Freshworks shares drop as annual profit forecast misses analyst estimates amid AI competition fears
Freshworks shares fell after the firm forecast annual profit below estimates due to tax changes. CEO Dennis Woodside dismissed concerns over AI competition.
Insights:
Freshworks Inc. announced its fiscal 2026 financial guidance on February 10, 2026, forecasting an adjusted profit per share between $0.55 and $0.57. This projection fell short of Wall Street estimates, which had anticipated an adjusted EPS of $0.69 according to consensus data from LSEG. The company attributed the lower guidance to a higher tax rate. Following the announcement of these 2026 profit and revenue forecasts, the company experienced a share price decline of over 6% during extended trading hours.
The guidance miss coincided with growing investor anxiety regarding the competitive impact of new artificial intelligence tools. Market participants have pointed to recent AI product advances, such as the plugins for Claude Cowork released by Anthropic, as potentially disruptive forces for established software vendors. These concerns contributed to a broader sector-wide investor reaction and selloff, as the market weighs the long-term implications of AI-driven competition.
