Freshworks at JPMorgan Conference: AI and Growth Strategy Insights

On Thursday, 15 May 2025, Freshworks Inc. (NASDAQ:FRSH) participated in the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company outlined its strategic focus on AI-powered solutions and growth in its Employee Experience (EX) and Customer Experience (CX) segments. Despite some challenges, Freshworks remains optimistic about its competitive position and market potential.

Key Takeaways

• Freshworks is investing in AI to enhance productivity and sees significant potential in its EX and CX segments.
• The company reported a 19% year-over-year revenue growth in Q1, with a focus on sustaining this growth through innovation.
• Freshworks benefits from cost advantages due to its large presence in India, aiding in R&D and operations.
• The macroeconomic environment has not significantly impacted Freshworks, and the company sees itself as well-positioned during potential recessionary periods.

Financial Results

• Full-year revenue guidance is set at $820 million.
• Cash flow margins stand at 26%.
• EX (Freshservice) Annual Recurring Revenue (ARR) reached $420 million, growing at 33% last quarter.
• CX (Freshdesk) ARR was $370 million, with a 7% year-over-year growth.
• Revenue distribution: 45% from North America and 40% from Europe.
• Gross margins are nearing 86%, with free cash margins over 26% in the last quarter.

Operational Updates

• Freshworks employs 4,300 people, with 3,000 based in India, down 1,000 from two years ago.
• AI is integrated into over 50 internal applications.
• The acquisition of Device42 for IT asset management was completed last June.
• A partnership with Unisys has been announced to penetrate larger organizations.
• CoPilot, launched over a year ago, now has 2,700 paying customers.
• The AI Agent product is used by 1,600 customers.

Future Outlook

• The EX growth strategy involves one-third from new wins and two-thirds from expanding the existing base.
• The company plans to enhance the AI Agent product with more capabilities soon.
• Freshworks aims to replicate its EX success in the mid-market CX segment.
• Continued innovation in AI and effective monetization are priorities for sustained growth.

Q&A Highlights

• The focus remains on EX and AI, with substantial engineering resources allocated to EX.
• Investment in AI benefits both EX and CX product lines.
• Freshworks’ leadership emphasizes the importance of free cash margins.
• The macroeconomic environment has not significantly influenced sales cycles, and Freshworks views itself as a net beneficiary of recessionary conditions due to its cost-effective solutions.

In conclusion, Freshworks is poised for growth through strategic investments in AI and a focus on expanding its EX and CX segments. For a detailed account, readers are encouraged to refer to the full transcript below.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Unidentified speaker: All right. I think that’s

Dennis, CEO and President, Freshworks: All right.

Unidentified speaker: My queue. Thank you everyone for coming and I’m delighted to have here with me, CEO and President of Freshworks, Dennis. Thank you for coming.

Dennis, CEO and President, Freshworks: Thanks for having me.

Unidentified speaker: Let’s start with a little bit of introduction about Freshworks for investors in the audience who might not know about the story.

Dennis, CEO and President, Freshworks: Sure. So Freshworks was started in Chennai, India in 2011 by Girish Mahatra Bhutan. The initial product was Freshdesk, which is a customer support tool initially focused on smaller businesses. The product that Girish built was a try to buy product, fast time to value, easy to use for a smaller organization. That product took off and was adopted really pretty immediately by companies globally.

I think the first customer is from Australia, and that trend has continued today. Over time, Freshdesk was brought into more IT departments, and Gears decided to build a separate product that was ITIL compliant for IT called Freshservice. So today, our business is we’re guiding to $820,000,000 for the full year in revenue. Cash flow, 26% cash flow margins. But today, we have two businesses, what we call employee experience, which is that fresh service product for IT.

That’s a $420,000,000 business in ARR, grew 33% last quarter. And we have customer experience products, which is Freshdesk and related products that are focused on customer support. That’s about a $370,000,000 business in ARR, and that’s growing about 7% year over year. We serve customers around the world. About 45% of our revenue today is from North America, 40 Percent from Europe.

Our typical customer can range from a smaller business, especially on that CX side of the business, up to Fortune 500 companies that are using us on the fresh service side. Fresh service tends to be and EX tends to be a customer that is larger. So our target market there is a mid market customer. Think of a company with 5,000 employees. I was with New Balance last night as a Boston area customer of ours.

Sophisticated IT department, global operations, but needs a solution that’s flexible, that’s enterprise grade, that has AI baked in, that does things besides just ITSM, like IT asset management and operations management, that can work outside of IT. That’s the sweet spot for that business and that product line. CX tends to be a smaller customer. So think of a company with several hundred employees, not 1,000, that needs a customer support tool that’s flexible AI enabled and so forth. So that’s a quick overview of what we are.

Unidentified speaker: Yeah, that’s great. So you came in as a or you became the CEO, I guess about a year ago.

Dennis, CEO and President, Freshworks: That’s right.

Unidentified speaker: Right. And you brought some new focus to kind of the company. Maybe talk about what was that? What strategy changes did you do as you came in as a CEO? And what is working so far in one year?

And where do you think there is some improvements to be made?

Dennis, CEO and President, Freshworks: So Freshworks went public in 2021. And like many entrepreneurial businesses, there were a lot of different priorities within the organization. And I think one of the things that we’ve been able to do over the last year is to bring a much clearer focus to what really matters, and where do we need to put most of our firepower. And the three priorities I’ve set have an order. The first priority is EX.

That EX business is a fantastic business. It’s our largest business. It’s our fastest growing business. The economics are fantastic. The competitive landscape for us is really good.

That mid market is wide open for us. The solutions that are there are if you’re an IT manager in one of these organizations, you can choose from very old technology like BMC, Avanti, Sherwell, even ServiceNow’s twenty year old product, or you can choose us. And there’s not a lot of other solutions out there that really can compete, and we like that. So that’s the number one priority. The second priority that I said is around AI, and ensuring that we have innovative products that we can monetize.

So we launched Co Pilot, which was our first real effort at monetizing AI about a year ago, year and a quarter ago. We have 2,700 paying customers for that product. It’s a $29 a seat adder on top of your license, whether it’s CX or EX. Customers are seeing 30% productivity improvement from that. So they’re seeing the labor cost savings, and they’re very willing to pay the $29 a seat.

But that focus on AI has been super important for us. We also have an AI agent product, which is primarily for CX to deflect tickets in the first place. And then we have a third product that’s in beta that’s going to go into GA, which is for managers called AI Insights. And that’s a conversational interface for a manager to understand what’s going on in their service environment. And it will launch with EX in particular.

So AI was the second priority. And then getting that CX business initially to stabilize in terms of growth, and ultimately to reaccelerate for growth. And that’s been about focusing the product effort, focusing the go to market effort, really getting efficient and good at that inbound motion, more efficient and better than we have been. And what you’re going to see over the course of the next year is getting the product to the point where it’s more competitive in the mid market. Because then we do a better job of selling that into the large EX customer base that we’ve built up in that mid market.

Customers want once they see the value of fresh service, they are very open to bringing us into customer support environment as well. So getting that focus has been really important. The other thing I’ve spent a lot of time is building the capability to go up market. And that can be partnerships. Like we announced a partnership with Unisys, which is our real GSI partnership that’s going to help us move into larger organizations.

It’s the sales teams themselves building the capability there to win larger and larger deals. And then it’s the cadence of managing that kind of a business, which is a little bit lumpier than what we’ve had in the past, and driving that kind of competitiveness when we get into situations where we’re going head to head with much larger competitors. So that’s what I’ve been focused on. Get the three areas of focus, get that strategy landed, get the team executing against it, help us move up market and really deliver against it.

Unidentified speaker: Yeah. Let’s talk about each one of them one by one, So EX is kind of your big opportunity $420,000,000 you said 33% growth. To maintain let’s say 25% to 30% kind of a growth you will have to add 100,000,000 1 hundred and 50 million dollars a year, right? It’s a large scale.

Dennis, CEO and President, Freshworks: It becomes a big number.

Unidentified speaker: Yes. So talk about that opportunity. What is the confidence in that opportunity around all of them, right? ITSM, ESM and then ITAM now with D42.

Dennis, CEO and President, Freshworks: So the first is the way to break down that growth, think about a third has to come from net new wins, and two thirds has to come from expansion of that existing base. And on the net new win side, the market for automating the IT department is huge. Every company in the world needs a solution like what we have. Every company in the world has to get more productivity out of their IT team. They have to manage outages, and respond to issues, and resolve problems.

They need an asset management solution. Often, they’re looking for a solution that they can also use outside the IT department. So the TAM is huge. It’s company in the world. The market historically has been served with one competitor, whether that’s BMC, Avanti, Sharewell, and ServiceNow, that has done the whole stack.

So from the high end of SMB all the way up. But the reality is the needs of the mid market in particular are very different than the needs of an enterprise, a large enterprise like a Home Depot. A smaller organization doesn’t have as many resources to put on a single piece of software, and can’t afford to have dedicated resources just to babysit the software. We have one customer who had three people full time babysitting the competitive solution that they have before they move to us. So they’re looking for a leaner piece of software they can manage themselves, and they’re looking for lower overall costs.

So that market is huge. So we have plenty of app ads. And increasingly, as the product continues to mature, we are involved in bigger and bigger opportunities in that mid market space. So that’s the new business side. And that’s a field motion.

It’s partner assisted. And that’s scaling really well, and we have a lot of confidence in that. The expansion motion, as we’ve built the product out, we have more and more to expand with. So we can go into an existing customer and add Device 42. That’s typically a big add on a total bill for a customer.

We can add in AI. That can be a meaningful component as well to move to Freddie copilot. We can add in ESM, so departments outside of IT. In fact, that’s one of our faster growing product lines. And about onefive of all new seats are actually outside of IT.

They’re in ESM today. And we’re building deeper capabilities for departments outside of IT, like the HR department, where we can do things like create much more advanced onboarding and offboarding routines within the product itself. That’s the capability we’re investing in, and that’s going be coming in the next couple months. So there’s plenty of expansion levers on that side of the business to grow. So that’s how I think of it.

Yes, it’s a big number. About a third has to come from new business. About two thirds has to come from expansion. We have a lot of certainty on the new business front and we have a lot of levers on the expansion side.

Unidentified speaker: On the expansion side, help us understand the D42 is extremely new, right? So what is the penetration today is just ESM, many customers ITSM customers are actually using ESM? Just help us understand where are we? Sure.

Dennis, CEO and President, Freshworks: So Device42, just to step back, we acquired a company called Device42 that does asset management. They’re actually Boston ish based About it was last June. And so it’s been really two quarters of selling that product. The first quarter, we were aligning our pipeline and go to market and so forth. And the hypothesis for the deal was that we were losing customers or losing new customers because our asset management capability was not deep enough.

And so it was to win new business, win bigger deals. And then we would the other vector was we’re going to sell that into our existing base. And both of those have proven to pan out. So if you look at our top deals in Q1, ’2 of our top five fresh service deals involved Device 42 for new business. And if we look at our existing customers, we have large customers like AmEx Business Travel adopting Device 42 as an upsell.

So we’re still only two quarters into selling it, but it’s a staple for any large deal. We’re going to raise it in any large deal. And many customers who are migrating from a different solution if you’re migrating from BMC, if you’re migrating from ServiceNow, you have a CMDB. You have an asset management capability in those products. You expect that when you come over to us.

So many of those customers are evaluating asset management right alongside our ITSM capabilities. And then for our existing base, they might be using another solution. Many of them are manual, are using Excel sheets to try to track assets where they don’t have a good solution at all. So there’s a lot of reasons that they should have a better automated solution, and that’s an opportunity for us to sell that in. So that’s Device 42 and asset management.

You also asked about ESM. So our ESM capability today, we’re really just getting started in a sense, in that fresh service for business teams is a workspace that’s segregated from the IT workspace. So if I am the people team leader, typically it’s like a people operations lead, I don’t want the IT department to see everything that’s in my service environment. I want to be able to control it myself. So that’s what we built.

What we’re doing now is building much richer functionality that’s specific for teams like HR to offer them a solution that’s AI enabled, that allows them to provide excellent service to their employees internally. And a common use case is this onboarding, offboarding use case, where we have customers with thousands of security agents, and the turnover is 30% a year. So they have to onboard and offboard thousands of agents each year. They have to be provisioned on different pieces of software, hardware, all that stuff. And that, in many organizations, is highly manual.

So if we can provide a solution that automates that, makes it easy, makes it auditable, there’s a market for that. And that’s what we’re building into ESM. So it’s meaningful portion of our growth plan going forward.

Unidentified speaker: Is it just quickly, is it possible to understand the step up in ACV when you add a D42 or ESM? So

Dennis, CEO and President, Freshworks: D42 priced on an asset basis. So if you have an environment with a ton of software and hardware assets, it’s very meaningful portion of the bill. It can be a third to 40% of the total cost of the relationship to start with. But it really depends on that asset count, and that can vary widely depending on the company and the industry. We think ESM over time I mean, you look at some of our competitors, they’re seeing the majority of their revenue come from outside the IT department.

And so we think over time we could see a meaningful portion of our revenue come from outside IT as well. Yeah.

Unidentified speaker: Okay. Let’s talk about the competitive landscape there. If I I’m listening closely to your transcripts for the let’s say last few quarters, ServiceNow has been coming up more and more, Yes. So has that intensity changed in recent quarters? How does that win rate look like?

And also talk about maybe Jira in that Atlassian Jira in that conversation.

Dennis, CEO and President, Freshworks: Yeah. I mean, think if you were to talk to partners or Forrester or Gartner, they would say that the market has changed pretty meaningfully in the last couple of years and that our product has changed dramatically in the last couple of years. That typically, if you’re a mid sized organization, maybe you signed a three year deal three years ago, our product was not where it is today, nowhere near. And you probably didn’t think of us, or consider us, as an alternative at that point in time. But now, larger and larger organizations are realizing that they have a choice, and that we have a cloud first product that’s modern in the way it’s architected, that’s easy to manage, easy to get up speed, that integrates with their current environment, that ticks all the boxes around security that they need.

And we have thousands of references that we didn’t have three years ago that they can go talk to. And in some industries, like education or professional services, manufacturing, I would say we’re becoming more the standard for what to deploy when these opportunities come up for renewal. So I think the product has changed. The product has gotten much more mature. The customer base has changed.

The customers are now here in that mid market. Those customers are realizing that their needs are different than the needs of a Home Depot or a FedEx that have an IT department that probably is in the thousands, and that our solution is better for them. So that market has changed pretty dramatically. And the reason that you hear that kind of increasing drumbeat is we are just seeing more and more larger customers come off of these older solutions ServiceNow, BMC, Avanti than what we saw two years ago, for sure.

Unidentified speaker: What about Jira? Do you see them at all?

Dennis, CEO and President, Freshworks: If you look at Jira’s customer base, I think that the last number I saw, they had $600,000,000 in revenue and then a lot of customers. So the ARPA appears to be quite a bit lower than where we are. And what we believe is that smaller teams in larger organizations are spinning up JSM instances for lightweight service needs that they might have. We don’t see them as much at all in competitive situations the way we see the other players. We do see them.

We see them in particular in companies that have large developer footprints, as you might expect, where there’s a big JIRA footprint already. But the IT department’s pretty different than the developer community. IT operates under a set of standards. A lot of people in IT are not as technical, especially when you get into the service desk as a developer. And the way the product works, the way you can train on the product matters a lot.

And so our product is very easy to train agents on. It’s easy for the agents to operate in. That’s different than JSM, which first of all, was created through four or five different acquisitions. So the product itself is a little bit kludger. But Jira, the look, the feel, the UI is really suited for a developer.

And that flows through to JSM as well. So in many cases where we do see them, one of the things that an IT department is looking for is usability, and we tend to win there.

Unidentified speaker: Yeah, understood. Let’s move on to the CX business because that business has been doing about 7% constant currency for three quarters now. So it seems like it has stabilized a bit. So you’re when you started talking about it, said stabilization and then acceleration, Yes. So what needs to happen for us to start to see that acceleration?

Is it more on the product side? Is it more on kind of the enablement of the go to market sales side? Like talk about that.

Dennis, CEO and President, Freshworks: So I think a couple of things. Number one is AI should over time be a net accelerant for that business, for sure. As I said earlier, we have three AI products. AI Agent is for deflecting that ticket that’s coming in from the actual customer, Copilot for improving the agent’s productivity, and insights for the manager. AI Agent is really important on the customer support side, whether it’s B2B, more so B2C.

So we do see early adoption of our AI Agent product. We have 1,600 customers using that now. We are building more capability into that product. We’ll be releasing more capability in that product in the next month that allows AI agent to do more on behalf of our customers, to take an action in a way that today, it’s capable of doing that, but you actually have to program it. It’s a bit of work.

So think about a scenario where I want to return an item or change an order. That capability is coming, and that should allow us to monetize that CX motion, or that CX product area, in particular for B2C companies more than we have in the past. And then there are areas of the product that we know we want to invest in over time, or partner for, where we can build richer functionality things like voice, things like workforce optimization. Over time, what I would like to do is take that CX product on the similar path to what EX has gone through, where we find more of a fit in that mid market. Because the mid market for CX, some of the same dynamics are there as for EX.

The players like Salesforce and even Zendesk are focused on much, much larger companies than that typical 5,000 person mid market company. And as a result, the product’s gotten very complex, they’ve gotten very expensive. We think there’s an opportunity there to take the same approach that we’ve taken over in fresh service on the CX side. We have some work to do on the product to mature it, to get it to the point where we can do that. But that will if and when we do that, that will create a lot more opportunities for us to cross sell in from the EX space into CX over time.

Unidentified speaker: So on the competitive landscape, you talked about Zendesk. Last quarter I think you said your win rates are actually improving They have, versus Zendesk. Maybe talk about that dynamic. Why is

Dennis, CEO and President, Freshworks: that happening? I think some of the like I said, I think some of the similar dynamics are at play in that mid market. So think of one of the customers that we won against Zendesk is a large US retailer. But they’re not huge. They have about 10,000 employees in total.

And the Zendesk solution has gotten more complex. It’s gotten more expensive over time. And there’s some question as to the level of innovation that’s going on there, given the ownership who owns it now and what their priorities are. And so that has created an opportunity for us to win in that space. So we have more work to do for sure.

Like in EX, it’s very clear the product is ready right now. We have work to do on the CX side, but there are early signs that that market is going to open up for us as well.

Unidentified speaker: Yeah, let’s go to AI. That has been a debate on Freshworks for some time now. It’s almost seems like it’s getting diluted a bit, but I guess we shall see that that bear thesis of AI. But you you said you’re you’re seeing good uptake of AI agent. Maybe first like explain because you had a self-service AI capability initially then you launched AI agents.

Right. How those two kind of relate to each other?

Dennis, CEO and President, Freshworks: Yeah. So like everybody I think like many other solutions, we had a product that was more NLP enabled pre gen AI than we’ve had AI in the product since 2018 that’s relying more on machine learning and NLP to provide functionality. And that required the user or the administrator to program the actual bot itself. So there was some natural language capability of the product. But at the end of the day, you had to program very much like you would program an IVR to solve a problem on behalf of an end customer.

That changed with AI Agent, which is a generative natural language interface that a consumer can interact with through a chat window that is trained on anything that the customer wants to train it on product manuals, FAQs, prior questions and answers. So that was the shift that has occurred in the last year for us. And most of our customers going forward are using the true Gen AI product for their L1 support needs. And what we’re now building in is the AgenTic capabilities to take actions on behalf of the customer. So that’s the evolution of that side of the product.

We have 1,600 customers, as you mentioned or alluded to, that are paying for sessions. And that’s how we monetize that product. As a consumer or a customer interacts with the chat interface, that is considered a session. We charge a per session fee. So it’s similar to a resolution.

And the way that one of our customers would think of it is they know their cost per resolution is $5 or $10 based on the amortized cost of the human that’s interacting with the end customer. And so they’re willing to pay a fraction of that to resolve it via AI. And that’s how that side of the industry is evolving as well. So that we’re still very early. We have 73,000 customers, only 1,600 are paying us for that product line.

So we have a long way to go there. But the product has to get more mature. But also customers are adopting at very different rates. I was at dinner last night, and a very advanced customer was like, look, our policies are such that we can’t use Gen AI. We can’t use ChatGPT internally.

We’re not allowed to use it. That’s because a lot of companies still are concerned about information and privacy and all that stuff. They’re going to come around because the productivity gains are huge when you adopt. But companies are in very different stages of adoption, and our customer base is very broad. So we have small companies that have jumped in and are basically pushing the limits of the products that we have, whether that’s Copilot or AI agent or InsightsNow.

And then we have other companies that are really stepping back and waiting. In some cases they’re more regulated, in some cases they’re not. So I think there’s a long runway for all these companies eventually are going to need AI to run their business. That’s a huge opportunity for us over time.

Unidentified speaker: So talk about what are you seeing as those 1,600 that are using AI agents, they’re seeing 50% deflection rates.

Dennis, CEO and President, Freshworks: Higher, higher. I mean we’re seeing on average for those who’ve deployed on the IT side for internal employee usage, we’re seeing 70% to 80% deflection rate. So huge deflection. For the CX side, it’s closer to 50%. But yeah, huge deflection rates due to AI and similar or higher customer satisfaction rates as well for the actual experience of interacting with the AI.

So it’s a huge opportunity for our customers to drive greater efficiency from their business. They’re looking at it as an opportunity to spend more on software and save a lot on labor. And it’s still super early, so we think that we’re going to be a beneficiary of that trend over time. We’ve proven we can monetize from both the the making the human agents more effective, that’s Copilot. And then reducing the need for the human agents in the in the first place, which is AI agent.

Unidentified speaker: So so that transition then, you said saving on labor as well, right? Yes. For those people who are using AI agents, have you seen them cut headcount in a way that could offset? Like how do you think of that, right?

Dennis, CEO and President, Freshworks: Because So there’s a lot so different companies are taking different approaches. So we have one customer that’s a very high growth business. They’re just not hiring more. And their expectation is they’re not going to need to scale their headcount linearly with their revenue growth at all in that part of the business. Others are redeploying people to higher value opportunities or moving them in from support roles into more selling roles.

So there’s a lot going on. It really just depends on the business and their overall needs are.

Unidentified speaker: How should investors think of you lose one seat, but you have more bot sessions? And in aggregate as an ACV from an ACV standpoint for Freshworks, how should investors think of that? Right? Is that you’re actually getting more ACV able to capture more value with the bots at this point or not?

Dennis, CEO and President, Freshworks: Yeah. So over time as the as the AI becomes more capable and allows the end customer to actually take actions, the value of that interaction, the value of the AI itself, is going to go up. And we’ll have to price that accordingly. But what we have proven in the last year is that we can monetize it and that monetization remember, our seat count is growing in aggregate, but that monetization really is reflected in the overall top line of the company. So as we see this shift over time where models that are entirely seat based are going to become much different, right?

They’re going to become more interaction based or resolution based. That’s what we’re positioning our business to do over time as well. And we’re showing we’ve shown internally at least that we can drive that usage, we can drive that adoption, and that the monetization will follow. And you see that in the top line growth, right, 19% year over year last quarter.

Unidentified speaker: Yes. Let me pause and see if anybody has any questions. We have

Unidentified speaker: There’s obviously super exciting traction on the EX side of the business. How do you think about prioritizing investment in EX versus CX? And how do you pull on each of the levers to understand you’re investing the right amount

Unidentified speaker: inside of the business?

Dennis, CEO and President, Freshworks: Yeah. So that was one of the big changes that I made coming in. We a number of other products that we had engineering behind. I’ve reprioritized the business in order of EX, AI, then CX. So the engineering allocation follows those three priorities.

I shifted a substantial portion of engineering into EX. And then we bought Device 42, which is an EX product with its own engineering team as well. So EX by far is where we’re putting more of the engineering resources, AI being second. The investment in AI benefits both product lines. So functionality like Copilot, although the specific application is a little bit different, the principles in a lot of the software is the same across the product lines.

So that’s been the prioritization on the R and D side. Similar on the go to market side, our field teams primarily sell the EX product line. They’re focused on that mid market account, more of an RFP type of a situation, whereas CX business is mostly inbound, mostly SMB. And the CX business, that inbound motion is served entirely out of India. So the advantage that we have, we have 4,300 employees roughly.

That’s actually down 1,000 from where we were two years ago. And AI has played a part in that. We have I think it’s over 50 different applications of AI internally in our operating environment. But India plays a big part of that, too, where 3,000 of our 4,300 people are in India. Nearly all of our R and D expense, nearly all of our code is written in India.

And that creates huge leverage for us as well. Cost of an engineer compared to a Valley engineer, it’s vastly different. So that’s allowed us to drive the cash flow margin up. We’re 26% for the full year is the guide. And I see opportunities to continue to drive that up in years to come.

So the way I think of it is we’ve been very focused on driving profitable growth, getting that our gross margins are now approaching 86%. Our free cash margins are we’re over 26% in this last quarter. But that’s been a big focus. We to be able to drive real profitability out of the business. And we’ve got to put the people where the opportunity is, which is in that EX business.

Unidentified speaker: Anyone else? Maybe touch on macro quickly, right? It’s you haven’t really seen anything as a flask. Yeah. Yeah.

Dennis, CEO and President, Freshworks: Not directly impacted by the tariffs, but some of our customers are. Our customer base, though, it does not skew towards any specific industry and it doesn’t skew to exporters as an example or industries that are impacted by we do have some customers, absolutely, that have been impacted. But we haven’t seen that on a broad way affect sales cycles. We haven’t seen it we didn’t see it in the numbers in Q1 at all. And as I said on the call, as of April, we had not seen anything either.

It’s neither in the SMB side nor in the mid market and low end of enterprise. So, so far, we haven’t seen it. Now, think we like to think that we’re a net beneficiary of any kind of recessionary environment, because our product on average is a third to half the total cost of competing solutions. And as teams are looking for greater value in their software spend, we’re a great place to look. And so we think over time that actually positions us well regardless of what happens in the macro.

Unidentified speaker: Great, I want to ask you about the go to market changes there. Abe Smith kind of left in Q1. At the April. Beginning of April. With him now gone, how do you feel about the go to market leadership overall?

And any changes that material changes you’re doing on that field sales teams?

Dennis, CEO and President, Freshworks: So the the so Abe left for personal reasons. The the we don’t have a traditional CRO, He wasn’t the CRO. He led the field team. So I have a leader for field, and I have a leader who has both marketing and the inbound motion. Because marketing is so intertwined with that sales motion, and it’s all in India.

That’s Mika Yamamoto. For field, we have very capable leaders around the world leading our field teams. We’re focused on eight countries. My interim leader was the CRO at Domo and has done an amazing job jumping in as of April. So I really don’t see it as something that’s going to affect our business.

Unidentified speaker: Okay, last question. You’re 19% ARR exiting

Dennis, CEO and President, Freshworks: Q1. Revenue.

Unidentified speaker: I think ARR also was 19 in constant currency. I might be mistaken, but let’s say high teens. Yes. Yes. Right?

High teens. What’s your kind of confidence in kind of maintaining sustaining that? What has to go right for you to do that for multiple years?

Dennis, CEO and President, Freshworks: So I think on the a couple of things. On the EX side, we have an amazing opportunity. The TAM is huge. It’s really a matter of execution. And then continuing to find the next incremental area that where we can solve a problem for our customer primarily, but not exclusively in the IT team, primarily but not exclusively in that mid market.

Like a Device42, where we can build deeper capability to create more value for our customers and therefore drive more revenue for us. So that side of the business, it’s really about execution. We have to continue to innovate on AI and monetize AI. And we have to get that CX business to a place where it has a better line of sight into these larger customers because those larger customers, on average, are going to expand at higher rates, retain at higher rates. So those are the things that have to go right for us.

Those three things.

Unidentified speaker: Awesome. We’re out of time. Thank you so much for the time.

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