FRSH 10-Q Quarterly Report June 30, 2025

FRESHWORKS INC.

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frsh-20250630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-40806

Freshworks Inc.

(Exact name of registrant as specified in its charter)


Delaware	2950 S Delaware Street , Suite 201	33-1218825
(State or other jurisdiction of incorporation or organization)	San Mateo , CA 94403	(I.R.S. Employer Identification No.)

(Address of principal executive offices and Zip Code)

( 650 ) 513-0514

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.00001 per share

FRSH

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 24, 2025, the number of shares of the registrant’s Class A common stock outstanding was 237,933,261 and the number of shares of the registrant’s Class B common stock outstanding was 53,495,414 .

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FRESHWORKS INC.

TABLE OF CONTENTS


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	43
ITEM 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	45
ITEM 1A.	Risk Factors	45
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
ITEM 3.	Defaults Upon Senior Securities	46
ITEM 4.	Mine Safety Disclosures	46
ITEM 5.	Other Information	47
ITEM 6.	Exhibits	48
SIGNATURES		49

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As used in this report, the terms “Freshworks,” “registrant,” “we,” “us,” and “our” mean Freshworks Inc. and its subsidiaries unless the context indicates otherwise.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would,” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

• our expectations regarding our annual recurring revenue (ARR), revenue, expenses, and other operating results;

• our ability to acquire new customers and successfully retain existing customers;

• our ability to increase the number of users who access our platform;

• our ability to increase usage of existing products;

• our ability to effectively manage our growth;

• our ability to achieve or sustain profitability;

• future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;

• the costs and success of our sales and marketing efforts, and our ability to maintain and enhance our brand;

• the estimated addressable market opportunity for existing products and new products;

• our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;

• our ability to effectively manage our growth, including any international expansion;

• our ability to successfully integrate acquired businesses, including D42 Parent, Inc.;

• the effects of macroeconomic uncertainties, including high interest rates, foreign exchange rate volatility, global geopolitical uncertainties, inflationary pressures, and other macroeconomic factors beyond our control;

• our ability to protect our intellectual property rights and any costs associated therewith;

• our ability to compete effectively with existing competitors and new market entrants; and

• the size and growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very

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competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

Statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject, based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Where You Can Find More Information

We announce material information to the public through a variety of means, including filings with the U.S. Securities and Exchange Commission, press releases, public conference calls, our website (freshworks.com), the investor relations section of our website (ir.freshworks.com), our LinkedIn account (linkedin.com/company/freshworks-inc/), and our X (formerly Twitter) account (@FreshworksInc). We use these channels to communicate with investors and the public about our company, our products and services and other matters. Therefore, we encourage investors, the media and others interested in our company to review the information we make public in these locations, as such information could be deemed to be material information.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

FRESHWORKS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)


	June 30, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	485,970	$	620,315
Marketable securities	440,226		449,750
Accounts receivable, net of allowance of $ 8,244 and $ 8,885	115,864		122,910
Deferred contract acquisition costs	27,508		26,106
Prepaid expenses and other current assets	66,942		46,346
Total current assets	1,136,510		1,265,427
Property and equipment, net	30,894		25,893
Operating lease right-of-use assets	32,358		36,891
Deferred contract acquisition costs, noncurrent	24,459		22,534
Goodwill	146,676		147,014
Intangible assets, net	83,818		90,840
Deferred tax assets	8,980		8,499
Other assets	17,131		14,786
Total assets	$	1,480,826	$	1,611,884
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,899	$	1,619
Accrued liabilities	86,714		81,933
Deferred revenue	339,210		323,435
Income tax payable	1,796		728
Total current liabilities	432,619		407,715
Operating lease liabilities, non-current	26,815		30,221
Other liabilities	36,750		36,027
Total liabilities	496,184		473,963
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $ 0.00001 par value per share; 10,000,000 shares authorized; zero shares issued and outstanding	—		—
Class A common stock, $ 0.00001 par value per share; 1,000,000,000 shares authorized; 238,553,324 and 244,965,000 shares issued and outstanding	2		2
Class B common stock, $ 0.00001 par value per share; 350,000,000 shares authorized; 53,489,007 and 58,417,396 shares issued and outstanding	1		1
Additional paid-in capital	4,723,457		4,874,133
Accumulated other comprehensive income (loss)	102		( 338 )
Accumulated deficit	( 3,738,920 )		( 3,735,877 )
Total stockholders' equity	984,642		1,137,921
Total liabilities and stockholders' equity	$	1,480,826	$	1,611,884

The accompanying notes are an integral part of these condensed consolidated financial statements.

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue	$	204,678	$	174,131	$	400,951	$	339,274
Cost of revenue	31,142		28,175		61,020		54,065
Gross profit	173,536		145,956		339,931		285,209
Operating expense:
Research and development	39,943		40,993		79,944		75,677
Sales and marketing	95,223		104,248		184,381		198,890
General and administrative	47,026		44,502		94,273		86,596
Restructuring charges	—		—		405		—
Total operating expenses	182,192		189,743		359,003		361,163
Loss from operations	( 8,656 )		( 43,787 )		( 19,072 )		( 75,954 )
Interest and other income, net	12,547		13,247		25,516		26,042
Income (loss) before income taxes	3,891		( 30,540 )		6,444		( 49,912 )
Provision for (benefit from) income taxes	5,630		( 10,356 )		9,487		( 6,403 )
Net loss	$	( 1,739 )	$	( 20,184 )	$	( 3,043 )	$	( 43,509 )



Net loss per share - basic and diluted	$	( 0.01 )	$	( 0.07 )	$	( 0.01 )	$	( 0.15 )
Weighted average shares used in computing net loss per share - basic and diluted	294,435		299,805		297,839		298,836

The accompanying notes are an integral part of these condensed consolidated financial statements.

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net loss	$	( 1,739 )	$	( 20,184 )	$	( 3,043 )	$	( 43,509 )
Other comprehensive income (loss):

Change in unrealized gain or loss on marketable securities	( 433 )		118		( 747 )		( 598 )



Net change on cash flow hedges	( 73 )		127		1,187		323
Total other comprehensive income (loss)	( 506 )		245		440		$	( 275 )
Comprehensive loss	$	( 2,245 )	$	( 19,939 )	$	( 2,603 )	$	( 43,784 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


		Three Months Ended June 30, 2025
	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount
Balances as of March 31, 2025		298,380	$	3		$	4,798,400	$	608	$	( 3,737,181 )	$	1,061,830
Issuance of common stock upon exercise of stock options		43	—			14		—		—		14

Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for taxes		1,519	—			( 13,638 )		—		—		( 13,638 )
Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes		281	—			3,307		—		—		3,307
Repurchase and retirement of common stock, including excise tax		( 8,181 )	—			( 114,683 )		—		—		( 114,683 )
Stock-based compensation		—	—			50,057		—		—		50,057
Other comprehensive income		—	—			—		( 506 )		—		( 506 )
Net loss		—	—			—		—		( 1,739 )		( 1,739 )
Balances as of June 30, 2025		292,042	$	3		$	4,723,457	$	102	$	( 3,738,920 )	$	984,642


		Three Months Ended June 30, 2024
	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount
Balances as of March 31, 2024		298,500	$	3		$	4,743,236	$	( 1,274 )	$	( 3,663,834 )	$	1,078,131


Issuance of common stock and options in connection with acquisition		687	—			12,874		—		—		12,874
Issuance of common stock upon exercise of stock options		89	—			26		—		—		26
Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for taxes		1,377	—			( 14,651 )		—		—		( 14,651 )
Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes		308	—			3,630		—		—		3,630
Stock-based compensation		—	—			55,028		—		—		55,028
Other comprehensive income		—	—			—		245		—		245
Net loss		—	—			—		—		( 20,184 )		( 20,184 )
Balances as of June 30, 2024		300,961	$	3		$	4,800,143	$	( 1,029 )	$	( 3,684,018 )	$	1,115,099

The accompanying notes are an integral part of these condensed consolidated financial statements.

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


		Six Months Ended June 30, 2025
	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount
Balances as of December 31, 2024		303,382	$	3		$	4,874,133	$	( 338 )	$	( 3,735,877 )	$	1,137,921
Issuance of common stock upon exercise of stock options		189	—			62		—		—		62
Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for taxes		3,103	—			( 30,392 )		—		—		( 30,392 )
Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes		281	—			3,307		—		—		3,307
Repurchase and retirement of common stock, including excise tax		( 14,913 )	—			( 226,660 )		—		—		( 226,660 )
Stock-based compensation		—	—			103,007		—		—		103,007
Other comprehensive income		—	—			—		440		—		440
Net loss		—	—			—		—		( 3,043 )		( 3,043 )
Balances as of June 30, 2025		292,042	$	3		$	4,723,457	$	102	$	( 3,738,920 )	$	984,642


		Six Months Ended June 30, 2024
	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount
Balances as of December 31, 2023		296,695	$	3		$	4,713,522	$	( 754 )	$	( 3,640,509 )	$	1,072,262


Issuance of common stock and options in connection with acquisition		687	—			12,874		—		—		12,874
Issuance of common stock upon exercise of stock options		121	—			36		—		—		36
Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for taxes		3,150	—			( 37,357 )		—		—		( 37,357 )
Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes		308	—			3,630		—		—		3,630
Stock-based compensation		—	—			107,438		—		—		107,438
Unrealized loss on marketable securities		—	—			—		( 275 )		—		( 275 )
Net loss		—	—			—		—		( 43,509 )		( 43,509 )
Balances as of June 30, 2024		300,961	$	3		$	4,800,143	$	( 1,029 )	$	( 3,684,018 )	$	1,115,099

FRESHWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2025		2024
Cash Flows from Operating Activities:
Net loss	$	( 3,043 )	$	( 43,509 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,641		6,713
Amortization of deferred contract acquisition costs	15,431		13,538
Non-cash lease expense	4,623		4,399
Stock-based compensation	100,944		107,581
Discount amortization on marketable securities	( 3,694 )		( 8,721 )


Deferred income taxes	( 459 )		( 13,801 )
Other	470		( 231 )
Changes in operating assets and liabilities:
Accounts receivable	6,981		4,948
Deferred contract acquisition costs	( 18,758 )		( 16,902 )
Prepaid expenses and other assets	( 22,689 )		( 7,176 )
Accounts payable	3,280		5,981
Accrued and other liabilities	7,813		8,873
Deferred revenue	15,439		17,219
Operating lease liabilities	( 2,415 )		( 1,957 )
Net cash provided by operating activities	116,564		76,955
Cash Flows from Investing Activities:
Purchases of property and equipment	( 1,676 )		( 3,054 )
Proceeds from sale of property and equipment	40		63
Capitalized internal-use software	( 7,448 )		( 2,406 )

Purchases of marketable securities	( 347,206 )		( 393,183 )

Maturities and redemptions of marketable securities	359,679		391,990

Business combination, net of cash acquired	—		( 213,905 )
Net cash provided by (used in) investing activities	3,389		( 220,495 )
Cash Flows from Financing Activities:

Proceeds from issuance of common stock under employee stock purchase plan, net	3,307		3,630
Proceeds from exercise of stock options	62		36
Payment of withholding taxes on net share settlement of equity awards	( 30,460 )		( 37,984 )
Repurchase of common stock	( 227,196 )		—


Net cash used in financing activities	( 254,287 )		( 34,318 )
Net decrease in cash, cash equivalents and restricted cash	( 134,334 )		( 177,858 )
Cash, cash equivalents and restricted cash, beginning of period	620,405		488,216
Cash, cash equivalents and restricted cash, end of period	$	486,071	$	310,358

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets:
Cash and cash equivalents	$	485,970	$	310,266
Restricted cash included in prepaid expenses and other current assets	—		3
Restricted cash included in other assets	101		89
Total cash, cash equivalents and restricted cash	$	486,071	$	310,358


Supplemental cash flow information:
Cash paid for taxes	$	7,146	$	4,189
Non-cash investing and financing activities:
Operating lease right-of-use assets obtained in exchange for operating lease obligations, net of modifications	$	90	$	4,601
Stock-based compensation capitalized as internal-use software	$	1,713	$	756
Issuance of common stock and options in connection with acquisition	$	—	$	12,874
Excise tax liability accrued for common stock repurchased	$	1,305	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FRESHWORKS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements of Freshworks Inc. and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated balance sheet as of June 30, 2025, the condensed consolidated statements of operations, of comprehensive loss, of cash flows, and of stockholders’equity for the three and six months ended June 30, 2025 and 2024, and the related notes to such condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our financial position as of June 30, 2025 and our results of operations and cash flows for the three and six months ended June 30, 2025 and 2024. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 20, 2025.

Use of Estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the following:

• determination of standalone selling price (SSP) for each distinct performance obligation included in customer contracts with multiple performance obligations;

• allowance for doubtful accounts;

• benefit period of deferred contract acquisition costs;

• capitalization of internal-use software development costs;

• fair value of goodwill;

• useful lives of long-lived assets, including intangible assets;

• valuation of deferred tax assets;

• valuation of employee defined benefit plan and other compensation liabilities;

• fair value of share-based awards; and

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• incremental borrowing rate used for operating leases.

Concentrations of Risk

Financial instruments that potentially expose us to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. Our cash, cash equivalents and marketable securities are generally held with large financial institutions and are in excess of the federally insured limits provided on such deposits. In addition, we have cash and cash equivalents held in international bank accounts, which are denominated primarily in euros, British Pounds, and Indian Rupees.

There were no customers that individually exceeded 10% of our revenue for the three and six months ended June 30, 2025 and 2024 or that represented 10% or more of our consolidated accounts receivable balance as of June 30, 2025.

We primarily rely upon our third-party cloud infrastructure partner, Amazon Web Services, to serve customers and operate certain aspects of its services. Any disruption of this cloud infrastructure partner would impact our operations and our business could be adversely impacted.

Significant Accounting Policies

Our significant accounting policies are described in the Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to these policies that have had a material impact on the condensed consolidated financial statements and the related notes for the three and six months ended June 30, 2025.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires entities to provide more information in the rate reconciliation table and about income taxes paid, including certain disclosures that would be disaggregated by jurisdiction and other categories. This authoritative guidance should be applied prospectively and will be effective for us starting in our annual disclosures for 2025. Retrospective application is permitted. This guidance is only related to disclosures and is not expected to have a significant impact on our condensed consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses, which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement. This authoritative guidance is effective for us starting in our annual disclosures for 2027 and interim periods starting 2028. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This guidance is only related to disclosure and is not expected to have a significant impact on our condensed consolidated financial statements.

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2. Cash Equivalents and Marketable Securities

Cash equivalents and available-for-sale debt securities consisted of the following as of the periods presented below (in thousands):


	June 30, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	308,108	$	—	$	—	$	308,108
U.S. treasury securities	46,104		—		( 1 )		46,103
U.S. government agency securities	11,738		—		( 1 )		11,737
Commercial paper	52,980		—		—		52,980
Total cash equivalents	418,930		—		( 2 )		418,928
Debt securities:
U.S. treasury securities	192,126		220		( 47 )		192,299
U.S. government agency securities	102,914		61		( 28 )		102,947
Corporate debt securities	47,228		57		( 24 )		47,261
Commercial paper	8,169		—		—		8,169
Certificates of deposit	89,550		—		—		89,550
Total debt securities	439,987		338		( 99 )		440,226
Total cash equivalents and debt securities	$	858,917	$	338	$	( 101 )	$	859,154


	December 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	507,655	$	—	$	—	$	507,655



Total cash equivalents	507,655		—		—		507,655
Debt securities:
U.S. treasury securities	215,773		612		( 17 )		216,368
U.S. government agency securities	144,474		321		( 12 )		144,783
Corporate debt securities	45,682		101		( 21 )		45,762
Commercial paper	16,388		—		—		16,388
Certificates of deposit	26,449		—		—		26,449
Total debt securities	448,766		1,034		( 50 )		449,750
Total cash equivalents and debt securities	$	956,421	$	1,034	$	( 50 )	$	957,405

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The following table presents gross unrealized losses and fair values for the securities that were in a continuous unrealized loss position as of the periods presented below (in thousands):


	June 30, 2025
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury securities	$	80,632	$	( 47 )	$	—	$	—	$	80,632	$	( 47 )
U.S. government agency securities	42,306		( 28 )		—		—		42,306		( 28 )
Corporate debt securities	24,361		( 24 )		—		—		24,361		( 24 )
Total	$	147,299	$	( 99 )	$	—	$	—	$	147,299	$	( 99 )


	December 31, 2024
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury securities	$	13,819	$	( 16 )	$	4,993	$	( 1 )	$	18,812	$	( 17 )
U.S. government agency securities	8,197		( 7 )		9,995		( 5 )		18,192		( 12 )
Corporate debt securities	7,998		( 19 )		5,982		( 2 )		13,980		( 21 )
Total	$	30,014	$	( 42 )	$	20,970	$	( 8 )	$	50,984	$	( 50 )

The amortized cost and fair value of the available-for-sale debt securities based on contractual maturities are as follows (in thousands):


	June 30, 2025
	Amortized Cost		Fair Value
Due within one year	$	387,115	$	387,382
Due after one year but within five years	52,872		52,844
Total	$	439,987	$	440,226

Accrued interest receivable of $ 2.8 million and $ 3.3 million was classified in prepaid expenses and other current assets in the condensed consolidated balance sheet as of June 30, 2025 and December 31, 2024, respectively

3. Fair Value Measurements

We measure our financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 —Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 —Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

Level 3 —Inputs that are unobservable.

Money market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven valuations

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which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

We did not have any assets or liabilities subject to fair value remeasurement on a nonrecurring basis as of June 30, 2025 and December 31, 2024.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table represents the fair value hierarchy for our financial assets measured at fair value on a recurring basis as of the periods presented below (in thousands):


	June 30, 2025
	Fair Value Measured Using
	Level 1		Level 2		Total
Financial assets:
Cash equivalents:
Money market funds	$	308,108	$	—	$	308,108
U.S. treasury securities	46,103		—		46,103
U.S. government agency securities	—		11,737		11,737
Commercial paper	—		52,980		52,980
Marketable securities:
U.S. treasury securities	192,299		—		192,299
U.S. government agency securities	—		102,947		102,947
Corporate debt securities	—		47,261		47,261
Commercial paper	—		8,169		8,169
Certificates of deposit	—		89,550		89,550
Total financial assets	$	546,510	$	312,644	$	859,154


	December 31, 2024
	Fair Value Measured Using
	Level 1		Level 2		Total
Financial assets:
Cash equivalents:
Money market funds	$	507,655	$	—	$	507,655



Marketable securities:
U.S. treasury securities	216,368		—		216,368
U.S. government agency securities	—		144,783		144,783
Corporate debt securities	—		45,762		45,762
Commercial paper	—		16,388		16,388
Certificates of deposit	—		26,449		26,449
Total financial assets	$	724,023	$	233,382	$	957,405

The fair value of derivative assets and liabilities as of June 30, 2025, and all related unrealized and realized gains and losses during the three and six months ended June 30, 2025, were not material. As of June 30, 2025 and December 31, 2024, the total notional amount of outstanding designated foreign currency forward contracts was $ 63.6 million and $ 50.5 million, respectively.

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4. Balance Sheet Components

Property and Equipment, net

The following table summarizes property and equipment, net as of the periods presented below (in thousands):


	June 30, 2025		December 31, 2024
Computers	$	19,472	$	19,694
Capitalized internal-use software	43,416		34,255
Office equipment	7,045		6,700
Furniture and fixtures	10,187		10,066
Motor vehicles	267		400
Leasehold improvements	8,333		7,847
Construction in progress	—		13
Total property and equipment	88,720		78,975
Less: accumulated depreciation and amortization	( 57,826 )		( 53,082 )
Property and equipment, net	$	30,894	$	25,893

The following table summarizes depreciation expense and internal-use software capitalization and amortization during the periods presented below (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Capitalization of costs associated with internal-use software	5,697	1,581	9,161	3,162
Amortization expense of capitalized internal-use software	1,634	1,432	3,274	2,795
Depreciation expense	1,138	1,342	2,345	2,942

As of June 30, 2025 and December 31, 2024, the net carrying value of capitalized internal-use software was $ 20.4 million and $ 14.5 million, respectively.

Accrued Liabilities

The following table summarizes accrued liabilities as of the periods presented below (in thousands):


	June 30, 2025		December 31, 2024
Accrued compensation	$	24,980	$	28,269

Accrued third-party cloud infrastructure expenses	3,375		—
Accrued reseller commissions	14,430		11,569
Accrued advertising and marketing expenses	4,734		4,414
Advanced payments from customers	5,668		4,487
Accrued taxes	13,041		14,747
Operating lease liabilities, current	9,208		8,073
Contributions withheld for employee stock purchase plan	1,116		1,127
Unsettled share repurchases	—		1,840

Other accrued expenses	10,162		7,407
Total accrued liabilities	$	86,714	$	81,933

Noncurrent liabilities include $ 20.9 million and $ 21.1 million of long term accrued compensation as of June 30, 2025 and December 31, 2024, respectively.

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5. Business Combinations

In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company, for $ 238.1 million. This consideration included a combination of approximately $ 225.3 million in cash, $ 8.9 million in common stock issued, and $ 3.9 million in assumed and converted stock option awards. Through the combination, we are able to offer a more comprehensive IT solution for customers. The identifiable assets and liabilities acquired are primarily $ 140.8 million of goodwill, $ 99.0 million of intangible assets, and $( 1.7 ) million in other net assets and liabilities. The assets acquired and liabilities assumed were recorded at fair value. As of June 30, 2025, we finalized the purchase price allocation, including the valuation pertaining to deferred tax liabilities. An immaterial adjustment was recorded during the measurement period, resulting in a decrease to goodwill and an increase to deferred tax balances.

We have included the operating results of D42 Parent, Inc. in our condensed consolidated financial statements since the date of the acquisition.

The following unaudited supplemental pro forma financial information is provided for informational purposes only and summarizes the combined results of operations as if the acquisition had occurred on January 1, 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,

	2024		2023		2024		2023
Revenue	$	180,588	$	153,690	$	354,445	$	300,038
Net loss	$	( 20,129 )	$	( 40,985 )	$	( 47,195 )	$	( 86,699 )

The unaudited supplemental pro forma results reflect certain adjustments for the amortization of acquired intangible assets, recognition of stock-based compensation, and acquisition-related transaction expenses. Such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the date indicated, nor is it indicative of our future operating results.

6. Intangible Assets, Net

Acquired intangible assets consist of developed technology, customer relationships and trademarks and are amortized on a straight-line basis over their estimated useful lives. The following tables summarize acquired intangible assets as of the periods presented below:


	June 30, 2025
	Gross Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life
	(amounts in thousands)						(in years)
Developed technology	$	41,196	$	( 15,958 )	$	25,238	4.9
Customer relationships	69,200		( 10,620 )		58,580		6.9
Trademarks	700		( 700 )		—		0.0
Total	$	111,096	$	( 27,278 )	$	83,818

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	December 31, 2024
	Gross Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life
	(amounts in thousands)						(in years)
Developed technology	$	41,196	$	( 13,423 )	$	27,773	5.4
Customer relationships	69,200		( 6,433 )		62,767		7.4
Trademarks	700		( 400 )		300		0.4
Total	$	111,096	$	( 20,256 )	$	90,840

Amortization of acquired intangible assets is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Cost of revenue	$	1,275	$	350	$	2,536	$	350

Sales and marketing	2,233		626		4,486		626


Total amortization expense	$	3,508	$	976	$	7,022	$	976

As of June 30, 2025, expected future amortization expense related to acquired intangible assets is as follows (in thousands):


Year Ending December 31,	Amortization Expense
Remainder of 2025	$	6,833
2026	13,553
2027	13,553
2028	13,590
2029	13,553
Thereafter	22,736
Total future amortization	$	83,818

7. Leases

We have operating leases primarily for office space. The leases have remaining lease terms of one to seven years , some of which include options to extend the lease for up to an additional six years . Our leases do not contain any residual value guarantee.

The following table presents various components of the lease costs (in thousands):


Operating Leases	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Operating lease cost	$	3,181	$	3,333	$	6,289	$	6,064
Short-term lease cost	153		116		283		217
Variable lease cost	1,228		949		2,531		1,860
Total lease cost	$	4,562	$	4,398	$	9,103	$	8,141

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The weighted-average remaining term of our operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:


Lease Term and Discount Rate	June 30, 2025		June 30, 2024
Weighted-average remaining lease term (in years)	3.9		4.7
Weighted-average discount rate	8.9	%	9.0	%

The following table presents supplemental information arising from lease transactions. Cash payments related to short-term leases are not included in the measurement of the operating lease liabilities, and as such, are excluded from the amounts below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Supplemental Cash Flow Information:	2025		2024		2025		2024
Cash payments included in the measurement of operating lease liabilities, net of tenant allowance receipts	$	3,715	$	498	$	4,752	$	4,001

As of June 30, 2025, maturities of the operating lease liabilities are as follows (in thousands):


	Operating Leases
Remainder of 2025	$	5,718
2026	11,998
2027	9,861
2028	8,724
2029	3,932
Thereafter	3,015
Total lease payments	43,248
Less: imputed interest	( 7,225 )
Present value of operating lease liabilities	$	36,023

As of June 30, 2025, there were no material future payments related to signed leases that have not yet commenced.

In July 2025, we entered into lease agreements related to our headquarters in San Mateo. See Note 15—Subsequent Events

8. Commitments and Contingencies

Other Contractual Commitments

Our other contractual commitments primarily consist of third-party cloud infrastructure agreements, service subscription purchase arrangements used to support operations at the enterprise level, and sponsorship arrangement to promote our brand and services. As of June 30, 2025, other contractual commitments totaling $ 284.0 million remain outstanding under these agreements through 2028.

Litigation and Loss Contingencies

On November 1, 2022, a purported Company stockholder filed a securities class action complaint in the U.S. District Court for the Northern District of California against us, certain of our current officers and directors, and underwriters of our initial public offering (IPO). On February 8, 2023, the court-appointed lead plaintiff and lead counsel. On April 14, 2023, lead plaintiff filed an amended complaint. The amended complaint alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by making material misstatements or

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omissions in offering documents filed in connection with our IPO. The amended complaint seeks unspecified damages, interest, fees, costs, and rescission on behalf of purchasers and/or acquirers of common stock issued in our IPO. On September 28, 2023, the court issued an order granting in part and denying in part defendants' motion to dismiss. On January 16, 2025, we filed a motion for summary judgment, which the court granted and entered judgment in our and the other defendants’ favor on April 10, 2025. Plaintiff filed a notice of appeal, and has until July 31, 2025 to appeal the judgment.

On March 20, 2023, a purported stockholder derivative complaint was filed in the U.S. District Court for the Northern District of California. The complaint names as defendants our current directors, as well as Freshworks, as nominal defendant, and asserts state and federal claims based on some of the same alleged misstatements as the securities class action complaint. The derivative complaint seeks unspecified damages, attorneys’ fees, and other costs. On June 21, 2023, the court stayed the case in light of the pending securities class action. On October 16, 2023, the court extended the stay of the case in light of the pending securities class action. We and the other defendants continue to vigorously defend against the claims in this action.

From time to time, we have been and may be in the future subject to other legal proceedings, claims, investigations, and government inquiries (collectively, legal proceedings) in the ordinary course of business. We have received and may receive claims from third parties asserting, among other things, infringement of their intellectual property rights, defamation, labor and employment rights, privacy, and contractual rights. There are no currently pending legal proceedings that we believe will have a material adverse impact on our business or condensed consolidated financial statements.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including losses arising out of intellectual property infringement claims made by third parties, if we have violated applicable laws, if we are negligent or commit acts of willful misconduct, and other liabilities with respect to its products and services and its business. In these circumstances, payment is typically conditional on the other party making a claim pursuant to the procedures specified in the particular contract. We also indemnify certain of our officers, directors and employees while they are serving in good faith in their respective capacities. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in its condensed consolidated financial statements.

9. Revenue From Contracts with Customers

We primarily derive revenue from subscription fees and related professional services, as well as through sale of software licenses with associated maintenance and professional services.

We sell subscriptions and software licenses directly to customers and indirectly through channel partners with 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. Subscription revenue is recognized ratably over the contract term when the cloud-based software is made available to customers.

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. For software licenses sold with maintenance and professional services, revenue from the software license is recognized when the software is made available to the

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customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term.

Professional services revenue is comprised of fees charged for services ranging from product configuration, data migration, systems integration, and training. We recognize professional services revenues as services are performed.

We record revenue net of sales or value-added taxes.

Disaggregation of Revenue

The following table summarizes revenue by our product and service offerings during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Subscription services, software licenses and maintenance	201,982		$	171,604	$	396,175	$	334,173

Professional services	2,696		2,527		4,776		5,101
Total revenue	$	204,678	$	174,131	$	400,951	$	339,274

See Note 10 for revenue by geographic location.

Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations

Unbilled receivables primarily represent revenue recognized in excess of billings from non-cancellable multi-year contract arrangements. As of June 30, 2025 and December 31, 2024, we had $ 7.3 million and $ 6.3 million of unbilled receivables, respectively. Unbilled receivables are included within accounts receivable, net on the condensed consolidated balance sheets.

Deferred revenue consists of customer billings in excess of revenue being recognized. As of June 30, 2025 and December 31, 2024, non-current deferred revenue of $ 3.5 million and $ 3.9 million, respectively, was included in other liabilities on the condensed consolidated balance sheet.

Revenue recognized during the three months ended June 30, 2025 and 2024 from amounts included in deferred revenue at the beginning of these periods was $ 152.1 million and $ 127.8 million, respectively. Revenue recognized during the six months ended June 30, 2025 and 2024 from amounts included in deferred revenue at the beginning of these periods was $ 243.8 million and $ 202.3 million, respectively.

The aggregate balance of remaining performance obligations as of June 30, 2025 was $ 568.9 million. We expect to recognize $ 414.3 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future

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periods.

Deferred Contract Acquisition Costs

The change in the balance of deferred contract acquisition costs during the periods presented is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Balance at beginning of the period	$	49,761	$	43,092	$	48,640	$	42,672
Add: Contract costs capitalized during the period	10,054		9,830		18,758		16,902
Less: Amortization of contract costs during the period	( 7,848 )		( 6,886 )		( 15,431 )		( 13,538 )
Balance at end of the period	$	51,967	$	46,036	$	51,967	$	46,036

10. Segment and Geographic Information

We operate in a single operating segment composed of the condensed consolidated financial results of Freshworks. Our Chief Executive Officer (CEO) is the chief operating decision maker (CODM) of Freshworks and the key measures of segment profit or loss that our CODM uses to allocate resources and assess performance is our revenue and consolidated net loss. Significant segment expenses reviewed by our CODM for our single operating segment comprise of stock-based compensation, amortization of acquired intangible assets, and other segment expenses. Other segment expenses utilize operating expenses recognized as research and development, selling and marketing, and general and administrative expenses within our condensed consolidated statement of operations less stock-based compensation and amortization of acquired intangible assets, and primarily related to personnel-related costs. Refer to Note 11—Stockholders' Equity and Stock-Based Compensation and Note 6—Intangible Assets, Net for information regarding amounts pertaining to stock-based compensation and amortization of acquired intangibles.

Revenue by geographic location is determined based on the customers' billing address. The following table summarizes revenue by geographic location (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
North America	$	95,140	$	78,907	$	186,611	$	152,937
Europe, Middle East and Africa	79,279		67,266		155,089		131,373
Asia Pacific	24,704		22,781		48,058		44,844
Other	5,555		5,177		11,193		10,120
Total revenue	$	204,678	$	174,131	$	400,951	$	339,274

Revenue from North America consists primarily of revenue from the United States. For the three months ended June 30, 2025 and 2024, revenue generated from the United States was approximately $ 86.1 million and $ 70.4 million, or approximately 42 % and 40 % of total consolidated revenue, respectively. For the six months ended June 30, 2025 and 2024, revenue generated from the United States was $ 168.5 million and $ 136.2 million, or 42 % and 40 % of total consolidated revenue, respectively.

The United Kingdom, included within Europe, Middle East and Africa in the table above, contributed $ 27.2 million and $ 22.2 million, or approximately 13 % and 13 % of total consolidated revenue for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, revenue generated from

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the United Kingdom was $ 54.3 million and $ 43.4 million, or 14 % and 13 % of the total consolidated revenue, respectively.

Long-lived assets consist primarily of property, plant and equipment and ROU assets. The following table summarizes long-lived assets by geographic information (in thousands):


	June 30, 2025		December 31, 2024
North America	$	24,996	$	20,052
Europe, Middle East and Africa	7,410		8,391
Asia Pacific	30,846		34,341
Total long-lived assets	$	63,252	$	62,784

Long-lived assets in North America are primarily located in the United States, and long-lived assets in Asia Pacific are primarily located in India.

11. Stockholders' Equity and Stock-Based Compensation

Share Repurchase

In November 2024, our board of directors (the Board) approved the share repurchase program, which authorized the repurchase of up to $ 400 million of our outstanding Class A common stock. During the three and six months ended June 30, 2025 we repurchased a total of 8,180,399 shares and 14,912,789 shares of Class A common stock, respectively, under this program in open market transactions for an aggregate purchase price of $ 113.6 million and $ 225.4 million, resulting in an average price of $ 13.89 per share and $ 15.11 per share, respectively. As of June 30, 2025, $ 159.1 million remained available for future share repurchases under the program. All shares of Class A common stock subsequently repurchased were retired. Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price over par value was recorded entirely to additional-paid-in capital, or in the absence of additional-paid-in capital, to accumulated deficit, in the condensed consolidated balance sheets.

Equity Compensation Plans

In August 2021, the Board adopted the 2021 Equity Incentive Plan (the 2021 Plan) and the 2021 Employee Stock Purchase Plan (ESPP). Pursuant to the 2021 Plan, the Board may grant incentive stock options to purchase shares of our common stock, non-statutory stock options to purchase shares of our common stock, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance restricted stock units (PRSUs) and other awards. The ESPP enables eligible employees to purchase shares of our Class A common stock. Both the 2021 Plan and ESPP include an automatic increase to their shares reserve on January 1 of each year as set forth in the respective plan documents.

In August 2022, the Compensation Committee of the Board adopted the 2022 Inducement Plan (the Inducement Plan) in accordance with Listing Rule 5635(c)(4) of the Nasdaq Stock Market. Under the Inducement Plan, nonstatutory stock options, stock appreciation rights, restricted stock, RSUs, PRSUs and other awards may be granted as an inducement material to an eligible person's entering into employment with us.

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Shares of common stock outstanding and reserved for future issuance were as follows (in thousands):


			June 30, 2025
2011 Stock Plan:
Options, RSUs and PRSUs outstanding			551
2021 Equity Incentive Plan:
Options, RSUs and PRSUs outstanding (1)			24,759
Shares reserved for future award issuances			89,465
2022 Inducement Plan:
Options and RSUs outstanding			2,412
Shares reserved for future award issuances			6,811
2021 Employee Stock Purchase Plan
Shares reserved for future award issuances			15,714
Total awards outstanding and shares of common stock reserved for issuance			139,712

(1) Outstanding shares include the 2025 Executive PRSUs as discussed below, based on 100 % achievement of target performance.

2021 Employee Stock Purchase Plan

Under the ESPP, the price at which common stock is purchased is equal to 85 % of the fair market value of a share of our common stock on the first day of the offering period or the applicable purchase date, whichever is lower. The fair market value of common stock will generally be the closing sales price on the determination date. The ESPP provides an offering period of 24 months. We issued 280,870 and 308,059 shares under the ESPP in the three and six months ended June 30, 2025 and 2024, respectively, in each case net of shares withheld and retired to satisfy withholding tax requirements for certain employees in jurisdictions outside the United States. The weighted average purchase price per share was $ 11.84 with aggregate net proceeds of $ 3.3 million in the three and six months ended June 30, 2025, and the weighted average purchase price was $ 11.85 with aggregate net proceeds of $ 3.6 million in the three and six months ended June 30, 2024.

The ESPP also includes a reset provision for the purchase price if the fair market value of a share of our common stock on the first day of any purchase period is less than or equal to the fair market value of a share of our common stock on the first day of an ongoing offering. If the reset provision is triggered, a new 24 -month offering period begins. Each triggering of the reset provision was considered a modification in accordance with ASC 718, Stock Based Compensation , and the modification charge recognized on a straight-line basis over the new offering period. Historically, the reset provision has been triggered by stock price declines, and the resulting modification have not been material on our stock-based compensation expense.

Stock-based compensation expense related to the ESPP was $ 1.1 million and $ 1.3 million for the three months ended June 30, 2025 and 2024, respectively, and $ 2.0 million and $ 2.5 million for the six months ended June 30, 2025 and 2024, respectively.

Determination of Fair Value of the ESPP

We estimate the fair value of the ESPP using the Black-Scholes option-pricing model, which requires certain complex valuation assumption inputs such as expected term, expected stock price volatility, risk-free interest rate, and dividend yield. The fair value of each of the four purchase periods is estimated separately. The following table summarizes the range of valuation assumptions used in estimating the fair value of the ESPP during the period.

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	Three and Six Months Ended June 30,
Valuation Assumption Inputs	2025	2024
Expected terms (in years)	0.5 - 1.0	0.5 - 2.0
Stock price volatility	48.2 % - 48.5 %	48.3 % - 57.2 %
Risk-free interest rate	4.13 % - 4.30 %	4.78 % - 5.41 %
Dividend yield	— %	— %

Stock Options

Stock options are generally granted with an exercise price equal to the fair market value of a share of common stock on the date of grant, have a 10 -year contractual term, and vest over a four-year period.


Share Information:	Number of Shares (in thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands) (1)
Balance as of December 31, 2024	2,569	$	10.30	7.4	$	15,066

Stock options expired	( 11 )	$	0.42
Stock options exercised	( 189 )	$	0.33

Balance as of June 30, 2025	2,369	$	11.14	7.4	$	9,138
Options vested and expected to vest as of June 30, 2025	2,369	$	11.14	7.4	$	9,138
Options exercisable as of June 30, 2025	1,290	$	13.19	7.0	$	2,341

(1) Aggregate intrinsic value for stock options represents the difference between the exercise price and the per share fair value of our common stock as of the end of the period, multiplied by the number of stock options outstanding, exercisable, or vested.

Restricted Stock Units

RSUs are granted at fair market value as of the date of the grant and typically vest over a four-year period.

RSU activity, which includes PRSUs, during the six months ended June 30, 2025 was as follows:


Share Information:	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
	(in thousands, except per share data)
Unvested, as of December 31, 2024	21,797	$	18.54
Granted	10,878	$	15.60
Vested (1)	( 5,000 )	$	21.20
Forfeited/Cancelled	( 2,322 )	$	16.36
Unvested, as of June 30, 2025	25,353	$	16.96

(1) During the six months ended June 30, 2025, total shares that vested were 5.0 million, of which 1.9 million were withheld for tax purposes.

The total fair value of vested RSUs during the three months ended June 30, 2025 and 2024 was $ 50.4 million and $ 43.5 million, respectively. For the six months ended June 30, 2025 and 2024, the total fair value of vested RSUs was $ 106.0 million and $ 88.6 million, respectively.

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Performance-Based Awards

Executive Chairman Awards

In September 2021, the Board approved a grant of 6,000,000 PRSUs to the Company’s then CEO, now current Executive Chairman, with a time-based service condition beginning January 1, 2022, and a market condition involving five separate stock price hurdles ranging from $ 70.00 to $ 200.00 per share for each of the five vesting tranches (2021 Executive Chairman Performance Award). In February 2024, the Board approved the cancellation of the 2021 Executive Chairman Performance Award and the grant of a new 2024 Executive Chairman Award, both effective March 1, 2024. The 2024 Executive Chairman Award comprised of 70 % time-based RSUs that vest quarterly over four years and 30 % PRSUs with terms consistent with the 2024 Executive PRSUs discussed below. The 2024 Executive Chairman Award is considered a modification and the remaining unrecognized stock-based compensation expense of $ 61.9 million from the 2021 Executive Chairman Performance Award is being recognized over the vesting period of the modified awards. During the three months ended June 30, 2025 and 2024, we recognized $ 4.2 million and $ 5.8 million, respectively, of stock-based compensation expense related to the 2024 Executive Chairman Award. For the six months ended June 30, 2025 and 2024, we recognized $ 9.4 million and $ 7.7 million, respectively, of stock-based compensation expense related to the 2024 Executive Chairman Award. As of March 31, 2025, the performance conditions for this award have been met and time-based vesting was the only condition yet to be satisfied over the remaining requisite service period.

Executive PRSUs

In March 2025 and February 2024, the Board approved the grant of PRSUs to certain members of the executive team (Executive PRSUs), subject to service and performance-based vesting conditions. The performance-based vesting conditions include revenue and free cash flow targets for each respective performance year, from January 1 to December 31, and vest over three years from the grant date. 70 % and 30 % of each Executive PRSU award will be earned based on our achievement of revenue and free cash flow targets, respectively. As of March 31, 2025, the performance conditions for the 2024 Executive PRSUs have been met and time-based vesting was the only condition yet to be satisfied over the remaining requisite service period. The 2025 performance target allows our executives to earn up to a maximum of 173.6 % of target performance in the aggregate for significant outperformance.

The fair value of each PRSU is based on the fair value of our common stock on the date of grant. Stock-based compensation associated with these Executive PRSUs is recognized using the accelerated attribution method over the requisite service period, based on our periodic assessment of the probability that the performance will be achieved. During the three months ended June 30, 2025 and 2024 , we r ecognized $ 2.5 million and $ 1.9 million of stock-based compensation expense related to the Executive PRSUs, respectively. For the six months ended June 30, 2025 and 2024 , we r ecognized $ 4.4 million and $ 2.5 million of stock-based compensation expense related to the Executive PRSUs, respectively.

Stock-Based Compensation

Total stock-based compensation expense recorded for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cost of revenue	$	1,437	$	1,682	$	2,955	$	3,203
Research and development (1)	8,618		10,355		17,831		19,021
Sales and marketing	11,819		18,376		25,228		35,677
General and administrative (2)	27,406		24,726		54,930		49,680
Stock-based compensation, net of amounts capitalized	49,280		55,139		100,944		107,581
Capitalized stock-based compensation	1,021		382		1,713		756
Total stock-based compensation expense	$	50,301	$	55,521	$	102,657	$	108,337

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(1) Stock-based compensation expense recorded to research and development in the condensed consolidated statements of operations excludes amounts that were capitalized for internal-use software.

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $ 10.4 million and $ 12.7 million for the three months ended June 30, 2025 and 2024, respectively, and $ 21.7 million and $ 26.2 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, unrecognized stock-based compensation expense related to unvested stock-based awards was as follows (in thousands, except for period data):


	June 30, 2025
	Unrecognized Stock-Based Compensation		Weighted-Average Period to Recognize Expense (in years)
RSUs and PRSUs	$	378,094	2.9
Stock options	5,211		1.1
ESPP	3,354		0.7
Total unrecognized stock-based compensation expense	$	386,659

12. Restructuring Charges

In November 2024, the Board approved a restructuring plan as a part of our efforts to align our talent with our strategic priorities and to improve operating efficiency. As a result, during the six months ended June 30, 2025, we recorded restructuring charges of $ 0.4 million, respectively, in our condensed consolidated statements of operations. The restructuring plan is complete, with no remaining liability as of June 30, 2025 .

The following table shows the total amount incurred and accrued related to restructuring charges (in thousands):


	Amount
Accrued restructuring costs as December 31, 2024	$	2,350
Restructuring charges incurred during the period	405
Amounts paid during the period	( 2,221 )
Other	( 534 )
Accrued restructuring costs as of June 30, 2025	$	—

13. Income Taxes

Our quarterly tax provision and the estimated annual effective tax rate are estimates based on several factors, including changes in pre-tax income (or loss), the mix of jurisdictions to which such income relates, discrete items (such as windfalls or shortfalls from stock-based compensation) in the period, which are offset with our valuation allowance. Income tax provision (benefit) was $ 5.6 million and $( 10.4 ) million for the three months ended June 30, 2025 and 2024, respectively, and income tax provision (benefit) was $ 9.5 million and $( 6.4 ) million for the six months ended June 30, 2025 and 2024, respectively. The change in income taxes for the three and six months ended June 30, 2025, compared to the same periods in the prior year, is primarily due to a tax benefit of $ 14.3 million generated from the Device42 acquisition in the prior year, and higher tax expense due to higher foreign profits before tax this year.

We continue to maintain a full valuation allowance against our U.S. federal and state deferred tax assets. While we have seen improvements in profitability, we will continue to evaluate all available positive and negative evidence in future periods to determine whether a release of the valuation allowance is warranted.

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14. Net Loss Per Share

Basic net loss per share attributable to common stockholders is computed by dividing the net loss by the number of weighted-average outstanding shares of common stock. Diluted net loss per share attributable to common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result. We consider our stock options and RSUs as potential common stock equivalents, but excluded them from the computation of diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2025 and 2024, as their effect was antidilutive.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders, are the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Numerator:
Net loss	$	( 1,739 )	$	( 20,184 )	$	( 3,043 )	$	( 43,509 )








Denominator:




Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders - basic and diluted	294,435		299,805		297,839		298,836


Net loss per share attributable to Class A and Class B common stockholders - basic and diluted	$	( 0.01 )	$	( 0.07 )	$	( 0.01 )	$	( 0.15 )

The following table summarizes the potential common equivalents that were excluded from the computation of diluted net loss per share attributable to Class A and Class B common stockholders for the periods presented (in thousands):


	Three and Six Months Ended June 30,
	2025	2024

RSUs and PRSUs	25,353	23,933
Stock options	2,369	2,785
ESPP	95	126
Total	27,817	26,844

15. Subsequent Events

One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. This legislation includes provisions allowing for the immediate expensing of domestic U.S. research and development costs, the immediate expensing of certain capital expenditures, and other significant changes to the U.S. tax code. We expect the impact on our tax expense for the third and fourth quarters of 2025 to be immaterial, primarily due to net operating loss carryforwards. We continue to evaluate the overall impact of the new legislation on our consolidated financial statements, including provisions that become effective beginning in 2026, and will evaluate the impact on future periods as further guidance becomes available.

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San Mateo Lease

In July 2025, we entered into a sublease agreement for adjacent office space at our headquarters, with a lease term expected to commence no later than November 2025 and end in November 2028. Concurrently, we entered into an agreement with the primary landlord to extend the lease term of our existing headquarters and to expand into the sublease space following the sublease's expiration in November 2028. Both the extended lease term and the expanded office space will expire in July 2031. The total lease commitment, net of expected tenant incentives, is estimated to be approximately $ 18.0 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2024 included in the Annual Report on Form 10-K. As described in the section titled “Special Note About Forward-Looking Statements,” the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors.”

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. 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.

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. With the acquisition of D42 Parent, Inc. in 2024, we also sell software licenses with associated maintenance.

Our customer base and operations have scaled over time. Our total revenue was $204.7 million and $174.1 million in the three months ended June 30, 2025 and 2024, respectively, representing year-over-year growth of 18%; and $401.0 million and $339.3 million in the six months ended June 30, 2025 and 2024, respectively, representing year-over-year growth of 18%. We incurred operating losses of $8.7 million and $43.8 million for three months ended June 30, 2025 and 2024, respectively; and $19.1 million and $76.0 million for the six months ended June 30, 2025 and 2024, respectively.

Macroeconomic and Other Factors

Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, tariffs, the threat of new or increased tariffs, escalating trade tensions, 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. For example, during the recent quarters, our net dollar retention rate was adversely impacted by lower expansion within existing customers driven by macroeconomic pressures and we expect these pressures to persist for the foreseeable future. A dditionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market still exist. For each of the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024 , we had approximately 27% of revenue exposure related to the euro and British Pound. If adverse conditions aris e, 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. The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, future results of operations, and financial condition.

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Key Business Metrics

We monitor and review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. Key business metrics and our financial performance are impacted by various factors discussed below, including fluctuations in the value of foreign currencies relative to the U.S. dollar. We also review customer data used for calculating these key business metrics on an ongoing basis and make necessary modifications resulting from such review. We believe these key business metrics provide meaningful supplemental information for management and investors in assessing our operating performance.


	As of June 30,
	2025		2024		% Growth
Number of customers contributing more than $5,000 in ARR	23,975		21,744		10	%
ARR from customers contributing more than $5,000 in ARR as a percentage of total ARR	91	%	90	%
Net dollar retention rate	106	%	106	%

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 believe that the number of customers that contribute more than $5,000 in ARR is an indicator of our success in attracting, retaining, and expanding with larger businesses.

Net Dollar Retention Rate

Our net dollar retention rate measures our ability to increase revenue across our existing customer base through expansion of users and products associated with a customer as offset by our churn and contraction in the number of users and products associated with a customer. To calculate net dollar retention rate as of a particular date, we first determine “Entering ARR,” which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the “Ending ARR,” which is ARR from the same set of customers as of the end of the reporting period. 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 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. 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. While monthly subscribers as a group have historically maintained or increased their subscriptions over time, there is no guarantee that any particular customer on a monthly subscription will renew its subscription in any given month, and therefore the calculation of ARR for these monthly subscriptions may not accurately reflect revenue to be received over a 12-month period from such customers, and net dollar retention rate may reflect a higher rate than the actual rate if customers on monthly subscriptions choose not to renew during the course of the 12 months. Monthly subscriptions represented 13% and 15% of ARR as of June 30, 2025 and 2024, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate. 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 remained flat at 106% as of June 30, 2025, compared to 106% as of June 30, 2024, primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by a favorable foreign currency impact and slight improvement on overall churn rate. We expect our net dollar retention

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rate may 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.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), we believe the following non-GAAP financial measures are useful in evaluating our operating performance: non-GAAP income from operations, non-GAAP net income, and free cash flow. 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.

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. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only.

We exclude the following items from one or more of our non-GAAP financial measures:

• Stock-based compensation expense. We exclude stock-based compensation, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this expense provides meaningful supplemental information regarding operational performance. In particular, stock-based compensation expense is not comparable across companies given the variety of valuation methodologies and assumptions.

• Employer payroll taxes on employee stock transactions. We exclude the amount of employer payroll taxes on equity awards from certain of our non-GAAP financial measures because they are dependent on our stock price at the time of vesting or exercise and other factors that are beyond our control and do not believe these expenses have a direct correlation to the operation of the business.

• Amortization of acquired intangibles. We exclude amortization of acquired intangibles, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operating performance of our business.

• Restructuring charges. 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.

• Income tax effect and adjustments. 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.

Non-GAAP Income From Operations and Non-GAAP Net Income

We define non-GAAP income 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.

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We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges, and amortization of acquired intangibles, and income tax adjustments.

The following tables present a reconciliation of our GAAP loss from operations to our non-GAAP income from operations and our GAAP net loss to our non-GAAP net income for each of the periods presented (in thousands):

Non-GAAP Income from Operations


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Loss from operations	$	(8,656)	$	(43,787)	$	(19,072)	$	(75,954)
Non-GAAP adjustments:
Stock-based compensation expense	49,280		55,139		100,944		107,581
Employer payroll taxes on employee stock transactions	702		785		1,901		2,266
Amortization of acquired intangibles	3,508		976		7,022		976
Restructuring charges	—		—		405		—
Non-GAAP income from operations	$	44,834	$	13,113	$	91,200	$	34,869

Non-GAAP Net Income


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net loss	$	(1,739)	$	(20,184)	$	(3,043)	$	(43,509)
Non-GAAP adjustments:
Stock-based compensation expense	49,280		55,139		100,944		107,581
Employer payroll taxes on employee stock transactions	702		785		1,901		2,266
Amortization of acquired intangibles	3,508		976		7,022		976
Restructuring charges	—		—		405		—
Income tax adjustments	782		(13,729)		1,192		(13,380)
Non-GAAP net income	$	52,533	$	22,987	$	108,421	$	53,934

Free Cash Flow

We define free cash flow as net cash provided by operating activities, less purchases of property and equipment and capitalized internal-use software costs. 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.

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The following table presents a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable measure calculated in accordance with GAAP for each of the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net cash provided by operating activities	$	58,591	$	36,336	$	116,564	$	76,955
Less:
Purchases of property and equipment	(380)		(2,315)		(1,676)		(3,054)
Capitalized internal-use software	(4,676)		(1,199)		(7,448)		(2,406)
Free cash flow, including restructuring costs (1)	$	53,535	$	32,822	$	109,661	$	71,495
Net cash provided by (used in) investing activities	$	(42,842)	$	(182,724)	$	3,389	$	(220,495)
Net cash used in financing activities	$	(124,014)	$	(11,364)	$	(254,287)	$	(34,318)

(1) Free cash flow includes $0.7 million and $2.2 million of restructuring costs paid during the three and six months ended June 30, 2025.

Components of Our Results of Operations

Revenue

Substantially all of our revenue is derived from subscriptions, which is comprised of fees paid by customers for accessing our cloud-based software products during the term of the subscription. Subscription revenue is recognized ratably over the contract term beginning on the commencement date of each subscription, which is the date that the cloud-based software is made available to customers. We also sell software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of D42 Parent, Inc. in June 2024. Software license revenue is recognized upon making the software available to the customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term.

Professional services revenue comprises less than 5% of total revenue and includes fees charged for product configuration, data migration, systems integration, and training. Professional services revenue is recognized as services are performed.

We generally enter into subscription and software license agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. Our payment terms generally require the customers to pay the invoiced amount in advance or within 30 days from the invoice date. Our maintenance and professional services are generally billed in advance along with the related subscription and software license arrangements.

Cost of Revenue

Cost of revenue consists primarily of personnel-related expenses (including salaries, related benefits, and stock-based compensation expense) for employees associated with our cloud-based infrastructure, payment gateway fees, voice, product support, and professional services organizations, as well as costs for hosting capabilities. Cost of revenue also includes third-party license fees, amortization of acquired technology intangibles, amortization of capitalized internal-use software, and allocation of general overhead costs such as facilities and information technology.

We expect our cost of revenue to continue to increase in dollar amount as we invest additional resources in our cloud-based infrastructure and customer support and professional services organizations. 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.

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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. Allocated shared costs are reflected in each of the expense categories described below, in addition to cost of revenue as described above.

Operating Expenses

Research and Development. 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 product development services and consulting expenses, and depreciation expense for equipment used in research and development activities. We capitalize a portion of our research and development expenses that meet the criteria for capitalization of internal-use software. All other research and development costs are expensed as incurred.

We believe that continued investment in our products is important for our growth, and as such, we expect that our research and development expenses will continue to increase in dollar amount for the foreseeable future, but such expenses as a percentage of revenue may fluctuate from period to period depending upon the timing and amount of these expenses.

Sales and Marketing. 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 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. As a result, we expect that our sales and marketing expenses will continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term. This percentage may fluctuate from period to period depending upon the timing and amount of these expenses.

General and Administrative. General and administrative expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for certain executives and other general and administrative personnel, third-party professional services fees, costs of director and officer insurance, and costs associated with acquisitions of businesses, software license fees, and rental of office premises.

We expect to increase personnel-related and professional service expenses associated with ongoing compliance and reporting obligations and costs to broaden our IT related infrastructure. Our general and administrative expenses are expected to continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term. This percentage may fluctuate from period to period depending upon the timing and amount of our general and administrative expenses.

Restructuring Charges . Restructuring charges primarily consist of employee severance and other employee termination benefits associated with the restructuring plan that we initiated in November 2024. Refer to Note 12—Restructuring Charges of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Interest and Other Income (Expense), Net

Interest and other income (expense), net primarily consists of interest income from our investment portfolios, amortization of premium or discount on marketable securities, and foreign currency gains and losses.

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Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes consists primarily of income taxes related to U.S. states and foreign jurisdictions in which we conduct business. 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 (benefit from) income taxes could also include changes in valuation allowance. 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.

Results of Operations

The following table sets forth our condensed consolidated statements of operations data for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue	$	204,678	$	174,131	$	400,951	$	339,274
Cost of revenue (1)	31,142		28,175		61,020		54,065
Gross profit	173,536		145,956		339,931		285,209
Operating expenses:
Research and development (1)	39,943		40,993		79,944		75,677
Sales and marketing (1)	95,223		104,248		184,381		198,890
General and administrative (1)	47,026		44,502		94,273		86,596
Restructuring charges	—		—		405		—
Total operating expenses	182,192		189,743		359,003		361,163
Loss from operations	(8,656)		(43,787)		(19,072)		(75,954)
Interest and other income, net	12,547		13,247		25,516		26,042
Income (loss) before income taxes	3,891		(30,540)		6,444		(49,912)
Provision for (benefit from) income taxes	5,630		(10,356)		9,487		(6,403)
Net loss	$	(1,739)	$	(20,184)	$	(3,043)	$	(43,509)

__________________

(1) Includes stock-based compensation expense as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cost of revenue	$	1,437	$	1,682	$	2,955	$	3,203
Research and development (1)	8,618		10,355		17,831		19,021
Sales and marketing	11,819		18,376		25,228		35,677
General and administrative (2)	27,406		24,726		54,930		49,680
Total stock-based compensation expense	$	49,280	$	55,139	$	100,944	$	107,581

(1) Stock-based compensation expense recorded to research and development in the condensed consolidated statements of operations excludes amounts that were capitalized for internal-use software.

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $10.4 million and $12.7 million for the three months ended June 30, 2025 and 2024, respectively and $21.7 million and $26.2 million for the six months ended June 30, 2025 and 2024, respectively.

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The following table sets forth our condensed consolidated statements of operations data for the periods presented, as a percentage of revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue	100	%	100	%	100	%	100	%
Cost of revenue	15		16		15		16
Gross profit	85		84		85		84
Operating expense:
Research and development	20		24		20		22
Sales and marketing	46		60		46		59
General administrative	23		26		24		26
Restructuring charges	—		—		—		—
Total operating expenses	89		110		90		107
Loss from operations	(4)		(26)		(5)		(23)
Interest and other income, net	6		8		6		8
Income (loss) before income taxes	2		(18)		1		(15)
Provision for (benefit from) income taxes	3		(6)		2		(2)
Net loss	(1)	%	(12)	%	(1)	%	(13)	%

Comparison of the Three Months Ended June 30, 2025 and 2024

Revenue


	Three Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Subscription services, software licenses and maintenance	$	201,982	$	171,604	$	30,378	18	%

Professional services	2,696		2,527		169		7	%
Total revenue	$	204,678	$	174,131	$	30,547	18	%

Revenue increased by $30.5 million, or 18%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Of the total increase in revenue, approximately $11.4 million was attributable to revenue from existing customers as of June 30, 2024, net of contraction and churn, and approximately $19.1 million was attributable to revenue from new customers acquired during the twelve months ended June 30, 2025, net of contraction and churn. Our net dollar retention rate of 106% as of June 30, 2025 reflects the expansion within existing customers and the sale of additional products to these customers. Our net dollar retention rate remained flat from 106% as of June 30, 2024 primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by a favorable foreign currency impact and a slight improvement in our overall churn rate. The majority of our revenue continues to be generated from subscription services.

Cost of Revenue and Gross Margin


	Three Months Ended June 30,						Change
	2025			2024			$		%
	(dollars in thousands)
Cost of revenue	$	31,142		$	28,175		$	2,967	11	%
Gross Margin	85		%	84		%

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Cost of revenue increased by $3.0 million, or 11%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to increases of $0.9 million in amortization of acquired developed technologies from the acquisition of D42 Parent, Inc., $0.8 million in personnel-related costs primarily due to annual compensation adjustments and higher variable incentive compensation and $0.8 million in third-party hosting costs as we expand capacity to support our growing customer base. Our gross margin increased to 85% for the three months ended June 30, 2025 from 84% in the same period of the prior year, as we increased our revenue and continue to realize benefits from economies of scale primarily related to our third-party hosting costs.

Operating Expenses


	Three Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Research and development	$	39,943	$	40,993	$	(1,050)	(3)	%
Sales and marketing	95,223		104,248		(9,025)		(9)	%
General and administrative	47,026		44,502		2,524		6	%

Total operating expenses	$	182,192	$	189,743	$	(7,551)	(4)	%

The $7.6 million or 4%, decrease in our operating expenses for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, was primarily driven by lower headcount following the restructuring, which decreased stock-based compensation expenses and personnel-related costs. This decrease is partially offset by the impact of annual compensation adjustments and higher variable incentive compensation which increased personnel-related costs. Additionally, the acquisition of D42 Parent, Inc. resulted in higher amortization of acquired developed technologies.

Research and Development

Research and development expense decreased by $1.1 million, or 3%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease was primarily driven by lower stock-based compensation expense of $1.8 million from employee terminations and fully vested equity awards and $3.6 million of higher capitalized internally developed software costs as a result of increased development activity. The decreases are partially offset by an increase in personnel-related costs of $2.8 million due to annual compensation adjustments and higher variable incentive compensation.

Sales and Marketing

Sales and marketing expense decreased by $9.0 million, or 9%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease was primarily driven by lower stock-based compensation expense of $6.6 million from employee terminations, fully vested equity awards, and the transition of our President to CEO mid 2024, $1.5 million in personnel-related costs primarily due to lower headcount offset by annual compensation adjustments and higher variable incentive compensation, and $3.1 million in advertisement, marketing and branding costs. These decreases were partially offset by increases of $1.5 million in amortization of acquired intangible assets from the acquisition of D42 Parent, Inc. and $1.0 million in software license fees.

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General and Administrative

General and administrative expense increased by $2.5 million, or 6%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily driven by increases of $2.7 million in stock-based compensation expense, mainly due to the transition of our President to CEO mid 2024 and $1.2 million in personnel-related costs primarily due to annual compensation adjustments and higher variable incentive compensation. The increases were partially offset by a decrease of $1.3 million in consulting fees, primarily related to acquisition-related expenses from the D42 Parent, Inc. acquisition.

Interest and Other Income (Expense), Net


	Three Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Interest income	$	10,155	$	13,775	$	(3,620)	(26)	%
Other income (expense), net	2,392		(528)		2,920		*
Interest and other income, net	$	12,547	$	13,247	$	(700)	(5)	%

* not meaningful

Interest income decreased by $3.6 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to lower balances maintained in our marketable securities portfolios.

Other income (expense), net changed by $2.9 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to changes in foreign exchange rates in British Pound and euro against the U.S. dollar.

Provision for (Benefit from) Income Taxes


	Three Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Provision for (benefit from) income taxes	$	5,630	$	(10,356)	$	15,986	*

* not meaningful

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the three months ended June 30, 2025 and 2024, we recorded an income tax provision (benefit) of $5.6 million and $(10.4) million on income (loss) before taxes of $3.9 million and $(30.5) million, respectively. The net increase in income tax provision of $15.9 million was primarily related to a tax benefit of $14.3 million from the Device42 acquisition as a result of releasing the valuation allowance due to sufficient income in prior year, and a higher pre-tax profit this year in certain foreign jurisdictions.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to the U.S. tax code, including the immediate expensing of domestic U.S. research and development costs, the immediate expensing of certain capital expenditures, and other tax code changes effective beginning in 2026. We continue to evaluate the overall impact of the legislation on our Consolidated Financial Statements and will evaluate the impact on future periods as further guidance becomes available.

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Comparison of the Six Months Ended June 30, 2025 and 2024

Revenue


	Six Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Subscription services, software licenses and maintenance	$	396,175	$	334,173	$	62,002	19	%

Professional services	4,776		5,101		(325)		(6)	%
Total revenue	$	400,951	$	339,274	$	61,677	18	%

Revenue increased by $61.7 million, or 18%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Of the total increase in revenue, approximately $29.1 million was attributable to revenue from existing customers as of June 30, 2024, net of contraction and churn, and approximately $32.6 million was attributable to revenue from new customers acquired during the twelve months ended June 30, 2025, net of contraction and churn. The substantial majority of our revenue continues to be generated from subscription services.

Cost of Revenue and Gross Margin


	Six Months Ended June 30,						Change
	2025			2024			$		%
	(dollars in thousands)
Cost of revenue	$	61,020		$	54,065		$	6,955	13	%
Gross Margin	85		%	84		%

Cost of revenue increased by $7.0 million, or 13%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to increases of $2.2 million in amortization of acquired developed technologies acquired from D42 Parent, Inc., $1.9 million in personnel-related costs primarily due to annual compensation adjustments and changes in retirement benefit obligations for employees in India and $1.3 million in third-party hosting costs as we expand capacity to support our growing customer base. Our gross margin increased to 85% for the six months ended June 30, 2025 from 84% in the same period of the prior year, as we increased our revenue and realized benefits from economies of scale primarily related to our third-party hosting costs.

Operating Expenses


	Six Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Research and development	$	79,944	$	75,677	$	4,267	6	%
Sales and marketing	184,381		198,890		(14,509)		(7)	%
General and administrative	94,273		86,596		7,677		9	%
Restructuring charges	405		—		405		100	%
Total operating expenses	$	359,003	$	361,163	$	(2,160)	(1)	%

The $2.2 million, or 1%, decrease in our operating expenses in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by lower headcount following the restructuring which deceased stock-based compensation expenses and personnel-related costs. This decrease is partially offset by the impact of annual compensation adjustments, changes in retirement benefit obligations for employees in India, and higher variable incentive compensation. Additionally, the acquisition of D42 Parent, Inc. resulted in higher amortization of acquired intangible assets.

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Research and Development

Research and development expense increased by $4.3 million, or 6%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by increases of $8.2 million in personnel-related costs, driven by annual compensation adjustments, changes in retirement benefit obligations for employees in India, and higher variable incentive compensation. These increases were partially offset by lower stock-based compensation expense of $1.2 million due to employee terminations and fully vested equity awards and higher capitalized internally developed software cost of $5.1 million as a result of increased development activity.

Sales and Marketing

Sales and marketing expense decreased by $14.5 million, or 7%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was primarily driven by lower stock-based compensation of $10.5 million from employee terminations and the transition of our President to CEO mid 2024, $2.5 million driven by personnel-related costs from lower headcount, $5.6 million in advertisement, marketing and branding costs, and $1.5 million in consulting fees. These decreases were partially offset by increases of $3.6 million in amortization of acquired intangible assets from the D42 Parent, Inc. acquisition and $1.7 million in software license fees.

General and Administrative

General and administrative expense increased by $7.7 million, or 9%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by $3.2 million in personnel-related costs, mainly due to annual compensation adjustments and higher variable incentive compensation, and $5.3 million in stock-based compensation expense, mainly due to the transition of our President to CEO.

Restructuring charges

Restructuring charges of $0.4 million for the six months ended June 30, 2025, consisted of employee severance and termination benefits related to the restructuring plan that we initiated in November 2024.

Interest and Other Income (Expense), Net


	Six Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Interest income	$	21,449	$	27,682	$	(6,233)	(23)	%
Other income (expense), net	4,067		(1,640)		5,707		*
Interest and other income, net	$	25,516	$	26,042	$	(526)	(2)	%

* not meaningful

Interest income decreased by $6.2 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to lower balances maintained in our marketable securities portfolios.

Other income (expense), net changed by $5.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a favorable impact from changes in foreign exchange in British Pound, euro, and Indian rupee against the U.S. dollar.

Provision for (Benefit from) Income Taxes


	Six Months Ended June 30,				Change
	2025		2024		$		%
	(dollars in thousands)
Provision for (benefit from) income taxes	$	9,487	$	(6,403)	$	15,890	*

* not meaningful

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We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the six months ended June 30, 2025 and 2024, we recorded an income tax provision (benefit) of $9.5 million and $(6.4) million, respectively. The net increase in tax benefit of $15.9 million was primarily related to a tax benefit of $14.3 million from the Device42 acquisition as a result of releasing the valuation allowance due to sufficient income in prior year, and a higher pre-tax profits this year in certain foreign jurisdictions.

Liquidity and Capital Resources

As of June 30, 2025, our principal sources of liquidity were cash and cash equivalents of $486.0 million and marketable securities of $440.2 million, which were primarily held for working capital resources.

As of June 30, 2025, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $116.6 million for the six months ended June 30, 2025.

Our material cash requirements from known contractual obligations consists primarily of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure, service subscription, and sponsorship arrangement to promote our brand and services. See Note 7 — Leases and Note 8 — Commitments and Contingencies for additional discussion of our principal contractual commitments.

In November 2024, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock. For the six months ended June 30, 2025, we repurchased a total of 14.9 million shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $225.4 million. As of June 30, 2025, $159.1 million remained available for future share repurchases.

As of June 30, 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 our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of our existing cash available balances, cash flow from operations, and issuances of equity securities or debt offerings, as needed. Our future capital requirements will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and other business initiatives and the continuing market adoption of our products. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing in connection with such activities. If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict our operational flexibility. Any additional equity or convertible debt financing may be dilutive to stockholders. 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.

The following table summarizes our cash flows for the periods presented (in thousands):


	Six Months Ended June 30,
	2025		2024
Net cash provided by operating activities	$	116,564	$	76,955
Net cash provided by (used in) investing activities	3,389		(220,495)
Net cash used in financing activities	(254,287)		(34,318)

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Cash Flows from Operating Activities

Net cash provided by operating activities of $116.6 million for the six months ended June 30, 2025 reflects our net loss of $3.0 million, adjusted for non-cash items such as stock-based compensation of $100.9 million, amortization of deferred contract acquisition costs of $15.4 million, depreciation and amortization of $12.6 million, and non-cash lease expense of $4.6 million; offset by $3.7 million from discount amortization of marketable securities. Additionally, net cash outflows from changes in operating assets and liabilities were $10.3 million. The net cash outflows from changes in operating assets and liabilities were primarily due to increases of $22.7 million in prepaid expenses and other assets and $18.8 million in deferred contract acquisition costs; offset by increases of $15.4 million in deferred revenue and $7.8 million in accrued and other liabilities, and a decrease of $7.0 million in accounts receivable.

Net cash provided by operating activities of $77.0 million for the six months ended June 30, 2024 reflects our net loss of $43.5 million, adjusted for non-cash items such as stock-based compensation of $107.6 million, amortization of deferred contract acquisition costs of $13.5 million, depreciation and amortization of $6.7 million and non-cash lease expense of $4.4 million; offset by $13.8 million from changes in deferred income taxes and $8.7 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $11.0 million. The net cash inflows from changes in operating assets and liabilities were due to a decrease of $4.9 million in accounts receivable and increases in operating liabilities of $17.2 million in deferred revenue, $8.9 million in accrued and other liabilities and $6.0 million in accounts payable; offset by increases in operating assets of $16.9 million in deferred contract acquisition costs and $7.2 million in prepaid expenses and other assets; and a decrease of $2.0 million in operating lease liabilities.

Cash Flows from Investing Activities

Net cash provided by investing activities of $3.4 million for the six months ended June 30, 2025 consisted of $12.5 million in maturities and redemptions of marketable securities, net of purchases; offset by $7.4 million in capitalized internal-use software and $1.7 million in purchases of property and equipment.

Net cash used in investing activities of $220.5 million for the six months ended June 30, 2024 consisted of $213.9 million cash paid for business combination, $1.2 million in purchases of marketable securities, net of proceeds from maturities and sales, $2.4 million in capitalized internal-use software and $3.1 million in purchases of property and equipment.

Cash Flows from Financing Activities

Net cash used in financing activities of $254.3 million for the six months ended June 30, 2025 consisted of $227.2 million cash paid to repurchase shares of our common stock, including $1.8 million of unsettled common stock repurchases as of December 31, 2024, and $30.5 million in payment of withholding taxes on net share settlement of equity awards; offset by $3.3 million of proceeds from the issuance of common stock under our employee stock purchase plan, net of taxes withheld.

Net cash used in financing activities of $34.3 million for the six months ended June 30, 2024 consisted of $38.0 million in payment of withholding taxes on net share settlement of equity awards, offset by $3.6 million of proceeds from the issuance of common stock under our employee stock purchase plan, net of taxes withheld.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates, assumptions and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change the results from those reported. We evaluate our estimates, assumptions, and judgments on an ongoing basis.

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There have been no changes to our critical accounting policies and estimates during the three and six months ended June 30, 2025 as compared to those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K filed with the SEC on February 20, 2025.

Recent Accounting Pronouncements

See Note 1—Basis of Presentation and Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. In addition, we are subject to broader market risk that is created by the global market disruptions and uncertainties resulting from macroeconomic challenges, geopolitical events, tariffs, trade and other international disputes.

Foreign Currency Exchange Risk

The functional currency of our foreign subsidiaries is the U.S. dollar. The majority of our sales are derived in U.S. dollars. Our operating expenses incurred by our foreign subsidiaries are denominated in their respective local currencies, and remeasured at the exchange rates in effect on the transaction date. Additionally, fluctuations in foreign exchange rates may result in the recognition of transaction gains and losses in our condensed consolidated statements of operations. Our condensed consolidated results of operations and cash flows are, therefore, subject to foreign exchange rate fluctuations, particularly changes in the Indian Rupee, British Pound and euro, and may be adversely affected in the future due to changes in foreign exchange rates. Based on a sensitivity analysis we have performed as of June 30, 2025, an adverse 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 $12.1 million.

To reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates, we entered into foreign exchange forward contracts to hedge a portion of our forecasted foreign currency expenses denominated in Indian Rupee. Gains or losses on these contracts are generally recognized in income at the time the related transactions being hedged are recognized. As of June 30, 2025, the total notional amount of outstanding designated foreign currency forward contracts was $63.6 million. The fair value of derivative assets and liabilities as of June 30, 2025, and all related unrealized and realized gains and losses during the three and six months ended June 30, 2025 and 2024 were not material.

We do not use foreign exchange contracts for speculative trading purposes and we may enter into other hedging transactions in the future if our exposure to foreign currency becomes more significant. We monitor our exposures in other currencies and assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis.

Interest 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 $486.0 million and marketable securities of $440.2 million as of June 30, 2025. We do not enter into investments for trading or speculative purposes. The carrying amount of our cash equivalents reasonably approximate fair value, due to the maturities of three months or less of these instruments. Our investments are subject to market risk due to changes in interest rates, which may affect our interest income and the fair value of our investments. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Due in part to these factors, our future investment income may fall short of our expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we

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classify our marketable securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.

Based on an interest rate sensitivity analysis we have performed as of June 30, 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required to be set forth under this Item 1 is incorporated by reference to Note 8. Commitments and Contingencies — Litigation and Loss Contingencies in the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties described under the section “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 20, 2025 as well as the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before making an investment decision. These identified risks and uncertainties may have a material adverse effect on our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our Class A common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently believe are not material may also become important factors that affect our business. There have been no material changes from the risks and uncertainties previously disclosed under the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Use of Proceeds

None.

Issuer Purchases of Equity Securities

Stock repurchase activity during the three months ended June 30, 2025 was as follows (in thousands, except number of shares and average price paid per share):


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)
April 1, 2025 - April 30, 2025	4,226,826	$	12.81	4,226,826	$	218,557
May 1, 2025 - May 31, 2025	2,462,769	$	14.88	2,462,769	$	181,902
June 1, 2025 - June 30, 2025	1,490,804	$	15.29	1,490,804	$	159,110
Total	8,180,399			8,180,399

(1) All of the shares purchased during the three months ended June 30, 2025 were acquired pursuant to our publicly announced share repurchase program described in footnote 3 below.

(2) The average price paid per share includes brokerage commissions and excludes excise tax.

(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. Under the repurchase program, we may repurchase shares of our outstanding Class A common stock from time to time in the open market, through privately negotiated transactions and/or other means in compliance with the Exchange Act and the rules and regulations thereunder. 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. 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.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended June 30, 2025, our officers (as defined in Rule 16a-1(f) under the Exchange Act) and directors adopted or terminated the contracts, instructions or written plans for the purchase or sale of the Company's securities, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, as set forth in the table below.

Name

Title

Action

Adoption Date

Expiration Date

Total number of shares of Class A common stock to be sold

Philippa Lawrence

Chief Accounting Officer

Adoption

June 16, 2025

March 27, 2026

Up to 34,178 shares

Tyler Sloat

Chief Operating Officer and Chief Financial Officer

Adoption

May 27, 2025

August 31, 2026

Up to 500,000 shares

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ITEM 6. EXHIBITS

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation.

8-K

001-40806

3.1

September 24, 2021

3.2

Amended and Restated Bylaws.

S-1/A

333-259118

3.4

September 13, 2021

31.1

Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1#

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2#

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

__________________

# The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Freshworks Inc.

Date:

July 29, 2025

By:

/s/ Dennis Woodside

Dennis Woodside

Chief Executive Officer and President (Principal Executive Officer)

Date:

July 29, 2025

By:

/s/ Tyler Sloat

Tyler Sloat

Chief Operating Officer and Chief Financial Officer (Principal Financial Officer)

Date:

July 29, 2025

By:

/s/ Philippa Lawrence

Philippa Lawrence

Chief Accounting Officer (Principal Accounting Officer)

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Part I. Financial Information Item 1. Financial Statements (unaudited)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

3.1 Amended and Restated Certificate of Incorporation. 8-K 001-40806 3.1 September 24, 2021 3.2 Amended and Restated Bylaws. S-1/A 333-259118 3.4 September 13, 2021 31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1# Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2# Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

FRSH 10-Q Quarter ended June 30, 2025

Exhibits