Business software provider Freshworks (NASDAQ:FRSH) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 16.5% year on year to $228.6 million. The company expects next quarter’s revenue to be around $233.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.
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Freshworks (FRSH) Q1 CY2026 Highlights:
- Revenue: $228.6 million vs analyst estimates of $223.6 million (16.5% year-on-year growth, 2.3% beat)
- Adjusted EPS: $0.11 vs analyst estimates of $0.11 (in line)
- Adjusted Operating Income: $40.96 million vs analyst estimates of $35.91 million (17.9% margin, 14.1% beat)
- The company slightly lifted its revenue guidance for the full year to $961 million at the midpoint from $956 million
- Management raised its full-year Adjusted EPS guidance to $0.62 at the midpoint, a 10.7% increase
- Operating Margin: -3.5%, up from -5.3% in the same quarter last year
- Free Cash Flow Margin: 24.4%, similar to the previous quarter
- Customers: 25,088 customers paying more than $5,000 annually
- Net Revenue Retention Rate: 106%, up from 104% in the previous quarter
- Billings: $229.7 million at quarter end, up 12.9% year on year
- Market Capitalization: $2.51 billion
"Freshworks began Q1 with strong momentum, building on our 2025 successes and achieving our sixth straight quarter of exceeding expectations," stated Dennis Woodside, CEO & President of Freshworks.
Company Overview
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ:FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Freshworks grew its sales at a solid 25.8% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Freshworks’s annualized revenue growth of 18.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Freshworks reported year-on-year revenue growth of 16.5%, and its $228.6 million of revenue exceeded Wall Street’s estimates by 2.3%. Company management is currently guiding for a 14.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Freshworks’s billings came in at $229.7 million in Q1, and over the last four quarters, its growth slightly lagged the sector as it averaged 14.7% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Freshworks’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 105% in Q1. This means Freshworks would’ve grown its revenue by 5.3% even if it didn’t win any new customers over the last 12 months.
Freshworks has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.
Key Takeaways from Freshworks’s Q1 Results
We were impressed by Freshworks’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also glad its net revenue retention grew. On the other hand, its new large contract wins stalled. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 2.5% to $8.94 immediately following the results.
Is Freshworks an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).