Shares in Freshworks Inc. rose slightly in after-hours trading today after the customer service and support software firm reported earnings and revenue ahead of expectations in its fiscal second quarter.

For the quarter that ended on June 30, Freshworks reported adjusted earnings per share of 18 cents, up from eight cents in the same quarter of 2024, on revenue of $204.7 million, up 18% year-over-year. Both figures were ahead of the 12 cents per share and revenue of $198.84 million expected by analysts.

Freshworks’ strong results were powered by customer growth. The company saw the number of customers spending more than $5,000 in annual recurring revenue growing 10% year-over-year, to 23,975. Customers are also sticking around, with Freshworks reporting a net dollar retention rate in the quarter of 106%, up from 105% in the previous quarter.

Notable new customers in the quarter included AEP Energy Inc., California Franchise Tax Board, Covington & Burling LLP, Manchester Metropolitan University, Reed Elsevier plc and Seagate Technology Holdings plc.

Net cash provided by operating activities rose $58.6 million, up from $36.3 million in the second quarter of 2024. The company ended the quarter with $962.2 million in cash, cash equivalents and marketable securities on hand.

Business highlights in the quarter include the June 11 debut of an expanded version of the Freddy Agentic AI Platform at Freshworks’ annual Refresh event.

The Freddy AI Agent, launched in October, was designed to improve customer and employee experiences by autonomously resolving a significant portion of service requests. The new, updated version of the Freddy Agentic platform offers a connected, intelligent, continuously learning system of AI agents that don’t just reply to service questions, but can resolve them.

The new update also included the introduction of the Freddy AI Agent Studio, a no-code platform that allows customer service teams to build and deploy custom AI agents without needing technical expertise.

Right at the end of the quarter, Freshworks also announced the general availability of Freshservice Journeys, an AI-assisted feature within its information technology and employee service management platform. The tool is designed to simplify complex employee lifecycle events, such as onboarding, offboarding, promotions and relocations.

“Freshworks delivered another strong quarter, exceeding our previously provided financial estimates in Q2 with 18% year-over-year revenue growth to $204.7 million, a 29% operating cash flow margin and 27% adjusted free cash flow margin,” Chief Executive Dennis Woodside said in the company’s earnings release.

For its fiscal third quarter, Freshworks expects adjusted earnings per share of 12 to 14 cents on revenue of $207 million to $210 million. Both figures, at the midpoint, were dead on the 13 cents per share and revenue of $208.5 million expected by analysts.

For the full year, the company expects adjusted earnings of 56 to 58 cents per share on revenue of $822.9 million to $828.9 million. The earnings outlook was in line with an expected 67 cents, while the revenue outlook was ahead of an expected $820.7 million.

Photo: Freshworks