Software-as-a-service (SaaS) firm Freshworks has announced a global workforce reduction of approximately 11 per cent of the company’s total headcount, at around 500 employees, and expects to incur $8 million in restructuring charges. This is the second such restructuring in the SaaS firm in the last two years. In 2024, it cut around 13 per cent staff.
The Nasdaq-listed company on Thursday beat its own revenue estimates for the quarter ended March 2026 (Q1) by reporting a 14 per cent growth in revenue (constant currency basis) at $228.6 million, as against $196.2 million in the same quarter last year.
GAAP (loss) from operations was at $8.1 million compared to $10.4 million in the first quarter of 2025 while net loss stood at $4.8 million ($1.3 million).
Freshworks has increased its full year guidance for 2026 from the earlier 13.5-14.5 per cent to 14 - 15 per cent now. For the second quarter ending June 2026, the firm expects to grow at 13-15 per cent.
In an earnings call post the results, Freshworks CEO Dennis Woodside said that the layoffs are driven by the need to consolidate ‘overlapping organisational efforts’, streamline product development process, and apply AI and automation across the company’s business.
Responding to a question on the teams that will be affected as part of the restructuring process, Woodside mentioned that the company is looking to improve the unit economics of its customer experience (CX) business to reinvest in the employee experience (EX) business.
“This shift meant we had to rebalance our teams—putting more resources into EX, while running the CX business in a way that generates profit and cash, which we can reinvest into EX,” he said.
AI effect
He added that the company has over the last year and a half, invested in embedding AI into the product development process, which is impacting the number of people needed.
“Over half of our code originates in AI today. Like many other software companies, that is changing how we build products, how fast we can build products, and the number of people that we need to build products. We have been investing in automation and AI to streamline the way we do business and move faster. All of those contributed to the decision to restructure,” he said.
As of the March 2026, the company had over 1,648 customers with greater than $100,000 in Annual Recurring Revenue (ARR), an increase of 29 per cent on-year and over 3,938 customers with greater than $50,000 in ARR, an increase of 23 per cent on-year.
In Q2, the company also signed the two largest deals in Freshworks Inc’s history, including its first seven-figure ARR deal in the employee experience segment.
As of March 31, 2026, the company’s cash, cash equivalents, restricted cash and marketable securities were at $780.4 million while Net dollar retention rate was at 105 per cent in constant currency terms.
Freshworks is the second US-based tech firm with a large Indian workforce to announce a restructuring programme, after Cognizant unveiled ‘Project Leap’ last week to accelerate AI-led delivery.
Published on May 6, 2026