Freshworks to cut 11% workforce as AI reshapes software industry
What's the story
Freshworks, a leading business-software company, has announced its decision to cut 11% of its workforce. The move will impact some 500 jobs and comes as the company grapples with an industry being reshaped by artificial intelligence (AI). The company's shares fell over 8% in extended trading after the announcement.
AI disruption
Job cuts becoming common in software industry
The job cuts at Freshworks are part of a broader trend in the software industry, where companies are racing to automate work and reshape products around AI. Just last month, Atlassian announced it would cut about 10% of its jobs. The rise of AI tools from companies like Anthropic has posed potential existential threats to traditional software makers, impacting their shares negatively.
CEO statement
Automation taking over 'rote work': Freshworks CEO
Dennis Woodside, the CEO of Freshworks, said that the decision to cut jobs was partly driven by the use of AI in product and engineering. He also noted that automation has taken over "rote work that technology can take care of." The restructuring will affect some 500 roles across departments globally and is expected to incur one-time charges of about $8 million.
Business reinvestment
Freshworks to reinvest savings into employee experience business
Woodside said that the savings from merging sales teams, reducing management layers, and automating work would be reinvested in Freshworks's Employee Experience business. This includes its IT service management software Freshservice. As of December 31, 2025, the company had some 4,500 full-time employees.
Revenue forecast
Freshworks expects strong revenue growth in 2nd quarter
Freshworks expects its second-quarter revenue to be between $232 million and $235 million. The midpoint of this range is above analysts' average estimate of $232.7 million. In the first quarter, the company's revenue rose 16% to $228.6 million, beating estimates of $223.24 million. However, its adjusted profit came in at 11 cents per share, slightly missing estimates of 12 cents per share.