Analyst(s): Futurum Research
Publication Date: August 7, 2026
Freshworks’ Q2 FY 2026 earnings show a company concentrating growth around employee experience, AI monetization, and service operations for mid-market and agile enterprise customers. The quarter also showed progress in profitability, partner involvement, and platform expansion through IT asset management, enterprise service management, and incident management.
What Is Covered in This Article:
- Freshworks’ Q2 FY 2026 financial results
- Employee experience as a growth center
- Freddy AI adoption and monetization
- ITAM, ESM, and FireHydrant expansion
- Guidance and Final Thoughts
The News: Freshworks (NASDAQ: FRSH) reported Q2 FY 2026 revenue of $237.4 million, up 16% year-on-year (YoY), above Wall Street Consensus of $233.8 million. Employee experience (EX) annual recurring revenue (ARR) ended the quarter at $567 million, up 24% on a constant currency (cc) basis, while customer experience (CX) ARR ended at $400 million, up 4% cc. Non-GAAP operating income was $55.9 million, up 24.7% YoY, with a non-GAAP operating margin of 23.6% (Q2 FY 2025: 21.9%). Non-GAAP net income was $45.7 million (Q2 FY 2025: $52.5 million), and non-GAAP diluted earnings per share was $0.17, compared with $0.18 in Q2 FY 2025.
“EX ARR grew 24% YoY, and Freddy AI Copilot is now attached to over 71% of new enterprise deals. Customers aren’t testing AI with us, they’re adopting and using Freddy AI,” said Dennis Woodside, CEO and President of Freshworks. “We built a platform for the mid-market and agile enterprise that we believe no one else can match, and we’re demonstrating you can grow fast, stay disciplined, and be profitable all at the same time.”
Freshworks Q2 FY 2026: Freddy AI and EX Drive Commercial Momentum
Analyst Take: Freshworks’ Q2 FY 2026 results show a clearer split between its growth engine and its stabilization engine. EX is now the center of the model, while CX is being run with greater operating focus and a more defined mid-market customer profile. AI is moving into paid adoption, not just product messaging, with Freddy AI Copilot attach rates and AI Agent Studio usage giving Freshworks more expansion paths. The main strategic question is whether the company can keep its ease-of-use differentiation while adding more enterprise-grade capability across IT service management (ITSM), IT asset management (ITAM), IT operations management (ITOM), enterprise service management (ESM), and incident management.
EX Becomes the Center of Freshworks’ Model
Freshworks is now shaping its business around EX as the primary growth engine. EX ARR reached $567 million in Q2 FY 2026 and represented about 59% of total ARR, with an expectation that it will exceed 60% by the end of FY 2026. The company’s target market remains companies with up to 20,000 employees, where customers often want enterprise-grade controls without long implementation cycles. Customer examples such as Seagate and American Oncology Network point to a recurring buyer pattern: replacement of complex incumbent systems with faster deployments and lower administrative overhead. Customers contributing more than $100,000 in ARR now account for roughly 40% of total ARR, which shows that Freshworks’ upmarket motion is becoming more material to the business mix. Freshworks’ next phase depends on converting that larger-account traction into repeatable multiproduct expansion.
Freddy AI Adoption Moves Into Commercial Scale
Freddy AI is becoming a measurable sales and expansion tool for Freshworks. More than 7,000 customers are now paying for an AI stock keeping unit, and Freddy AI Copilot attached to more than 70% of larger new deals. Eligible EX customers paying for Copilot increased to 22% of the installed base, which gives Freshworks a growing pool for AI-led expansion. Customer productivity metrics are also becoming part of the commercial case, with agents using Freddy AI Copilot handling 50% more tickets and AI agent deflection rates averaging 50%, reaching as high as 80% in mature deployments. The iQor deployment, where 35% of IT service delivery was automated, and monthly ticket volume fell 39%, gives Freshworks a useful proof point for larger service operations buyers. AI monetization will matter most where it improves renewal quality, expansion rates, and competitive displacement.
Platform Expansion Supports the Upmarket Motion
Freshworks’ broader EX portfolio is reducing its reliance on core ITSM lands and giving sales teams more ways to enter and expand accounts. About one-third of large new EX wins now include ITAM, aided by the cloud version of the Device42-powered advanced ITAM product. ESM crossed $50 million in ARR and grew 67% YoY, with one-fifth of new EX seats coming from outside IT. FireHydrant added another path into incident management, including its first six-figure expansion deal since joining Freshworks and one of Freshworks’ three largest deals in the quarter. The strategic challenge is integration quality, because the company’s differentiation depends on keeping deployment and administration easier than larger legacy platforms. Product breadth will help Freshworks move upmarket only if customers still experience the speed and simplicity that drove its original mid-market position.
Guidance and Final Thoughts
Freshworks guided Q3 FY 2026 revenue of $244.5 million to $245.5 million, implying about 14% YoY growth and 14% to 15% cc growth. For FY 2026, the company expects revenue of $963.5 million to $966.5 million, or about 15% YoY growth and 14% to 15% cc growth. Non-GAAP income from operations is expected to be $59 million to $61 million in Q3 FY 2026 and $222 million to $228 million for FY 2026. Non-GAAP net income per share is expected to be $0.18 in Q3 FY 2026 and $0.66 to $0.68 for FY 2026.
Freshworks is increasingly defining its competitive position around simplifying enterprise service operations rather than matching every feature offered by larger incumbents. The combination of employee experience, AI monetization, and adjacent products such as ITAM, ESM, and incident management broadens the company’s expansion opportunities, but sustaining that momentum will depend on preserving the ease of deployment and administration that has differentiated the platform. The next phase of execution will be measured by whether AI and multiproduct adoption deepen customer relationships without increasing implementation complexity or slowing sales velocity.
See the full press release on Freshworks’ Q2 FY 2026 financial results on the company website.
Declaration of generative AI and AI-assisted technologies in the writing process: This content has been generated with the support of artificial intelligence technologies. Due to the fast pace of content creation and the continuous evolution of data and information, The Futurum Group and its analysts strive to ensure the accuracy and factual integrity of the information presented. However, the opinions and interpretations expressed in this content reflect those of the individual author/analyst. The Futurum Group makes no guarantees regarding the completeness, accuracy, or reliability of any information contained herein. Readers are encouraged to verify facts independently and consult relevant sources for further clarification.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Read the full Futurum Group Disclosure.
Other Insights From Futurum:
Freshworks Q1 FY 2026 Earnings: EX Momentum Offsets CX Growth Questions
Are Mid-Market AI Budgets Doomed to Complexity Tax, Or Is a Simpler Path Emerging?
How Will TeamViewer and ServiceNow Reshape Autonomous IT Operations?
Author Information
Futurum Research
Futurum Research delivers forward-thinking insights on technology, business, and innovation. Content published under the Futurum Research byline incorporates both human and AI-generated information, always with editorial oversight and review from the expert Futurum Research team to ensure quality, accuracy, and relevance. All content, analysis, and opinion are based on sources and information deemed to be reliable at the time of publication.
The Futurum Group is not liable for any errors, omissions, biases, or inadequacies in the information contained herein or for any interpretations thereof. The reader is solely responsible for any decisions made or actions taken based on the information presented in this publication.
