Freshworks Targets $1 Billion Annual Revenue as AI Adoption Drives Growth in Chennai

Chennai-based software company Freshworks is on track to cross $1 billion in annual recurring revenue this year, driven by rapid AI adoption and a 30 percent growth in its large enterprise customer segment. Chief Executive Officer Dennis Woodside announced the milestones following the company's March 2026 quarter, highlighting a surge in demand for AI-enabled software over legacy systems.

The Nasdaq-listed company, which maintains its roots in Chennai, achieved GAAP profitability last year and is guiding to be GAAP profitable in the second half of this year. The growth comes as businesses seek partners to help them safely transform their operations and maximize the value of artificial intelligence.

According to Woodside, Freshworks closed its two largest deals ever last quarter, which included a single transaction valued at $1 million. The firm’s larger customer segment grew at 30 percent on a yearly basis during the March 2026 quarter, outperforming the company's average growth rate.

A significant driver of this growth is the adoption of the company's AI solutions. As of January, Freshworks had 7,000 actively paying customers for its AI offerings. This segment alone has generated directly monetised revenue exceeding $20 million.

Looking ahead, Freshworks has set a target of reaching $1.3 billion in annual recurring revenue over the next two and a half years. The company is specifically targeting mid-to-large companies that have complex software needs but lack massive headcounts and resources.

While the company's growth outlook for 2026 has moderated, its financial focus has shifted toward balancing expansion with profitability. Woodside noted that the industry has entered a phase where profitability is considered equally important as growth. Freshworks is currently generating cash flow margins in the high 20 percent range.

To support its product portfolio, the company is open to potential acquisitions to plug existing gaps. However, Woodside declined to share specific details, indicating that no deals are imminent.