What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-02-20 · 302 added, 223 removed, 926 unchanged (36% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders' Equity

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Freshworks Inc.

To the stockholders and the Board of Directors of Freshworks Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Freshworks Inc.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively, referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

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The Company predominately derives its revenue from subscription contracts providing access to the Company’s cloud-based software solutions and related professional services.

The Company’s cloud-based software solutions allow customers to use the software without requiring them to take possession of the software and, as a result, are recognized ratably over the contract term.

In some cases, the Company will negotiate contractual terms and conditions with customers that deviate from the standard contractual terms and conditions (“non-standard contracts”).

We determined the identification of performance obligations in non-standard contracts to be a critical audit matter.

Significant auditor judgment was required to audit the evaluation of the Company’s assessment of the identification of distinct performance obligations in non-standard contracts.

The Company’s cloud-based software solutions allow customers to use the software without requiring them to take possession of the software, and as a result, subscription revenue is recognized ratably over the contract term.

We identified subscription revenue as a critical audit matter given the significant volume of transactions, including contracts that may have varying terms and conditions.

This required an increased extent of audit effort in performing procedures and evaluating audit evidence relating to the appropriate recognition of subscription revenue.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to evaluating the Company’s assessment of the identification of distinct performance obligations in non-standard contracts included the following, among others:

• We obtained an understanding of the Company’s process for reviewing non-standard contracts and tested the effectiveness of internal controls related to the review of contract terms and identification of distinct performance obligations.

• We selected a sample of non-standard contracts and performed the following:

◦ Obtained and reviewed the non-standard contracts and other documents (i.e., purchase orders and invoices) that were part of the arrangement.

◦ Tested management’s identification and evaluation of distinct performance obligations.

Our audit procedures related to the Company's subscription revenue included the following, among others:

• Testing the effectiveness of controls relating to the subscription revenue recognition process.

• Testing subscription revenue transactions through a combination of procedures including (1) obtaining and inspecting, on a sample basis, source documents, such as contracts, invoices and cash receipts, evaluating management’s identification of distinct performance obligations and recalculating revenue recognized, (2) obtaining and performing customer contract reviews to identify terms and conditions that could impact the recognition of subscription revenue, and (3) developing an expectation of revenue recognized and comparing that expectation to the amounts recorded by the Company for certain revenue transactions.

/s/ Deloitte & Touche LLP

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Freshworks Inc.

To the stockholders and the Board of Directors of Freshworks Inc.

Opinion on Internal Control over Financial Reporting

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 26, 2026, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Controls over Financial Reporting , management excluded from its assessment the internal control over financial reporting at D42 Parent Inc., which was acquired on June 6, 2024, and whose financial statements constitute less than 2% of consolidated total assets and approximately 3% of consolidated revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2024.

Accordingly, our audit did not include the internal control over financial reporting at D42 Parent, Inc.

Basis for Opinion

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Cash and cash equivalents $ 569,774 $ 620,315

Restricted cash 62,374 3

Marketable securities 211,597 449,750

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Intangible assets, net

Deferred tax assets 8,499 10,013

76,986 90,840

Deferred tax assets, net

157,466 8,499

Other assets 18,503 14,786

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Total operating expenses 699,459 745,700 663,235

Loss from operations ( 138,610 ) ( 170,172 ) ( 233,372 )

Income (loss) from operations

13,205 ( 138,610 ) ( 170,172 )

Interest and other income, net 40,077 47,773 46,403

Loss before income taxes ( 90,837 ) ( 123,769 ) ( 220,790 )

Provision for income taxes 4,531 13,667 11,342

Net loss ( 95,368 ) ( 137,436 ) ( 232,132 )

Net loss attributable to common stockholders $ ( 95,368 ) $ ( 137,436 ) $ ( 232,132 )

Net loss per share attributable to common stockholders - basic and diluted $ ( 0.32 ) $ ( 0.47 ) $ ( 0.82 )

Weighted-average shares used in computing net loss per share attributable to common stockholders - basic and diluted 300,843 293,087 284,587

Income (loss) before income taxes

53,282 ( 90,837 ) ( 123,769 )

Provision for (benefit from) income taxes

( 130,441 ) 4,531 13,667

Net income (loss)

183,723 ( 95,368 ) ( 137,436 )

Net income (loss) per share - basic

$ 0.63 $ ( 0.32 ) $ ( 0.47 )

Net income (loss) per share - diluted

$ 0.63 $ ( 0.32 ) $ ( 0.47 )

Weighted-average shares used in computing net income (loss) per share:

291,079 300,843 293,087

293,769 300,843 293,087

The accompanying notes are an integral part of these consolidated financial statements.

FRESHWORKS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

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2025 2024 2023

Net loss $ ( 95,368 ) $ ( 137,436 ) $ ( 232,132 )

Net income (loss)

$ 183,723 $ ( 95,368 ) $ ( 137,436 )

Other comprehensive income (loss), net of taxes:

Changes in unrealized loss on marketable securities 1,310 7,105 ( 6,684 )

Unrealized gains (losses) on available-for-sale debt securities ( 592 ) 1,310 7,105

Net change on cash flow hedging

( 661 ) ( 894 ) ( 428 )

Total other comprehensive income (loss), net of taxes:

$ ( 1,253 ) $ 416 $ 6,677

Comprehensive loss $ ( 94,952 ) $ ( 130,759 ) $ ( 238,816 )

Comprehensive income (loss)

$ 182,470 $ ( 94,952 ) $ ( 130,759 )

The accompanying notes are an integral part of these consolidated financial statements.

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Stock-based compensation — — 212,465 — — 212,465

Unrealized loss on marketable securities

Other comprehensive income

— — — 6,677 — 6,677

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Balances as of December 31, 2023

296,695 3 4,713,522 ( 754 ) ( 3,640,509 ) 1,072,262

Issuance of common stock upon exercise of stock options 338 — 89 — — 89

Issuance of common stock and options in connection with acquisition

687 — 12,874 — — 12,874

Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for tax purposes 6,078 — ( 59,629 ) — — ( 59,629 )

Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes 569 — 6,643 — — 6,643

Repurchase and retirement of common stock

( 985 ) — ( 15,535 ) — — ( 15,535 )

Stock-based compensation — — 216,169 — — 216,169

Unrealized loss on marketable securities — — — 6,677 — 6,677

Other comprehensive income

— — — 416 — 416

Net loss — — — — ( 95,368 ) ( 95,368 )

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Issuance of common stock upon exercise of stock options 227 — 74 — — 74

Issuance of common stock and options in connection with acquisition 687 — 12,874 — — 12,874

Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for tax purposes 6,148 — ( 56,492 ) — — ( 56,492 )

Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes 566 — 6,228 — — 6,228

Repurchase and retirement of common stock ( 985 ) — ( 15,535 ) — — ( 15,535 )

Repurchase and retirement of common stock, including excise tax

( 26,896 ) — ( 387,426 ) — — ( 387,426 )

Stock-based compensation — — 149,875 — — 149,875

Other comprehensive income — — — ( 1,253 ) — ( 1,253 )

Net loss — — — — ( 95,368 ) ( 95,368 )

— — — — 183,723 183,723

Balances as of December 31, 2025 283,427 $ 3 $ 4,586,392 $ ( 1,591 ) $ ( 3,552,154 ) $ 1,032,650

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2025 2024 2023

Cash Flows Operating Activities:

Net loss $ ( 95,368 ) $ ( 137,436 ) $ ( 232,132 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Cash Flows from Operating Activities:

Net income (loss)

$ 183,723 $ ( 95,368 ) $ ( 137,436 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 25,857 19,415 12,144

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Stock-based compensation 146,819 216,706 210,707

Discount on amortization on marketable securities

Discount amortization on marketable securities

( 6,557 ) ( 15,992 ) ( 15,652 )

Gain on sale of non-marketable equity investments

( 1,837 ) — —

Release of valuation allowance

( 151,738 ) — —

Deferred income taxes 2,637 ( 12,642 ) ( 1,322 )

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Operating lease liabilities ( 8,547 ) ( 4,264 ) ( 12,917 )

Net cash provided by (used in) operating activities 160,646 86,178 ( 2,525 )

Net cash provided by operating activities

242,370 160,646 86,178

Cash Flows from Investing Activities:

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Purchases of marketable securities ( 586,833 ) ( 620,573 ) ( 842,803 )

Sales of marketable securities — — 92,786

Sale of non-marketable equity investments

Maturities and redemptions of marketable securities 830,756 887,664 1,009,532

Advances paid for business combination (Note 16)

( 18,432 ) — —

Business combination, net of cash acquired — ( 213,905 ) —

Net cash provided by (used in) investing activities

Net cash provided by investing activities

206,133 38,803 158,499

3 unchanged sentences

Payment of withholding taxes on net share settlement of equity awards ( 56,654 ) ( 60,299 ) ( 67,978 )

Payment of deferred offering costs — — ( 109 )

Repurchase of common stock

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( 436,658 ) ( 67,260 ) ( 60,619 )

Net increase (decrease) in cash, cash equivalents and restricted cash 132,189 184,058 ( 443,706 )

Net increase in cash, cash equivalents and restricted cash

11,845 132,189 184,058

Cash, cash equivalents and restricted cash, beginning of period 620,405 488,216 304,158

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Cash and cash equivalents $ 569,774 $ 620,315 $ 488,121

Restricted cash included in prepaid expenses and other current assets 3 — 3

Restricted cash, current 62,374 3 —

Restricted cash included in other assets 102 87 95

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$ — $ 12,874 $ —

Excise tax liability accrued for common stock repurchased

$ 2,961 $ — $ —

Payables related to unsettled common stock repurchases

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Freshworks Inc.

is a software development company that provides software-as-a-service (SaaS) products that provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences.

We are headquartered in San Mateo, California, and have subsidiaries located in the United States, India, Australia, the United Kingdom, Ireland, Germany, France, the Netherlands, and Singapore.

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Dividend yield— Because we have never paid and have no intention to pay cash dividends on our common stock, the dividend yield is zero .

For the performance-based award granted to the then CEO, now Executive Chairman, with both a service-based vesting condition and a market condition (as discussed further in Note 12 — Stockholders' Equity and Stock-Based Compensation ), we determined the fair value of the award by using the Monte Carlo simulation model.

For the performance-based award granted to the then CEO, subsequently Executive Chairman and now former Executive Chairman, with both a service-based vesting condition and a market condition (2021 Executive Chairman Performance Award as discussed further in Note 12 — Stockholders' Equity and Stock-Based Compensation ), we determined the fair value of the award by using the Monte Carlo simulation model.

The main assumptions used in the Monte Carlo simulation model include stock price volatility, risk-free interest rate, dividend yield and the measurement period, which is the period over which our simulated stock prices are used to evaluate the possibility of achieving the specified stock price targets.

Since both vesting conditions have to be met for each tranche of the award to ultimately vest, the associated stock-based compensation expense is recognized over the longer of the derived service period or the requisite service period, using the accelerated attribution method.

In February 2024, the Board approved performance awards (PRSUs) to be granted to certain members of the executive team subject to service and performance-based vesting conditions (referred to as Executive PRSUs in Note 12— Stockholders' Equity and Stock-Based Compensation ).

In March 2025 and February 2024, the Board approved performance awards (PRSUs) to be granted to certain members of the executive team subject to service and performance-based vesting conditions (referred to as Executive PRSUs in Note 12— Stockholders' Equity and Stock-Based Compensation ).

The performance-based vesting conditions include revenue and free cash flow targets.

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Stock-based compensation associated with these Executive PRSUs is recognized using the accelerated attribution method over the requisite service period, based on Freshworks' periodic assessment of the probability that the performance will be achieved.

If the performance goals are not met as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed.

the performance goals are not met as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As of December 31, 2024 and 2023, we have recorded a full valuation allowance against our U.S.

deferred tax assets.

We recognized the effect of income tax positions only if those positions are more likely than not of being sustained.

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Cash and cash equivalents are recorded at cost, which approximates fair value.

Restricted Cash

Restricted cash consists of cash balances that are legally or contractually restricted as to withdrawal or use.

Such restrictions primarily relate to cash held as collateral under certain contractual arrangements, amounts restricted for the settlement of specific obligations, or cash held in escrow.

Restricted cash is recorded at cost, which approximates fair value.

Marketable Securities

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There were no credit losses or impairment on available-for-sale debt securities recognized for the years ended December 31, 2025, 2024, and 2023.

Marketable securities also included mutual funds comprised of certain term bonds.

These mutual funds meet certain criteria for equity investments in accordance with ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities.

Under this guidance, we measure mutual funds at their estimated fair value, with changes in fair value recognized in interest and other income, net in the consolidated statements of operations.

Accounts Receivable and Allowance for Credit Losses

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Once the development project is available for general release, capitalization ceases, and we estimate the useful life of the asset and begin amortization.

Internal-use software and cloud computing services are amortized on a straight-line basis over its estimated useful life.

Internal-use software and cloud computing services are amortized on a straight-line basis over its estimated useful life, within cost of revenue in the consolidated statements of operations.

Long-Lived Assets (Including Goodwill)

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If the carrying amount of an asset or asset group exceeds these estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group.

We did no t recognize any impairment of long-lived assets during the years ended December 31, 2025, 2024, and 2023.

Goodwill is not amortized but rather is tested for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

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Our payment terms generally provide that customers pay the invoiced portion of the total arrangement fee either in advance or within 30 days from the invoice date.

Net Loss per Share Attributable to Common Stockholders

Basic and diluted net loss per share attributable to common stockholders are presented in conformity with the two-class method required for participating securities.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the number of weighted-average shares of common stock outstanding during the reporting period.

Diluted net loss per share attributable to common stockholders adjusts basic net loss per share for the potentially dilutive impact of outstanding stock options, RSUs, PRSUs, and stock purchases rights granted under the ESPP.

Net Income (Loss) per Share

Basic and diluted net income (loss) per share is computed by dividing the net income (loss) by the number of weighted-average shares of common stock outstanding during the reporting period.

Diluted net income (loss) per share adjusts basic net income (loss) per share for the potentially dilutive impact of outstanding stock options, RSUs, PRSUs, and stock purchases rights granted under the ESPP.

The dilutive potential shares are computed using the treasury stock method.

Because we have reported net losses for all periods presented, all potentially dilutive securities are considered antidilutive, and accordingly, diluted net loss per share is the same as basic net loss per share.

In periods when we report net losses, all potentially dilutive securities are considered antidilutive, and accordingly, diluted net loss per share is the same as basic net loss per share.

Defined Benefit Plan

Employees in India are entitled to benefits under the Gratuity Act, a defined benefit retirement plan covering eligible employees.

The plan requires employers to provide for a lump-sum payment to eligible employees at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employee’s salary and tenure of employment.

Employees in India are also entitled to a defined benefit plan with benefits based on an employee’s accumulated leave balance and salary.

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Accounting Standards Recently Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit and loss and assets that are currently required annually.

Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280.

This authoritative guidance is required to be applied retrospectively and effective for Freshworks starting in its annual disclosures for 2024 and interim periods starting 2025.

We adopted this ASU on January 1, 2024.

See Note 11—Segment and Geographic Information for additional details.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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ASU 2023-09 requires entities to provide more information in the rate reconciliation table and about income taxes paid, including certain disclosures that would be disaggregated by jurisdiction and other categories.

This authoritative guidance should be applied prospectively and will be effective for us starting in our annual disclosures for 2025.

Retrospective application is permitted.

This guidance is only related to disclosures and is not expected to have a significant impact on our consolidated financial statements.

This authoritative guidance was adopted on January 1, 2025 prospectively for our annual disclosures starting 2025.

This guidance is only related to disclosures and did not have a significant impact on our consolidated financial statements.

See Note 14—Income Taxes.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No.

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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.

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 consolidated financial statements.

Cash Equivalents and Marketable Securities

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.

This guidance is effective for us starting in our annual disclosures for 2026.

Early adoption is permitted.

We do not expect this guidance to have a material 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 consolidated financial statements, including which transition method to apply.

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.

Cash Equivalents and Investments

Cash equivalents and available-for-sale debt securities consisted of the following as of December 31, 2025 and 2024 (in thousands):

3 unchanged sentences

Money market funds $ 120,923 $ — $ — $ 120,923

treasury securities

100,235 16 — 100,251

government agency securities

26,168 3 ( 1 ) 26,170

Commercial paper

47,466 — — 47,466

Fixed deposits

129,875 — — 129,875

Total cash equivalents 424,667 19 ( 1 ) 424,685

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Corporate debt securities 36,878 69 ( 6 ) 36,941

Certificates of deposit

Commercial paper

12,369 — — 12,369

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Money market funds $ 507,655 $ — $ — $ 507,655

treasury securities 239,727 22 — 239,749

government agency securities 8,388 1 — 8,389

Corporate debt securities 36,905 — — 36,905

Total cash equivalents 507,655 — — 507,655

3 unchanged sentences

Corporate debt securities 45,682 101 ( 21 ) 45,762

Commercial paper

16,388 — — 16,388

Certificates of deposit

26,449 — — 26,449

Total debt securities 448,766 1,034 ( 50 ) 449,750

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treasury securities $ 21,500 $ ( 9 ) $ — $ — $ 21,500 $ ( 9 )

government agency securities 8,197 ( 7 ) 9,995 ( 5 ) 18,192 ( 12 )

Corporate debt securities 7,495 ( 6 ) — — 7,495 ( 6 )

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Total $ 211,401 $ 211,597

Accrued interest receivable of $ 3.3 million and $ 4.4 million was classified as prepaid expenses and other current assets in the consolidated balance sheets as of December 31, 2024 and December 31, 2023, respectively.

In addition to available-for-sale debt securities, marketable securities also include term bond mutual funds, which are measured at fair value.

As of December 31, 2024 we did not have any term bond mutual funds.

As of December 31, 2023, the fair value of the term bond mutual funds was $ 1.6 million.

The change in fair value of the term bond mutual funds is recorded in interest and other income, net in the consolidated statements of operations.

The realized and unrealized gains recognized in the consolidated statements of operations for the term bond mutual funds were not material during the years ended December 31, 2024, 2023, and 2022.

Accrued interest receivable of $ 1.5 million and $ 3.3 million was classified in prepaid expenses and other current assets in the consolidated balance sheets as of December 31, 2025 and December 31, 2024, respectively.

Non-Marketable Equity Securities

Non-marketable equity securities represent our interests in privately held entities which have no readily determinable fair values.

We carry these investments at cost, less impairment, and report them under other assets in the consolidated balance sheets.

In July 2025, we sold our interest in a privately held entity for $ 2.2 million which resulted in a gain of $ 1.8 million.

The gain was recorded within Interest and other income, net in the consolidated statements of operations.

Fair Value Measurements

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Money market funds $ 120,923 $ — $ 120,923

treasury securities

100,251 — 100,251

government agency securities

— 26,170 26,170

Commercial paper

— 47,466 47,466

Fixed deposits

— 129,875 129,875

Marketable securities:

2 unchanged sentences

Corporate debt securities — 36,941 36,941

Certificates of deposit

Commercial paper

— 12,369 12,369

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Money market funds $ 507,655 $ — $ 507,655

treasury securities 239,749 — 239,749

government agency securities — 8,389 8,389

Corporate debt securities — 36,905 36,905

Marketable securities:

2 unchanged sentences

Corporate debt securities — 45,762 45,762

Term bond mutual funds — 1,578 1,578

Commercial paper

— 16,388 16,388

Certificates of deposit

— 26,449 26,449

Total financial assets $ 724,023 $ 233,382 $ 957,405

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Year Ended December 31,

2024 2023 2022

Capitalization of costs associated with internal-use software $ 18,990 $ 6,843 $ 8,029

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Accrued compensation $ 28,233 $ 28,269

Accrued third-party cloud infrastructure expenses

Accrued reseller commissions 11,512 11,569

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Total accrued liabilities $ 97,631 $ 81,933

Noncurrent liabilities include $ 21.1 million and $ 22.7 million of long term accrued compensation as of December 31, 2024 and 2023, respectively.

Other liabilities include $ 21.1 million of long term accrued compensation each as of December 31, 2025 and 2024.

Business Combination

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Transaction costs associated with the acquisition were approximately $ 2.1 million for the year ended December 31, 2024 and were recorded in general and administrative expense.

We expect to finalize the valuation as soon as is practicable, but not later than one year from the acquisition date.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition:

As of June 30, 2025, we finalized the purchase price allocation, including the valuation pertaining to deferred tax liabilities.

An immaterial adjustment was recorded during the measurement period, resulting in a decrease to goodwill and an increase to deferred tax balances.

The following table summarizes the final fair value of assets acquired and liabilities assumed from the acquisition, inclusive of measurement period adjustments:

(in thousands)

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The deferred tax liability was primarily driven by the fair value of intangible assets.

The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date and are considered preliminary pending finalization of the valuation pertaining to deferred tax liabilities.

The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date.

The customer relationships, developed technology, and trademarks are amortized on a straight-line basis over their estimated useful lives of 8 years, 6 years, and 1 year, respectively.

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Such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the date indicated, nor are they indicative of our future operating results.

Goodwill and Intangible Assets, Net

The change in the carrying amounts of goodwill is presented below (in thousands):

Balance as of December 31, 2023 $ 6,181

Goodwill acquired

Balance as of December 31, 2024 $ 147,014

The addition to goodwill during the year ended December 31, 2024 was associated with the acquisition of D42 Parent, Inc..

There was no changes to goodwill during the year ended December 31, 2023.

Intangible Assets, Net

Acquired intangible assets consist of developed technology, customer relationships, and trademarks and are amortized on a straight-line basis over their estimated useful lives.

The following table summarizes acquired intangible assets as of December 31, 2024 (amounts in thousands):

The following tables summarize acquired intangible assets as of December 31, 2025 and 2024 (amounts in thousands):

December 31, 2025

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Total $ 111,096 $ ( 34,110 ) $ 76,986

December 31, 2024

Gross Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life

Developed technology $ 41,196 $ ( 13,423 ) $ 27,773 5.4

Customer relationships 69,200 ( 6,433 ) 62,767 7.4

$ 700 $ ( 400 ) $ 300 0.4

Total $ 111,096 $ ( 20,256 ) $ 90,840

Total amortization of acquired intangible assets for the years ended December 31, 2025, 2024, and 2023 is as follows (in thousands):

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We have operating leases primarily for office space.

The leases have remaining lease terms of one to eight years , some of which include options to extend the lease for up to six years .

The leases have remaining lease terms of 1 to 8 years, some of which include options to extend the lease for up to 6 years.

Our leases do not contain any residual value guarantee.

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Cash payments included in the measurement of operating lease liabilities $ 11,527 $ 6,808

Operating ROU assets obtained in exchange for lease obligations 13,275 7,461

Maturities of the operating lease liabilities are as follows (in thousands):

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Present value of operating lease liabilities $ 42,503

As of December 31, 2024, there were no future payments related to signed leases that have not yet commenced.

As of December 31, 2025, there were $ 6.4 million of future payments related to signed leases that have not yet commenced.

Commitments and Contingencies

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District Court for the Northern District of California against us, certain of our current officers and directors, and underwriters of our initial public offering (IPO).

On April 14, 2023, the court-appointed lead plaintiff filed a consolidated amended class action complaint.

The complaint alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by making material misstatements or omissions in offering documents filed in connection with the IPO.

The complaint seeks unspecified damages, interest, fees, costs, and rescission on behalf of purchasers and/or acquirers of common stock issued in the IPO.

On February 8, 2023, the court-appointed lead plaintiff and lead counsel.

On April 14, 2023, lead plaintiff filed an amended complaint.

The amended complaint alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by making material misstatements or omissions in offering documents filed in connection with our IPO.

The amended complaint seeks unspecified damages, interest, fees, costs, and rescission on behalf of purchasers and/or acquirers of common stock issued in our IPO.

On September 28, 2023, the court issued an order granting in part and denying in part defendants' motion to dismiss.

We and the other defendants continue to vigorously defend against the remaining claims in this action.

On January 16, 2025, we filed a motion for summary judgment, which the court granted and entered judgment in our and the other defendants’ favor on April 10, 2025.

Plaintiff has appealed the judgment, and we continue to vigorously defend against the claims in this action.

On March 20, 2023, a purported stockholder derivative complaint was filed in the U.S.

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We have received and may receive claims from third parties asserting, among other things, infringement of their intellectual property rights, defamation, labor and employment rights, privacy, and contractual rights.

There are no currently pending legal proceedings that we believe will have a material adverse impact on our business or consolidated financial statements.

There are no currently pending legal proceedings that we believe will have a material adverse impact on our business or condensed consolidated financial statements.

Indemnifications

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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.

For software licenses sold with maintenance and professional services, 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.

Disaggregation of Revenue

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As of December 31, 2025 and 2024, we had $ 9.8 million and $ 6.3 million of unbilled receivables, respectively.

The increase in unbilled receivable is primarily related to the acquisition of D42 Parent, Inc.

and its business.

Unbilled receivables are included within accounts receivable, net on the consolidated balance sheets.

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acquisition and changes in unbilled receivable.

(2) As of December 31, 2024 and 2023, non-current deferred revenue of $ 3.9 million and $ 0 was included in Other Liabilities in the consolidated balance sheets, respectively.

(2) As of December 31, 2025 and 2024, non-current deferred revenue of $ 3.1 million and $ 3.9 million was included in Other Liabilities in the consolidated balance sheets, respectively.

Revenue recognized during the years ended December 31, 2025, 2024, and 2023 from amounts included in deferred revenue at the beginning of these periods was $ 323.5 million, $ 265.4 million, and $ 204.8 million, respectively.

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We operate in a single operating segment composed of the consolidated financial results of Freshworks.

Our Chief Executive Officer (CEO) is the chief operating decision maker (CODM) of Freshworks and the key measures of segment profit

or loss that our CODM uses to allocate resources and assess performance is our revenue and consolidated net loss.

Our Chief Executive Officer (CEO) is the chief operating decision maker (CODM) of Freshworks and the key measures of segment profit or loss that our CODM uses to allocate resources and assess performance is our revenue and consolidated net income (loss).

Significant segment expenses reviewed by our CODM for our single operating segment comprise of stock-based compensation, amortization of acquired intangible assets, and other segment expenses.

Other segment expenses utilizes operating expenses recognized as research and development, selling and marketing and general and administrative expenses within our consolidated statement of operations less stock-based compensation and amortization of acquired intangible assets, and primarily related to personnel-related costs.

Refer to Note 12— Stockholders' Equity and Stock-Based Compensation and Note 7— Goodwill and Intangible Assets, Net for information regarding amounts pertaining to stock-based compensation and amortization of acquired intangibles.

Other segment expenses utilize operating expenses recognized as research and development, selling and marketing and general and administrative expenses within our consolidated statement of operations less stock-based compensation and amortization of acquired intangible assets, and primarily related to personnel-related costs.

Refer to Note 12— Stockholders' Equity and Stock-Based Compensation and Note 7— Intangible Assets, Net for information regarding amounts pertaining to stock-based compensation and amortization of acquired intangibles.

Revenue by geographic location is determined based on the customers' billing address.

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Year Ended December 31,

2024 2023 2022

North America $ 390,795 $ 329,934 $ 266,331

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In November 2024, our board of directors (the Board) approved the share repurchase program, which authorized the repurchase of up to $ 400 million of our outstanding Class A common stock.

Under the repurchase program, we may repurchase shares of our outstanding Class A common stock from time to time in the open market, through privately negotiated transactions and/or other means in compliance with the Exchange Act and the rules and regulations thereunder.

Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 under the Exchange Act.

We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of Class A common stock under this authorization.

The timing, manner, price, and amount of any repurchases will be determined by us at our discretion, and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

The repurchase program may be suspended or discontinued at any time.

During the year ended December 31, 2025 we repurchased a total of 26,895,424 shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $ 384.5 million, resulting in an average price of $ 14.29 per share.

As of December 31, 2024, $ 384.5 million remained available for future share repurchases under the program.

During the year ended December 31, 2024, we repurchased a total of 985,234 shares for an aggregate price of $ 15.5 million and average price of $ 15.77 per share.

The program was completed in August 2025.

Under the repurchase program, we repurchased shares in the open market, through privately negotiated transactions and/or other means in compliance with the Exchange Act and the rules and regulations thereunder.

These repurchases were executed in accordance with Rule 10b-18 under the Exchange Act and, where applicable, Rule 10b5-1 trading plans.

All shares of Class A common stock subsequently repurchased were retired.

Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price over par value was recorded entirely to additional-paid-in capital, or in the absence of additional-paid-in capital, to accumulated deficit, in the consolidated balance sheets.

Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price over par value was recorded to additional-paid-in capital.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is comprised of two components — unrealized gains or losses on available-for-sale debt securities and net changes in cash flow hedges.

The following tables shows the changes in the components of accumulated other comprehensive (loss) income:

The following tables shows the changes in the components of accumulated other comprehensive (loss) income (in thousands):

Year Ended December 31,

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Equity Compensation Plans

In August 2021, the Board adopted the 2021 Plan and the ESPP, effective upon the IPO.

In August 2021, the Board adopted the 2021 Plan and the ESPP.

Pursuant to the 2021 Plan, the Board may grant incentive stock options to purchase shares of our common stock, non-statutory stock options to purchase shares of our common stock, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance awards (PRSUs) and other awards.

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Upon adoption, we have initially reserved 10,000,000 shares of Class A common stock for issuance under the Inducement Plan.

In September 2022, we hired a President and granted him 1,732,501 RSUs under the Inducement Plan and stock options to purchase up to 1,815,980 shares of Class A common stock, of which stock options to purchase up to 1,776,780 shares of Class A common stock were granted under the Inducement Plan and the remaining under the 2021 Plan.

Each award will vest over

four years with 25 % of the shares vesting on the first anniversary of the grant date and the remaining 75 % of the shares vesting in equal quarterly installments thereafter, subject to continued employment.

Shares of common stock reserved for future issuance were as follows (in thousands):

2011 Stock Plan:

Options, RSUs and PRSUs outstanding

2021 Equity Incentive Plan:

Options and RSUs outstanding

Shares reserved for future award issuances 81,101

2022 Inducement Plan:

Options and RSUs outstanding 2,723

Shares reserved for future award issuances 6,664

2021 Employee Stock Purchase Plan 15,421

Shares reserved for future award issuances 12,972

Total awards outstanding and shares of common stock reserved for issuance

Total shares of common stock reserved for issuance

2021 Employee Stock Purchase Plan

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Balance as of December 31, 2024 2,569 $ 10.30 7.4 $ 15,066

Assumed and converted options from acquisition (Note 6)

Stock options exercised ( 227 ) $ 0.33

Stock options cancelled / forfeited / expired ( 10 ) $ 0.42

Balance as of December 31, 2025 2,332 $ 11.32 7.1 $ 4,650

Options vested and expected to vest as of December 31, 2025

2,332 $ 11.32 7.1 $ 4,650

Options exercisable as of December 31, 2025

1,480 $ 13.57 6.7 $ 49

(1) Aggregate intrinsic value for stock options represents the difference between the exercise price and the per share fair value of our common stock as of the end of the period, multiplied by the number of stock options outstanding, exercisable, or vested.

Total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 3.4 million, $ 5.4 million, and $ 6.8 million, respectively.

There were no options granted during the years ended December 31, 2025, 2024 and 2023, other than the replacement awards related to the D42 Parent Inc.

acquisition in 2024.

The weighted-average grant date fair value per share of the assumed and converted stock options related to the D42 Parent, Inc.

acquisition was $ 11.09 for the year ended December 31, 2024, of which approximately $ 1.8 million was related to post-combination services and will be recognized as stock-based compensation over requisite service period of two years (Note 6).

The weighted-average grant date fair value of stock options granted was $ 8.26 per share during the year ended December 31, 2022.

There were no options granted during the years ended December 31, 2024 and 2023.

Determination of Fair Value of Stock Options

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Unvested, as of December 31, 2025 21,936 $ 14.98

(1) During the year ended December 31, 2024, shares granted includes 0.9 million shares granted to the Executive Chairman as long-term equity incentive award accounted for as a modification.

The weighted average grant date fair value was $ 69.78 per share.

Refer to the Executive Chairman Awards discussion below.

(1) During the year ended December 31, 2025, total shares that vested were 10.1 million, of which 4.0 million shares were withheld for tax purposes.

(3) Shares forfeited includes the cancellation of the 2021 Executive Chairman Performance Award consisting of 6,000,000 PRSUs discussed in the Executive Chairman Awards section below.

The total fair value of vested RSUs during the years ended December 31, 2025, 2024, and 2023 were $ 199.5 million, $ 180.0 million, and $ 175.3 million, respectively.

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Executive Chairman Awards

In May 2019, the Board approved a grant of 166,390 shares PRSUs to our then CEO, now current Executive Chairman.

The vesting of these PRSUs is contingent upon the satisfaction of certain milestones.

The revenue-related milestone and the liquidity event condition were met prior to December 31, 2021.

Upon completion of the milestones, the time-based vesting was the only condition yet to be satisfied over the remaining requisite service period.

All shares related to this grant were vested as of December 31, 2023.

In September 2021, the Board approved a grant of 6,000,000 PRSUs to our Executive Chairman, with a time-based service condition beginning January 1, 2022, and a market condition involving five separate stock price targets ranging from $ 70.00 to $ 200.00 per share for each of the five vesting tranches (2021 Executive Chairman Performance Award).

The 2021 Executive Chairman Performance Award had a total grant date fair value of $ 131.0 million.

The fair value of the 2021 Executive Chairman Performance Award was determined at grant date by using the Monte Carlo simulation model, which requires certain complex valuation assumption inputs such as measurement period, expected stock price volatility, risk-free interest rate and dividend yield.

The valuation assumptions using the Monte Carlo simulation model at the date of grant were:

Valuation Assumption Inputs

Measurement period (in years) 7.0

Stock price volatility 60.0 %

Risk-free interest rate 1.12 %

Dividend yield — %

As a result of macroeconomic conditions outside the control of our leadership team, the five separate stock price hurdles were considered by the Board to be too high for the 2021 Executive Chairman Performance Award to have the retention value expected at the time the award was granted.

In September 2021, the Board approved a grant of 6,000,000 PRSUs to our then Chief Executive Officer, subsequently Executive Chairman and now former Executive Chairman, with a time-based service condition beginning January 1, 2022, and a market condition involving five separate stock price targets ranging from $ 70.00 to $ 200.00 per share for each of the five vesting tranches (2021 Executive Chairman Performance Award).

In February 2024, the Board approved the cancellation of the 2021 Executive Chairman Performance Award and the grant of a 2024 Executive Chairman Award with a fair value of $ 19.0 million, both effective March 1, 2024.

We accounted for the 2024 Executive Chairman Award as a modification.

There were no incremental costs recognized as a result of the modification and the remaining unrecognized stock-based compensation expense from the 2021 Executive Chairman Performance Award of $ 61.9 million will be recognized over the vesting period of the new 2024 Executive Chairman Award.

There were no incremental costs recognized as a result of the modification and the remaining unrecognized stock-based compensation expense from the 2021 Executive Chairman Performance Award of $ 61.9 million was to be recognized over the vesting period of the new 2024 Executive Chairman Award.

The 2024 Executive Chairman Award is comprised of 70 % time-based RSUs that vest quarterly over four years and 30 % PRSUs with the same terms as the Executive PRSUs discussed below.

For the year ended December 31, 2024, we recognized $ 19.4 million, of stock-based compensation expense related to the 2024 Executive Chairman Award.

For the years ended December 31, 2024, 2023 and 2022 we recognized $ 4.6 million (prior to modification), $ 28.1 million and $ 27.6 million of stock-based compensation expense associated with the 2021 Executive Chairman Performance Award, respectively.

As of March 31, 2025, the performance conditions for this award had been met and time-based vesting was the only condition yet to be satisfied over the remaining requisite service period.

Effective December 1, 2025, the Executive Chairman and Chairman of the Board, retired from his role in the Company.

As a result of the termination, unvested shares of the Executive Chairman Award were forfeited and certain previously recorded compensation expenses related to the Executive Chairman Award were reversed.

For the years ended December 31, 2025, 2024 and 2023, we recognized $( 25.8 ) million, $ 24.0 million and $ 28.1 million, respectively, of stock-based compensation expense (benefit) related to the Executive Chairman awards, with 2025 including $ 38.7 million in forfeitures .

Executive PRSUs

In February 2024, the Board approved PRSUs to be granted to certain members of the executive team (Executive PRSUs), subject to service and performance-based vesting conditions.

The performance-based vesting conditions include revenue and free cash flow targets over the performance period from January 1 to December 31, 2024, and vest over three years from the grant date.

70 % and 30 % of each Executive PRSU award will be earned based on Freshworks’ achievement of revenue and free cash flow targets, respectively.

The performance targets allow our executives to earn up to a maximum of 177.5 % of target performance in the aggregate for significant outperformance.

In March 2025 and February 2024, the Board approved the grant of PRSUs to certain members of the executive team (Executive PRSUs), subject to service and performance-based vesting conditions.

The performance-based vesting conditions include revenue and free cash flow targets for each respective performance year, from January 1 to December 31, and vest over three years from the grant date.

70 % and 30 % of each Executive PRSU award will be earned based on our achievement of revenue and free cash flow targets, respectively.

As of March 31, 2025, the performance conditions for the Executive PRSUs had been met and time-based vesting was the only condition yet to be satisfied over the remaining requisite service period.

The 2025 performance target allows our executives to earn up to a maximum of 173.6 % of target performance in the aggregate for significant outperformance.

The fair value of each PRSU is based on the fair value of our common stock on the date of grant.

For the year ended December 31, 2024, we recognized $ 5.0 million of stock-based compensation expense related to the Executive PRSUs.

Stock-based compensation associated with these Executive PRSUs is recognized using the accelerated attribution method over the requisite

service period, based on our periodic assessment of the probability that the performance will be achieved.

During the years ended December 31, 2025 and 2024, we recognized $ 9.3 million and $ 5.0 million of stock-based compensation expense related to the Executive PRSUs, respectively.

Stock-Based Compensation

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(1) Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software.

(2) Sales and marketing expense for the years ended December 31, 2024, 2023, and 2022 includes $ 6.5 million, $ 9.6 million, and $ 3.2 million , respectively, of stock-based compensation expense associated with RSUs, PRSUs and options granted to the President.

After the appointment of the President as our Chief Executive Officer, stock-based compensation expenses were included in General and Administrative.

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $( 5.1 ) million, $ 50.4 million and $ 55.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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In November 2024, the Board approved a restructuring plan as a part of our efforts to align our talent with our strategic priorities and to improve operating efficiency.

As a result, during the year ended December 31, 2024, we have recorded

restructuring charges of $ 9.7 million in our consolidated statements of operations, which consist of severance costs of $ 8.1 million and other related-personnel and exit costs of $ 1.6 million.

We expect to complete the restructuring plan by the end of the second quarter of fiscal year 2025.

As a result, during the year ended December 31, 2024, we recorded restructuring charges of $ 9.7 million in our consolidated statements of operations, which consist of severance costs of $ 8.1 million and other related-personnel and exit costs of $ 1.6 million.

During the year ended December 31, 2025, we recorded restructuring charges of $ 0.4 million.

The restructuring plan is complete, with no remaining liability as of December 31, 2025.

The following table shows the total amount incurred and accrued related to restructuring charges (in thousands):

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Accrued restructuring costs as of December 31, 2025

The remaining balance of $ 2.4 million as December 31, 2024, primarily related to severance and is included in accrued liabilities in our consolidated balance sheets.

Our net loss before provision for income taxes for the years ended December 31, 2024, 2023, and 2022 was as follows (in thousands):

We adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, prospectively during the year ended December 31, 2025.

Our net income (loss) before provision for income taxes for the years ended December 31, 2025, 2024, and 2023 was as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Domestic $ 12,935 $ ( 130,763 ) $ ( 165,144 )

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$ 4,010 $ 2,897 $ 2,589

Domestic $ 3,381 $ 2,810 $ 2,137

1,051 484 221

Foreign 13,599 13,792 12,179

Domestic ( 14,165 ) — —

( 131,046 ) ( 12,725 ) —

( 17,973 ) ( 1,440 ) —

Foreign ( 82 ) 1,523 ( 1,322 )

Total provision for income taxes $ ( 130,441 ) $ 4,531 $ 13,667

The following is a reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31, 2024, 2023, and 2022:

A reconciliation of provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follow:

Year Ended December 31,

U.S Federal statutory tax rate $ 11,189 21.0 %

United States

State and local income taxes (1)

( 14,365 ) ( 27.0 )

Foreign tax effects

Effect of rates different than statutory

Lease accounting

Other 1,066 2.0

United Kingdom

Other ( 698 ) ( 1.3 )

Withholding tax 563 1.1

Other foreign jurisdictions 2,095 3.9

Effect of cross-border tax laws

Global intangible low-taxed income, net of credits 3,021 5.7

Foreign-derived intangible income ( 4,777 ) ( 9.0 )

Foreign tax credits ( 14,577 ) ( 27.4 )

Research and development credits ( 4,562 ) ( 8.6 )

Changes in valuation allowances

( 137,367 ) ( 257.8 )

Nontaxable or nondeductible items

Stock-based compensation 11,020 20.7

Non-deductible expenses 464 0.9

Foreign exchange loss 1,075 2.0

Other Adjustments 320 0.7

Changes in unrecognized tax benefits 6,434 12.1

Total provision for income taxes $ ( 130,441 ) ( 244.8 ) %

(1) Income taxes in California made up the majority (greater than 50 percent) of the state tax effect.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:

Year Ended December 31,

Federal income tax

21.0 % 21.0 %

Stock-based compensation ( 23.9 ) ( 16.9 )

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Uncertain tax positions ( 3.2 ) ( 2.1 )

( 3.2 ) ( 2.1 ) —

taxes on foreign operations 3.5 ( 4.8 )

3.5 ( 4.8 ) —

Other items 0.3 —

Total provision for income taxes

( 5.0 ) % ( 11.0 ) %

The components of our net deferred tax assets as of December 31, 2025 and 2024, were as follows (in thousands):

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Accruals and reserves

Depreciation and amortization — 3,328

Allowance for uncollectible accounts 328 412

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Depreciation and amortization

( 14,903 ) ( 17,159 )

Federal tax effect of non-US branches

Operating lease right-of-use assets ( 10,809 ) ( 8,772 )

Net deferred tax assets $ 157,466 $ 8,499

We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies.

Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute the business plans and/or tax planning strategies.

Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

Our valuation allowance increased by $( 3.1 ) million and $ 8.7 million during the years ended December 31, 2024 and 2023, respectively.

The Tax Cuts and Jobs Act of 2017 (TCJA) made a significant change to Internal Revenue Code Section 174, which went into effect for taxable years beginning after December 31, 2021.

The change requires Companies to capitalize specific research and experimental (R&E) expenditures and amortize over five years for U.S.

incurred R&E or fifteen years for foreign incurred R&E beginning on January 1, 2022.

This mandatory capitalization requirement does not have a material impact on the 2023 cash tax liabilities due to sufficient tax attributes.

We have not provided U.S.

income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries because we intend to permanently reinvest such earnings outside the United States.

We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period.

As of December 31,2025, based on the relevant weight of positive and negative evidence, including the implemented tax restructuring, we concluded that it is more likely than not that our U.S.

federal and state deferred tax assets are realizable.

As such, we released $ 151.7 million valuation allowance related to U.S.

federal and state deferred tax assets during the year ended December 31, 2025.

Our valuation allowance decreased by $ 3.1 million during the year ended December 31, 2024.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to the U.S.

tax code, including the immediate expensing of U.S.

research and development costs, the immediate expensing of certain capital expenditures, and other tax code changes effective beginning in 2026.

Effective January 1, 2025, all non-U.S.

earnings are not permanently reinvested.

Net Operating Loss and Credit Carryforwards

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If not utilized, the federal NOL carryforwards will begin to expire in 2034.

For the federal NOL carryforwards arising in tax years beginning after December 31, 2017, which represents the majority of our federal NOL carryforwards, the Tax Act limits our ability to utilize carryforwards to 80% of taxable income;

For the Federal NOL carryforwards arising in tax years beginning after December 31, 2017, the Tax Cuts Jobs Act of 2017 (TCJA) limits our ability to utilize carryforwards to 80% of taxable income;

however, these NOLs may be carried forward indefinitely.

As of December 31, 2024, the NOL carryforwards for all the states in the United States is $ 146.8 million.

If not utilized, the state NOL carryforwards will begin to expire in 2025.

As of December 31, 2024, we also have federal tax credits carryforwards of $ 8.1 million.

If not utilized, the credits will begin to expire in 2027.

We have foreign tax credit of $ 17.6 million, which will begin to expire in 2028 if not utilized.

We also have research and development credits of $ 4.6 million, which will begin to expire in 2041 if not utilized.

As of December 31, 2025, the NOL carryforwards for all the states in the United States is $ 112.0 million, of which $ 110.3 million will begin to expire in 2026, and $ 1.7 million will be carried forward indefinitely.

Utilization of the NOL carryforwards may be subject to a substantial annual limitation due to the ownership change provisions of IRC Section 382 and similar state provisions.

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We continually monitors the impact to net operating losses of any ownership changes.

Income Taxes Paid

The following presents cash paid for income taxes, net of refunds by jurisdiction for the year ended December 31, 2025 (in thousands):

Year Ended December 31,

Other foreign jurisdictions

Total cash paid for taxes, net of refunds

For the years ended December 31, 2024 and 2023, cash paid for taxes, net of refunds was $ 11.9 million and $ 12.0 million, respectively.

Unrecognized Tax Benefits

We have adopted authoritative guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in our income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

We recognize financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has no likelihood of being realized upon ultimate settlement with the relevant tax authority.

As of December 31, 2024 and 2023, we had gross unrecognized tax benefits of $ 8.1 million and $ 5.6 million, respectively, all of which would affect the effective tax rate, if recognized, after consideration of valuation allowance.

For tax positions meeting the more likely than not threshold, the amount we recorded is the largest benefit that has no likelihood of being realized upon ultimate settlement with the relevant tax authority.

As of December 31, 2025 and 2024, we had gross unrecognized tax benefits of $ 13.3 million and $ 8.1 million, respectively, all of which would affect the effective tax rate.

The following table presents a reconciliation of the beginning and ending amount of the unrecognized tax benefits (in thousands):

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Accrued interest of $ 3.2 million and $ 2.2 million has been recorded as of December 31, 2025 and 2024, respectively.

Our major tax jurisdictions are India and the United States and we also files income tax returns in various U.S.

Our major tax jurisdictions are India and the United States and we also file income tax returns in various U.S.

states and foreign jurisdictions.

2 unchanged sentences

federal, state, and foreign jurisdictions have statutes of limitations that generally range from three to five years.

Due to our net losses, substantially all of its federal and state income tax returns are subject to examination since inception.

We are under examination in India and have appealed our case to the tribunal court.

Due to our net losses, substantially all of our U.

federal and state income tax returns are subject to examination

since inception.

We are under examination in India and have appealed our case to the appeals court.

As of December 31, 2025, we are waiting the results of the appeal.

1 unchanged sentence

As the outcome of our tax audits are resolved in a manner inconsistent with management's expectations, we could adjust our provision for income taxes in the future.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is computed by dividing the net loss by the number of weighted-average outstanding shares of common stock.

Diluted net 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.

We consider our stock options and RSUs as potential common stock equivalents, but excluded them from the computation of diluted net loss per share attributable to common stockholders for the periods presented, as their effect was antidilutive.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) by the number of weighted-average outstanding shares of common stock.

Diluted net income (loss) per share is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result.

We consider our stock options and RSUs as potential common stock equivalents.

In periods when we report net losses, we exclude potential common stock equivalents from the computation of diluted net loss per share, as their effects are antidilutive.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights.

As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted

net loss per share attributable to common stockholders are the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):

Year Ended December 31,

2024 2023 2022

Net loss $ ( 95,368 ) $ ( 137,436 ) $ ( 232,132 )

Net loss attributable to Class A and Class B common stockholders - basic and diluted $ ( 95,368 ) $ ( 137,436 ) $ ( 232,132 )

Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders - basic and diluted 300,843 293,087 284,587

Net loss per share attributable to Class A and Class B common stockholders - basic and diluted $ ( 0.32 ) $ ( 0.47 ) $ ( 0.82 )

The following table summarizes the potential common equivalents that were excluded from the computation of diluted net loss per share attributable to Class A and Class B common stockholders for the periods presented (in thousands):

As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net income (loss) per share are the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data):

Year Ended December 31,

Net income (loss)

Weighted-average shares used in computing net income (loss) per share - basic

Weighted-average effect of potentially dilutive equity awards

Weighted-average shares used in computing net income (loss) per share - diluted

Net income (loss) per share - basic

Net income (loss) per share - diluted

Equity awards excluded from diluted net income (loss) per share because their effect would have been anti-dilutive

10,679 24,462 29,259

RSUs and PRSUs 21,797 26,755 32,253

Stock options 2,569 2,395 2,758

ESPP 96 109 124

Total 24,462 29,259 35,135

Subsequent Events

FireHydrant Acquisition

In January 2026, the Company completed the acquisition of FireHydrant, Inc., a provider of AI-powered incident management software.

As of December 31, 2025, the Company paid $ 18.4 million of advances for the acquisition, included within prepaid expenses and other current assets in the consolidated balance sheet, and held $ 61.3 million of restricted cash with its payments administrator specifically for the acquisition.

The Company will account for the transaction as a business combination.

Since the closing date of the acquisition occurred subsequent to the end of the reporting period, the allocation of purchase price to the underlying net assets has not yet been completed.

Share Repurchase Program

In February 2026, the Board of Directors of the Company approved a stock repurchase program for the repurchase of up to $ 400 million of the Company’s outstanding Class A common stock.

Under the repurchase program, the Company may repurchase shares of the Company’s outstanding Class A common stock from time to time in the open market, through privately negotiated transactions and/or other means in compliance with the Exchange Act and the rules and regulations thereunder.

The timing, manner, price, and amount of any repurchases will be determined by the Company at its discretion, and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

The repurchase program may be suspended or discontinued at any time.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data