Freshworks Inc. (FRSH) experienced a significant after-hours plunge of 5.50% on Tuesday, sharply reversing an initial positive reaction to its quarterly earnings report. The stock had initially rallied approximately 3% in extended trading following the release of better-than-expected fourth-quarter results.

The sudden downturn was driven by investor disappointment with the company's forward earnings guidance. While Freshworks reported Q4 adjusted earnings per share of $0.14, beating the consensus estimate of $0.11, and revenue of $222.7 million, exceeding the $218.8 million forecast, its outlook for 2026 fell short of expectations. The company projected full-year adjusted EPS in the range of $0.55 to $0.57, significantly below the analyst estimate of $0.69.

Furthermore, the company's first-quarter 2026 guidance also disappointed, with adjusted EPS expected between $0.10 and $0.12 versus the $0.14 estimate. This weak earnings outlook overshadowed the company's revenue guidance, which exceeded analyst projections for both Q1 and the full year. The guidance miss suggests potential margin pressures or increased investments that concerned investors, leading to the after-hours selloff.