Freshworks to cut 500 jobs, reducing workforce by 11% globally
AI adoption drives restructuring as over 50% code generated by automation
Revenue rises 16% to $228.6 million despite layoffs and profitability push
Freshworks will reduce its global workforce by around 11%, or nearly 500 employees, as part of a restructuring exercise aimed at streamlining operations and accelerating AI-led transformation.
The layoffs are expected to impact both India and US operations, making it the latest technology company to recalibrate costs and workforce structures amid changing demand trends in the software sector.
1 May 2026
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The Nasdaq-listed company expects to incur one-time restructuring charges of about $8 million, most of which will be recognised in the second quarter of 2026, Chief Financial Officer Tyler Sloat said during the company’s Q1 earnings call on May 6.
"We announced some workforce changes we are making to the company in Q2 to consolidate overlapping go-to-market efforts, streamline our product development process, and apply AI and automation across our business," Sloat said during the earnings call.
AI Driving Structural Changes
The restructuring highlights the growing impact of artificial intelligence on software development and operations.
CEO Dennis Woodside said the company's investments in AI over the past year and a half have significantly altered how products are built and the scale of workforce required.
"Over half of our code originates in AI today," Woodside said, adding that automation and AI have improved development speed and operational efficiency, contributing to the restructuring decision.
The move also reflects a broader trend across the SaaS industry, where companies are focusing on profitability, automation and operational efficiency amid slower enterprise spending.
Freshworks becomes the second US-based technology company with a significant India workforce to announce a restructuring initiative recently, after Cognizant unveiled its AI-focused "Project Leap" programme last week.
Third Round of Layoffs
This is the third major round of layoffs by Freshworks in recent years, highlighting the broader pressure on SaaS firms to improve profitability amid slowing demand and tighter enterprise spending.
The company had announced a 13% workforce reduction in November 2024, affecting around 660 employees. Prior to that, Freshworks cut jobs in 2023 through multiple rounds, including layoffs of around 114 employees in March and another 90–100 jobs in June.
Freshworks currently employs over 5,000 people globally and has also undergone management restructuring since 2024.
The company appointed Dennis Woodside as President in September 2022, with responsibility for leading global operations and strategy.
Revenue Growth Continues
Alongside the restructuring announcement, Freshworks reported a 16% year-on-year increase in first-quarter revenue to $228.6 million. Its GAAP operating loss narrowed to $8.1 million from $10.4 million a year earlier.
The company's net dollar retention rate improved slightly to 105% in constant currency terms, indicating continued expansion within its existing customer base.
Freshworks said it now has over 1,648 customers generating more than $100,000 in annual recurring revenue (ARR), up 29% year-on-year, while customers contributing over $50,000 in ARR rose 23%.
The company also signed the two largest deals in its history during the quarter, including its first seven-figure ARR deal in the employee experience segment.
Despite a nearly 2% rise in its Nasdaq-listed shares following the earnings announcement, the stock remains down around 26% so far this year.
