Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | The accompanying condensed consolidated financial statements of Freshworks Inc. and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany balances and transactions have been eliminated in consolidation.
|
| Principles of Consolidation | The accompanying condensed consolidated balance sheet as of March 31, 2026, the condensed consolidated statements of operations, of comprehensive loss, of cash flows, and of stockholders’ equity for the three months ended March 31, 2026 and 2025, and the related notes to such condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our financial position as of March 31, 2026 and our results of operations and cash flows for the three months ended March 31, 2026 and 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 which was filed with the SEC on February 26, 2026. In January 2026, we acquired all outstanding shares of FireHydrant, Inc., an incident management software company, for $88.7 million. See Note 5 - Business Combinations.
|
| Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the following: •determination of standalone selling price (SSP) for each distinct performance obligation included in customer contracts with multiple performance obligations; •allowance for doubtful accounts; •benefit period of deferred contract acquisition costs; •capitalization of internal-use software development costs; •fair value of goodwill; •useful lives of long-lived assets, including intangible assets; •valuation of deferred tax assets; •valuation of employee defined benefit plan and other compensation liabilities; •fair value of share-based awards; and •incremental borrowing rate used for operating leases.
|
| Concentrations of Risk | Concentrations of Risk Financial instruments that potentially expose us to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. Our cash, cash equivalents and marketable securities are generally held with large financial institutions and are in excess of the federally insured limits provided on such deposits. In addition, we have cash and cash equivalents held in international bank accounts, which are denominated primarily in euros, British pounds, and Indian rupees. There were no customers that individually exceeded 10% of our revenue for the three months ended March 31, 2026 and 2025 or that represented 10% or more of our consolidated accounts receivable balance as of March 31, 2026. We primarily rely upon our third-party cloud infrastructure partner, Amazon Web Services, to serve customers and operate certain aspects of its services. Any disruption of this cloud infrastructure partner would impact our operations and our business could be adversely impacted.
|
| Accounts Receivable and Contract Assets | Accounts Receivable and Contract Assets Effective January 1, 2026, we elected to apply the practical expedient provided by ASU 2025-05 to measure expected credit losses for qualifying current accounts receivable and contract assets and assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. See "Recent Adopted Accounting Pronouncements" below for further details.
|
| Recent Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted | Recent Adopted Accounting Pronouncements In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, Revenue from Contracts with Customers. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. Effective January 1, 2026, we adopted this guidance. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Adopted In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies that the interim reporting requirements in Topic 270 apply to all entities that issue interim financial statements prepared in accordance with U.S. GAAP and consolidates such requirements within Topic 270. The amendments provide a comprehensive list within Topic 270 of required interim disclosures, establish a principle requiring disclosure of events or changes occurring after the end of the most recent annual reporting period that have a material impact on interim results. and clarifies the form and content requirements applicable to interim financial statements. ASU 2025-11 will be effective for our interim periods starting January 1, 2028, with early adoption permitted. This guidance is only related to disclosure and is not expected to have a significant impact on our consolidated financial statements. In September 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025‑06 updates guidance on accounting for software costs by aligning capitalization with when management commits to funding a project and completion is probable. Additionally, the ASU introduces new disclosure requirements, including significant judgments made in applying the guidance and the nature and amount of capitalized software costs. This guidance is effective for us starting in our annual and interim disclosures for periods starting January 1, 2028. Early adoption is permitted. We are currently assessing the impact of this update on our condensed consolidated financial statements, including which transition method to apply. In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses, which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement. This authoritative guidance is effective for us starting in our annual disclosures for 2027 and interim periods starting 2028. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This guidance is only related to disclosure and is not expected to have a significant impact on our condensed consolidated financial statements.
|
| Fair Value Measurements | We measure our financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3—Inputs that are unobservable. Money market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.
|
| Revenue From Contracts with Customers | We primarily derive revenue from subscription fees and related professional services, as well as through sale of software licenses with associated maintenance and professional services. We sell subscriptions and software licenses directly to customers and indirectly through channel partners with arrangements that are non-cancelable and non-refundable. Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as service arrangements. Subscription revenue is recognized ratably over the contract term when the cloud-based software is made available to customers. Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases. Revenue from the software license is recognized when the software is made available to the customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term. Professional services revenue is comprised of fees charged for services ranging from product configuration, data migration, systems integration, and training. We recognize professional services revenues as services are performed. We record revenue net of sales or value-added taxes.
|