.
As we rely in part on brand names and trademark protection to enforce our intellectual property rights, efforts by third parties to oppose trademark applications, limit use of our brand names or trademarks and barriers to the registration of brand names and trademarks in various countries may restrict our ability to promote and maintain a cohesive brand throughout our key markets.
There can be no assurance that our business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such investigations, litigation or changes to laws and regulations in the future. 43 Table of Contents We may need additional capital, and we cannot be sure that additional financing will be available.
There can be no assurance that our business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such investigations, litigation or changes to laws and regulations in the future. 39 Table of Contents We may need additional capital, and we cannot be sure that additional financing will be available.
Changes in corporate tax rates, the realization of net operating losses, and other deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Act or future reform legislation could have a material impact on the value of our deferred tax assets and could increase our future U.S. tax expense.
Changes in corporate tax rates, the realization of net operating losses, and other deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses or future tax reform legislation could have a material impact on the value of our deferred tax assets and could increase our future U.S. tax expense.
Demand for our products is affected by a number of factors, some of which are beyond our control, such as the rate of adoption of our products within an organization, the timing of development and release of new products by our competitors; the development and acceptance of new features, integrations, and capabilities for our products; price, product, and service changes by us or our competitors; technological changes and developments within the markets we serve; growth, contraction, and rapid evolution of our market; and general economic conditions and trends.
Demand for our products is affected by a number of factors, some of which are beyond our control, such as the rate of 25 Table of Contents adoption of our products within an organization, the timing of development and release of new products by our competitors; the development and acceptance of new features, integrations, and capabilities for our products; price, product, and service changes by us or our competitors; technological changes and developments within the markets we serve; growth, contraction, and rapid evolution of our market; and general economic conditions and trends.
While we employ practices designed to monitor our compliance with the licenses of third-party open source software and protect our valuable proprietary source code, we may inadvertently use third-party open source software in a manner that exposes us to claims of non-compliance with the applicable terms of such license, including claims for infringement of intellectual property rights or for breach of contract.
While we employ practices designed to monitor our compliance with the licenses of third-party open source software and protect our valuable proprietary source code, we may inadvertently use third-party open source software in a 31 Table of Contents manner that exposes us to claims of non-compliance with the applicable terms of such license, including claims for infringement of intellectual property rights or for breach of contract.
If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our products, our results of operations may be harmed. We have in the past and may in the future experience system slowdowns and interruptions from time to time.
If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our products, our results of operations may be harmed. We have in the past and may in the future experience system slowdowns and interruptions.
Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock.
Our effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Act; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations or administrative appeals; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Our effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them, including the One Big Beautiful Bill Act ("OBBBA"); • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations or administrative appeals; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Developing, testing and deploying AI systems may also increase the cost profile of our offerings due to the nature of the computing costs involved in such systems. 16 Table of Contents Additionally, we rely on third parties to develop products that are complementary to ours in order to retain existing customers and attract new customers.
Developing, testing and deploying AI systems may also increase the cost profile of our offerings due to the nature of the computing costs involved in such systems. Additionally, we rely on third parties to develop products that are complementary to ours in order to retain existing customers and attract new customers.
Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern. • We track certain key business metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition. • We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability. • The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock. 12 Table of Contents Risks Related to Our Business We have a history of losses, and we may not be able to achieve profitability or, if achieved, sustain profitability.
Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern. • We track certain key business metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition. • We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability. 12 Table of Contents • The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock. 13 Table of Contents Risks Related to Our Business Although we recently generated net income, we have a history of losses and we may not be able to sustain profitability.
Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not be successful. If we fail to promote and maintain the “Freshworks” brand, or if we incur excessive expenses in this effort, our business, results of operations, and financial condition would be adversely affected.
Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not be successful. If we fail to promote and maintain the 17 Table of Contents “Freshworks” brand, or if we incur excessive expenses in this effort, our business, results of operations, and financial condition would be adversely affected.
Risk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: • We have a history of losses, and we may not be able to achieve profitability or, if achieved, sustain profitability. • We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. • Macroeconomic uncertainties, including inflationary pressures, supply chain disruptions, labor shortages, significant volatility in global markets, and recession risks have in the past and may continue to adversely affect our business, future results of operations, and financial condition, the effects of which remain uncertain. • Our quarterly results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts. • Sales efforts to large customers, which are a growing part of our business involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.
Risk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: • Although we recently generated net income, we have a history of losses and we may not be able to sustain profitability. • We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. • Macroeconomic uncertainties, including inflationary pressures, supply chain disruptions, labor shortages, significant volatility in global markets, and recession risks have in the past and may continue to adversely affect our business, future results of operations, and financial condition, the effects of which remain uncertain. • Our quarterly results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts. • Sales efforts to large customers, which are a growing part of our business involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.
The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment. The trading price of our Class A common stock has been and will likely continue to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control.
The trading price of our Class A common stock has been and will likely continue to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our Class A common stock.
If the protection of our intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more 34 Table of Contents effectively mimic our products and methods of operations.
If the protection of our intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our products and methods of operations.
While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally.
While these 19 Table of Contents numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally.
Furthermore, there is an increasing number of open-source software license types, almost none of which have been tested in a court of law, resulting in a dearth of guidance regarding the proper legal interpretation of such 35 Table of Contents license types.
Furthermore, there is an increasing number of open-source software license types, almost none of which have been tested in a court of law, resulting in a dearth of guidance regarding the proper legal interpretation of such license types.
Generative AI is also the subject of a quickly evolving legal and regulatory environment, and new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns, or other complications related to our use of generative AI could cause us to divert resources towards compliance and adversely affect our business, reputation, or financial results.
Generative and agentic AI is also the subject of a quickly evolving legal and regulatory environment, and new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns, or other complications related to our use of generative or agentic AI could cause us to divert resources towards compliance and adversely affect our business, reputation, or financial 18 Table of Contents results.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations, or other remedies that adversely affect our business.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
In addition, continued growth in our customer base could place additional demands on our products and could cause or exacerbate slowdowns or interrupt the availability of our products. If there is a substantial increase in the volume of usage of our products, we will be required to further expand and upgrade our technology and infrastructure.
Additionally, growth in our customer base could place additional demands on our products and cause or otherwise exacerbate slowdowns or interrupt the availability of our products. If there is a substantial increase in the volume of usage of our products, we will be required to further expand and upgrade our technology and infrastructure.
Tax and other levies imposed by the central and state governments in India that affect our tax liability include central and state taxes and other levies, income tax, turnover tax, goods and service tax, stamp duty, and other special taxes and surcharges, which are introduced on a temporary or permanent basis from time to time.
Tax and other levies imposed by the central and state governments in India that affect our tax liability include central and state taxes and other levies, income tax, turnover tax, goods and service tax, stamp duty, and other special taxes and surcharges, which are introduced on a temporary or 33 Table of Contents permanent basis from time to time.
We rely on our trademarks, trade names, and brand names to distinguish our solutions from the products of our competitors, and have registered or applied to register many of these trademarks in the United States and certain countries outside the United States.
We use trademarks, trade names, and brand names to distinguish our solutions from the products of our competitors, and have registered or applied to register many of these trademarks in the United States and certain countries outside the United States.
If customers do not renew their subscriptions, renew on less favorable terms, or fail to add more users, or if we fail to upgrade trial customers to our paid subscription plans, or expand the adoption of our products within and across organizations, our revenue may decline or grow less quickly than anticipated, which would harm our business, results of operations, and financial condition.
If customers do not renew their subscriptions, renew on less favorable terms, or fail to add more users, or if we fail to expand the adoption of our products within and across organizations, our revenue may decline or grow less quickly than anticipated, which would harm our business, results of operations, and financial condition.
If we are ultimately unable to achieve or 18 Table of Contents improve profitability at the level or during the time frame anticipated by securities or industry analysts and our stockholders, the trading price of our Class A common stock may decline. We recognize revenue from subscriptions over the term of our customer contracts.
If we are ultimately unable to improve growth and profitability at the level or during the time frame anticipated by securities or industry analysts and our stockholders, the trading price of our Class A common stock may decline. We recognize revenue from subscriptions over the term of our customer contracts.
If our information technology, systems, or those of third parties upon which we rely, or our data are or were to be compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.
If our information technology, systems, or those of third parties with whom we work, or our data are or were to be compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.
If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in the market, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, results of operations, and financial condition would suffer.
If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in the market, or if we do not address these risks successfully, our results of operations could fall short of our expectations, and our business, results of operations, and financial condition would suffer.
If we are unable to continue to meet the demands of users and customers to keep up with trends in preferences for CX or EX products, or to achieve more widespread market acceptance of our products, our business, results of operations, and financial condition would be harmed.
If we are unable to continue to meet the demands of users and customers to keep up with trends in preferences for employee and customer experience products, or to achieve more widespread market acceptance of our products, our business, results of operations, and financial condition would be harmed.
For the fiscal year ended December 31, 2024, 53% of our revenue was generated from customers outside North America. Besides India and the United States, we have sales and marketing operations primarily in Australia, select countries in the European Union and the United Kingdom.
For the fiscal year ended December 31, 2025, approximately 54% of our revenue was generated from customers outside North America. Besides India and the United States, we have sales and marketing operations primarily in Australia, select countries in the European Union and the United Kingdom.
Additional stock issuances could result in significant dilution to our stockholders. We may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or otherwise.
Additional stock issuances could result in significant dilution to our stockholders. We may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or otherwise. Additional issuances of our stock will result in dilution to existing holders of our stock.
If such third parties interfere with the distribution of our mobile applications, our business would be adversely affected. We rely on third parties maintaining open digital marketplaces, including the Apple App Store and Google Play, which make our mobile applications for our Freshservice, Freshdesk, Freshchat, Freshcaller, and Freshsales products available for download.
If such third parties interfere with the distribution of our mobile applications, our business would be adversely affected. We rely on third parties maintaining open digital marketplaces, including the Apple App Store and Google Play, which make our mobile applications for certain of our products available for download.
We expect that any additional channel partners we identify and develop will be similarly non-exclusive and not bound by any requirement to continue to market our products.
We expect that 20 Table of Contents any additional channel partners we identify and develop will be similarly non-exclusive and not bound by any requirement to continue to market our products.
Risks Related to International Operations Our international operations and sales to customers outside the United States expose us to risks inherent in international operations and sales. We have a significant portion of our operations in India. As of December 31, 2024, approximately 3,700 of our employees reside in India, representing approximately 83% of our total employee population.
Risks Related to International Operations Our international operations and sales to customers outside the United States expose us to risks inherent in international operations and sales. We have a significant portion of our operations in India. As of December 31, 2025, approximately 3,600 of our employees reside in India, representing approximately 81% of our total employee population.
In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which would result in loss of brand recognition and would require us to devote resources to advertising and marketing new brands.
In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which would result in loss of brand recognition and would require us to devote resources to advertising and marketing new brands. We also rely on unpatented proprietary technology.
Based on shares of common stock held as of December 31, 2024, our directors, executive officers, and holders of more than 5% of our Class A common stock or Class B common stock, and their respective affiliates held in the aggregate approximately 81.0% of the voting power of our outstanding capital stock, and our Executive Chairman, Mr.
Based on shares of common stock held as of December 31, 2025, our directors, executive officers, and holders of more than 5% of our Class A common stock or Class B common stock, and their respective affiliates held in the aggregate approximately 71.1% of the voting power of our outstanding capital stock, and our former Executive Chairman, Mr.
For example, the Tax Act enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation.
For example, the OBBBA, together with prior tax legislation, enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to any tax legislation may affect us, and certain aspects of such legislation could be repealed or modified or sunset in future years.
You should not rely on our revenue for any prior quarterly or annual periods as any indication of our future revenue or revenue growth. 13 Table of Contents In addition, in order to fuel our growth, we expect to continue to expend substantial financial and other resources on: • expansion and enablement of our sales, services, and marketing organization to increase brand awareness and drive adoption of our products; • product development, including investments in our product development team and the development of new products and new features and functionality, as well as investments in further differentiating our existing offerings; • strategic technology and sales channel partnerships; • acquisitions or strategic investments; and • general administration, including legal and accounting expenses associated with being a public company.
In addition, in order to fuel our growth, we expect to continue to expend substantial financial and other resources on: • expansion and enablement of our sales, services, and marketing organization to increase brand awareness and drive adoption of our products; • product development, including investments in our product development team and the development of new products and new features and functionality, as well as investments in further differentiating our existing offerings; 14 Table of Contents • strategic technology and sales channel partnerships; • acquisitions or strategic investments; and • general administration, including legal and accounting expenses associated with being a public company.
The incentives to attract, retain, and motivate employees provided by our equity awards, or by other compensation arrangements, may not be as effective as in the past. Many of the companies with which we compete for experienced personnel have greater resources than we have.
As we become a more mature company, we may find our recruiting efforts more challenging. The incentives to attract, retain, and motivate employees provided by our equity awards, or by other compensation arrangements, may not be as effective as in the past. Many of the companies with which we compete for experienced personnel have greater resources than we have.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
For state income tax purposes, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. 32 Table of Contents In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
In addition, some current and potential customers, particularly larger organizations, may develop or acquire their own tools or continue to rely on traditional 26 Table of Contents tools and software for their CX or EX needs, which would reduce or eliminate their demand for our products.
In addition, some current and potential customers, particularly larger organizations, may develop or acquire their own tools or continue to rely on traditional tools and software for their employee and customer experience needs, which would reduce or eliminate their demand for our products.
If we are unable to effectively anticipate and manage these risks, or if it is difficult for customers to access and use our products, our business, results of operations, and financial condition may be harmed. We rely on traditional web search engines to direct traffic to our website.
If we are unable to effectively anticipate and manage these risks, or if it is difficult for customers to access and use our products, our business, results of operations, and financial condition may be harmed.
If we (or a third-party processing payment card transactions on our behalf) suffer a security breach affecting payment card information, we may have to pay significant fines, penalties, and assessments arising out of the major card brands’ rules and regulations, contractual indemnifications, or liability contained in merchant agreements and similar contracts, and we may lose our ability to accept payment cards for payment for our goods and services, which could materially impact our operations and financial performance.
If we (or a third-party processing payment card transactions on our behalf) suffer a security breach affecting payment card information, we may have to pay significant fines, penalties, and assessments arising out of the major card brands’ rules and regulations, contractual indemnifications, or liability contained in merchant agreements and similar contracts, and we may lose our ability to accept payment cards for payment for our goods and services, which could materially impact our operations and financial performance. 24 Table of Contents If customers pay for their subscription plans with stolen credit cards, we could incur substantial third-party vendor costs for which we may not be reimbursed or able to recover.
We have incurred net losses in each fiscal year since our founding. We generated net losses of $95.4 million and $137.4 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $3.7 billion.
Other than the fiscal year ended December 31, 2025, we have incurred net losses in each fiscal year since our founding. We generated net income of $183.7 million and incurred a net loss $95.4 million for the years ended December 31, 2025 and 2024. As of December 31, 2025, we had an accumulated deficit of $3.6 billion.
In addition, we have foreign tax credits of $8.1 million that will begin to expire in 2027. Furthermore, we have state net operating loss carryforwards of $146.8 million, portions of which will begin to expire in 2025. Portions of these net operating loss carryforwards and foreign tax credits could expire unused and be unavailable to offset future income tax liabilities.
Furthermore, we have state net operating loss carryforwards of $112.0 million, portions of which will begin to expire in 2026. Portions of these net operating loss carryforwards and foreign tax credits could expire unused and be unavailable to offset future income tax liabilities.
We and the third parties with whom we work are subject to stringent and evolving US and foreign laws, regulations, and rules, contractual obligations, industry standards, policies, and other obligations related to data privacy and security.
We and the third parties with whom we work are subject to stringent and evolving global data privacy and security laws, regulations, contractual obligations, industry standards, and other obligations relating to data privacy or security.
To protect our trade secrets and other proprietary information, we require employees, consultants, and independent contractors to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information.
We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including inflation, supply chain disruptions, labor shortages, as well as recession risks, which may continue for an extended period and which have resulted and may in the future result in decreased business spending by our customers and prospective customers and business partners and third-party business partners, reduced demand for our products, lower renewal rates by our customers, longer or delayed sales cycles, including due to existing customers and prospective customers delaying contracts, entering into new subscriptions, renewing existing subscriptions, or reducing budgets related to the products that we offer, all of which could have an adverse impact on our business operations and financial condition. 14 Table of Contents To the extent that macroeconomic uncertainties continue to harm our business, many of the other risks described in these risk factors may be exacerbated including, but not limited to, those relating to our ability to increase sales to existing and new customers, develop and deploy new offerings and applications and maintain effective marketing and sales capabilities.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including inflation, supply chain disruptions, labor shortages, as well as recession risks, which may continue for an extended period and which have resulted and may in the future result in decreased business spending by our customers and prospective customers and business partners and third-party business partners, reduced demand for our products, lower renewal rates by our customers, longer or delayed sales cycles, including due to existing customers and prospective customers delaying contracts, entering into new subscriptions, renewing existing subscriptions, or reducing budgets related to the products that we offer, all of which could have an adverse impact on our business operations and financial condition.
Changes to U.S. immigration laws could make it more difficult to obtain the required work authorizations for our employees. This could in turn have an adverse effect on our operations and the value of our Class A common stock.
Our business is strengthened by the ability to mobilize employees between India and the United States where we have significant operations. Changes to U.S. immigration laws could make it more difficult to obtain the required work authorizations for our employees. This could in turn have an adverse effect on our operations and the value of our Class A common stock.
There is continuing debate among certain investors, regulators, customers, employees, and other stakeholders concerning ESG matters. Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to ESG are not in line with their philosophy.
Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to ESG are not in line with their philosophy.
Any decreased use of our products or mobile applications or increased limitations on our ability to export or sell our products and mobile applications would adversely affect our business, results of operations, and financial condition.
Any decreased use of our products or mobile applications or increased limitations on our ability to export or sell our products and mobile applications would adversely affect our business, results of operations, and financial condition. 29 Table of Contents Restrictive changes to immigration laws may hamper our growth.
A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our products, the discretionary nature of purchasing and budget cycles, and the competitive nature of evaluation and purchasing approval processes.
A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our products, the considerable time spent by potential customers to evaluate and test our products prior to making a purchase decision, the discretionary nature of purchasing and budget cycles, and the competitive nature of 16 Table of Contents evaluation and purchasing approval processes.
Any one or more of the factors above may result in significant fluctuations in our quarterly results of operations, which may negatively impact the trading price of our Class A common stock.
Any one or more of the factors above may result in significant fluctuations in our quarterly results of operations, which may negatively impact the trading price of our Class A common stock. You should not rely on our past results as an indicator of our future performance.
As a result, these stockholders, acting together, and potentially our Executive Chairman on his own have significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of the company or our assets, for the foreseeable future.
Mathrubootham, controlled approximately 18.3% of the voting power of our outstanding common stock. As a result, these stockholders, acting together, have significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of the company or our assets, for the foreseeable future.
Specifically, our results of operations and cash flows are subject to currency fluctuations primarily in the Indian rupee, British pound and euro against the U.S. dollar. These exposures may change over time as business practices evolve, economic and political conditions change and evolving tax regulations come into effect.
Our results of operations and cash flows are subject to currency fluctuations primarily in the Indian rupee, British pound, and euro, as the Company is exposed to remeasurement to the U.S. dollar, which is our functional currency. These exposures may change as business practices evolve, economic and political conditions shift, and tax regulations develop.
We use generative artificial intelligence, including in certain of our products and services, which may result in operational challenges, legal liability and reputational concerns that could adversely affect our business and results of operations. We deploy generative AI into certain of our products and services, which may result in adverse effects to our operations, legal liability, reputation and competitive risks.
We use generative and agentic artificial intelligence, including in certain of our products and services, which may result in operational challenges, legal liability, reputational concerns and other negative consequences that could adversely affect our business and results of operations.
Macroeconomic uncertainties, including inflationary pressures, supply chain disruptions, labor shortages, significant volatility in global markets, and recession risks, have in the past adversely affected and may continue to adversely affect our business, future results of operations, and financial condition, the effects of which remain uncertain.
Macroeconomic uncertainties, including inflationary pressures, rising interest rates, supply chain disruptions, labor market volatility, geopolitical tensions, and recession risks, have in the past adversely affected and may continue to adversely affect our business, future results of operations, and financial condition.
We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Unless we are able to continue to increase the efficiency and productivity of our employees over the long term, wage increases may negatively affect our financial performance.
Unless we are able to continue to increase the efficiency and productivity of our employees over the long term, wage increases may negatively affect our financial performance.
Our financial statements could fail to reflect adequate reserves to cover such a contingency. Changes in the taxation system in India could adversely affect our business. Our business, financial condition, and results of operations could be materially and adversely affected by any change in the extensive central and state tax regime in India applicable to us and our business.
Our business, financial condition, and results of operations could be materially and adversely affected by any change in the extensive central and state tax regime in India applicable to us and our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDepending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards, and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: dedicated cybersecurity staff, including a 24/7 security operations center monitoring for and responding to threat activity, incident response plans and processes, vulnerability management, secure software development, static and dynamic code scanning for vulnerabilities, open-source software scanning, internal and third-party penetration testing, a bug bounty program, internal audit and assurance of security controls, disaster recovery/business continuity plans, attainment and maintenance of industry-standard security certifications, identity and access management, asset management, tracking and disposal, encryption, access controls, third-party risk management, phish testing and reporting, employee security awareness training, and maintaining cybersecurity insurance.
Biggest changeDepending on the environment, we implement and maintain various technical, physical, and organizational safeguards—such as 24/7 security operations center (SOC) monitoring, formal incident-response plans, secure software-development practices (including static and dynamic code scanning and third-party component analysis), identity and access management, encryption of data at rest and in transit, continuous cloud-security-posture monitoring through a Cloud-Native Application Protection Platform (CNAPP) that is designed to provide visibility across our multi-cloud environment, third-party risk-management processes, phishing testing and training, employee awareness programs, and cybersecurity insurance.
Risk Factors in this Annual Report on Form 10-K, including "If our information technology, systems, or those of third parties upon which we rely or our data are or were to be compromised, we could experience adverse consequences resulting from such compromise, including, but not limited to, regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences." Governance Our board of directors addresses our cybersecurity risk management as part of its general oversight function.
“Risk Factors,” including: “If our information technology, systems, or those of third parties with whom we work, or our data, are or were to be compromised, we could experience adverse consequences resulting from such compromise, including, but not limited to, regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences.” Governance Our Board of Directors oversees cybersecurity risk as part of its risk-management responsibilities.
Cybersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and data related to our customers and employees (Information Systems and Data).
Cybersecurity Risk Management and Strategy We have implemented and maintain various information security processes, including a formal cybersecurity risk-management framework, designed to identify, assess, and manage material risks to our information systems and data, including our networks (on-premises and cloud), communications systems, hardware, software, third-party hosted services, confidential and proprietary data (including customer, employee, and strategic business information), and intellectual property.
For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1. Item 1A.
Vendors that provide critical services are subject to our vendor risk management program, which includes risk evaluation and contractual security obligations. For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see Part I, Item 1A.
The Audit Committee is responsible for overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by our CISO and our information security team.
The Audit Committee is responsible for monitoring our cybersecurity risk management processes, including oversight and mitigation of risks associated with cybersecurity threats. The CISO leads our cybersecurity program and works cross-functionally across IT, product and engineering, human resources, finance, and legal/compliance, to align cybersecurity risk with business objectives.
Upon consultation with our Chief Financial Officer and our Chief Legal Officer, our CISO works with our incident response team to help us mitigate and remediate cybersecurity incidents of which they are notified. In addition, our incident response process includes reporting to the Audit Committee for certain cybersecurity incidents.
Our incident-response process is designed to escalate certain cybersecurity events to the CISO, Chief Financial Officer (CFO), and Chief Legal Officer (CLO), as appropriate, with the aim of timely disclosure to the Audit Committee and Board.
Removed
Our Chief Information Security Officer (CISO), our information security team, and third-party service providers help identify, assess, and manage our cybersecurity threats and risks, including through the use of our cybersecurity risk assessment program.
Added
The Chief Information Security Officer (CISO), in collaboration with our information security team, broader IT organization, product and engineering functions, and external advisors, leads our cybersecurity program. This program utilizes various methods, including both automated and manual controls, threat-feed monitoring, internal audits, access-control assessments, vulnerability scanning, penetration testing, open-source software analysis, and a bug bounty program.
Removed
Our CISO along with this team, as applicable, identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods, including automated and manual tools, third-party threat feeds, internal audits, access control assessments, and evaluating threats reported to us by various third party enterprise threat reporting services.
Added
Our Chief Information Security Officer (CISO) leads a global cybersecurity program that is embedded across engineering, product, IT, legal, and compliance functions. The program is risk-based and references recognized industry frameworks and regulatory requirements.
Removed
Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes. For example, cybersecurity risks are considered a part of our overall business strategy, financial planning, and capital allocation. We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats.
Added
We employ a layered defense strategy that includes automated and manual controls, continuous threat intelligence monitoring, secure software development practices, cloud security governance, independent assessments, vulnerability management, penetration testing, third-party risk management, and a coordinated vulnerability disclosure and bug bounty program.
Removed
Our information security leadership inventories and prioritizes information security risks and evaluates material risks from cybersecurity threats, and reports those quarterly to the audit committee of our board of directors (Audit Committee), which evaluates our overall enterprise risk.
Added
Cybersecurity risks are regularly assessed, prioritized, and reported to executive leadership and the Board, with defined incident response, escalation, and resilience procedures in place to address evolving threats.
Removed
We use third-party service providers to perform a variety of security functions throughout our business, such as SaaS security providers, cloud-native application protection platforms, dark web monitoring, and software code scanning. We have a vendor management program to manage cybersecurity risks associated with our use of these providers. The program includes risk assessments and imposition of contractual obligations.
Added
As we deploy and embed artificial intelligence (AI) and machine learning technologies into our platform, operations, and customer-facing solutions, we have established an AI security governance program designed to manage emerging risks associated with AI adoption, including risks related to cybersecurity.
Removed
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management process may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider, which may impose contractual obligations related to cybersecurity on the provider.
Added
This includes a cross-functional AI Advisory Board comprised of representatives from cybersecurity, IT, product engineering, legal/privacy, data science, and business operations; training and awareness for employees and contractors on AI-specific security topics such as safe use of generative AI and monitoring of AI-enabled threats; and vendor and third-party AI component risk-management, which applies contractual and technical controls—such as model provenance review and ongoing monitoring of AI supplier performance.
Removed
Our CISO has served in various roles in information technology and information security for more than 20 years, including serving as the Chief Information Security Officer at a publicly traded SaaS company and large e-commerce company.
Added
Our cyber-risk management processes are integrated into our business strategy, and capital allocation decisions. The CISO reports to senior management and the Audit Committee of our Board of Directors on our risk posture, threat landscape, and certain material cybersecurity issues that may arise.
Removed
Our CISO works with our broader Information Technology team on IT security issues and also works with our product organization, finance, legal and internal controls teams. 47 Table of Contents Our CISO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.
Added
The CISO is responsible for staffing, budgeting, process approval, reviewing key metrics, and responding to and escalating cybersecurity incidents. Our 43 Table of Contents CISO has over 20 years of experience in cybersecurity and information technology leadership, including senior roles in public and cloud-based software companies. The CISO holds CISSP, CISM, CISA, and multiple GIAC certifications.
Removed
Our CISO is responsible for overseeing our Information Security budget, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. Our cybersecurity incident response process is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances including our CISO, our Chief Financial Officer and our Chief Legal Officer.
Added
The Audit Committee receives quarterly updates from the CISO on significant threats, risk posture, and mitigation activities; the full Board receives an annual briefing on cybersecurity risk. We maintain controls and procedures designed to ensure that material cybersecurity information is communicated promptly to senior management and the Board, enabling them to exercise oversight and disclosure.
Removed
The Audit Committee receives reports as part of its quarterly meetings from our CISO concerning our significant cybersecurity threats and risk and the processes we have implemented to address them. Our board also receives periodic reports (at least annually) from our CISO regarding the overall cybersecurity landscape, including material related to cybersecurity threats, risk, and mitigation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also maintain additional offices in the United States and internationally, including Denver, Seattle, and West Haven; our principal engineering facility in Chennai, as well as offices in Bangalore and Hyderabad in India; and other offices in London, United Kingdom; Paris, France; Berlin, Germany; Utrecht, Netherlands; and Sydney and Melbourne, Australia.
Biggest changeIn India we have our principal engineering facility in Chennai, as well as offices in Bangalore and Hyderabad. Outside of US and India we have offices located in London, United Kingdom; Paris, France; Berlin, Germany; Utrecht, Netherlands; and Sydney, Australia. These offices are all leased and we do not own any real property.
These offices are leased, and we do not own any real property. We may continue to open up satellite offices in strategic locations to gain access to new talent markets and to facilitate business operations. We believe that the facilities we occupy are suitable to meet our current needs.
We may continue to open up satellite offices in strategic locations to gain access to new talent markets and to facilitate business operations. We believe that the facilities we occupy are suitable to meet our current needs.
Item 2. Properties Our headquarters office is located in San Mateo, California, where we lease more than 20,000 square feet under a lease that expires in July 2026.
Item 2. Properties Our headquarters office is located in San Mateo, California, where we lease more than 55,000 square feet under a lease that expires in July 2031. We also maintain additional offices in the United States and internationally. In the United States we have additional offices in Denver and Seattle.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures None. 48 Table of Contents Part II
Biggest changeMine Safety Disclosures None. 44 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. 49 Table of Contents Recent Sales of Unregistered Securities None.
Biggest changeThe graph uses the closing market price on September 22, 2021 of $47.55 per share as the initial value of our Class A common stock. As discussed above, we have never declared or paid a cash dividend on our Class A common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from September 22, 2021 (the date that our Class A common stock commenced trading on the Nasdaq Capital Market) through December 31, 2024 with (ii) the cumulative total return of the NASDAQ Composite Index, the Standard & Poor's (S&P) 500 Index and the S&P 500 Information Technology Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on September 22, 2021 and the reinvestment of dividends.
The following graph compares (i) the cumulative total stockholder return on our Class A common stock from September 22, 2021 (the date that our Class A common stock commenced trading on the Nasdaq Capital Market) through December 31, 2025 with (ii) the cumulative total return of the NASDAQ Composite Index, the Standard & Poor's (S&P) 500 Index and the S&P 500 Systems Software Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on September 22, 2021 and the reinvestment of dividends.
The timing, manner, price, and amount of any repurchases will be determined by us at our discretion, and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations. The repurchase program may be suspended or discontinued at any time. 50 Table of Contents Use of Proceeds None.
The timing, manner, price, and amount of any repurchases will be determined by the Company at its discretion, and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations. The repurchase program may be suspended or discontinued at any time. Use of Proceeds None. Item 6. Reserved
Our Class B common stock is not listed on any stock exchange nor traded on any public market. As of February 14, 2025, there were 34 and 37 registered holders of our Class A and Class B common stock, respectively.
Our Class B common stock is not listed on any stock exchange nor traded on any public market. As of February 23, 2026, there were 31 and 33 registered holders of our Class A and Class B common stock, respectively.
(2) The average price paid per share includes brokerage commissions. (3) On November 6, 2024, we publicly announced that our board of directors had approved a share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock.
Issuer Purchases of Equity Securities In February 2026, our board of directors approved a stock repurchase program for the repurchase of up to $400 million of our outstanding Class A common stock.
Removed
The graph uses the closing market price on September 22, 2021 of $47.55 per share as the initial value of our Class A common stock.
Added
In 2025, the Company changed the comparative index in the performance chart from S&P 500 Information Technology Index to S&P 500 Systems Software as we believe this index is more appropriate for comparative purposes due to its better reflection of our industry. 45 Table of Contents Recent Sales of Unregistered Securities None.
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Issuer Purchases of Equity Securities The following table summarizes repurchase of our Class A common stock made by or on behalf of us or any of our "affiliated purchasers" as defined in Rule 10b-19(a)(3) under the Exchange Act during each month during the three months ended December 31, 2024 (in thousands, except share amount and average price paid per share amount): Period by fiscal month Total number of shares repurchased (1) Average price paid per share (2) Total number of shares repurchased as part of publicly announced plans or programs (3) Approximate dollar value of shares that may yet be purchased under the plans or programs (3) October 1, 2024 - October 31, 2024 — $ — — $ — November 1, 2024 to November 30, 2024 — $ — — $ 400,000 December 1, 2024 to December 31, 2024 985,234 $ 15.77 985,234 $ 384,465 Total 985,234 985,234 (1) All of the shares purchased during the three months ended December 31, 2024 were acquired pursuant to our publicly announced share repurchase program described in footnote 3 below.
Removed
Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of common stock under this authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+21 added−15 removed71 unchanged
Biggest changeThe following tables present a reconciliation of our GAAP loss from operations to our non-GAAP income (loss) from operations and our GAAP net loss to our non-GAAP net income (loss) for each of the periods presented (in thousands): Non-GAAP Income (Loss) from Operations Year Ended December 31, 2024 2023 2022 Loss from operations $ (138,610) $ (170,172) $ (233,372) Non-GAAP adjustments: Stock-based compensation expense 216,706 210,707 207,696 Employer payroll taxes on employee stock transactions 3,223 3,711 1,827 Amortization of acquired intangibles 8,160 303 1,591 Restructuring charges 9,664 — — Non-GAAP income (loss) from operations $ 99,143 $ 44,549 $ (22,258) Non-GAAP Net Income (Loss) Year Ended December 31, 2024 2023 2022 Net loss $ (95,368) $ (137,436) $ (232,132) Non-GAAP adjustments: Stock-based compensation expense 216,706 210,707 207,696 Employer payroll taxes on employee stock transactions 3,223 3,711 1,827 Amortization of acquired intangibles 8,160 303 1,591 Restructuring charges 9,664 — — Income tax adjustments (12,017) 1,398 1,978 Non-GAAP net income (loss) $ 130,368 $ 78,683 $ (19,040) Free Cash Flow We define free cash flow as net cash provided by (used in) operating activities, less purchases of property and equipment, and capitalized internal-use software costs.
Biggest changeThe following tables present a reconciliation of our GAAP income (loss) from operations to our non-GAAP income from operations and our GAAP net income (loss) to our non-GAAP net income for each of the periods presented (in thousands): Non-GAAP Income from Operations Year Ended December 31, 2025 2024 2023 Income (loss) from operations $ 13,205 $ (138,610) $ (170,172) Non-GAAP adjustments: Stock-based compensation expense 146,819 216,706 210,707 Employer payroll taxes on employee stock transactions 3,026 3,223 3,711 Amortization of acquired intangibles 13,854 8,160 303 Restructuring charges 405 9,664 — Acquisition expenses 684 — — Non-GAAP income from operations $ 177,993 $ 99,143 $ 44,549 Non-GAAP Net Income Year Ended December 31, 2025 2024 2023 Net income (loss) $ 183,723 $ (95,368) $ (137,436) Non-GAAP adjustments: Stock-based compensation expense 146,819 216,706 210,707 Employer payroll taxes on employee stock transactions 3,026 3,223 3,711 Amortization of acquired intangibles 13,854 8,160 303 Restructuring charges 405 9,664 — Acquisition expenses 684 — — Gain on sale of non-marketable equity investments (1,837) — — Income tax adjustments (1) (151,900) (12,017) 1,398 Non-GAAP net income $ 194,774 $ 130,368 $ 78,683 (1) During the year ended December 31, 2025, income tax adjustments primarily included approximately $151.7 million of tax benefit from a release of our valuation allowance on U.S. deferred tax assets and $39.1 million of income tax effect of non-GAAP adjustments, partially offset by $38.9 million of transition impact as a result of releasing our valuation allowance.
For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR.
For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR.
Investing Activities Net cash provided by investing activities of $38.8 million for the year ended December 31, 2024 consisted of $267.1 million in proceeds from maturities and sales, net of purchases of marketable securities; partially offset by $213.9 million cash paid for the business combination, net of cash acquired, $8.9 million in purchases, net of proceeds from sale, of property and equipment, and $5.5 million related to the capitalization of internal-use software.
Net cash provided by investing activities of $38.8 million for the year ended December 31, 2024 consisted of $267.1 million in proceeds from maturities and sales, net of purchases of marketable securities; partially offset by $213.9 million cash paid for the business combination, net of cash acquired, $8.9 million in purchases, net of proceeds from sale, of property and equipment, and $5.5 million related to the capitalization of internal-use software.
Sales commissions that are considered incremental costs incurred to obtain contracts with customers, are deferred and amortized over the benefit period of three years. Marketing activities include online lead generation, advertising, and promotional events. We expect to continue to make significant investments as we expand our customer acquisition, retention efforts and marketing events and associated business travel.
Sales and reseller commissions that are considered incremental costs incurred to obtain contracts with customers, are deferred and amortized over the benefit period of three years. Marketing activities include online lead generation, advertising, and promotional events. We expect to continue to make significant investments as we expand our customer acquisition, retention efforts and marketing events and associated business travel.
In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate. Our net dollar retention rate was 103% and 108% as of December 31, 2024 and 2023, respectively.
In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate. Our net dollar retention rate was 108% and 103% as of December 31, 2025 and 2024, respectively.
As of December 31, 2024, we have two primary products with over $100 million in ARR, Freshdesk and Freshservice. We intend to invest in growing our research and development team to extend the functionality of our solutions and continue to bring new solutions to market. Our investments in our Neo platform have helped us accelerate the pace of innovation.
As of December 31, 2025, we have two primary products with over $100 million in ARR, Freshservice and Freshdesk. We intend to invest in growing our research and development team to extend the functionality of our solutions and continue to bring new solutions to market. Our investments in our Neo platform have helped us accelerate the pace of innovation.
Prior to our Initial Public Offering (IPO), we determined the fair value of the common stock underlying stock options and RSUs by considering numerous objective and subjective factors including, but not limited to: (i) independent third-party 55 Table of Contents valuations, (ii) the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to its common stock, (iii) the lack of marketability of the common stock, (iv) current business conditions and financial projections, and (iv) the likelihood of achieving an IPO or sale event.
Prior to our Initial Public Offering (IPO), we determined the fair value of the common stock underlying stock options and RSUs by considering numerous objective and subjective factors including, but not limited to: (i) independent third-party valuations, (ii) the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to its common stock, (iii) the lack of marketability of the common stock, (iv) current business conditions and financial projections, and (iv) the likelihood of achieving an IPO or sale event.
As of December 31, 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
As of December 31, 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
We believe that our market remains largely underserved. We intend to invest aggressively in our direct and indirect sales and marketing capabilities, including investments in our outbound sales motion. We have been global from our earliest product sales and our global footprint continues to expand, with customers in approximately 170 countries.
We believe that our market remains largely underserved. We intend to invest aggressively in our direct and indirect sales and marketing capabilities, including investments in our outbound sales motion. We have been global from our earliest product sales and our global footprint continues to expand, with customers in over 170 countries.
Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on either the rate implicit in the lease or our incremental borrowing rate (the estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease), whichever is more readily determinable.
Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on either the rate implicit in the lease or our incremental borrowing rate (the 51 Table of Contents estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease), whichever is more readily determinable.
Non-GAAP Income (Loss) From Operations and Non-GAAP Net Income (Loss) We define non-GAAP income (loss) from operations as GAAP loss from operations excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, and restructuring charges.
Non-GAAP Income From Operations and Non-GAAP Net Income We define non-GAAP income from operations as GAAP income (loss) from operations excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, restructuring charges and acquisition expenses.
We sell subscriptions for our cloud-based solutions directly to customers and indirectly through channel partners through arrangements that are non-cancelable and non-refundable. Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as 54 Table of Contents service arrangements.
We sell subscriptions for our cloud-based solutions directly to customers and indirectly through channel partners through arrangements that are non-cancelable and non-refundable. Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as service arrangements.
See the section titled “Risk Factors” for further discussion of the challenges and risks we have encountered and could encounter related to these macroeconomic events. Key Factors Affecting Our Performance The growth and future success of our business depends on many factors.
See the section titled “Risk Factors” for further discussion of the challenges and risks we have encountered and could encounter related to these macroeconomic events. 47 Table of Contents Key Factors Affecting Our Performance The growth and future success of our business depends on many factors.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 16, 2024.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on February 20, 2025.
Research and development expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for engineering and product development employees and 58 Table of Contents certain executives, software license fees, rental of office premises, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities.
Research and development expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for engineering and product development employees and certain executives, software license fees, rental of office premises, third-party hosting fees, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities.
Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel and certain executives, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, software license fees, and rental of office premises.
Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel and certain executives, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, amortization of acquired technology intangibles, software license fees, and rental of office premises.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. 46 Table of Contents A discussion regarding our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below.
These customers represented 46% of total ARR as of December 31, 2024, illustrating the large opportunity we have to sell additional products to our current customer base and drive growth. We continue to increase the number of customers that have entered into larger subscriptions with us.
These customers represented 45% of total ARR as of December 31, 2025, illustrating the large opportunity we have to sell additional products to our current customer base and drive growth. We continue to increase the number of customers that have entered into larger subscriptions with us.
We define annual recurring revenue (ARR) as the sum total of the subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of the contract.
We define annual recurring revenue (ARR) as the sum total of the subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses.
Macroeconomic and Other Factors Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services.
Macroeconomic and Other Factors Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future.
Monthly subscriptions represented 14%, 17%, and 20% of ARR as of December 31, 2024, 2023 and 2022, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate.
Monthly subscriptions represented 13%, 14%, and 17% of ARR as of December 31, 2025, 2024 and 2023, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate.
No single customer accounted for more than 1% of ARR and our top 10 customers represented less than 5% of ARR as of December 31, 2024, and we have no significant concentration in a specific industry vertical.
No 48 Table of Contents single customer accounted for more than 1% of ARR and our top 10 customers represented less than 5% of ARR as of December 31, 2025, and we have no significant concentration in a specific industry vertical.
Our net dollar retention rate of 103% for the year ended December 31, 2024 reflects the expansion within existing customers and the sale of additional products to these customers.
Our net dollar retention rate of 108% for the year ended December 31, 2025 reflects the expansion within existing customers and the sale of additional products to these customers.
During the year ended December 31, 2024, 46%, 38%, and 16% of our revenue was derived from customers in North America; Europe, Middle East and Africa; and the rest of the world, respectively. We have a significant opportunity to further expand globally.
During the year ended December 31, 2025, 46%, 39%, and 15% of our revenue was derived from customers in North America; Europe, Middle East and Africa; and the rest of the world, respectively. We have a significant opportunity to further expand globally.
December 31, 2024 2023 2022 Number of customers contributing more than $5,000 in ARR 22,558 20,261 17,722 ARR from customers contributing more than $5,000 in ARR as a percent of total ARR 90 % 89 % 87 % Net dollar retention rate 103 % 108 % 108 % 53 Table of Contents Number of Customers Contributing More Than $5,000 in ARR We define our total customers contributing more than $5,000 in annual recurring revenue (ARR) as of a particular date as the number of business entities or individuals, represented by a unique domain or a unique email address, with one or more paid subscriptions to one or more of our products that contributed more than $5,000 in ARR.
December 31, 2025 2024 2023 Number of customers contributing more than $5,000 in ARR 24,762 22,558 20,261 ARR from customers contributing more than $5,000 in ARR as a percent of total ARR 91 % 90 % 89 % Net dollar retention rate 108 % 103 % 108 % Number of Customers Contributing More Than $5,000 in ARR We define our total customers contributing more than $5,000 in annual recurring revenue (ARR) as of a particular date as the number of business entities or individuals, represented by a unique domain or a unique email address, with one or more paid subscriptions to one or more of our products that contributed more than $5,000 in ARR.
We define non-GAAP net income (loss) as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, and restructuring charges, and income tax adjustments.
We define non-GAAP net income as GAAP net income (loss), excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, restructuring charges, gain on sale of non-marketable equity investments, acquisition expenses and income tax adjustments.
Financing Activities Net cash used in financing activities of $67.3 million for the year ended December 31, 2024 consisted primarily of $60.3 million in payment of withholding taxes on net share settlement of equity awards, $13.7 million cash paid to repurchase shares of our common stock; partially offset by $6.6 million in proceeds from issuance of common stock under our employee stock purchase plan, net.
Cash Flows from Financing Activities Net cash used in financing activities of $436.7 million for the year ended December 31, 2025 consisted primarily of $386.3 million cash paid to repurchase shares of our common stock and $56.7 million in payment of withholding taxes on net share settlement of equity awards; partially offset by $6.2 million in net proceeds from issuance of common stock under our employee stock purchase plan.
As of December 31, 2024 and 2023, 22,558 and 20,261 of our customers contributed more than $5,000 in ARR, respectively, demonstrating the broad appeal of our products to customers of all sizes and geographies, and as of December 31, 2024 and 2023, customers contributing more than $5,000 in ARR represented 90% and 89% of total ARR, respectively.
As of December 31, 2025 and 2024, 24,762 and 22,558 of our customers contributed more than $5,000 in ARR, respectively, demonstrating the broad appeal of our products to customers of all sizes and geographies, and as of December 31, 2025 and 2024, customers contributing more than $5,000 in ARR represented 91% and 90% of total ARR, respectively.
Liquidity and Capital Resources As of December 31, 2024 our principal sources of liquidity were cash and cash equivalents of $620.3 million and marketable securities of $449.8 million, which were primarily held for working capital resources. As of December 31, 2024, we had an accumulated deficit of $3.7 billion.
Liquidity and Capital Resources As of December 31, 2025 our principal sources of liquidity were cash and cash equivalents of $569.8 million and marketable securities of $211.6 million, which were primarily held for working capital resources. As of December 31, 2025, we had an accumulated deficit of $3.6 billion.
Our approach to acquiring new customers allows us to benefit from user-driven, organic adoption of our products across organizations of all sizes, as well as enable our customers to standardize on our products across the organization. As of December 31, 2024 and 2023, we had more than 72,200 and 67,100 paying customers, respectively.
Our approach to acquiring new customers allows us to benefit from user-driven, organic adoption of our products across organizations of all sizes, as well as enable our customers to standardize on our products across the organization. As of December 31, 2025 and 2024, we had nearly 75,000 and over 72,200 paying customers, respectively.
We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.
Net dollar retention rate increased from prior year primarily due to a favorable foreign currency impact and an improvement in our churn rate.We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.
We exclude restructuring charges, which primarily consist of employee severance and other employee termination benefits associated with the restructuring plan initiated in November 2024, from our non-GAAP 56 Table of Contents financial measures, because we do not believe these expenses have a direct correlation to the operating performance of our business. • Income tax effect and adjustments.
We exclude restructuring charges, which primarily consist of employee severance and other employee termination benefits associated with the restructuring plan initiated in November 2024, from our non-GAAP financial measures, because we do not believe these expenses have a direct correlation to the operating performance of our business. • Gain on sale of non-marketable equity investments .
We had approximately 3,053 customers each contributing $50,000 or more in ARR as of December 31, 2024, representing an increase of 22% compared to 2,497 customers as of December 31, 2023. As of December 31, 2024 and December 31, 2023, customers contributing more than $50,000 in ARR represented approximately 50% and 48% of total ARR, respectively.
We had approximately 3,760 customers each contributing $50,000 or more in ARR as of December 31, 2025, representing an increase of 23% compared to 3,053 customers as of December 31, 2024. As of December 31, 2025 and December 31, 2024, customers contributing more than $50,000 in ARR represented approximately 54% and 50% of total ARR, respectively.
Of the total increase in revenue, approximately $74.3 million was attributable to revenue from existing customers as of December 31, 2023, net of contraction and churn, and approximately $49.7 million was attributable to revenue from new customers acquired during the year ended December 31, 2024, net of contraction and churn, as well as all revenue from D42 Parent, Inc. during the year.
Of the total increase in revenue, approximately $80.0 million was attributable to revenue from existing customers as of December 31, 2024, net of contraction and churn, and approximately $38.4 million was attributable to revenue from new customers acquired during the year ended December 31, 2025, net of contraction and churn, as well as all revenue from D42 Parent, Inc. during the year.
Sales and Marketing Sales and marketing expense increased by $33.0 million, or 9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Sales and Marketing Sales and marketing expense increased by $3.9 million, or 1%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
(3) General and administrative expense includes stock-based compensation expense associated with RSUs and PRSUs primarily granted to the Executive Chairman of $50.4 million, $55.9 million and $55.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. 60 Table of Contents The following table sets forth our consolidated statements of operations for the periods presented, as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Revenue 100 % 100 % 100 % Cost of revenue 16 17 19 Gross profit 84 83 81 Operating expense: Research and development 23 23 27 Sales and marketing 54 60 69 General administrative 25 29 32 Restructuring charges 2 — — Total operating expenses 104 112 128 Loss from operations (20) (29) (47) Interest and other income, net 7 8 2 Loss before income taxes (13) (21) (45) Provision for income taxes 1 2 2 Net loss (14) % (23) % (47) % Comparison of Fiscal Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Subscription services, software licenses and maintenance $ 710,744 $ 582,868 $ 127,876 22 % Professional services $ 9,676 $ 13,564 $ (3,888) (29 %) Total revenue $ 720,420 $ 596,432 $ 123,988 21 % Revenue increased by $124.0 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
(2) General and administrative expense includes stock-based compensation expense associated with RSUs and PRSUs primarily granted to the Executive Chairman of $(5.1) million, $50.4 million and $55.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, with 2025 including $38.7 million in forfeitures due to the departure of the Executive Chairman. 56 Table of Contents The following table sets forth our consolidated statements of operations data for the periods presented, as a percentage of revenue: Year Ended December 31, 2025 2024 2023 Revenue 100 % 100 % 100 % Cost of revenue 15 16 17 Gross profit 85 84 83 Operating expense: Research and development 19 23 23 Sales and marketing 47 54 60 General administrative 17 25 29 Restructuring charges — 2 — Total operating expenses 83 104 112 Income (loss) from operations 2 (20) (29) Interest and other income, net 5 7 8 Income (loss) before income taxes 7 (13) (21) Provision for (benefit from) income taxes (16) 1 2 Net income (loss) 23 % (14) % (23) % Comparison of Fiscal Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Subscription services, software licenses and maintenance $ 829,403 $ 710,744 $ 118,659 17 % Professional services $ 9,406 $ 9,676 $ (270) (3 %) Total revenue $ 838,809 $ 720,420 $ 118,389 16 % Revenue increased by $118.4 million, or 16%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. 63 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 160,646 $ 86,178 $ (2,525) Net cash provided by investing activities $ 38,803 $ 158,499 $ (284,827) Net cash used in financing activities $ (67,260) $ (60,619) $ (156,354) Operating Activities Net cash provided by operating activities of $160.6 million for the year ended December 31, 2024 reflects our net loss of $95.4 million, adjusted for non-cash items such as stock-based compensation of $216.7 million, amortization of deferred contract acquisition costs of $28.6 million, depreciation and amortization of $19.4 million, non-cash lease expense of $8.8 million, offset by $16.0 million from discount amortization on marketable securities and $12.6 million from changes in deferred income taxes.
In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. 59 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 242,370 $ 160,646 $ 86,178 Net cash provided by investing activities $ 206,133 $ 38,803 $ 158,499 Net cash used in financing activities $ (436,658) $ (67,260) $ (60,619) Cash Flows from Operating Activities Net cash provided by operating activities of $242.4 million for the year ended December 31, 2025 reflects our net income of $183.7 million, adjusted for non-cash items such as stock-based compensation of $146.8 million, amortization of deferred contract acquisition costs of $31.7 million, depreciation and amortization of $25.9 million, non-cash lease expense of $9.7 million, offset by $6.6 million from discount amortization on marketable securities and $1.8 million in gain on sale of non-marketable equity investments.
Overview We provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences. We provide our solutions in two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams and Device42.
Overview We provide people-first AI service software that organizations use to deliver exceptional employee and customer experiences. Our employee experience (EX) products include Freshservice, Freshservice for Business Teams, Device42 and FireHydrant. Our customer experience (CX) products include our Freshdesk suite of products.
We measure the rate of expansion within our customer base using net dollar retention rate (as defined under Key Business Metrics ), and we believe that our net dollar retention rate demonstrates our rate of expansion within our existing customer base. Our net dollar retention rate was 103% and 108% as of December 31, 2024 and December 31, 2023, respectively.
We measure the rate of expansion within our customer base using net dollar retention rate (as defined under Key Business Metrics ), and we believe that our net dollar retentio n rate demonstrates our rate of expansion within our existing customer base.
We exclude the income tax effect of the above adjustments and income tax effect associated with acquisitions from our non-GAAP financial measures. We exclude these costs because we do not believe these expenses have a direct correlation to the operating performance of our business.
We exclude acquisition expenses, which primarily consist of legal fees and due diligence costs, from our non-GAAP financial measures because we do not believe these expenses have a direct correlation to the operating performance of our business. • Income tax effect and adjustments.
Our operating activities resulted in cash inflows of $160.6 million for the year ended December 31, 2024.
Our operating activities resulted in cash inflows of $242.4 million for the year ended December 31, 2025.
The net cash outflows from changes in operating assets and liabilities were due to increases of operating assets of $27.0 million in deferred contract acquisition costs, $27.0 million in accounts receivable, $7.4 million in prepaid expenses and other assets and decreases of $12.9 million in operating lease liabilities and $2.4 million in accounts payable; partially offset by increases in operating liabilities of $60.8 million in deferred revenue and $1.8 million in accrued and other liabilities.
The net cash inflows from changes in operating assets and liabilities were due to increases of operating liabilities of $61.2 million in deferred revenue, $19.1 million in accrued and other liabilities and $9.6 million in accounts payable; partially offset by increases in operating assets of $40.1 million in deferred contract acquisition costs, $28.1 million in accounts receivable, $11.9 million in prepaid expenses and other assets and decreases of operating liabilities of $8.5 million in operating lease liabilities.
Judgment is also used to estimate the contract's transaction price and allocate it to each performance obligation. Deferred Contract Acquisition Costs Deferred contract acquisition costs are incremental costs that are associated with acquiring customer contracts and consist primarily of sales commissions and the associated payroll taxes and certain referral fees paid to third party resellers.
Deferred Contract Acquisition Costs Deferred contract acquisition costs are incremental costs that are associated with acquiring customer contracts and consist primarily of sales commissions and the associated payroll taxes and certain referral fees paid to third party resellers.
Professional Services Revenue Professional services revenue is comprised of fees charged for services ranging from product configuration, data migration, systems integration and training. Professional services revenue is recognized as services are performed and represents less than 5% of total revenue.
Professional Services Revenue Professional services revenue is comprised of fees charged for services ranging from product configuration, data migration, systems integration and training.
Restructuring Charges Restructuring charges of $9.7 million for the year ended December 31, 2024, consisted of employee severance and termination benefits related to a restructuring plan that we initiated in November 2024.
Restructuring Charges Restructuring charges of $0.4 million and $9.7 million for the years ended December 31, 2025 and 2024, respectively, consisted of employee severance and termination benefits related to a restructuring plan that we initiated in November 2024. The restructuring plan is complete, with no remaining liability as of December 31, 2025.
Free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses. 57 Table of Contents The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable measure calculated in accordance with GAAP for each of the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net cash provided by (used in) operating activities $ 160,646 $ 86,178 $ (2,525) Less: Purchases of property and equipment (9,177) (2,069) (7,129) Capitalized internal-use software (5,485) (6,271) (5,116) Free cash flow, including restructuring costs (1) $ 145,984 $ 77,838 $ (14,770) Net cash provided by (used in) investing activities $ 38,803 $ 158,499 $ (284,827) Net cash used in financing activities $ (67,260) $ (60,619) $ (156,354) (1) Free cash flow includes $7.3 million of restructuring costs paid during the year ended December 31, 2024.
The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable measure calculated in accordance with GAAP for each of the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 242,370 $ 160,646 $ 86,178 Less: Purchases of property and equipment (5,700) (9,177) (2,069) Capitalized internal-use software (15,791) (5,485) (6,271) Free cash flow, including restructuring costs (1) $ 220,879 $ 145,984 $ 77,838 Net cash provided by investing activities $ 206,133 $ 38,803 $ 158,499 Net cash used in financing activities $ (436,658) $ (67,260) $ (60,619) (1) Free cash flow includes $2.2 million and $7.3 million of restructuring costs paid during the years ended December 31, 2025 and 2024.
Net cash provided by investing activities of $158.5 million for the year ended December 31, 2023 consisted of $166.7 million in proceeds from maturities and sales, net of purchases of marketable securities; partially offset by $2.0 million in purchases, net of proceeds from sale of property and equipment, and $6.3 million related to the capitalization of internal-use software.
Cash Flows from Investing Activities Net cash provided by investing activities of $206.1 million for the year ended December 31, 2025 consisted of $243.9 million in proceeds from maturities and sales, net of purchases of marketable securities and $2.0 million in proceeds from sale of non-marketable securities; partially offset by $18.4 million advances paid for the business combination, $15.8 million related to the capitalization of internal-use software, and $5.6 million in purchases, net of proceeds from sale, of property and equipment.
We incurred operating losses of $138.6 million, $170.2 million and $233.4 million in the years ended December 31, 2024, 2023 and 2022, respectively, and our net losses were $95.4 million, $137.4 million and $232.1 million in the years ended December 31, 2024, 2023 and 2022, respectively.
We generated operating income of $13.2 million and incurred operating losses of $138.6 million and $170.2 million in the years ended December 31, 2025, 2024 and 2023, respectively, and recognized net income of $183.7 million and incurred net losses of $95.4 million and $137.4 million in the years ended December 31, 2025, 2024 and 2023, respectively.
Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: non-GAAP income (loss) from operations, non-GAAP net income (loss), and free cash flow. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes.
We record interest and penalties related to unrecognized tax benefits in tax expense. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: non-GAAP income (loss) from operations, non-GAAP net income (loss), and free cash flow.
The transaction price is allocated to the separate performance obligations on the basis of relative standalone selling price (SSP). We determine SSP by taking into consideration historical selling price of these performance obligations in similar transactions, as well as current pricing practices and other observable inputs including, but not limited to, customer size and geography.
We determine SSP by taking into consideration historical selling price of these performance obligations in similar transactions, as well as current pricing practices and other observable inputs including, but not limited to, customer size and geography. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to SSP.
Net cash provided by operating activities of $86.2 million for the year ended December 31, 2023 reflects our net loss of $137.4 million, adjusted for non-cash items such as stock-based compensation of $210.7 million, depreciation and amortization of $12.1 million, amortization of deferred contract acquisition costs of $24.0 million, non-cash lease expense of $7.7 million, premium amortization on marketable securities of $15.7 million, and net cash outflows of $14.1 million from changes in operating assets and liabilities.
Net cash provided by operating activities of $160.6 million for the year ended December 31, 2024 reflects our net loss of $95.4 million, adjusted for non-cash items such as stock-based compensation of $216.7 million, amortization of deferred contract acquisition costs of $28.6 million, depreciation and amortization of $19.4 million, non-cash lease expense of $8.8 million, offset by $16.0 million from discount amortization on marketable securities and $12.6 million from changes in deferred income taxes.
We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of the contract.
Ending ARR includes upsells, cross-sells, renewals, and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period. 49 Table of Contents We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses.
We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. We also sell professional services that include product configuration, data migration, systems integration, and training. With the acquisition of D42 Parent, Inc. in June 2024, we also sell software licenses with associated maintenance.
We generate revenue primarily from the sale of subscriptions for accessing our cloud-based software products over the contract term. We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. We also sell professional services that include product configuration, data migration, systems integration, and training.
Cost of Revenue and Gross Margin Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Cost of revenue $ 113,330 $ 103,369 $ 9,961 10 % Gross margin 84 % 83 % Cost of revenue increased by $10.0 million, or 10%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Cost of Revenue and Gross Margin Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Cost of revenue $ 126,145 $ 113,330 $ 12,815 11 % Gross margin 85 % 84 % Cost of revenue increased by $12.8 million, or 11%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment.
We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses.
Our customer base and operations have scaled over time. Our total revenue was $720.4 million, $596.4 million and $498.0 million in the years ended December 31, 2024, 2023 and 2022, respectively, representing year-over-year growth rates of 21% and 20%, respectively.
With the acquisition of D42 Parent, Inc., we also sell software licenses with associated maintenance. Our customer base and operations have scaled over time. Our total revenue was $838.8 million, $720.4 million and $596.4 million in the years ended December 31, 2025, 2024 and 2023, respectively, representing year-over-year growth rates of 16% and 21%, respectively.
Non-GAAP financial measures have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles.
Non-GAAP financial measures have limitations in their usefulness to investors and should not be considered in isolation or as substitutes for financial information presented under GAAP. Non-GAAP financial measures have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles.
Net cash used in financing activities of $60.6 million for the year ended December 31, 2023 consisted primarily of $68.0 million in payment of withholding taxes on net share settlement of equity awards, partially offset by $7.3 million in proceeds from issuance of common stock under our employee stock purchase plan, net.
Net cash used in financing activities of $67.3 million for the year ended December 31, 2024 consisted primarily of $60.3 million in payment of withholding taxes on net share settlement of equity awards, $13.7 million cash paid to repurchase shares of our common stock; partially offset by $6.6 million in net proceeds from issuance of common stock under our employee stock purchase plan. 60 Table of Contents Recent Accounting Pronouncements See “Summary of Significant Accounting Policies” in Note 2 of the notes to our consolidated financial statements for more information.
Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as stock-based compensation, and changes in our valuation allowance. 59 Table of Contents Results of Operations The following tables set forth our consolidated statements of operations data for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Revenue $ 720,420 $ 596,432 $ 497,999 Cost of revenue (1) 113,330 103,369 95,772 Gross profit 607,090 493,063 402,227 Operating expenses: Research and development (1) 164,590 137,756 135,543 Sales and marketing (1) 390,817 357,781 343,207 General and administrative (1) 180,629 167,698 156,849 Restructuring charges 9,664 — — Total operating expenses 745,700 663,235 635,599 Loss from operations (138,610) (170,172) (233,372) Interest and other income, net 47,773 46,403 12,582 Loss before income taxes (90,837) (123,769) (220,790) Provision for income taxes 4,531 13,667 11,342 Net loss $ (95,368) $ (137,436) $ (232,132) __________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 2022 Cost of revenue $ 6,565 $ 6,774 $ 7,039 Research and development (1) 41,512 37,524 36,413 Sales and marketing (2) 63,219 66,755 64,328 General and administration (3) 105,410 99,654 99,916 Total stock-based compensation expense $ 216,706 $ 210,707 $ 207,696 (1) Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software.
Results of Operations The following tables set forth our consolidated statements of operations data for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Revenue $ 838,809 $ 720,420 $ 596,432 Cost of revenue (1) 126,145 113,330 103,369 Gross profit 712,664 607,090 493,063 Operating expenses: Research and development (1) 163,208 164,590 137,756 Sales and marketing (1) 394,753 390,817 357,781 General and administrative (1) 141,093 180,629 167,698 Restructuring charges 405 9,664 — Total operating expenses 699,459 745,700 663,235 Income (loss) from operations 13,205 (138,610) (170,172) Interest and other income, net 40,077 47,773 46,403 Income (loss) before income taxes 53,282 (90,837) (123,769) Provision for (benefit from) income taxes (130,441) 4,531 13,667 Net income (loss) $ 183,723 $ (95,368) $ (137,436) __________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2025 2024 2023 Cost of revenue $ 5,833 $ 6,565 $ 6,774 Research and development (1) 34,864 41,512 37,524 Sales and marketing 48,384 63,219 66,755 General and administration (2) 57,738 105,410 99,654 Total stock-based compensation expense $ 146,819 $ 216,706 $ 210,707 (1) Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software.
However, our gross profit and gross margin may fluctuate from period to period due to the timing and extent of our investments in third-party hosting capacity, expansion of our cloud-based infrastructure, customer support, and professional services organizations, as well as the amortization of costs associated with capitalized internal-use software.
However, our gross profit and gross margin may fluctuate from period to period due to the timing and extent of our investments in third-party hosting capacity, expansion of our cloud-based infrastructure, customer support, and professional services organizations, as well as the amortization of costs associated with capitalized internal-use software. 54 Table of Contents Overhead Allocation We allocate shared costs, such as facilities costs (including rent, utilities, and depreciation on capital expenditures related to facilities shared by multiple departments), information technology costs, and certain administrative personnel costs to all departments based on headcount and location.
Currently, over 72,000 companies choose Freshworks' uncomplicated solutions to increase efficiency and loyalty. In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company for approximately $238.1 million, which primarily consisted of $225.3 million in cash, and approximately $12.9 million of common stock and stock options.
In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company for approximately $238.1 million, which primarily consisted of $225.3 million in cash, and approximately $12.9 million of common stock and stock options. Our consolidated financial statements and key business metrics include D42 Parent, Inc. since the acquisition date.
Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods.
If adverse conditions arise, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings. Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods.
Provision for Income Taxes Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Provision for income taxes $ 4,531 $ 13,667 $ (9,136) (67 %) We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions.
Provision for Income Taxes Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Provision for income taxes $ (130,441) $ 4,531 $ (134,972) * *not meaningful We are subject to income taxes in the U.S. and in foreign jurisdictions.
Software License Revenue Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases. Software license revenue consists of term licenses and is recognized upfront, upon making the software available to the customer.
Professional services revenue is recognized as services are performed and represents less than 5% of total revenue. 50 Table of Contents Software License Revenue Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases.
The effective tax rates differ from the statutory rate of 21% primarily due to nondeductible compensation and change in the valuation allowance. The $9.1 million decrease in tax expense was primarily related to the tax benefit of $14.3 million from D42 Parent, Inc. acquisition, partially offset by higher tax expenses due to higher pre-tax earnings from foreign subsidiaries.
The $135.0 million decrease in tax expense was primarily related to the tax benefit of $151.7 million related to U.S. federal and state valuation allowance release, partially offset by higher expenses due to higher pre-tax earnings from foreign subsidiaries and nondeductible compensation.
Our material cash requirements from known contractual obligations consists of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure. See Item 8 of Part I, "Financial Statements and Supplementary Data — Note 8—Leases and Note 9—Commitments and Contingencies" for additional discussion of our principal contractual commitments.
Our material cash requirements from known contractual obligations primarily consist of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure.
These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future We have a significant opportunity to expand within our existing customer base and substantially increase the number of customers that purchase multiple Freshworks products.
We have a significant opportunity to expand within our existing customer base and substantially increase the number of customers that purchase multiple Freshworks products. As of December 31, 2025, approximately 31% of our customers purchased two or more Freshworks products.
The associated software maintenance revenue is generally recognized ratably over the contract term as support and updates are provided to the customers over the term of the arrangement. Customers with Multiple Performance Obligations Some of our contracts with customers contain both subscriptions, professional services and software licenses. For these contracts, we account for individual performance obligations separately.
Customers with Multiple Performance Obligations Some of our contracts with customers contain both subscriptions, professional services and software licenses. For these contracts, we account for individual performance obligations separately. The transaction price is allocated to the separate performance obligations on the basis of relative standalone selling price (SSP).
As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to SSP. Evaluating the terms and conditions of our customer contracts for appropriate revenue recognition and determining whether products and services are considered distinct performance obligations may require significant judgment.
Evaluating the terms and conditions of our customer contracts for appropriate revenue recognition and determining whether products and services are considered distinct performance obligations may require significant judgment. Judgment is also used to estimate the contract's transaction price and allocate it to each performance obligation.
We believe these non-GAAP financial measures may be helpful to investors because they provide consistency and comparability with past financial performance. Non-GAAP financial measures have limitations in their usefulness to investors and should not be considered in isolation or as substitutes for financial information presented under GAAP.
We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe these non-GAAP financial measures may be helpful to investors because they provide consistency and comparability with past financial performance.
For the years ended December 31, 2024 and 2023, we recorded a provision for income taxes of $4.5 million, and $13.7 million, respectively, on loss before taxes of $90.8 million and $123.8 million, respectively. The effective tax rates for the years ended December 31, 2024 and 2023 were (5.0)% and (11.0)% respectively.
As such, we released $151.7 million valuation allowance related to the U.S. federal and state deferred tax assets during the year ended December 31, 2025. For the years ended December 31, 2025 and 2024, we recorded income tax provision (benefit) of $(130.4) million and $4.5 million, respectively, on income (loss) before taxes of $53.3 million and $(90.8) million, respectively.
Our gross margin increased to 84% from 83% as we increased revenue and realized benefits from economies of scale primarily related to our third-party hosting costs. 61 Table of Contents Operating Expenses Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Research and development $ 164,590 $ 137,756 $ 26,834 19 % Sales and marketing 390,817 357,781 33,036 9 % General and administrative 180,629 167,698 12,931 8 % Restructuring charges 9,664 — 9,664 100 % Total operating expenses $ 745,700 $ 663,235 $ 82,465 The increases in our operating expenses in the year ended December 31, 2024 compared to the year ended December 31, 2023 were primarily driven by increases in personnel-related costs due to annual compensation adjustments, net of certain changes in employee incentives, changes in stock-based compensation expense, and increases in advertising, marketing and branding expenses and professional service fees.
Our gross margin increased to 85% from 84% as we increased revenue and realized benefits from economies of scale primarily related to our third-party hosting costs. 57 Table of Contents Operating Expenses Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Research and development $ 163,208 $ 164,590 $ (1,382) (1 %) Sales and marketing 394,753 390,817 3,936 1 % General and administrative 141,093 180,629 (39,536) (22 %) Restructuring charges 405 9,664 (9,259) (96 %) Total operating expenses $ 699,459 $ 745,700 $ (46,241) (6 %) The $46.2 million, or 6%, decrease in our operating expenses in the year ended December 31, 2025 compared to the year ended December 31, 2024 were primarily driven by the cancellation of equity awards following the resignation of our former Executive Chairman and lower headcount following the November 2024 restructuring, which decreased stock-based compensation expenses and personnel-related costs.
This increase was primarily due to increases of $16.9 million in personnel-related costs due to compensation adjustments, $4.7 million amortization of acquired intangible assets, $4.0 million in advertising, branding and event costs, $2.7 million in travel related expenses for events, $2.3 million in reseller commissions, $2.3 million in professional services fees, and $1.3 million in software license fees, partially offset by a decrease of $3.5 million in stock-based compensation expense.
This increase was primarily due to increases of $5.6 million in reseller commissions, $4.7 million in adverting, marketing and branding costs, $4.4 million in software license fees, and $3.6 million amortization of acquired intangible assets from the D42 Parent, Inc. acquisition.
On constant currency basis, our net dollar retention rate was 105% which was a decrease from prior year primarily due to lower expansion within existing customers driven by macroeconomic pressures offset by the addition of Device42 and a slight improvement in 52 Table of Contents our overall churn rate.
Our net dollar retention rate was 108% and 103% as of December 31, 2025 and December 31, 2024, respectively. On constant currency basis, our net dollar retention rate was 104% which was an increase from prior year primarily due to an improvement in our overall churn rate.
Interest and Other Income, Net Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Interest income $ 51,696 $ 45,895 $ 5,801 13 % Other income (expense) net (3,923) 508 (4,431) * Interest and other income, net $ 47,773 $ 46,403 $ 1,370 3 % • not meaningful Interest income increased by $5.8 million primarily due to higher interest rates and increased interest income earned on larger balances maintained in our marketable securities portfolios. 62 Table of Contents Other income (expense), net changed by $4.4 million, primarily due to an unfavorable impact from changes in British pound against the U.S. dollar.
Interest and Other Income, Net Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Interest income $ 38,181 $ 51,696 $ (13,515) (26) % Other income (expense) net 1,896 (3,923) 5,819 * Interest and other income, net $ 40,077 $ 47,773 $ (7,696) (16) % • not meaningful 58 Table of Contents Interest income decreased by $13.5 million, primarily due to reduction in average balances held in our marketable securities portfolios as a result of our share repurchases.
We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, renewals, and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period.
We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate.
Research and Development Research and development expense increased by $26.8 million, or 19%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The decrease is partially offset by the impact of annual compensation adjustments and higher variable incentive compensation which increased personnel-related costs. Research and Development Research and development expense decreased by $1.4 million, or 1%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
This increase was primarily due to increases of $2.8 million in amortization of developed technology, $1.8 million in software license fees, $1.6 million in third-party hosting costs, $1.3 million in professional service fees, and $1.2 million in personnel-related costs.
This increase was primarily due to increases of $3.4 million in third-party hosting costs as we expand capacity to support our growing customer base, $2.7 million in employee related costs driven by annual compensation adjustments, higher variable incentive compensation and changes in retirement benefit obligations for employees in India, partially offset by lower headcount, $2.6 million in software license fees attributable to higher usage and renewal costs, $2.2 million in amortization of developed technology, and $1.8 million in amortization of internally capitalized software.
We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. Provision for income taxes could also include changes in valuation allowance.
As of December 31, 2025, based on the relevant weight of positive and negative evidence, including the amount of our taxable income in the current year, which is objective and verifiable, we concluded that it is more likely than not that our U.S. federal and state deferred tax assets are realizable.
Our latest generative AI solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience. Freddy AI Agent offers always-on, autonomous, personalized resolutions to customer and employee queries. Freddy AI Copilot provides always-on contextual assistance for customer support, employee support, marketing and sales use cases to boost productivity.
Our AI offerings, which include Freddy AI Agent, Freddy AI Copilot and Freddy AI Insights, further enhance the employee and customer and employee experience and are designed to boost productivity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed10 unchanged
Biggest changeInterest Rate Risk Our cash, cash equivalents, and marketable securities primarily consist of deposits held at financial institutions, highly liquid money market funds, and investments in U.S. treasury securities, U.S. government agency securities, corporate bonds and commercial paper. We had cash and cash equivalents of $620.3 million and marketable securities of $449.8 million as of December 31, 2024.
Biggest changeInterest Rate Risk Our cash, cash equivalents, and marketable securities primarily consist of deposits held at financial institutions, highly liquid money market funds, and investments in U.S. treasury securities, U.S. government agency securities, corporate bonds and commercial paper. We had cash and cash equivalents of $569.8 million and marketable securities of $211.6 million as of December 31, 2025.
The fair value of derivative assets and liabilities as of December 31, 2024, and all related unrealized and realized gains and losses during the year ended December 31, 2024 were not material.
The fair value of derivative assets and liabilities as of December 31, 2025, and all related unrealized and realized gains and losses during the year ended December 31, 2025 were not material.
Based on a sensitivity analysis we have performed as of December 31, 2024, a hypothetical 10% foreign currency exchange rate change applied to total monetary assets and liabilities denominated in currencies other than the U.S. dollar would result in a gain or loss of approximately $8.1 million.
Based on a sensitivity analysis we have performed as of December 31, 2025, a hypothetical 10% foreign currency exchange rate change applied to total monetary assets and liabilities denominated in currencies other than the U.S. dollar would result in a gain or loss of approximately $15.1 million.
Based on an interest rate sensitivity analysis we have performed as of December 31, 2024, a hypothetical 100 basis points favorable or adverse movement in interest rates would not have a material effect in the combined market value of our cash and cash equivalents and marketable securities. 65 Table of Contents
Based on an interest rate sensitivity analysis we have performed as of December 31, 2025, a hypothetical 100 basis points favorable or adverse movement in interest rates would not have a material effect in the combined market value of our cash and cash equivalents and marketable securities. 61 Table of Contents
Gains or losses on these contracts are generally recognized in income at the time the related transactions being hedged are recognized. As of December 31, 2024, the total notional amount of outstanding designated foreign currency forward contracts was $50.5 million.
Gains or losses on these contracts are generally recognized in income at the time the related transactions being hedged are recognized. As of December 31, 2025, the total notional amount of outstanding designated foreign currency forward contracts was $86.7 million.

Other FRSH 10-K year-over-year comparisons