Freshworks Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 63 Consolidated Balance Sheets 66 Consolidated Statements of Operations 68 Consolidated Statements of Comprehensive Income (Loss) 69 Consolidated Statements of Stockholders' Equity 70 Consolidated Statements of Cash Flows 71 Notes to Consolidated Financial Statements 73 62 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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, 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. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue — Refer to Note 2 and Note 10 to the financial statements Critical Audit Matter Description 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, 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. 63 Table of Contents How the Critical Audit Matter Was Addressed in the Audit 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 San Jose, California February 26, 2026 We have served as the Company's auditor since 2018. 64 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Freshworks Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Freshworks Inc. and subsidiaries (the “Company”) 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 (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. 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. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP San Jose, California February 26, 2026 65 Table of Contents Consolidated Financial Statements FRESHWORKS INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 569,774 $ 620,315 Restricted cash 62,374 3 Marketable securities 211,597 449,750 Accounts receivable, net of allowance of $ 10,809 and $ 8,885 150,817 122,910 Deferred contract acquisition costs 29,830 26,106 Prepaid expenses and other current assets 72,774 46,343 Total current assets 1,097,166 1,265,427 Property and equipment, net 38,843 25,893 Operating lease right-of-use assets 39,893 36,891 Deferred contract acquisition costs, noncurrent 27,179 22,534 Goodwill 146,676 147,014 Intangible assets, net 76,986 90,840 Deferred tax assets, net 157,466 8,499 Other assets 18,503 14,786 Total assets $ 1,602,712 $ 1,611,884 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 11,507 $ 1,619 Accrued liabilities 97,631 81,933 Deferred revenue 385,320 323,435 Income tax payable 3,571 728 Total current liabilities 498,029 407,715 Operating lease liabilities, non-current 33,282 30,221 Other liabilities 38,751 36,027 Total liabilities 570,062 473,963 Commitments and contingencies (Note 9) Stockholders' equity: Preferred stock, $ 0.00001 par value per share; 10,000,000 shares authorized as of December 31, 2025 and 2024, respectively; zero shares issued and outstanding as of December 31, 2025 and 2024 — — Class A common stock, $ 0.00001 par value per share; 1,000,000,000 shares authorized as of December 31, 2025 and 2024; 248,359,124 and 244,965,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively 2 2 Class B common stock, $ 0.00001 par value per share; 350,000,000 shares authorized as of December 31, 2025 and 2024; 35,067,987 and 58,417,396 shares issued and outstanding as of December 31, 2025 and 2024, respectively 1 1 66 Table of Contents FRESHWORKS INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2025 2024 Additional paid-in capital 4,586,392 4,874,133 Accumulated other comprehensive loss ( 1,591 ) ( 338 ) Accumulated deficit ( 3,552,154 ) ( 3,735,877 ) Total stockholders' equity 1,032,650 1,137,921 Total liabilities and stockholders' equity $ 1,602,712 $ 1,611,884 The accompanying notes are an integral part of these consolidated financial statements. 67 Table of Contents FRESHWORKS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 Revenue $ 838,809 $ 720,420 $ 596,432 Cost of revenue 126,145 113,330 103,369 Gross profit 712,664 607,090 493,063 Operating expense: Research and development 163,208 164,590 137,756 Sales and marketing 394,753 390,817 357,781 General and administrative 141,093 180,629 167,698 Restructuring charges 405 9,664 — Total operating expenses 699,459 745,700 663,235 Income (loss) from operations 13,205 ( 138,610 ) ( 170,172 ) Interest and other income, net 40,077 47,773 46,403 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: Basic 291,079 300,843 293,087 Diluted 293,769 300,843 293,087 The accompanying notes are an integral part of these consolidated financial statements. 68 Table of Contents FRESHWORKS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2025 2024 2023 Net income (loss) $ 183,723 $ ( 95,368 ) $ ( 137,436 ) Other comprehensive income (loss), net of taxes: 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 income (loss) $ 182,470 $ ( 94,952 ) $ ( 130,759 ) The accompanying notes are an integral part of these consolidated financial statements. 69 Table of Contents FRESHWORKS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' (Deficit) Equity Shares Amount Balances as of January 1, 2023 289,093 $ 3 $ 4,562,319 $ ( 7,431 ) $ ( 3,503,073 ) $ 1,051,818 Issuance of common stock upon exercise of stock options 360 — 88 — — 88 Issuance of common stock upon vesting and settlement of restricted stock units, net of shares withheld for tax purposes 6,615 — ( 68,621 ) — — ( 68,621 ) Issuance of common stock under employee stock purchase plan, net of shares withheld and retired for taxes 627 — 7,271 — — 7,271 Stock-based compensation — — 212,465 — — 212,465 Other comprehensive income — — — 6,677 — 6,677 Net loss — — — — ( 137,436 ) ( 137,436 ) 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 Other comprehensive income — — — 416 — 416 Net loss — — — — ( 95,368 ) ( 95,368 ) Balances as of December 31, 2024 303,382 $ 3 $ 4,874,133 $ ( 338 ) $ ( 3,735,877 ) $ 1,137,921 Issuance of common stock upon exercise of stock options 227 — 74 — — 74 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, including excise tax ( 26,896 ) — ( 387,426 ) — — ( 387,426 ) Stock-based compensation — — 149,875 — — 149,875 Other comprehensive income — — — ( 1,253 ) — ( 1,253 ) Net income — — — — 183,723 183,723 Balances as of December 31, 2025 283,427 $ 3 $ 4,586,392 $ ( 1,591 ) $ ( 3,552,154 ) $ 1,032,650 The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents FRESHWORKS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2025 2024 2023 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 Amortization of deferred contract acquisition costs 31,702 28,556 23,965 Non-cash lease expense 9,700 8,842 7,736 Stock-based compensation 146,819 216,706 210,707 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 ) Other 779 1,397 119 Changes in operating assets and liabilities: Accounts receivable ( 28,059 ) ( 17,145 ) ( 26,982 ) Deferred contract acquisition costs ( 40,071 ) ( 34,524 ) ( 26,962 ) Prepaid expenses and other assets ( 11,868 ) ( 1,393 ) ( 7,411 ) Accounts payable 9,573 ( 2,204 ) ( 2,423 ) Accrued and other liabilities 19,078 14,454 1,839 Deferred revenue 61,179 54,808 60,773 Operating lease liabilities ( 8,547 ) ( 4,264 ) ( 12,917 ) Net cash provided by operating activities 242,370 160,646 86,178 Cash Flows from Investing Activities: Purchases of property and equipment ( 5,700 ) ( 9,177 ) ( 2,069 ) Proceeds from sale of property and equipment 149 279 110 Capitalized internal-use software ( 15,791 ) ( 5,485 ) ( 6,271 ) Purchases of marketable securities ( 586,833 ) ( 620,573 ) ( 842,803 ) Sale of non-marketable equity investments 1,984 — — 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 investing activities 206,133 38,803 158,499 Cash Flows from Financing Activities: Proceeds from issuance of common stock under employee stock purchase plan, net 6,228 6,643 7,271 Proceeds from exercise of stock options 74 89 88 Payment of withholding taxes on net share settlement of equity awards ( 56,654 ) ( 60,299 ) ( 67,978 ) Repurchase of common stock ( 386,306 ) ( 13,693 ) — Net cash used in financing activities ( 436,658 ) ( 67,260 ) ( 60,619 ) 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 Cash, cash equivalents and restricted cash, end of period $ 632,250 $ 620,405 $ 488,216 Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets: Cash and cash equivalents $ 569,774 $ 620,315 $ 488,121 Restricted cash, current 62,374 3 — Restricted cash included in other assets 102 87 95 Total cash, cash equivalents and restricted cash $ 632,250 $ 620,405 $ 488,216 71 Table of Contents Supplemental cash flow information: Cash paid for taxes $ 14,384 $ 11,949 $ 12,034 Non-cash investing and financing activities: Operating lease right-of-use assets obtained in exchange for operating lease obligations $ 12,755 $ 13,275 $ 7,461 Stock-based compensation capitalized as internal-use software $ 3,199 $ 1,358 $ 1,758 Issuance of common stock and options in connection with acquisition $ — $ 12,874 $ — Excise tax liability accrued for common stock repurchased $ 2,961 $ — $ — Payables related to unsettled common stock repurchases $ — $ 1,840 $ — The accompanying notes are an integral part of these consolidated financial statements. 72 Table of Contents FRESHWORKS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business 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 employee and customer 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. In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company, for approximately $ 238.1 million. See Note 6—Business Combination. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of Freshworks and its wholly owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. Foreign Currency Remeasurement and Transactions The functional currency of our foreign subsidiaries is the U.S. dollar. Accordingly, each foreign subsidiary remeasures monetary assets and liabilities at period-end exchange rates, while non-monetary items are remeasured at historical rates. Revenues and expenses are remeasured at the exchange rates in effect on the day the transaction occurred, except for those expenses related to non-monetary assets and liabilities which are remeasured at historical exchange rates. Remeasurement adjustments are recognized in interest and other income, net in the consolidated statements of operations, and have not been material for the years ended December 31, 2025, 2024, and 2023. Use of Estimates The preparation of 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 income 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. 73 Table of Contents Revenue Recognition We derive revenue from subscription fees, related professional services, and following the acquisition of D42 Parent, Inc. in June 2024, software licenses. Subscription Revenue We sell subscriptions for our cloud-based solutions directly to customers and indirectly through channel partners through 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. We record revenue net of sales or value-added taxes. We sell subscriptions to third-party resellers. The price at which subscriptions are sold to the reseller is typically discounted, as compared to the price at which we would sell to an end customer, in order to enable the reseller to realize a margin on the eventual sale to the end customer. As pricing to the reseller is fixed, and we lack visibility into the pricing provided by the reseller to the end customer, reseller revenue is recorded net of any reseller discounts. Subscription revenue is primarily comprised of fees paid by our customers for accessing our cloud-based software during the term of the arrangement. Cloud-based services allow customers to use our multi-tenant software without requiring them to take possession of the software. Given that access to the cloud-based software represents a series of distinct services that comprise a single performance obligation that is satisfied over time, subscription revenue is recognized ratably over the contract term beginning on the commencement date of each contract, which is the date that the cloud-based software is made available to customers. Professional Service Revenue 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. Software License Revenue 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. Software license revenue consists of term licenses and is recognized upfront, upon making the software available to the customer. The associated software maintenance revenue is generally recognized ratably over the contract term as support and updates are provided to the customers over the term of the arrangement. Customers with Multiple Performance Obligations Some of our contracts with customers contain both subscriptions and professional services, and software licenses. For these contracts, we account for individual performance obligations separately. The transaction price is allocated to the separate performance obligations on the basis of relative standalone selling price (SSP). We determine SSP by taking into consideration historical selling price of these performance obligations in similar transactions, as well as current pricing practices and other observable inputs including, but not limited to, customer size and geography. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to SSP. Cost of Revenue Cost of revenue consists mainly of personnel-related expenses (primarily including salaries, related benefits, and stock-based compensation) for employees associated with our cloud-based infrastructure, payment gateway fees, voice, product support, and professional service organizations, as well as costs incurred by us for third-party hosting capabilities. Cost of revenue also includes third-party license fees, amortization of acquired intangibles, amortization of capitalized internal-use software, and allocation of general overhead expenses such as facilities and information technology. Research and Development Research and development costs are expensed as incurred and consist primarily of personnel-related expenses (primarily including salaries, related benefits, and stock-based compensation) for our product development employees. Research and development expenses also include non-personnel-related expenses such as third-party services for product development and consulting expenses, depreciation expense related to equipment used in research and development activities, and allocation of our general overhead expenses. 74 Table of Contents Advertising Costs Advertising costs are charged to sales and marketing expense in the consolidated statements of operations as incurred. We recognized $ 41.3 million, $ 41.4 million, and $ 41.2 million of advertising costs for the years ended December 31, 2025, 2024, and 2023, respectively. Stock-Based Compensation We issue stock options and restricted stock units (RSUs) to employees, consultants and directors under our 2021 Equity Incentive Plan (2021 Plan) and stock purchase rights granted under the 2021 Employee Stock Purchase Plan (ESPP) to employees based on the estimated fair value on the date of the grant. Stock-based compensation expense related to stock options and RSUs under the 2021 Plan and stock purchase rights under the ESPP is recognized in the consolidated statements of operations on a straight-line basis over the requisite service period, which is the vesting period of the respective awards. Forfeitures are accounted for when they occur. The fair value of RSUs is based on the closing market price of our Class A common stock on the date of the grant. Prior to the Initial Public Offering (IPO) in 2021, we determined the fair value of the common stock underlying stock options and RSUs by considering numerous objective and subjective factors including, but not limited to: (i) independent third-party valuations, (ii) the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to its common stock, (iii) the lack of marketability of the common stock, (iv) current business conditions and financial projections, and (iv) the likelihood of achieving an IPO or sale event. Subsequent to the IPO, the fair values of stock options and the stock purchase rights under the ESPP are estimated using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions. These assumptions represent our best estimates and involve inherent uncertainties and the application of our judgment. The main assumptions used in the Black-Scholes option-pricing model include: Expected term— The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method which represents the average of the contractual term of the option and the weighted-average vesting period of the option. We consider this appropriate as there is not sufficient historical information available to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The expected term for ESPP is the length of time from the grant date to the date on which the stock is purchased by the employees. Stock price volatility— For the stock price volatility over the expected term where our common stock has sufficient trading history, we generally estimate the stock price volatility using the historical volatility of our own stock. If our common stock lacks sufficient trading history, the stock price volatility over the expected term is estimated based on the historical volatility of comparable companies with similar characteristics to those of ours. Risk-free interest rate— The risk-free interest rate is based on the yield of the U.S. treasury debt securities commensurate with the expected term. 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, 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 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. The fair value of each Executive PRSU is based on the fair value of our common stock on the date of grant. 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 75 Table of Contents 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 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. 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. We recognized the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is more likely than not of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We recognize interest and penalties related to income tax matters as a component of income tax expense. Cash and Cash Equivalents Cash and cash equivalents consist of deposits held at financial institutions, money market funds, as well as highly liquid investments with an original maturity of three months or less when purchased. 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 Marketable securities consist primarily of debt securities such as corporate bonds, commercial paper, U.S. treasury securities, U.S. government agency securities and certificates of deposit. These securities are classified as available-for-sale securities at the time of purchase as they represent funds readily available for current operations, and we have the ability and intent to liquidate them at any time to meet our operating cash needs, if necessary. All available-for-sale debt securities are recorded at their estimated fair value, with changes in fair value recognized as unrealized gains or losses in accumulated other comprehensive income. For available-for-sale debt securities in an unrealized loss position, we evaluate whether a current expected credit loss exists based on available information relevant to the credit rating of the security, current economic conditions and reasonable and supportable forecasts. Expected credit losses are recorded in interest and other income, net, on the consolidated statements of income, and any remaining unrealized losses are recognized in accumulated other comprehensive income or loss in the stockholders' equity section of the consolidated balance sheets. Realized gains and losses are determined based on the specific identification method and are reported in interest and other income, net in the consolidated statements of operations. There were no credit losses or impairment on available-for-sale debt securities recognized for the years ended December 31, 2025, 2024, and 2023. Accounts Receivable and Allowance for Credit Losses Trade accounts receivable are recorded at the invoiced amount, net of allowance for credit losses. The allowance is based on our assessment of the collectability of accounts and is recorded as an offset to revenue and deferred revenue. We regularly review the adequacy of the allowance by considering the age of each outstanding invoice and the collection history. 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 and 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. 76 Table of Contents There were no customers that individually exceeded 10% of our revenue for the years ended December 31, 2025, 2024, and 2023, or that represented 10% or more of our consolidated accounts receivable balance as of December 31, 2025 and 2024. We primarily rely upon third-party cloud infrastructure partner, Amazon Web Services (AWS), 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. Derivative Instruments We enter into foreign currency forward contracts, all of which were designated as cash flow hedges, in order to manage the volatility of cash flows that relate to cost of revenues and operating expenses denominated in Indian rupee. All derivative instruments are measured at fair value based upon quoted market prices for comparable instruments and as such, classified within Level 2 of the fair value hierarchy. Derivative assets and liabilities are presented on a gross basis on the consolidated balance sheets under prepaid expenses and other current assets and accrued liabilities, respectively. Gains or losses related to cash flow hedges are recorded as a component of accumulated other comprehensive income (AOCI) on the consolidated statements of stockholders' equity until the forecasted transaction occurs in earnings. When the forecasted transaction occurs, the related gains and losses are reclassified into earnings within the financial statement line item associated with the underlying hedged transaction. If the underlying hedged transaction does not occur, or it becomes probable that the hedged transaction will not occur, the cumulative unrealized gain or loss is reclassified immediately from AOCI into earnings within interest and other income. Changes in the fair value of currency forward exchange contracts due to changes in time value were excluded from the assessment of effectiveness. The initial value of this excluded component is amortized on a straight-line basis over the life of the hedging instrument and recognized in the f inancial statement line item to which the hedge relates. A majority of the balance related to foreign exchange derivative instruments included in AOCI at December 31, 2025 is expected to be reclassified into earnings within 12 months. Derivative instruments are classified in the consolidated statements of cash flows as cash from operating activities, which reflect the classification of the underlying hedged transactions. We do not use derivative financial instruments for trading or speculative purposes. Entering into derivative instruments exposes us to credit risk to the extent that the counterparties are unable to meet the terms of the contract. We mitigate this credit risk by transacting with major financial institutions with high credit ratings. In addition, we have entered into master netting arrangements that mitigate credit risk by permitting net settlement of transactions. As such, our exposure is not considered significant. We do not have any collateral requirements with counterparties. Deferred Contract Acquisition Costs Deferred contract acquisition costs are incremental costs that are associated with acquiring customer contracts and consist primarily of sales commissions and the associated payroll taxes and certain referral fees paid to third-party resellers. The costs incurred upon the execution of initial and expansion contracts are primarily deferred and amortized over an estimated benefit period of three years . The estimated benefit period is determined by taking into consideration our contracts with customers, technology life cycle and other factors. We consider the estimated benefit period to exceed the initial contract term for certain costs because of anticipated renewals and because sales commission rates for renewal contracts are not commensurate with sales commissions for initial contracts. We include amortization of deferred commissions in sales and marketing expense in our consolidated statements of operations. There was no impairment loss in relation to the incremental selling costs capitalized for the years ended December 31, 2025, 2024, and 2023. We have elected to apply the practical expedient under Accounting Standards Codification (ASC) No. 340-40—Other Assets and Deferred Costs to account for costs incurred in obtaining a contract with a benefit period of one year or less as commission expenses. Deferred contract acquisition costs are included in sales and marketing expense in our consolidated statements of operations. 77 Table of Contents Property and Equipment, net Property and equipment, net, including capitalized internally-developed software, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: Estimated Useful Life Computers 3 years Capitalized internal-use software 3 years Office equipment, furniture and fixtures 5 years Motor vehicles 5 years Leasehold improvements Lesser of lease term or 5 years Capitalized Internal-Use Software We capitalize costs incurred in our software development projects and implementation of certain enterprise cloud computing services during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. 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, within cost of revenue in the consolidated statements of operations. Long-Lived Assets (Including Goodwill) Long-lived assets with finite lives include property and equipment, capitalized internal-use software and right-of-use (ROU) assets. We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. 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. We elected to bypass the qualitative assessment, and performed a quantitative goodwill impairment test. Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, in which case an impairment charge in the amount of such excess is recorded to goodwill, limited to the amount of goodwill. We did no t recognize any impairment of goodwill during the years ended December 31, 2025, 2024, and 2023. Deferred Revenue Deferred revenue consists of customer billings in advance of revenue being recognized from our subscription and professional services arrangements. Customers are invoiced for subscription service arrangements in advance for monthly, quarterly, semi-annual and annual subscription plans. 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 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. 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 78 Table of Contents employment. Employees in India are also entitled to a defined benefit plan with benefits based on an employee’s accumulated leave balance and salary. Both plans are unfunded arrangements. Current service costs are accrued in the period to which they relate. The benefit obligations are calculated by a qualified actuary using the projected unit credit method and the unfunded position is recognized as a liability in the consolidated balance sheets. In measuring the defined benefit obligations, we use a discount rate at the reporting date based on yields of local government treasury bills denominated in the same currency in which the benefits are expected to be paid, with maturities approximating the terms of our obligations. Because the plan is unfunded, no annual contributions are required to be made as per applicable regulations. Disclosures required under ASC 715—Compensation—Retirement Benefits, have been omitted because we have deemed them immaterial to our consolidated financial statements. The benefit plans had a plan benefit obligation of $ 13.0 million and $ 11.4 million as of December 31, 2025 and 2024, respectively. The long-term portion for the amount of $ 10.9 million and $ 9.6 million is included in other liabilities in the consolidated balance sheets as of December 31, 2025 and 2024, respectively. The current portion for the amount of $ 2.1 million and $ 1.8 million is included in accrued expenses in the consolidated balance sheets as of December 31, 2025 and 2024, respectively. Leases We lease office space under operating leases with expiration dates through 2032. We determine whether an arrangement constitutes a lease and records lease liabilities and ROU assets on our consolidated balance sheets at the lease commencement date. Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on either the rate implicit in the lease or our incremental borrowing rate (the estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease), whichever is more readily determinable. The incremental borrowing rate is based on an estimate of our expected unsecured borrowing rate for its notes, adjusted for tenor and collateralized security features. Lease liabilities due within 12 months are included within accrued liabilities on our consolidated balance sheets. ROU assets are measured based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the lease commencement date, (ii) initial direct costs incurred, and (iii) tenant incentives received, incurred or payable under the lease. Recognition of rent expense begins when the lessor makes the underlying asset available to us. We do not assume renewals or early terminations of its leases unless it is reasonably certain to exercise these options at commencement and does not allocate consideration between lease and non-lease components. For short-term leases, we record rent expense in our consolidated statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred. Restructuring Charges Costs associated with our restructuring plan primarily consist of severance payments, benefits continuation, and other employee separation costs. In general, we record involuntary employee-related exit costs when we communicate to employees that they are entitled to receive such benefits and the amount can be reasonably estimated. Related costs are included in restructuring charges in the consolidated statements of operations. The remaining restructuring liability is included in accrued liabilities in the consolidated balance sheet. Recent Accounting Pronouncements Accounting Standards Recently Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. 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 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. 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 79 Table of Contents 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. 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. 3. 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): December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 120,923 $ — $ — $ 120,923 U.S. treasury securities 100,235 16 — 100,251 U.S. 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 Debt securities: U.S. treasury securities 131,286 102 ( 9 ) 131,379 U.S. government agency securities 30,868 40 — 30,908 Corporate debt securities 36,878 69 ( 6 ) 36,941 Commercial paper 12,369 — — 12,369 Total debt securities 211,401 211 ( 15 ) 211,597 Total cash equivalents and debt securities $ 636,068 $ 230 $ ( 16 ) $ 636,282 80 Table of Contents December 31, 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 507,655 $ — $ — $ 507,655 Total cash equivalents 507,655 — — 507,655 Debt securities: U.S. treasury securities 215,773 612 ( 17 ) 216,368 U.S. government agency securities 144,474 321 ( 12 ) 144,783 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 Total cash equivalents and debt securities $ 956,421 $ 1,034 $ ( 50 ) $ 957,405 The following table presents gross unrealized losses and fair values for the securities that were in a continuous unrealized loss position as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Less than 12 months Greater than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss U.S. treasury securities $ 21,500 $ ( 9 ) $ — $ — $ 21,500 $ ( 9 ) Corporate debt securities 7,495 ( 6 ) — — 7,495 ( 6 ) Total $ 28,995 $ ( 15 ) $ — $ — $ 28,995 $ ( 15 ) December 31, 2024 Less than 12 months Greater than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss U.S. treasury securities $ 13,819 $ ( 16 ) $ 4,993 $ ( 1 ) $ 18,812 $ ( 17 ) U.S. government agency securities 8,197 ( 7 ) 9,995 ( 5 ) 18,192 ( 12 ) Corporate debt securities 7,998 ( 19 ) 5,982 ( 2 ) 13,980 ( 21 ) Total $ 30,014 $ ( 42 ) $ 20,970 $ ( 8 ) $ 50,984 $ ( 50 ) The amortized cost and fair value of the available-for-sale debt securities based on contractual maturities are as follows (in thousands): December 31, 2025 Amortized Cost Fair Value Due within one year $ 182,634 $ 182,772 Due after one year but within five years 28,767 28,825 Total $ 211,401 $ 211,597 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. 81 Table of Contents 4. 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. We did not have any assets or liabilities subject to fair value remeasurement on a nonrecurring basis as of December 31, 2025 and 2024. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table represents the fair value hierarchy for our financial assets measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Fair Value Measured Using Level 1 Level 2 Total Financial assets: Cash equivalents: Money market funds $ 120,923 $ — $ 120,923 U.S. treasury securities 100,251 — 100,251 U.S. government agency securities — 26,170 26,170 Commercial paper — 47,466 47,466 Fixed deposits — 129,875 129,875 Marketable securities: U.S. treasury securities 131,379 — 131,379 U.S. government agency securities — 30,908 30,908 Corporate debt securities — 36,941 36,941 Commercial paper — 12,369 12,369 Total financial assets $ 352,553 $ 283,729 $ 636,282 82 Table of Contents December 31, 2024 Fair Value Measured Using Level 1 Level 2 Total Financial assets: Cash equivalents: Money market funds $ 507,655 $ — $ 507,655 Marketable securities: U.S. treasury securities 216,368 — 216,368 U.S. government agency securities — 144,783 144,783 Corporate debt securities — 45,762 45,762 Commercial paper — 16,388 16,388 Certificates of deposit — 26,449 26,449 Total financial assets $ 724,023 $ 233,382 $ 957,405 The fair value of derivative assets and liabilities as of December 31, 2025 and 2024, and all related unrealized and realized gains and losses during the year ended December 31, 2025 and 2024, were not material. As of December 31, 2025 and 2024, the total notional amount of outstanding designated foreign currency forward contacts were $ 86.7 million and $ 50.5 million, respectively. 5. Balance Sheet Components Property and Equipment, net The following table summarizes property and equipment, net as of December 31, 2025 and 2024 (in thousands): December 31, 2025 2024 Computers $ 18,835 $ 19,694 Capitalized internal-use software 53,245 34,255 Office equipment 7,887 6,700 Furniture and fixtures 9,518 10,066 Motor vehicles 267 400 Leasehold improvements 8,994 7,847 Construction in progress 269 13 Total property and equipment 99,015 78,975 Less: accumulated depreciation and amortization ( 60,172 ) ( 53,082 ) Property and equipment, net $ 38,843 $ 25,893 The following table summarizes depreciation expense and internal-use software capitalization and amortization expense for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Capitalization of costs associated with internal-use software $ 18,990 $ 6,843 $ 8,029 Amortization expense of capitalized internal-use software 7,410 5,631 5,106 Depreciation expense 4,593 5,623 6,735 As of December 31, 2025 and 2024, the net carrying value of capitalized internal-use software was $ 26.1 million and $ 14.5 million, respectively. 83 Table of Contents Accrued and Other Liabilities The following table summarizes accrued liabilities as of December 31, 2025 and 2024 (in thousands): December 31, 2025 2024 Accrued compensation $ 28,233 $ 28,269 Accrued third-party cloud infrastructure expenses 5,922 — Accrued reseller commissions 11,512 11,569 Accrued advertising and marketing expenses 7,835 4,414 Advanced payments from customers 6,097 4,487 Accrued taxes 14,499 14,747 Operating lease liabilities, current 9,221 8,073 Contributions withheld for employee stock purchase plan 1,198 1,127 Unsettled share repurchases — 1,840 Other accrued expenses 13,114 7,407 Total accrued liabilities $ 97,631 $ 81,933 Other liabilities include $ 21.1 million of long term accrued compensation each as of December 31, 2025 and 2024. 6. Business Combination In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company. Through the combination, we are able to offer a more comprehensive IT solution for customers. The total purchase price consideration is $ 238.1 million, which consists of $ 225.3 million in cash paid, including $ 11.4 million of cash acquired, $ 8.9 million in common stock issued, and $ 3.9 million in assumed and converted stock option awards. As part of the business combination, we assumed certain unvested, in-the-money options held by D42 Parent, Inc.'s founder, which were converted into 511,770 replacement stock option awards issued pursuant to our 2021 Equity Incentive Plan. These awards have a fair value of $ 5.7 million and will vest two years from the closing date subject to continued employment. The portion of the fair value of the assumed and converted awards related to pre-combination vesting was $ 3.9 million and is included as consideration discussed above, and the remaining $ 1.8 million is post-combination expense that will be recognized as compensation expense over the remaining service period. Refer to Note 12—Stockholders' Equity and Stock-Based Compensation. 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. 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: 84 Table of Contents Amount (in thousands) Assets acquired: Cash $ 11,432 Trade accounts and other receivables 8,916 Prepaid expenses and other current assets 1,792 Customer relationships 67,600 Developed technology 30,700 Trademarks 700 Goodwill 140,495 Total $ 261,635 Liabilities assumed: Accounts payable and other current liabilities 3,510 Deferred revenue 6,080 Deferred tax liability 13,940 Total 23,530 Total purchase price consideration $ 238,105 The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets and liabilities acquired was recorded as goodwill. The goodwill recognized is not deductible for U.S. income tax purposes. We expect to derive value from the combination of D42 Parent, Inc.’s existing customer base, IT asset management technology, and trademarks, as well as through other synergies. 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. 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. We used the income approach to estimate the fair value of intangible assets acquired. We have included the operating results of D42 Parent, Inc. in our consolidated financial statements since the date of the acquisition. The revenue and net loss of D42 Parent, Inc. included in the consolidated statement of operations from the date of acquisition to December 31, 2024 were not material. The following unaudited supplemental pro forma financial information is provided for informational purposes only and summarizes our combined results of operations as if the acquisition had occurred on January 1, 2023 (in thousands): Year Ended December 31, 2024 2023 Revenue $ 735,591 $ 631,608 Net loss ( 99,999 ) ( 151,546 ) The unaudited supplemental pro forma results reflect certain adjustments for the amortization of acquired intangible assets, recognition of stock-based compensation, and acquisition-related transaction expenses. 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. 85 Table of Contents 7. 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 tables summarize acquired intangible assets as of December 31, 2025 and 2024 (amounts in thousands): December 31, 2025 Gross Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life (in years) Developed technology $ 41,196 $ ( 18,535 ) $ 22,661 4.4 Customer relationships 69,200 ( 14,875 ) 54,325 6.4 Trademarks $ 700 $ ( 700 ) $ — — Total $ 111,096 $ ( 34,110 ) $ 76,986 December 31, 2024 Gross Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life (in years) Developed technology $ 41,196 $ ( 13,423 ) $ 27,773 5.4 Customer relationships 69,200 ( 6,433 ) 62,767 7.4 Trademarks $ 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): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 5,113 $ 2,927 $ 158 Sales and marketing 8,741 5,233 145 Total amortization expense $ 13,854 $ 8,160 $ 303 As of December 31, 2025, expected future amortization expense related to acquired intangible assets is as follows (in thousands): Year Ending December 31, 2026 $ 13,553 2027 13,553 2028 13,591 2029 13,553 2030 10,640 Thereafter 12,096 Total future amortization $ 76,986 86 Table of Contents 8. Leases We have operating leases primarily for office space. 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. The following table presents various components of the lease costs (in thousands): Year Ended December 31, Operating Leases 2025 2024 Operating lease cost $ 13,112 $ 12,093 Short-term lease cost 492 489 Variable lease cost 4,802 3,842 Total lease cost $ 18,406 $ 16,424 The weighted-average remaining term of our operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows: December 31, Lease Term and Discount Rate 2025 2024 Weighted-average remaining lease term (in years) 3.9 4.3 Weighted-average discount rate 8.3 % 9.0 % The following table presents supplemental information arising from lease transactions. Cash payments related to short-term leases are not included in the measurement of the operating lease liabilities, and as such, are excluded from the amounts below (in thousands): Year Ended December 31, Supplemental Cash Flow Information: 2025 2024 Cash payments included in the measurement of operating lease liabilities $ 11,527 $ 6,808 Maturities of the operating lease liabilities are as follows (in thousands): Year Ending December 31: Operating Leases 2026 $ 12,307 2027 13,489 2028 12,152 2029 6,136 2030 3,580 Thereafter 2,579 Total lease payments 50,243 Less: imputed interest ( 7,740 ) Present value of operating lease liabilities $ 42,503 As of December 31, 2025, there were $ 6.4 million of future payments related to signed leases that have not yet commenced. 87 Table of Contents 9. Commitments and Contingencies Contractual Commitments Our contractual commitments primarily consist of third-party cloud infrastructure agreements and service subscription purchase arrangements used to support operations at the enterprise level. Future minimum payments under our non-cancelable purchase commitments as of December 31, 2025 are presented in the table below (in thousands): Year ending December 31, Contractual Commitments 2026 $ 95,447 2027 91,498 2028 68,723 Total $ 255,668 Litigation and Loss Contingencies On November 1, 2022, a purported Company stockholder filed a securities class action complaint in the U.S. 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 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. 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. District Court for the Northern District of California. The complaint names as defendants our current directors, as well as Freshworks, as nominal defendant, and asserts state and federal claims based on some of the same alleged misstatements as the securities class action complaint. The derivative complaint seeks unspecified damages, attorneys’ fees, and other costs. On June 21, 2023, the court stayed the case in light of the pending securities class action. On October 16, 2023, the court extended the stay of the case in light of the pending securities class action. We and the other defendants continue to vigorously defend against the claims in this action. From time to time, we have been and may be in the future subject to other legal proceedings, claims, investigations, and government inquiries (collectively, legal proceedings) in the ordinary course of business. 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 condensed consolidated financial statements. Indemnifications In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including losses arising out of intellectual property infringement claims made by third parties, if we have violated applicable laws, if we are negligent or commit acts of willful misconduct, and other liabilities with respect to our products and services and our business. In these circumstances, payment is typically conditional on the other party making a claim pursuant to the procedures specified in the particular contract. We also indemnify certain of our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in our consolidated financial statements. 10. 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. 88 Table of Contents 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 The following table summarizes revenue by our service offerings (in thousands): Year Ended December 31, 2025 2024 2023 Subscription services, software licenses and maintenance $ 829,403 $ 710,744 $ 582,868 Professional services 9,406 9,676 13,564 Total revenue $ 838,809 $ 720,420 $ 596,432 See Note 11—Segment and Geographic Information for revenue by geographic location. Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations Unbilled receivables primarily represent revenue recognized in excess of billings from non-cancellable multi-year contract arrangements. As of December 31, 2025 and 2024, we had $ 9.8 million and $ 6.3 million of unbilled receivables, respectively. Unbilled receivables are included within accounts receivable, net on the consolidated balance sheets. The aggregate balance of remaining performance obligations as of December 31, 2025 was $ 644.4 million. We expect to recognize $ 464.4 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Deferred revenue consists of customer billings in advance of revenue being recognized from our subscription and professional services arrangements. The following table summarizes the changes in the balance of deferred revenue during the years (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of the year (2) $ 327,288 $ 266,399 $ 205,626 Add: Billings during the year (1) 899,988 781,309 657,205 Less: Revenue recognized during the year ( 838,809 ) ( 720,420 ) ( 596,432 ) Balance at end of the year (2) $ 388,467 $ 327,288 $ 266,399 (1) Includes deferred revenue and unbilled receivables acquired as part of D42 Parent, Inc. acquisition and changes in unbilled receivable. (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. 89 Table of Contents Deferred Contract Acquisition Costs The change in the balance of deferred contract acquisition costs during the periods presented is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of the year $ 48,640 $ 42,672 $ 39,675 Add: Contract costs capitalized during the year 40,071 34,524 26,962 Less: Amortization of contract costs during the year ( 31,702 ) ( 28,556 ) ( 23,965 ) Balance at end of the year $ 57,009 $ 48,640 $ 42,672 11. Segment and Geographic Information 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 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 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. The following table summarizes revenue by geographic region (in thousands): Year Ended December 31, 2025 2024 2023 North America $ 390,795 $ 329,934 $ 266,331 Europe, Middle East and Africa 324,618 277,851 229,983 Asia Pacific 100,183 91,442 83,109 Other 23,213 21,193 17,009 Total revenue $ 838,809 $ 720,420 $ 596,432 Revenue from North America primarily includes revenue from the United States. For the years ended December 31, 2025, 2024 and 2023, revenue generated from the United States was $ 354.3 million, $ 294.5 million and $ 235.3 million, or 42 %, 41 % and 39 % of total consolidated revenue, respectively. The United Kingdom, categorized within Europe, Middle East and Africa in the table above, contributed $ 113.5 million, $ 94.1 million and $ 75.1 million or 14 %, 13 % and 13 % of total consolidated revenue for the years ended December 31, 2025, 2024 and 2023, respectively. Long-lived assets consist primarily of property, plant and equipment and ROU assets. The following table summarizes long-lived assets by geographic information (in thousands): December 31, 2025 2024 North America $ 39,747 $ 20,052 Europe, Middle East and Africa 6,383 8,391 Asia Pacific 32,606 34,341 Total long-lived assets $ 78,736 $ 62,784 Long-lived assets in North America are primarily located in the United States, and long-lived assets in Asia Pacific are primarily located in India. 90 Table of Contents 12. Stockholders' Equity and Stock-Based Compensation Common Stock We have two classes of common stock: Class A common stock and Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes. Class A and Class B common stock are referred to as common stock throughout these notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. Shares of Class B common stock automatically convert to Class A common stock upon the following: (1) sale or transfer of such share of Class B common stock, except for certain permitted transfers as described in our amended and restated certificate of incorporation; (2) the death of such Class B common stockholder (or nine months after the date of death if the stockholder is our founder); and (3) on the final conversion date, defined as the earlier of (a) the last trading day of the fiscal year following the seventh anniversary of our IPO; or (b) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock, voting as a single class. Share Repurchase 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. 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. 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 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 (in thousands): Year Ended December 31, 2025 2024 2023 Beginning balance $ ( 338 ) $ ( 754 ) $ ( 7,431 ) Unrealized gains (losses) on available-for-sale debt securities ( 592 ) 1,310 7,105 Net change on cash flow hedging ( 661 ) ( 894 ) ( 428 ) Net impact to other comprehensive (loss) income in current period ( 1,253 ) 416 6,677 Ending balance $ ( 1,591 ) $ ( 338 ) $ ( 754 ) 91 Table of Contents Equity Compensation Plans 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. The ESPP enables eligible employees to purchase our Class A common stock. Both the 2021 Plan and ESPP include an automatic increase to their shares reserve on January 1 of each year as set forth in the respective plan documents. In August 2022, the Compensation Committee of the Board adopted the 2022 Inducement Plan (the Inducement Plan) in accordance with Listing Rule 5635(c)(4) of the Nasdaq Stock Market. Under the Inducement Plan, nonstatutory stock options, stock appreciation rights, restricted stock, RSUs, PRSUs and other awards may be granted as an inducement material for eligible persons to enter into employment with us. Upon adoption, we have initially reserved 10,000,000 shares of Class A common stock for issuance under the Inducement Plan. Shares of common stock reserved for future issuance were as follows (in thousands): December 31, 2025 2021 Equity Incentive Plan: 89,696 2022 Inducement Plan: 6,958 2021 Employee Stock Purchase Plan 15,421 Total shares of common stock reserved for issuance 112,075 2021 Employee Stock Purchase Plan Under the ESPP, the price at which common stock is purchased is equal to 85 % of the fair market value of a share of our common stock on the first day of the offering period or the applicable purchase date, whichever is lower. The fair market value of common stock will generally be the closing sales price on the determination date. The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long and end on May 15 and November 15 of each year. The following table summarizes the information on shares purchased under the ESPP for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 Net shares issued under ESPP (1) 566,042 569,003 627,371 Weighted average purchase price $ 11.10 $ 11.81 $ 11.88 Aggregate net proceeds (in thousands) $ 6,228 $ 6,643 $ 7,271 (1) Net of shares withheld and retired to satisfy withholding tax requirements for certain employees in jurisdictions outside the United States The ESPP also includes a reset provision for the purchase price if the fair market value of a share of our common stock on the first day of any purchase period is less than or equal to the fair market value of a share of our common stock on the first day of an ongoing offering. If the reset provision is triggered, a new 24-month offering period begins. Each triggering of the reset provision was considered a modification in accordance with ASC 718, Stock Based Compensation , with the modification charge recognized on a straight-line basis over the new offering period. The modifications did not have a material effect on our stock-based compensation expense during the years ended December 31, 2025, 2024, and 2023. As of December 31, 2025 and 2024, we have withheld $ 1.2 million and $ 1.1 million of contributions from its employees. During the years ended December 31, 2025, 2024 and 2023, we recognized $ 3.8 million, $ 5.3 million and $ 7.6 million of stock-based compensation expense related to the ESPP, respectively. Determination of Fair Value of the ESPP We estimate the fair value of the ESPP using the Black-Scholes option-pricing model, which requires certain complex valuation assumption inputs such as expected term, expected stock price volatility, risk-free interest rate and dividend yield. 92 Table of Contents The fair value of each of the four purchase periods is estimated separately. The following table summarizes the range of valuation assumptions used in estimating the fair value of the ESPP during the period: Year Ended December 31, Valuation Assumption Inputs 2025 2024 2023 Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 1.5 Stock price volatility 33.8 % - 48.5 % 48.3 % - 57.2 % 47.4 % - 77.3 % Risk-free interest rate 3.60 % - 4.30 % 4.29 % - 5.41 % 4.47 % - 5.38 % Dividend yield — % — % — % Stock Options Stock options are generally granted with an exercise price equal to the fair market value of a share of common stock at the date of grant, have a 10-year contractual term, and vest over a four-year period. Stock option activity during the year ended December 31, 2025 is as follows (in thousands, except per share data): Share Information: Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Balance as of December 31, 2024 2,569 $ 10.30 7.4 $ 15,066 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). Determination of Fair Value of Stock Options We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires certain complex valuation assumption inputs such as expected term, expected stock price volatility, risk-free interest rate, and dividend yield. The following table summarizes the valuation assumptions used in estimating the fair value of stock options assumed and granted for the years presented: Year Ended December 31, Valuation Assumption Inputs 2024 Expected term (in years) 6.0 Stock price volatility 65.0 % Risk-free interest rate 4.29 % Dividend yield — % 93 Table of Contents Restricted Stock Units RSUs are granted at fair market value at the date of the grant and typically vest over a four-year period. RSU activity, which includes PRSUs, during the year ended December 31, 2025 is as follows (in thousands, except per share data): Share Information: Number of Shares Weighted-Average Grant Date Fair Value Unvested, as of December 31, 2024 21,797 $ 18.54 Granted 15,450 $ 14.93 Vested (1) ( 10,128 ) $ 19.69 Forfeited/Cancelled ( 5,183 ) $ 20.58 Unvested, as of December 31, 2025 21,936 $ 14.98 (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. 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. Performance-Based Awards Executive Chairman Awards 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 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. 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 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. Stock-based compensation associated with these Executive PRSUs is recognized using the accelerated attribution method over the requisite 94 Table of Contents 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 Total stock-based compensation expense recorded for the years ended December 31, 2025, 2024, and 2023 was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Equity awards: Cost of revenue $ 5,833 $ 6,565 $ 6,774 Research and development (1) 34,864 41,512 37,524 Sales and marketing 48,384 63,219 66,755 General and administrative (2) 57,738 105,410 99,654 Stock-based compensation, net of amounts capitalized 146,819 216,706 210,707 Capitalized stock-based compensation 3,199 1,358 1,758 Total stock-based compensation expense $ 150,018 $ 218,064 $ 212,465 (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) 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. As of December 31, 2025, unrecognized stock-based compensation expense related to unvested stock-based awards was as follows (in thousands, except for period data): December 31, 2025 Unrecognized Stock-Based Compensation Weighted-Average Period to Recognize Expense (in years) RSUs and PSUs $ 289,786 2.7 Stock options 2,880 0.5 ESPP 6,257 1.1 Total unrecognized stock-based compensation expense $ 298,923 13. Restructuring Charges 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 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): Amount Accrued restructuring costs as of December 31, 2024 $ 2,350 Restructuring charges incurred during the period 405 Amounts paid during the period ( 2,221 ) Other ( 534 ) Accrued restructuring costs as of December 31, 2025 $ — 95 Table of Contents 14. Income Taxes 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, 2025 2024 2023 Domestic $ 12,935 $ ( 130,763 ) $ ( 165,144 ) Foreign 40,347 39,926 41,375 Total $ 53,282 $ ( 90,837 ) $ ( 123,769 ) The components of the provision for income taxes for the years ended December 31, 2025, 2024, and 2023 were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ 4,010 $ 2,897 $ 2,589 State 1,051 484 221 Foreign 13,599 13,792 12,179 Deferred: Federal ( 131,046 ) ( 12,725 ) — State ( 17,973 ) ( 1,440 ) — Foreign ( 82 ) 1,523 ( 1,322 ) Total provision for income taxes $ ( 130,441 ) $ 4,531 $ 13,667 96 Table of Contents 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, 2025 Amount Rate % 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 India Effect of rates different than statutory 1,358 2.5 Lease accounting 660 1.2 Other 1,066 2.0 United Kingdom Other ( 698 ) ( 1.3 ) Brazil 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 ) Branch taxes 6,640 12.5 Tax Credits 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. 97 Table of Contents 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, 2024 2023 Federal income tax 21.0 % 21.0 % Stock-based compensation ( 23.9 ) ( 16.9 ) Change in valuation allowance 4.3 ( 6.4 ) Foreign tax rate differential ( 4.9 ) — Earnings from foreign subsidiaries ( 2.1 ) ( 1.8 ) Uncertain tax positions ( 3.2 ) ( 2.1 ) U.S. taxes on foreign operations 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): December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 21,269 $ 58,907 Foreign tax credit carryforwards 21,488 8,489 Capitalized R&E under IRC 174 112,700 98,274 Stock-based compensation 6,327 6,705 Accruals and reserves 24,344 9,965 Allowance for uncollectible accounts 328 412 Operating lease liability 11,605 9,518 Total deferred tax assets 198,061 192,270 Less: valuation allowance — ( 151,738 ) Deferred tax assets, net of valuation allowance 198,061 40,532 Deferred tax liabilities: Commissions ( 7,764 ) ( 6,102 ) Depreciation and amortization ( 14,903 ) ( 17,159 ) Federal tax effect of non-US branches ( 7,119 ) — Operating lease right-of-use assets ( 10,809 ) ( 8,772 ) Net deferred tax assets $ 157,466 $ 8,499 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. 98 Table of Contents Net Operating Loss and Credit Carryforwards As of December 31, 2025, we have U.S. federal net operating loss (NOL) carryforwards of approximately $ 67.3 million. 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, 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. 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. The annual limitation may result in the expiration of NOL carryforwards before utilization. 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, 2025 U.S. Federal $ — U.S. State 695 Foreign India 11,889 Other foreign jurisdictions 1,800 Total cash paid for taxes, net of refunds $ 14,384 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 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 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): Year Ended December 31, 2025 2024 Unrecognized gross tax benefits at the beginning of the period $ 8,144 $ 5,634 Increases related to prior year tax positions 2,612 449 Decreases related to prior year tax positions ( 512 ) — Increases in current year unrecognized benefits 3,071 2,061 Unrecognized gross tax benefits at the end of the period $ 13,315 $ 8,144 We recognize interest and penalties related to income tax matters as a component of income tax expense. 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 file income tax returns in various U.S. states and foreign jurisdictions. Carryover attributes beginning December 31, 2008, remain open to adjustment by the U.S. federal and state authorities. The U.S. 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 our U. S. federal and state income tax returns are subject to examination 99 Table of Contents 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. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years. 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. 15. 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 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, 2025 2024 2023 Numerator: Net income (loss) $ 183,723 $ ( 95,368 ) $ ( 137,436 ) Denominator: Weighted-average shares used in computing net income (loss) per share - basic 291,079 300,843 293,087 Weighted-average effect of potentially dilutive equity awards 2,690 — — Weighted-average shares used in computing net income (loss) per share - diluted 293,769 300,843 293,087 Net income (loss) per share - basic $ 0.63 $ ( 0.32 ) $ ( 0.47 ) Net income (loss) per share - diluted $ 0.63 $ ( 0.32 ) $ ( 0.47 ) Equity awards excluded from diluted net income (loss) per share because their effect would have been anti-dilutive 10,679 24,462 29,259 16. 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. 100 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.