Freshworks to cut 11% staff, registers 16% rise in revenue

Software-as-a-service (SaaS) company Freshworks will cut its workforce by 11%, largely due to the growing influence of artificial intelligence (AI), even as it reported a 16% increase in revenue for the first quarter of 2026.

Freshworks, which announced its January to March 2026 (Q1) results on Wednesday said it would let go of around 500 employees. This is primarily due to what CEO Dennis Woodside said, “Over half of our code is written by AI.”

This is the second time that Freshworks has reduced its employee headcount. In 2024, it had cut down 13% of its staff.

According to the CEO, the restructuring plan is aimed at improving the unit economics of the customer experience (CX) team and investing the resources toward employee experience teams. This whole exercise is expected to cost the company around $8 million.

Meanwhile, Freshworks registered a revenue of $228.6 million for the first quarter of 2026 as compared to $196.3 million in the similar period a year ago, which was a 16% rise. However, the net loss of the company rose to $4.8 million in Q1 of 2026 as compared to $1.3 million in the similar period a year ago.

On the performance of the company, the CEO said, “High demand for our Employee Experience (EX) platform is fueling market traction, characterised by accelerating EX ARR, growing AI Copilot revenue, and strong net dollar retention.”

He further noted, “We are strategically investing in the EX opportunity as our approach continues to resonate with our customers. Freshworks is focused on delivering long-term value to shareholders and customers through sustainable growth and increased profitability."

For the second quarter of 2026, Freshworks projected an annual revenue growth rate to be in the range of 13-15%.

In the first quarter, Freshworks said the number of customers contributing more than $100,000 in annual recurring revenue was 1,646, which was an annual growth of 29%. It was 22% annual growth for the category of $50,000 customers. The company said the net dollar retention rate was 106% during the quarter as compared to 105% a year ago.