Freshworks (FRSH) investor relations material

Strategic focus and business transformation

• Transitioned to an EX-first, enterprise-focused business, with EX expected to reach 70% of ARR by 2028, up from 37% at IPO and 60% by end of this year.

• EX business targets agile enterprises (up to 20,000 employees), with rapid upmarket growth, increasing deal sizes, and over 20,000 global customers projected by 2026.

• AI is a major growth driver, with new products like AI Agent Studio, Copilot, and MCP gateway, and over half of new large deals attaching paid AI SKUs.

• Expansion within existing customers is strong, with 60% of bookings from expansion and NDR for EX at 111% (119% for multi-product customers).

• Product and GTM investments have led to 700bps improvement in operating profit and FCF margins over two years.

Financial outlook and guidance update

• 2028 revenue target raised by $100M to $1.3B+, with ARR guidance at $1.4B+, driven by faster EX growth and larger deal sizes.

• EX growth forecasted at mid-20s percent, with ARR mix shifting to 70% EX by 2028.

• Operating and FCF margins raised to 32–34% for 2028; SBC target lowered to 13–14% of revenue by 2028.

• Free cash flow per share expected to reach $1.35 by 2028, with continued share buybacks and prudent capital management.

• Rule of 50 targeted by 2028: $1.3B revenue, $1.4B ARR, and near 34% FCF margin.

Market positioning and competitive dynamics

• Addressable market (TAM) for ITSM/ITAM/ITOM/ESM is $45B, with focus on companies up to 20,000 employees, a fragmented segment with no player above 20% share.

• Wins driven by unified, enterprise-grade platform, rapid deployment, transparent pricing, and domain-specialized AI.

• Customers include major brands across industries, with strong momentum in mid-market and enterprise segments.

• AI capabilities and flexible pricing models are key differentiators, with indirect benefits such as higher win rates and NDR.

• Consistent wins against large competitors, with ~250 new logos >$30K ARR in the past year.