Freshworks Financial Outlook and AI Concerns
By Anhata Rooprai
CEO’s Perspective on the Impact of AI
Feb 10 (Reuters) – Freshworks forecast annual profit on Tuesday that fell short of Wall Street estimates, stoking investor concerns about the company’s sustainability as rapid growth in artificial intelligence services threatens the software industry.
Revenue and profit forecasts
Shares of the company fell more than 7% in extended trading.
Market reaction and analyst views
As businesses adopt AI-based software from companies like Freshworks for IT services, automating workflows and improving customer support, sophisticated new tools from AI companies promising to do the same could threaten their market.
On January 30, Anthropic introduced plugins for customer support, legal, financial and sales services on Claude Cowork, which could potentially disrupt software companies, contributing to an industry-wide sell-off.
Analysts, however, downplayed the risks.
Freshworks expects adjusted earnings per share of between 55 cents and 57 cents for 2026, below estimates of 69 cents, according to data compiled by LSEG, as the company expects a higher tax rate.
CEO Tries to Dispel AI Concerns
Dennis Woodside, CEO of Freshworks, said customers won’t just build everything outright, arguing that building complete IT systems and customer services for the company is complex and takes years.
“We spent a decade building a system of record and an interaction system that understands everything about your computing environment,” Woodside said in an interview with Reuters.
Regarding concerns that AI could reduce the number of paid software licenses, Woodside said Freshworks continues to grow its user base. “We’re taking share from much larger incumbents, like ServiceNow, BMC and Atlassian, and that’s how we’re growing our business,” he said.
Freshworks sells licenses for tools like Freshdesk for customer service and Freshservice for IT support, which are priced based on the number of people logging into those services, unlike the usage-based pricing used by some AI products.
The company expects revenue between $952 million and $960 million for 2026, above estimates of $945.3 million.
Fourth-quarter revenue rose 14% to $222.7 million, beating estimates of $218.8 million. Adjusted earnings per share of 14 cents also beat estimates by 11 cents.
(Reporting by Anhata Rooprai in Bengaluru; Additional reporting by Arsheeya Bajwa; Editing by Vijay Kishore)