Freshworks Posts Strong Earnings — Then Cuts 500 Jobs

On May 5, 2026, Freshworks reported first quarter results that beat analyst expectations: $228.6 million in revenue (up 16% year-over-year), 1,646 customers above $100K ARR (up 29%), and 106% net dollar retention. The company is profitable on a non-GAAP basis and raised full-year guidance to $958–964 million.

Hours later, they announced an 11% workforce reduction affecting approximately 500 employees.

For Freshdesk customers, this juxtaposition raises an uncomfortable question: if Freshworks is cutting their own support and engineering teams while their Customer Experience (CX) segment grows at just 9%, who's maintaining the product you rely on?

The EX vs CX Growth Gap

Freshworks operates two main product lines: Customer Experience (CX) tools like Freshdesk, and Employee Experience (EX) tools like Freshservice. The Q1 numbers reveal where the company's priorities lie:

CX segment: ~$395M ARR, +9% growth
EX segment: ~$510M ARR, +26% growth

EX has overtaken CX in total annual recurring revenue and is growing nearly 3x faster. Freshworks' first $1 million+ ARR deal came from the EX side. Investor messaging focused heavily on EX momentum, AI Copilot revenue, and employee workflow automation.

Meanwhile, CX — the segment that includes Freshdesk — grew 9% for the second consecutive year. That's not decline, but it's maintenance mode. For comparison, DeskLeap's customer base is growing faster than that as a startup.

The Layoff Context: Reallocating Resources Away from CX

According to reports, Freshworks restructured teams focused on customer experience products (support, sales, marketing) and reallocated people and investments to prioritize the faster-growing employee experience business. Translation: the CX segment is being de-prioritized.

The stated reason for the layoffs is AI-driven industry transformation. Freshworks is betting they can maintain CX products with fewer engineers and support staff because AI will handle the gap. But here's the catch: they're replacing their own people with AI internally while CX product innovation appears to stall.

Who's Maintaining Freshdesk Now?

If your vendor just cut 11% of their workforce and explicitly shifted engineering resources away from your product category, you should be asking:

Will feature development slow down?
Will support response times increase?
Will critical bugs take longer to fix?
Is this product in long-term maintenance mode?

Strong financial results don't erase product risk. A profitable company can still deprioritize specific products if they're not driving growth.

What This Means for Freshdesk Customers

Freshworks isn't abandoning Freshdesk — 9% growth still represents real revenue. But the strategic direction is clear: investment dollars, engineering talent, and executive attention are flowing to EX, not CX.

For support teams evaluating platforms in 2026, this creates a migration trigger. You don't need to wait for a vendor to formally discontinue a product to recognize it's no longer their focus.

Signs Your Vendor Is Deprioritizing Your Product

Segment growth significantly lags other segments (9% vs 26% is a red flag)
Workforce reductions explicitly target your product's teams
Feature releases slow down or focus on incremental improvements
Marketing messaging shifts to other products
Pricing changes become more aggressive (trying to squeeze existing customers rather than attract new ones)

The AI Replacement Irony

Freshworks' rationale for the layoffs is that AI is reshaping the software sector. They're using AI to reduce headcount internally — which is a valid business decision. But if they're replacing their own support and engineering teams with AI, what does that say about the customer experience their CX products will deliver?

The irony is sharp: a company selling customer support software is betting it can maintain those products with fewer support and development staff because AI will fill the gap. If that works internally, it validates their product strategy. If it doesn't, their customers are the ones who'll experience the consequences.

Alternatives to Consider

If you're a Freshdesk customer wondering whether this restructuring affects your support operations, now is the time to evaluate alternatives. Not because Freshdesk is shutting down, but because your vendor's strategic priorities have shifted.

DeskLeap offers the same core capabilities — live chat, ticketing, knowledge base, AI automation — with a key difference: customer support is our only product. We're not splitting focus between CX and EX segments. We're not using AI to replace our own team while selling support software to others.

Our approach is straightforward:

AI that augments, not replaces — Chatbot handles common questions, humans step in for complex issues, and the handoff is transparent
Knowledge-guided AI — No need for 20,000 historical tickets like enterprise platforms require. Our AI works from day one using your existing documentation
Transparent pricing — One price per agent, AI included, no per-resolution fees or surprise add-ons
Focus — Customer support is what we do. It's not a segment we're deprioritizing to fund employee experience tools

The Bottom Line

Freshworks' Q1 2026 results are strong. The 11% layoff is a strategic reallocation, not a financial crisis. But for Freshdesk customers, the signal is clear: CX is not where Freshworks is placing its bets.

If your support platform vendor is explicitly shifting resources away from your product category, it's reasonable to ask whether you should do the same with your business. Migration doesn't need to be reactive — it can be strategic.

Try DeskLeap free and see what customer-first support looks like when it's the vendor's only focus.

Freshworks Just Cut 11% of Staff While CX Growth Hits 9% — What This Means for Helpdesk Customers