Freshworks Surpasses Estimates with Record-Breaking Q3 2026 Performance
The company's non-GAAP operating income reached $73.2 million, with a remarkable 30% margin. Moreover, non-GAAP EPS was $0.22, exceeding the estimates and marking another profitable quarter for Freshworks. GAAP net income stood at $18.3 million, with GAAP EPS of $0.07, reflecting their second consecutive profitable quarter and ninth successive quarter at Rule of 40 or better.
Adjusted free cash flow reached $73.9 million, with a 30% margin, and adjusted free cash flow per share grew by an impressive 40% over Q3 last year. Freshworks is now anticipating to exceed $0.94 of adjusted free cash flow per share for the year, outpacing their target of 20% free cash flow per share growth.
The company's strategic EX (Expand and Elevate) approach continues to drive success, with EX ARR growing 22% in constant currency to $588 million or 59% of total ARR. Customers above $100,000 in ARR grew by 26%, accounting for about 41% of total ARR. ARPA (Average Revenue Per Account) for new EX customers saw a significant 35% increase, and Freshworks closed another multi-product seven-figure EX deal this year.
Dennis Woodside, Freshworks' CEO, emphasized the company's shift upmarket, highlighting their ability to meet or exceed expectations on both top and bottom-line metrics while delivering record free cash flow. He further explained that the acquisition of Torii and Robusta in October has added critical AI capabilities, strengthening their robust ITOM and ITAM offerings.
The integration of these companies with Freshworks' existing solutions is poised to provide customers with a unified view of their technology assets and operations. This strategic move aligns perfectly with the company's vision for governed operational data, which is increasingly crucial in today's fast-paced business environment.
Freshworks' commitment to innovation, customer satisfaction, and profitable growth has solidified its position as a leader in the service operations platform market. As the company continues to push boundaries and meet evolving customer needs, it will be interesting to see how Freshworks further capitalizes on this momentum in the coming quarters.>
