Freshworks Trims Q2 Loss By 91% YoY To $1.7 Mn

Nasdaq-listed homegrown SaaS major Freshworks trimmed its consolidated net loss by 91.4% to $1.7 Mn in the second quarter of the calendar year 2025 (Q2 2025) from $20.2 Mn in the previous year, on the back of a consistent rise in customer adoption and operating efficiency due to AI.

However, the company’s net loss widened by 33.3% from $1.3 Mn on a sequential basis.

Revenue jumped 17.5% to $204.7 Mn during the quarter under review from $174.1 Mn in Q2 2024. On a quarterly basis, it grew by 4.3% from $194.6 Mn.

The SaaS company said the number of customers continued to contribute more than $5,000 in annual recurring revenue (ARR), an increase of 10% year-over-year (YoY) to 23,975 in the second quarter.

As per Freshworks, ARR comprises the sum total of subscription, software license, and maintenance revenue that the company would contractually expect to recognise over the next 12 months from all customers at a point in time.

Founded in 2010 by Girish Mathrubootham and Shanmugam Krishnasamy, Freshworks was established in San Mateo, California, as a customer relationship management platform, serving small and medium businesses. In recent times, the company has shifted its interest in catering to mid-market and enterprise customers.

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

“We believe our strong momentum through the first half of the year reflects that businesses are increasingly turning to Freshworks to reduce complexity. They want AI-powered employee and customer service solutions that are fast to implement, easy to use, and built to deliver results,” Dennis Woodside, chief executive and president of Freshworks said.

Without specifying the revenue earned from India, the company broadly revealed that it earned 12% of its sales from Asia Pacific (APAC) region in the second quarter of 2025.

Notably, Freshworks managed to cut down its quarterly expenses by almost 4% to $182.2 Mn, while it spent $189.7 Mn in the previous year.

To break down, the company allocated $39.9 Mn towards its research and development, general and administrative expenses stood around $47 Mn, and the biggest portion was spent in sales and marketing with $95.2 Mn in the reported quarter.

Its overall customers on the platform have been consistently seeing an increase. On an annual basis, the metric was up 8% at 74.6 Mn in the quarter under review.

Net dollar retention rate, which represents the ability of a business to retain revenue from its existing customers, rose to 106% in the reported period, maintaining the same as the previous year, and rose slightly from 105% in Q1 2025.

On the outlook side, the company projected its revenue to grow 11%-12% to $207-$210 Mn for the third quarter of 2025. Also, it increased Freshworks’ annual revenue forecast to grow 14%-15% in the range of $822.9-$828.9 Mn for FY25.