Freshworks Cuts 500 Jobs Due to AI
Analysis based on 11 articles · First reported May 05, 2026 · Last updated May 06, 2026
The announcement of layoffs by Freshworks, driven by the adoption of Artificial intelligence, caused its shares to drop over 8% in extended trading, reflecting investor concerns about the impact of AI on traditional software companies. This event highlights a broader industry trend where companies like Atlassian, Salesforce, and ServiceNow are also facing disruptions and workforce adjustments due to AI, leading to valuation compression across the SaaS sector.
Freshworks announced a significant workforce reduction, cutting 11% of its global staff, approximately 500 jobs, in response to the rapid advancements in Artificial intelligence and increased automation. CEO Dennis Woodside stated that over half of Freshworks' code is now written by AI, leading to reduced 'rote work' and a need for a leaner team. The company expects to incur $8 million in one-time restructuring charges but plans to reinvest savings into its Employee Experience business, including Freshservice. This move is part of a wider industry trend, with peers like Atlassian also implementing layoffs due to AI. Despite the job cuts, Freshworks reported stronger-than-expected Q1 revenue of $228.6 million and provided optimistic Q2 revenue guidance, though adjusted profit missed estimates. The company's stock declined about 26% this year, and its market capitalization has fallen significantly since its 2021 listing.
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