The SaaS industry is once again at an inflection point, with agentic AI challenging long-held assumptions about software, scale and competitive advantage. In a wide-ranging interview with BW Businessworld, [color=hsl(0,75%,60%)]Dennis Woodside, President and CEO at Freshworks, explains why the playing field is becoming more level and why this moment could redefine where Freshworks sits in the global software hierarchy. Excerpts:
The world has been engulfed in uncertainty for the last two to four years — tariffs, trade tensions, wars. In the new fiscal year, what are your customers telling you? Is there a slowdown, and how are you factoring current conditions into the quarters ahead?
You’re right. The last two years in particular have brought a considerable amount of uncertainty. There are two forces at play: uncertainty driven by political developments, and uncertainty driven by technology, particularly AI. Both create enormous change for our customers and for Freshworks internally.
One thing I’ve learned is that a leader’s job is to create certainty so their team can execute. Part of what I was doing today (at all-hands meeting with Freshworks board and employees at Bengaluru office) was sharing the messages I want our team to understand about the strength of our business, how AI is reshaping our industry, and what we can do about it.
When it comes to our customers, we serve 75,000 of them, it’s critical that we bring genuine empathy to what they’re experiencing. Some are dramatically impacted. We have over 1,300 customers in the Middle East. When two AWS data centres went down recently, we had to rapidly transition services while simultaneously supporting customers in Dubai and Qatar who were under tremendous stress, trying to keep their businesses running. Our job in that moment is to help them solve a problem.
We have other customers affected by tariffs, where input costs suddenly jumped 50 per cent and they’re asking, ‘How do I run this business?’ Again, our job is to have empathy, deliver the best we can from our products, and appreciate what they’re going through. It’s a leadership challenge for any business, large or small, dealing with these global events.
About 40 per cent of your revenue comes from EMEA. Can you give us a sense of the financial impact of the Middle East situation and how you're baking that into guidance for the upcoming quarter?
The Middle East specifically is a small portion of our overall business, so the direct financial impact from that region is limited.
That said, what is affecting everybody — and moving at an almost incomprehensible pace — is AI. I was with a global media company in London last week, a long-standing customer. Eighteen months ago, AI wasn’t on the senior-most executives’ agenda. This year, their CIO walked me through how they’ve transformed virtually every aspect of their business: using AI to scout filming locations, create trailers, price their products. A company that’s been around 75 years is fundamentally reinventing itself.
When I asked the CIO what the primary objective was, he said, ‘We want to move faster. We want to free up our creative talent to do what they do best, which is think creatively about an amazing piece of content and not sit in spreadsheets doing budgeting.’ That’s a sentiment we’re hearing everywhere. We’re using AI across every function at Freshworks for the same reason.
On IT spend more broadly, with AI and macro disruption both in the picture, how are deal structures being shaped right now? Are cycles lengthening?
For most of our customers, they are investing as much, if not more, in technology than they ever have. And AI is additive to that. AI has given many CIOs the opportunity to play a much bigger role inside their businesses.
On deal cycles, actually, no, we haven’t seen them lengthen for AI. If anything, decisions are happening faster because CEOs are saying, ‘I want to see results.’ If a media company can ship a full television series a month earlier, that’s worth a great deal. The CEO will approve the Freshworks licences and the OpenAI tokens without hesitation. In Q4, over half of our large deals had an AI component, either as a conversation starter or as the centrepiece of the deal.
Freshworks hit USD 25 million in AI ARR last year and has set a target of USD 100 million by 2028. That’s still just 2-3 per cent of overall revenue. How does AI scale from here?
The way AI is priced by the industry and by us is going to change pretty dramatically in the next year. You’ll see AI functionality woven into all aspects of the product. Some of it we will charge for separately; some we won’t. But AI will be a factor in every single purchasing decision.
Customers are going to evaluate security, flexibility, extensibility, integrations, references — the things they’ve always assessed — and now, right alongside those: what is your AI today, your AI vision, your AI roadmap?
What ultimately happens is that business growth will inflect upwards as AI becomes a larger part of our offering and as customers increasingly understand the value it delivers to their business.
Your AI attach rate on new enterprise deals is now above 50 per cent. How are you converting your existing base of 75,000 customers, and is upselling helping?
Absolutely. Every quarter we’ve added a couple of thousand new customers paying for our AI. Getting more of the existing base to adopt requires continuous product innovation.
One thing we launched in Q4 is AI Agent Studio for the CX business. If you’re a Freshdesk customer, you can now create your own agents on our platform tailored to something very specific like initiating a return or exchanging a product. We also ship 30 out-of-the-box integrations with pre-built workflows, things like ‘change my flight’ for a travel company, or ‘get me a copy of my bill.’
What we’re really trying to do is make AI accessible to people who aren’t technical. A service desk administrator isn’t a coder. So, we need to make it genuinely easy for them to create agentic experiences. Once they start, the usage skyrockets, because they quickly realise: I built an AI agent myself, it’s helping our customers, and it’s saving my team time. We price on conversations, so our revenue scales as their usage scales. More and more of our 75,000 customers are going to cross into that paying AI customer category.
The industry has been questioning your CX business. EX looks like the clear growth driver, but CX seems stuck at single-digit growth. Is the problem go-to-market, or is the market itself structurally difficult?
Both businesses matter, so let me address them fairly. The EX business has been a tremendous growth driver, we grew 25 per cent in Q4, which is remarkable for a business now well over half a billion dollars in revenue. The typical customer is around a 5,000-person company, businesses like New Balance, Nucor Steel, Mahindra & Mahindra. We’ve found a real sweet spot there.
New Balance is a good example of the dynamic. They have roughly 10 per cent of Nike’s headcount, but they have to innovate at the same pace, compete for the same shelf space, and capture the same buyer attention. They need a product that’s agile and nimble, and that’s precisely what we provide. We call these businesses the ‘agile enterprise.’ In that market, we’ve genuinely hit a sweet spot.
On the CX side, it’s a more mature, more competitive space. You have HubSpot targeting smaller customers, Zendesk competing for the same segment as us, and Salesforce going after the very largest. Budgets for customer support haven’t been growing the way IT budgets have, and we compounded the challenge by running multiple products against the same market, which confused buyers and fragmented our own ability to innovate.
What we’re doing now is consolidating everything into Freshdesk Omni, one platform that handles traditional ticketing, email and phone, conversational interaction, and has AI built in from the ground up. We’ve already moved more than half our customers onto it, and we’ll complete the migration by year-end. I believe that will drive a meaningful improvement in CX growth, because the product is better, expansion within accounts is easier, and AI is far more accessible on that unified platform.
On the USD 1 billion ARR ambition — you’ve guided to around USD 960 million for 2026. Is this the year you cross the milestone?
If we deliver up to USD 960 million in revenue this year, our ARR will have exceeded USD 1 billion by definition. So, this is the year and it will be a huge milestone for this company.
Girish (Mathrubootham) spoke about being a billion-dollar ARR company from the very early days. When we cross that threshold, we’ll want to celebrate it, because it means something significant. There are only 51 public software companies in the world with ARR above a billion dollars. Microsoft. ServiceNow. Adobe. CrowdStrike and the likes. We’re about to join that list.
And we’ll be the only one that started from India, the only one that still builds all of its products in India. Our engineers are in Bengaluru, Hyderabad and Chennai. For a company that’s only 14 years old, competing alongside names that have been around 50 years — that’s an extraordinary accomplishment. Microsoft has been around for 50-plus years. Salesforce has a decade on us. And we’re on the journey to become one of those great global software companies.
What are the two or three internal milestones you’re most focused on hitting in 2026?
Revenue at USD 960 million is something we’ve talked about publicly, and we’re clearly focused on it. But internally, we’ve set what we’re calling ‘audacious goals.’
One is around AI agent adoption: we’ve committed to more than quadrupling monthly sessions in under a year. We’re already in the millions of sessions per month, and we’re well on track. That matters because sessions are proof that customers are getting real value from the AI we’re shipping.
Another is around our ESM business, Fresh Service for business teams outside of IT. That business nearly doubled last year. We have real goals around sustaining that trajectory.
We also have a major launch event in May in New York, Refresh EX, anchored around the next version of our AI agent for the EX portfolio. That product allows customers to automate service operations across their business using agentic AI, and thousands of customers are eager to get their hands on it. And finally, we have a goal to complete the migration of all our customers onto Freshdesk Omni. These are the milestones that will tell us whether we’re on the right path.
You’ve been CEO for nearly two years now. Girish Mathrubootham stepped down from the chairmanship in December as well. What was it like working alongside him, and what does Freshworks look and feel like as a fully non-founder-led company?
Girish is an extraordinary leader and entrepreneur, genuinely inspirational to me and to everyone who has worked with him. He brought an innovative speed to this company that’s remarkable. Freshdesk came first, then he quickly saw the conversational opportunity and built Freshchat. He noticed that IT teams were bringing Freshdesk in, so he built Freshservice and that’s now the bigger part of our business. He was among the first to embrace AI; I believe we launched our first AI product in 2018.
What I have to carry forward is that innovative spirit but at a much larger scale. I’m not looking for the next USD 10 million product. I’m looking for the next USD 100 million product. The scale we operate at now means you have to be very disciplined about where to invest, and you need a clear path from launch to scale.
ESM is a good example. Freshservice for business teams, is like a startup within our own company that is now a major growth driver, doubling year-over-year. If that were a standalone startup, it would be hugely valuable. We need to keep that spirit alive, but with enterprise-grade quality from day one and serious go-to-market behind it.
I’ve also focused on raising our ambition. We talk about landing our first million-dollar account. We have customers spending that, but they grew into it over time. We should be landing at that level from the start.
India is the talent base, but 85 per cent of revenue is from North America and EMEA. How do you bridge that gap, and how are you thinking about headcount?
India is the core of this company. Eighty-five percent of our employees are in Hyderabad, Chennai, or Bengaluru. And yes, 85 per cent of our revenue comes from North America and EMEA. Connecting those two realities is one of my central leadership challenges.
We fly engineers and product leaders to see customers. We have a customer event in New York coming up and we’ll have people from the engineering team there. We connect constantly over Zoom. Customer-centricity has to run through the entire organisation, regardless of geography.
But that India concentration is also an enormous strength. We receive over 10,000 applications a week — so many that we’ve built our own AI to sift through them and identify the right candidates. Ninety-one percent of the offers we make are accepted. That tells you how compelling this opportunity is to the talent pool.
What’s also exciting is the calibre of senior leaders we’re attracting — people who were born in Bengaluru, Chennai, or Hyderabad, went to the US, worked for world-class companies like Google, Dropbox, ServiceNow and then chose to come back. Our new CMO grew up in Bengaluru, spent her career in Silicon Valley, worked with me at Dropbox, and part of the pull for her was getting to come back to her roots and inspire the next generation here. Our CIO has a similar story. That passion and cultural familiarity is something I actively look for and it’s visibly inspiring to younger employees.
What's your take on the ‘SaaS apocalypse’ narrative? We’ve been discussing it for two years or so with the industry, agentic AI is now firmly in the picture, and the conversation around MCP is growing. Where are we actually at in 2026?
I think it’s still remarkably early. You can see the promise of what agentic AI could do, but you’re nowhere near the completion state. If you spend time with Claude’s Co-Work or some of OpenAI’s newer products, you start to sense what the art of the possible looks like but customers broadly aren’t there yet.
There’s a useful tension in technology: part of your job is to live in the future and understand where the world is going. But your customers need you to bring that vision back to the present — to ship product that solves a real, here-and-now business problem, while also giving them a credible path forward.
With AI, what’s both exciting and unsettling is that the path isn’t 100 per cent clear. There’s still a vast amount of innovation ahead. Leadership positions in this industry are going to change. A company our size has as much chance of massively innovating as one ten times larger. The playing field is genuinely more level than it has ever been.
An engineer in India with five years of experience is, in many respects, as valuable as an engineer in Silicon Valley with 25 years, because they both have exactly five years of experience in AI. It simply hasn’t existed longer than that. For a company at our scale, approaching a billion dollars, with access to extraordinary talent, but not yet at the very top of the heap, this is actually a massive opportunity. We can change our position in this industry very quickly if we get the right products and the right market fit. |
