Freshworks announced on May 6, 2026, that it will lay off approximately 500 employees — roughly 11% of its global workforce — as the enterprise software company accelerates its use of artificial intelligence across its operations.
The Chennai- and San Mateo, California-based company simultaneously reported Q1 2026 revenue of $228.6 million, a 16% year-on-year increase that exceeded analyst estimates of $223.24 million. Despite the revenue growth, Freshworks posted a GAAP operating loss of $8.1 million for the January–March quarter, narrowing from a $10.4 million loss a year earlier. The company expects a one-time restructuring charge of $8 million to be recorded in the April–June period.
This marks Freshworks’ first major workforce reduction since 2024, when it cut around 660 employees — about 13% of staff — to streamline operations. CEO Dennis Woodside said the company does not plan further layoffs but will be selective about hiring going forward. “We will be very thoughtful about any additional headcount…or backfilling existing roles, and about how we stay fast and nimble while taking advantage of AI,” he said.
Woodside described AI as reshaping how software is built, noting that engineers can now produce more output with fewer resources and that future hires will need to be comfortable with AI-native workflows. He added that AI features are now a paid component in more than 60% of the company’s large deals from day one.
Freshworks’ stock closed at $9.19 on Nasdaq on May 5, 2026, giving the company a market capitalisation of approximately $2.6 billion — nearly 80% below its peak valuation of $10 billion at its 2021 listing. Shares had ranged from a high of $16.14 to a low of $6.79.
The cuts reflect a broader pattern in the SaaS sector, where AI adoption is prompting companies to reassess headcount needs even as revenues continue to grow.
Source: Tech-Economic Times