Freshworks will lay off around 500 employees—approximately 11% of its global workforce—as part of a restructuring effort to align operations with its growing focus on AI and efficiency.
The Nasdaq-listed company mentioned in its Q1 earnings call that the move is part of a broader shift to streamline operations and accelerate growth in key areas.
“We are realigning our organisation to accelerate our biggest growth drivers and move faster in the AI era. As a result, we are reducing our global workforce by ~11% (~494 employees). This shift allows us to lean into our momentum in EX and CX and build a more agile and competitive Freshworks for the future,” CEO Dennis Woodside stated in the call.
The layoffs come as SaaS companies globally face mounting pressure on profitability while investing heavily in AI-driven capabilities. Freshworks indicated that increased adoption of automation and AI tools has reduced the need for manual processes and multiple layers of coordination.
“We’ve invested heavily in technology, systems, and AI to work more efficiently. Our systems can now handle many of the manual tasks and fragmented handoffs that once required multiple teams to manage,” Woodside said, adding that Freshworks is removing management layers, centralising functions, and restructuring teams to better utilise these capabilities.
The company expects to incur a one-time restructuring charge of approximately $8 million, most of which will be reflected in its second-quarter 2026 results, according to CFO Tyler Sloat.
As part of the reorganisation, Freshworks has consolidated its Sales, Customer Success, and Support functions under a single leadership structure. It has also launched a dedicated India-based team focused on customer experience to improve retention and streamline go-to-market operations. Meanwhile, its field teams will now focus on employee experience, targeting mid-market and enterprise growth opportunities.
The restructuring has led to overlaps across sales, marketing, and support roles, contributing to the workforce reduction.
Meanwhile, in a recent interview with AIM, Woodside shared, “When I joined, the company was around $400 million in revenue, and I believed it could grow to a $1 billion and beyond. In fact, we’re set to cross $1 billion in ARR this year—a milestone only about 50 software companies globally have achieved.”
The company said impacted employees will receive severance packages based on tenure, along with bonuses, extended healthcare coverage, employee assistance programmes, and career transition support.
Freshworks reported a 14% year-over-year constant-currency growth in quarterly revenue to $228.6 million in Q1 2026. It narrowed the loss from operations at $8.1 million, compared with $10.4 million a year ago. The firm expects to grow at 13–15% in the second quarter.
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