Beats revenue and profitability expectations, raises full year estimates
-- Total revenues of $237.4 million, representing 16% year-over-year growth
-- Positive GAAP Net Income of $3.2 million, representing the Company's
first quarter of GAAP profitability in 2026
-- Achieved the 8th consecutive quarter of Rule of 40 demonstrating
consistent growth and profitability
SAN MATEO, Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Freshworks Inc. (Nasdaq: FRSH), today announced financial results for its second quarter ended June 30, 2026.
"Freshworks just delivered its seventh straight quarter beating revenue estimates, its eighth consecutive quarter hitting Rule of 40, and a milestone we said we'd hit - GAAP profitability, months ahead of plan. This isn't just a moment, this has been a pattern of execution," stated Dennis Woodside, CEO & President of Freshworks. "EX ARR grew 24% year-over-year, and Freddy AI Copilot is now attached to over 71% of new enterprise deals. Customers aren't testing AI with us, they're adopting and using Freddy AI. We built a platform for the mid-market and agile enterprise that we believe no one else can match, and we're demonstrating you can grow fast, stay disciplined, and be profitable all at the same time. This is what a durable, category-defining business should look like."
Second Quarter 2026 Financial Summary Results
-- Revenue: Total revenue was $237.4 million, representing growth of 16%
compared to total revenue of $204.7 million in the second quarter of
2025, and 15% adjusting for constant currency.
-- GAAP Income (Loss) from Operations: GAAP income (loss) from operations
was $6.1 million, representing an operating margin of 2.6%, compared to
$(8.7) million, representing an operating margin of (4.2)%, in the second
quarter of 2025.
-- Non-GAAP Income from Operations: Non-GAAP income from operations was
$55.9 million, representing a non-GAAP operating margin of 23.6%,
compared to $44.8 million, representing a non-GAAP operating margin of
21.9%, in the second quarter of 2025.
-- GAAP Net Income (Loss) Per Share: GAAP diluted net income (loss) per
share was $0.01 based on 273.0 million weighted-average shares
outstanding, compared to $(0.01) based on 294.4 million weighted-average
shares outstanding in the second quarter of 2025.
-- Non-GAAP Net Income Per Share: Non-GAAP diluted net income per share was
$0.17 based on 273.0 million weighted-average shares outstanding,
compared to $0.18 based on 297.3 million weighted-average shares
outstanding in the second quarter of 2025.
-- Net Cash Provided by Operating Activities: Net cash provided by operating
activities was $58.5 million, representing an operating cash flow margin
of 24.7%, compared to $58.6 million, representing an operating cash flow
margin of 28.6%, in the second quarter of 2025.
-- Adjusted Free Cash Flow: Adjusted free cash flow was $57.7 million,
representing an adjusted free cash flow margin of 24.3%, compared to
$54.3 million, representing an adjusted free cash flow margin of 26.5%,
in the second quarter of 2025 .
-- Cash, Cash Equivalents, Restricted Cash and Marketable Securities: Cash,
cash equivalents, restricted cash and marketable securities were $665.3
million as of June 30, 2026.
All financial numbers for 2026 include the results of our FireHydrant business. A description of non-GAAP financial measures is contained in the section titled "Explanation of Non-GAAP Financial Measures" below and a reconciliation of GAAP to non-GAAP financial measures is detailed in the tables below.
Second Quarter Metrics and Recent Business Highlights
-- Number of customers contributing more than $100,000 in ARR was 1,746, an
increase of 25% year-over-year and 26% adjusting for constant currency.
-- Number of customers contributing more than $50,000 in ARR was 4,091, an
increase of 18% year-over-year and 19% adjusting for constant currency.
-- Number of customers contributing more than $5,000 in ARR was 25,356, an
increase of 6% year-over-year and 6% adjusting for constant currency.
-- Net dollar retention rate was 104%, compared to 106% in the first quarter
of 2026 and 106% in the second quarter of 2025. Adjusted for constant
currency, net dollar retention rate was 105%, compared to 105% in the
first quarter of 2026 and 104% in the second quarter of 2025.
-- Announced AI Agent Studio and MCP Gateway for Freshservice.
-- Welcomed and onboarded many new customers to the Freshworks community
including Van Marcke, Hydrite Chemical, Simpar, Upland Software, Paddle,
and Open Health Communications.
-- Appoints Ryan Manning as Chief Product and Technology Officer.
-- Named a Leader in the 2026 Gartner$(R)$ Magic Quadrant$(TM)$ for IT Service
Management Platforms.
Financial Outlook
We are providing estimates for the third quarter and for the full year 2026. We emphasize that these estimates are subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below.
For the third quarter and full year 2026, we currently expect the following results:
($ in millions, except per share data) Third Quarter 2026 Full Year 2026 Revenue(1) $244.5 - $245.5 $963.5 - $966.5 Year-over-year growth 14% 15% Year-over-year growth (constant currency) 14% - 15% 14% - 15% Non-GAAP income from operations(1) $59.0 - $61.0 $222.0 - $228.0 Non-GAAP net income per share(2) $0.18 $0.66 - $0.68
(1) Revenue and non-GAAP income from operations are based on exchange rates as of August 1, 2026 for currencies other than USD.
(2) Non-GAAP net income per share was estimated assuming 265.8 million and 272.8 million weighted-average shares outstanding for the third quarter and full year 2026, respectively.
These statements are forward-looking and actual results may differ materially. Refer to the "Forward-Looking Statements" safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
We have not reconciled our third quarter and full year 2026 estimates for non-GAAP financial measures to GAAP due to the uncertainty and potential variability of expenses that may be incurred in the future. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to address the probable significance of the unavailable information. We have provided a reconciliation of other GAAP to non-GAAP financial measures in the financial statement tables for our second quarter 2026 and 2025 non-GAAP results included in this press release.
Webcast and Conference Call Information
We will host a conference call for investors on August 4, 2026 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the Company's financial results and business highlights. Investors are invited to listen to a live audio webcast of the conference call by visiting the investor relations website at ir.freshworks.com. A replay of the audio webcast will be available shortly after the call on the Freshworks Investor Relations website and will be available for twelve months thereafter.
Explanation of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including revenue adjusted for constant currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income per share, non-GAAP net income, adjusted free cash flow, and adjusted free cash flow margin. This press release and the accompanying tables also contain certain other metrics, including annual recurring revenue, net dollar retention rates, revenue growth rates, and related presentation thereof adjusted for constant currency.
We adjust revenue and related growth rates for constant currency to provide a framework for assessing business performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for currencies other than USD are converted into USD at the average exchange rates in effect during the comparison period (for Q2 2025, the average exchange rates in effect for our major currencies were 1 EUR to 1.05 USD and 1 GBP to 1.26 USD), rather than the actual average exchange rates in effect during the current period (for Q2 2026, the average exchange rates in effect for our major currencies were 1 EUR to 1.16 USD and 1 GBP to 1.34 USD).
We use these non-GAAP measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe these non-GAAP measures provide investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results. We believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.
Investors, however, are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.
We exclude the following items from one or more of our non-GAAP financial measures:
-- Stock-based compensation expense. We exclude stock-based compensation,
which is a non-cash expense, from certain of our non-GAAP financial
measures because we believe that excluding this expense provides
meaningful supplemental information regarding operational performance. In
particular, stock-based compensation expense is not comparable across
companies given the variety of valuation methodologies and assumptions.
-- Employer payroll taxes on employee stock transactions. We exclude the
amount of employer payroll taxes on equity awards from certain of our
non-GAAP financial measures because they are dependent on our stock price
at the time of vesting or exercise and other factors that are beyond our
control and do not believe these expenses have a direct correlation to
the operation of our business.
-- Amortization of acquired intangibles. We exclude amortization of acquired
intangibles, which is a non-cash expense, from certain of our non-GAAP
financial measures. Our expenses for amortization of acquired intangibles
are inconsistent in amount and frequency because they are significantly
affected by the timing, size of acquisitions, and the allocation of
purchase price. We exclude these amortization expenses because we do not
believe these expenses have a direct correlation to the operation of our
business.
-- Restructuring charges. We exclude restructuring charges, which primarily
consists of employee severance and other employee termination benefits
associated with the restructuring program initiated in November 2024 and
May 2026, from our non-GAAP financial measures, because we do not believe
these expenses have a direct correlation to the operating performance of
our business.
-- Acquisition expenses. We exclude acquisition expenses, which primarily
consist of legal fees and due diligence costs, from our non-GAAP
financial measures because we do not believe these expenses have a direct
correlation to the operating performance of our business.
-- Income tax effect and adjustments. Starting January 1, 2026, we utilize a
long-term projected non-GAAP tax rate to compute our non-GAAP income tax
provision in order to provide better consistency across interim reporting
periods. Our non-GAAP tax rate reflects our estimated long-term effective
tax rate based on our anticipated geographic earnings mix and statutory
tax regimes. For fiscal year 2026, we determined the projected non-GAAP
tax rate to be 24%. The difference between our GAAP income tax provision
and our non-GAAP income tax provision is presented as non-GAAP income tax
reconciling adjustments. Prior to 2026, we excluded the income tax effect
of the above adjustments, income tax effect associated with acquisitions
and tax charges or benefits that are a result of a change in valuation
allowance on deferred tax assets and its related impacts, from our
non-GAAP financial measures. We excluded these costs because we do not
believe these expenses have a direct correlation to the operating
performance of our business.
We define adjusted free cash flow as net cash provided by operating activities, less purchases of property and equipment, capitalized internal-use software, plus acquisition costs and restructuring charges. We believe that adjusted free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Adjusted free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses. We define adjusted free cash flow margin as adjusted free cash flow as a percentage of revenue. We believe that adjusted free cash flow margin is a useful indicator of how efficiently we convert revenue into adjusted free cash flow.
Operating Metrics
Number of Customers Contributing More Than $5,000, $50,000 and $100,000 in ARR. We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of subscription and maintenance contracts and upon delivery for software licenses. We define our total customers contributing more than $5,000, $50,000 and $100,000 in ARR as of a particular date as the number of business entities or individuals, represented by a unique domain or a unique email address, with one or more paid subscriptions to one or more of our products that contributed ARR above the applicable threshold.
Net Dollar Retention Rate. To calculate net dollar retention rate as of a given date, we first determine Entering ARR, which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the Ending ARR from the same set of customers as of the end of the reporting period. We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, renewals and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period.
We also adjust the above operating metrics, growth rates of customers contributing more than $5,000, $50,000 and $100,000 in ARR and related presentation thereof for constant currency to provide a framework for assessing our business performance excluding the effects of foreign currency rates fluctuations. To present this information, the Ending ARR of the current period in currencies other than USD is converted into USD at the exchange rates in effect at the end of the comparison period (for Q2 2025, the period end exchange rates in effect for our major currencies were 1 EUR to 1.17 USD and 1 GBP to 1.37 USD), rather than the actual exchange rates in effect at the end of the current period (for Q2 2026, the period end exchange rates in effect for our major currencies were 1 EUR to 1.14 USD and 1 GBP to 1.32 USD).
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our GAAP and non-GAAP estimates for the third quarter and full year 2026, our financial outlook, our ability to sustain profitability, and our expectations regarding impact of new product capabilities and our AI-powered software. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, including our financial outlook and macroeconomic uncertainties, management's beliefs and certain assumptions made by the company, all of which are subject to change. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "future," "believe," "expectation," "may," "will," "outlook," "estimate," "continue," "anticipate," "could," "would," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, many of which involve factors or circumstances that are beyond our control, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include our ability to achieve our long-term plans and key initiatives; our ability to sustain or manage any future growth and profitability effectively; our ability to attract and retain customers or expand sales to existing customers; delays in product development or deployments or the success of such products; the impact to the economy, our customers and our business due to uncertain global economic conditions, including market volatility, foreign exchange rates, and impact of inflation, as well as the other potential factors described under "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2025 as such factors may be updated from time to time in our periodic and other documents of Freshworks Inc. filed with the Securities and Exchange Commission from time to time (available at www.sec.gov).
We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof and are based on information available to us at the time the statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law.
About Freshworks Inc.
Freshworks is the AI-powered, unified service operations platform that is fast to deploy, intuitive to use, and enables every employee to be more productive. We offer powerful governance and scale, without the operational drag of legacy platforms. Organizations including Bridgestone, New Balance, S&P Global, and Sony Music trust Freshworks to deliver quality employee and customer service and manage efficient technology operations. For the latest updates, visit freshworks.com and follow Freshworks on LinkedIn, X, and Facebook.
(c) 2026 Freshworks Inc. All Rights Reserved. Freshworks, Freshservice and any associated logo are trademarks of Freshworks Inc. All other company, brand and product names may be trademarks or registered trademarks of their respective companies. Nothing in this press release should be construed to the contrary, or as an approval, endorsement or sponsorship by any third parties of Freshworks Inc. or any aspect of this press release.
Gartner Source Citation
Gartner, Magic Quadrant for IT Service Management Platforms, Rich Doheny, Ankita Hundal, et al., 27 July 2026
Gartner Disclaimer
Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's business and technology insights research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. The Gartner content described herein (the "Gartner Content") represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not a representation of fact. Gartner Content speaks as of its original publication date and not as of the date of this press release, and the opinions expressed in the Gartner Content are subject to change without notice.
Investor Relations Contact:
IR@freshworks.com
Media Relations Contact:
PR@freshworks.com
FRESHWORKS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------------
2026 2025 2026 2025
------- -------
Revenue $237,377 $204,678 $466,010 $400,951
Cost of revenue(1) 36,096 31,142 70,784 61,020
------- ------- ------- -------
Gross profit 201,281 173,536 395,226 339,931
Operating expenses:
Research and
development(1) 43,815 39,943 93,076 79,944
Sales and
marketing(1) 106,450 95,223 218,767 184,381
General and
administrative(1) 37,924 47,026 78,351 94,273
Restructuring
charges 7,032 -- 7,032 405
------- ------- ------- -------
Total operating
expenses 195,221 182,192 397,226 359,003
------- ------- ------- -------
Income (loss) from
operations 6,060 (8,656) (2,000) (19,072)
Interest and other
income, net 4,204 12,547 5,630 25,516
------- ------- ------- -------
Income before income
taxes 10,264 3,891 3,630 6,444
Provision for income
taxes 7,025 5,630 5,201 9,487
------- ------- ------- -------
Net income (loss) 3,239 (1,739) (1,571) (3,043)
------- ------- ------- -------
Weighted-average
shares used in
calculating net income
(loss) per share:
Basic 271,951 294,435 277,612 297,839
------- ------- ------- -------
Diluted 272,988 294,435 277,612 297,839
------- ------- ------- -------
Net income (loss) per
share - basic and
diluted
Basic $ 0.01 $ (0.01) $ (0.01) $ (0.01)
------- ------- ------- -------
Diluted $ 0.01 $ (0.01) $ (0.01) $ (0.01)
------- ------- ------- -------
______________________
(1) Includes stock-based compensation expense as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2026 2025 2026 2025
------- -------
Cost of revenue $ 1,636 $ 1,437 $ 3,254 $ 2,955
Research and
development 8,956 8,618 21,257 17,831
Sales and
marketing 11,088 11,819 24,088 25,228
General and
administrative 16,168 27,406 33,170 54,930
-------- ------- ------ -------
Total
stock-based
compensation
expense, net of
amounts
capitalized $ 37,848 $ 49,280 $ 81,769 $100,944
-------- ------- ------ -------
FRESHWORKS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2026 December 31, 2025
--------------- ---------------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 494,665 $ 569,774
Restricted cash 1,154 62,374
Marketable securities 169,442 211,597
Accounts receivable, net 137,678 150,817
Deferred contract acquisition
costs 32,105 29,830
Prepaid expenses and other
current assets 66,866 72,774
---------- --------------
Total current assets 901,910 1,097,166
Property and equipment, net 46,387 38,843
Operating lease right-of-use
assets 32,264 39,893
Deferred contract acquisition
costs, noncurrent 28,661 27,179
Goodwill 198,010 146,676
Intangible assets, net 92,473 76,986
Deferred tax assets, net 174,047 157,466
Other assets 16,716 18,503
---------- --------------
Total assets $ 1,490,468 $ 1,602,712
---------- --------------
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 26,902 $ 11,507
Accrued liabilities 105,290 101,202
Deferred revenue 400,469 385,320
---------- --------------
Total current liabilities 532,661 498,029
Operating lease liabilities,
non-current 25,565 33,282
Other liabilities 36,299 38,751
---------- --------------
Total liabilities 594,525 570,062
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 4,451,395 4,586,392
Accumulated other comprehensive
loss (1,730) (1,591)
Accumulated deficit (3,553,725) (3,552,154)
---------- --------------
Total stockholders' equity 895,943 1,032,650
---------- --------------
Total liabilities and
stockholders' equity $ 1,490,468 $ 1,602,712
---------- --------------
FRESHWORKS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ------------------------
2026 2025 2026 2025
-------- --------
Cash Flows from
Operating
Activities:
Net income
(loss) $ 3,239 $ (1,739) $ (1,571) $ (3,043)
Adjustments to
reconcile net
income (loss) to
net cash
provided by
operating
activities:
Depreciation
and
amortization 8,263 6,281 16,126 12,641
Amortization
of deferred
contract
acquisition
costs 8,966 7,848 17,533 15,431
Non-cash
lease
expense 2,683 2,320 5,608 4,623
Stock-based
compensation 37,849 49,280 81,770 100,944
Discount
amortization
on
marketable
securities (297) (1,793) (1,244) (3,694)
Deferred
income
taxes 3,224 -- (2,641) (459)
Other 1,582 487 9,390 470
Changes in
operating assets
and
liabilities:
Accounts
receivable (10,340) (3,613) 14,577 6,981
Deferred
contract
acquisition
costs (11,093) (10,054) (21,290) (18,758)
Prepaid
expenses and
other
assets 2,295 (7,372) (10,269) (22,689)
Accounts
payable 8,674 2,754 15,568 3,280
Accrued and
other
liabilities (2,307) 8,309 (5,749) 7,813
Deferred
revenue 8,429 8,390 9,456 15,439
Operating
lease
liabilities (2,644) (2,507) (6,352) (2,415)
-------- -------- -------- --------
Net cash
provided by
operating
activities 58,523 58,591 120,912 116,564
-------- -------- -------- --------
Cash Flows from
Investing
Activities:
Purchases of
property and
equipment (5,041) (380) (8,942) (1,676)
Proceeds from
sale of
property and
equipment 3 2 8 40
Capitalized
internal-use
software (1,471) (4,676) (4,850) (7,448)
Purchases of
marketable
securities (126,404) (225,273) (273,825) (347,206)
Maturities
and
redemptions
of
marketable 187,545 187,485 316,896 359,679
Business
combination,
net of cash
acquired -- -- (56,913) --
-------- -------- -------- --------
Net cash
provided by
(used in)
investing
activities 54,632 (42,842) (27,626) 3,389
-------- -------- -------- --------
Cash Flows from
Financing
Activities:
Proceeds from
issuance of
common stock
under
employee
stock
purchase
plan, net 3,061 3,307 3,061 3,307
Proceeds from
exercise of
stock
options 2 14 2 62
Payment of
withholding
taxes on net
share
settlement
of equity
awards (9,826) (13,749) (16,986) (30,460)
Repurchase of
common
stock (159,042) (113,586) (207,411) (227,196)
-------- -------- -------- --------
Net cash used in
financing
activities (165,805) (124,014) (221,334) (254,287)
-------- -------- -------- --------
Effect of
exchange rate
changes on
cash, cash
equivalents and
restricted
cash (862) -- (8,383) --
-------- -------- -------- --------
Net decrease in
cash, cash
equivalents and
restricted
cash (53,512) (108,265) (136,431) (134,334)
Cash, cash
equivalents and
restricted
cash, beginning
of period 549,331 594,336 632,250 620,405
-------- -------- -------- --------
Cash, cash
equivalents and
restricted
cash, end of
period $ 495,819 $ 486,071 $ 495,819 $ 486,071
======== ======== ======== ========
FRESHWORKS INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP
MEASURES
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended June 30,
-------------------------------
2026 2025 Growth Rates
-----------
Revenue
GAAP revenue $ 237,377 $ 204,678 16%
Effects of foreign
currency rate
fluctuations $ (1,466)
------------ ------------
Revenue adjusted for
constant currency $ 235,911 $ 204,678 15%
------------ -----------
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2026 2025 2026 2025
-------- --------
Reconciliation of
gross profit and
gross margin:
GAAP gross profit $ 201,281 $ 173,536 $ 395,226 $ 339,931
Non-GAAP
adjustments:
Stock-based
compensation
expense 1,636 1,437 3,254 2,955
Employer
payroll taxes
on employee
stock
transactions 27 30 56 57
Amortization of
acquired
intangibles 1,655 1,275 3,292 2,536
-------- -------- -------- --------
Non-GAAP gross
profit $ 204,599 $ 176,278 $ 401,828 $ 345,479
-------- -------- -------- --------
GAAP gross margin 84.8% 84.8% 84.8% 84.8%
Non-GAAP gross
margin 86.2% 86.1% 86.2% 86.2%
Reconciliation of
operating
expenses:
GAAP research and
development $ 43,815 $ 39,943 $ 93,076 $ 79,944
Non-GAAP
adjustments:
Stock-based
compensation
expense (8,956) (8,618) (21,257) (17,831)
Employer
payroll taxes
on employee
stock
transactions (104) (57) (217) (209)
-------- -------- -------- --------
Non-GAAP research
and development $ 34,755 $ 31,268 $ 71,602 $ 61,904
-------- -------- -------- --------
GAAP research and
development as
percentage of
revenue 18.5% 19.5% 20.0% 19.9%
Non-GAAP research
and development
as percentage of
revenue 14.6% 15.3% 15.4% 15.4%
GAAP sales and
marketing $ 106,450 $ 95,223 $ 218,767 $ 184,381
Non-GAAP
adjustments:
Stock-based
compensation
expense (11,088) (11,819) (24,088) (25,228)
Employer
payroll taxes
on employee
stock
transactions (402) (372) (792) (934)
Amortization of
acquired
intangibles (2,574) (2,233) (5,120) (4,486)
-------- -------- -------- --------
Non-GAAP sales
and marketing $ 92,386 $ 80,799 $ 188,767 $ 153,733
-------- -------- -------- --------
GAAP sales and
marketing as
percentage of
revenue 44.8% 46.5% 46.9% 46.0%
Non-GAAP sales
and marketing as
percentage of
revenue 38.9% 39.5% 40.5% 38.3%
GAAP general and
administrative $ 37,924 $ 47,026 $ 78,351 $ 94,273
Non-GAAP
adjustments:
Stock-based
compensation
expense (16,168) (27,406) (33,170) (54,930)
Employer
payroll taxes
on employee
stock
transactions (188) (243) (413) (701)
Acquisition
expense (38) -- (193) --
-------- -------- -------- --------
Non-GAAP general
and
administrative $ 21,530 $ 19,377 $ 44,575 $ 38,642
-------- -------- -------- --------
GAAP general and
administrative
as percentage of
revenue 16.0% 23.0% 16.8% 23.5%
Non-GAAP general
and
administrative
as percentage of
revenue 9.1% 9.5% 9.6% 9.6%
Reconciliation of
operating income
(loss) and
operating
margin:
GAAP income
(loss) from
operations $ 6,060 $ (8,656) $ (2,000) $ (19,072)
Non-GAAP
adjustments:
Stock-based
compensation
expense 37,848 49,280 81,769 100,944
Employer
payroll taxes
on employee
stock
transactions 721 702 1,478 1,901
Amortization of
acquired
intangibles 4,229 3,508 8,412 7,022
Restructuring
charges 7,032 -- 7,032 405
Acquisition
expense 38 -- 193 --
-------- -------- -------- --------
Non-GAAP income
from operations 55,928 44,834 96,884 91,200
-------- -------- -------- --------
GAAP operating
margin 2.6% (4.2)% (0.4)% (4.8)%
Non-GAAP
operating
margin 23.6% 21.9% 20.8% 22.7%
Reconciliation of
net income
(loss):
GAAP net income
(loss) $ 3,239 $ (1,739) $ (1,571) $ (3,043)
Non-GAAP
adjustments:
Stock-based
compensation
expense 37,848 49,280 81,769 100,944
Employer
payroll taxes
on employee
stock
transactions 721 702 1,478 1,901
Amortization of
acquired
intangibles 4,229 3,508 8,412 7,022
Restructuring
charges 7,032 -- 7,032 405
Acquisition
expense 38 -- 193 --
Income tax
adjustments (7,407) 782 (19,403) 1,192
-------- -------- -------- --------
Non-GAAP net
income $ 45,700 $ 52,533 $ 77,910 $ 108,421
-------- -------- -------- --------
Reconciliation of
net income (loss)
per share -
diluted:
GAAP net income
(loss) per share
- diluted $ 0.01 $ (0.01) $ (0.01) $ (0.01)
Non-GAAP
adjustments:
Stock-based
compensation
expense 0.14 0.17 0.29 0.34
Employer
payroll taxes
on employee
stock
transactions -- 0.01 0.01 0.01
Amortization of
acquired
intangibles 0.02 0.01 0.03 0.02
Restructuring
charges 0.03 -- 0.03 --
Acquisition
expense -- -- -- --
Income tax
adjustments (0.03) -- (0.07) --
-------- -------- -------- --------
Non-GAAP net
income per share
- diluted $ 0.17 $ 0.18 $ 0.28 $ 0.36
-------- -------- -------- --------
Weighted-average
shares used in
computing GAAP
net income
(loss) per share
- diluted 272,988 294,435 277,612 297,839
Weighted-average
shares used in
computing
non-GAAP net
income (loss)
per share -
diluted(1) 272,988 297,254 278,623 301,913
Computation of
adjusted free
cash flow:
Net cash provided
by operating
activities $ 58,523 $ 58,591 $ 120,912 $ 116,564
Less:
Purchases of
property and
equipment (5,041) (380) (8,942) (1,676)
Capitalized
internal-use
software (1,471) (4,676) (4,850) (7,448)
Add:
Acquisition and
restructuring
costs paid 5,648 728 6,367 2,221
-------- -------- -------- --------
Adjusted free
cash flow $ 57,659 $ 54,263 $ 113,487 $ 109,661
-------- -------- -------- --------
Operating cash
flow margin 24.7% 28.6% 25.9% 29.1%
Adjusted free
cash flow
margin 24.3% 26.5% 24.4% 27.4%
Net cash provided
by (used in)
investing
activities $ 54,632 $ (42,842) $ (27,626) $ 3,389
Net cash used in
financing
activities $(165,805) $(124,014) $(221,334) $(254,287)
(1) Diluted net income (loss) per share attributable to common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result. The company considers its stock options and RSUs as potential common stock equivalents but excluded them from the computation of GAAP diluted net income (loss) per share attributable to common stockholders, as their effect was antidilutive. For the three months ended June 30, 2026 and 2025, potentially dilutive shares of 1.0 million and 2.8 million shares, respectively, were included in the weighted average shares used in computing non-GAAP diluted net income per share. For the six months ended June 30, 2026 and 2025, potentially dilutive shares of 1.0 million and 4.1 million shares, respectively, were included in the weighted average shares used in computing non-GAAP diluted net income per share.