Freshworks (FRSH)
NASDAQ:FRSH
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Freshworks
(NASDAQ:FRSH)
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Rating:73Outperform
Price Target:
$8.00
▲(1.39% Upside)
Action:ReiteratedDate:02/26/26
The score is driven primarily by strong financial performance (notably free cash flow strength and a low-debt balance sheet) and a positive forward outlook from management (revenue growth, margin expansion, and robust FY2026 free cash flow targets). These are tempered by weak technicals (below key moving averages with negative MACD) despite oversold readings, while valuation appears supportive with a low P/E and the new buyback adds incremental positives.
Positive Factors
Strong free cash flow generation
Consistent, high free cash flow (record >$223M in 2025 and a FY2026 FCF target of ~$250M) materially improves strategic optionality. Durable FCF underpins reinvestment in product, M&A, and go-to-market while reducing reliance on external financing and supporting sustained margin expansion.
Negative Factors
Customer Experience (CX) growth lag
Slower CX (Freshdesk) growth creates a structural drag on consolidated ARR growth and limits upside from the company’s largest service category. Persistently tepid CX adoption, while product migration occurs, can weigh on billings durability and force continued investment to modernize the offering.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Consistent, high free cash flow (record >$223M in 2025 and a FY2026 FCF target of ~$250M) materially improves strategic optionality. Durable FCF underpins reinvestment in product, M&A, and go-to-market while reducing reliance on external financing and supporting sustained margin expansion.
Read all positive factors
Freshworks (FRSH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.24B
Dividend YieldN/A
Average Volume (3M)5.36M
Price to Earnings (P/E)19.4
Beta (1Y)1.49
Revenue Growth18.18%
EPS Growth70.94%
CountryUS
Employees4,400
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.14
Shares Outstanding249,087,200
10 Day Avg. Volume4,724,073
30 Day Avg. Volume5,363,129
Financial Highlights & Ratios
PEG Ratio-0.07
Price to Book (P/B)3.45
Price to Sales (P/S)4.25
P/FCF Ratio14.54
Enterprise Value/Market Cap0.76
Enterprise Value/Revenue2.04
Enterprise Value/Gross Profit2.40
Enterprise Value/Ebitda28.39
Forecast
1Y Price Target
$12.56Price Target Upside59.19% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)0.57
Revenue Forecast (FY)$956.33M
Freshworks Business Overview & Revenue Model
Company Description
Freshworks Inc., a software development company, provides modern software-as-a-service products worldwide. Freshworks Inc. was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. The company was incorporated in 2...
How the Company Makes Money
Freshworks generates revenue primarily through a subscription-based model, where customers pay for access to its cloud-based software solutions. The company offers various pricing tiers and packages tailored to the needs of different businesses, e...
Freshworks Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call conveyed strong positive momentum: Freshworks achieved its first full-year GAAP profitability, delivered record free cash flow and expanded non-GAAP operating margins, while showing robust ARR and upmarket growth—especially in Employee Experience and AI (Freddie). Key strategic products (Device 42, ESM, FireHydrant) and AI monetization show clear traction and underlie an upgraded growth outlook and FY2026 guidance. Areas of caution include slower CX growth, one-time items inflating GAAP results, Device 42-related mix effects on billings/NRR, integration-related short-term margin impact from FireHydrant, and the need to educate customers for broader AI adoption. Overall, the positives (profitability, cash generation, ARR growth, AI momentum, upmarket wins and guidance raise) substantially outweigh the operational and near-term integration headwinds.Positive Updates
First Full-Year Profitability and Record Cash Generation
Freshworks achieved GAAP profitability for the full year for the first time and generated record adjusted free cash flow of over $223 million in 2025, with Q4 free cash flow of $56.2 million and a Q4 free cash flow margin of 25% (full-year adjusted free cash flow margin 27%).
Negative Updates
Customer Experience (CX) Growth Lags
Freshdesk ARR ended at $395 million, growing 9% year-over-year (5% constant currency), described as mid-single-digit growth and a relative drag compared to the faster-growing EX business; company is being conservative on CX growth while migrating customers to the new Freshdesk Omni platform.
Read all updates
Q4-2025 Updates
Positive
Negative
First Full-Year Profitability and Record Cash Generation
Freshworks achieved GAAP profitability for the full year for the first time and generated record adjusted free cash flow of over $223 million in 2025, with Q4 free cash flow of $56.2 million and a Q4 free cash flow margin of 25% (full-year adjusted free cash flow margin 27%).
Read all positive updates
Company Guidance
Freshworks guided Q1 2026 revenue of $222–225M (up 13–15% YoY) and full‑year revenue of $952–960M (up ~13.5–14.5% YoY); Q1 non‑GAAP operating income of $33–35M and non‑GAAP EPS of $0.10–0.12 (≈287.4M weighted shares), and full‑year non‑GAAP operating income of $181–189M and EPS of $0.55–0.57 (≈291.5M shares); non‑GAAP operating margin expected ~15% in Q1, improving ~100 bps in Q2 and exiting ~23.5% in Q4; calculated billings growth ~13% YoY in Q1 and ~14% for FY; net dollar retention slated to rise to ~105% (constant currency) in Q1; FireHydrant (closed Jan 1) is expected to be immaterial to revenue but to pressure non‑GAAP operating margin by ~1 percentage point in Q1 and FY; free cash flow targeted at about $55M for Q1 and ~$250M for FY 2026 (FCF margin ≈25–26%); guidance assumes a 24% non‑GAAP tax rate and FX rates as of 02/06/2026.Freshworks Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
80
Positive
Cash Flow
86
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 838.81M | 720.42M | 596.43M | 498.00M | 371.02M |
| Gross Profit | 712.66M | 607.09M | 493.06M | 402.23M | 292.99M |
| EBITDA | 110.84M | -109.53M | -158.03M | -225.06M | -191.49M |
| Net Income | 183.72M | -95.37M | -137.44M | -232.13M | -192.00M |
Balance Sheet | |||||
| Total Assets | 1.60B | 1.61B | 1.46B | 1.38B | 1.48B |
| Cash, Cash Equivalents and Short-Term Investments | 843.75M | 1.07B | 1.19B | 1.15B | 1.32B |
| Total Debt | 66.56M | 38.29M | 29.49M | 34.95M | 0.00 |
| Total Liabilities | 570.06M | 473.96M | 384.51M | 328.40M | 244.77M |
| Stockholders Equity | 1.03B | 1.14B | 1.07B | 1.05B | 1.24B |
Cash Flow | |||||
| Free Cash Flow | 245.22M | 145.98M | 77.84M | -14.77M | 2.34M |
| Operating Cash Flow | 250.92M | 160.65M | 86.18M | -2.52M | 11.46M |
| Investing Cash Flow | 206.13M | 38.80M | 158.50M | -284.83M | -420.30M |
| Financing Cash Flow | -445.20M | -67.26M | -60.62M | -156.35M | 1.06B |
Freshworks Technical Analysis
Negative
7.89
Price Trends
8.08
Negative
10.07
Negative
11.41
Negative
Market Momentum
-0.12
Positive
43.61
Neutral
24.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRSH, the sentiment is Negative. The current price of 7.89 is below the 20-day moving average (MA) of 8.01, below the 50-day MA of 8.08, and below the 200-day MA of 11.41, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 43.61 is Neutral, neither overbought nor oversold. The STOCH value of 24.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FRSH.
Freshworks Risk Analysis
Freshworks disclosed 63 risk factors in its most recent earnings report. Freshworks reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Freshworks Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.24B | 19.41 | 18.70% | ― | 18.18% | 70.94% | |
73 Outperform | $1.75B | 83.96 | 10.50% | ― | 17.77% | -76.05% | |
68 Neutral | $1.96B | 465.26 | 0.49% | ― | 12.14% | -19.29% | |
66 Neutral | $1.70B | -156.46 | -5.49% | ― | 17.11% | -19.12% | |
63 Neutral | $2.34B | -17.11 | -22.84% | ― | 22.95% | 3.12% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $1.38B | -12.84 | -94.12% | ― | 9.47% | 16.97% |
* Technology Sector Average
FRSH
Freshworks
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-37.64%
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Freshworks Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Freshworks Authorizes $400 Million Stock Repurchase Program
Positive
Feb 26, 2026
Freshworks Inc., a Nasdaq-listed provider of enterprise-grade but user-friendly employee and customer experience software, focuses on AI-powered tools that simplify service operations for about 75,000 business customers worldwide. Its EX and CX pr...
Executive/Board Changes
Freshworks announces board transition following director retirement
Neutral
Dec 19, 2025
Freshworks Inc. announced that Zachary Nelson will retire from its Board of Directors as a Class III member, effective January 2, 2026, following notice given on December 17, 2025, with the company stating his departure is unrelated to any disagre...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.