Freshworks Turns Profitable on the Back of AI Discipline, Shrinking Costs

Nasdaq-listed SaaSmajor Freshworks returned to profitability in the fourth quarter of 2025, reporting a net profit of $191.4 million compared with a net loss of $21.9 million in the same period last year, aided by tax benefits. In the September quarter, the company had posted a net loss of $4.7 million.

Revenue from operations rose 14% to $222 million in the December quarter, up from $194 million in Q4 2024. Freshworks reported a GAAP profit of $39.7 million, reversing an operating loss of $23.7 million a year earlier, as total expenses fell to $150.8 million from $188.9 million. The company had reported its first non-GAAP operating profit in Q1 2023.

GAAP, or Generally Acceptable Accounting Principles, profit includes all operating and one-time, non-recurring costs.

For the full year, revenue increased 16% to $838 million in 2025 from $720.4 million in 2024. The company recorded a net profit of $183 million, compared with a net loss of $95.4 million the previous year.

“Our AI-powered software continues to be an important growth driver and path for customer expansion, and it shows in the product adoption results,” said CEO and President Dennis Woodside during the investor presentation.

During the quarter, Freshworks also agreed to acquire AI-powered incident management platform FireHydrant for an undisclosed sum. With the takeover, it aims to build an AI-native solution focused on preventing disruptions and improving service reliability.

The results position Freshworks among SaaS companies successfully balancing moderate growth with improving profitability—a key theme as enterprise software demand remains steady but growth rates normalise after the post-pandemic surge. The company demonstrated stronger operating discipline, with expanding margins and improving free cash flow.

A notable trend was Freshworks’ continued success in the mid-market and enterprise segments. The company has steadily moved upmarket, securing larger deals and driving deeper multi-product adoption. Management highlighted healthy net dollar retention and increasing contributions from higher-value accounts, suggesting its enterprise repositioning strategy is gaining traction.

Artificial intelligence is becoming increasingly central to its strategy. Freshworks has embedded generative AI capabilities across its customer support and IT service management products, positioning AI as a productivity enhancer rather than a standalone revenue stream. This measured integration reflects a broader SaaS trend: customers remain cost-conscious but are prepared to invest where automation delivers tangible efficiency gains.