Freshworks Inc.FRSH
Freshworks Inc. Revenue Disclosure
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.
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.
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 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.