tiprankstipranks
Trending News
More News >
Freshworks, Inc. Class A (FRSH)
:FRSH

Freshworks (FRSH) AI Stock Analysis

Compare
501 Followers

Top Page

FR

Freshworks

(NASDAQ:FRSH)

Rating:71Outperform
Price Target:
$16.50
▲(11.86%Upside)
Freshworks' stock is buoyed by strong financial performance and optimistic earnings call results, with notable revenue growth and profitability improvements. However, the technical indicators and valuation metrics suggest some caution, particularly due to lack of profitability and economic uncertainties.
Positive Factors
Financial Performance
Freshworks reported solid Q1 results with revenue surpassing guidance by over $3M, improved operating margins, and a 17% growth in calculated billings.
Product Innovation
Freshworks debuted the next generation of its Freddy Agentic AI platform, showcasing significant improvements in task execution capabilities.
Stock Buyback
Freshworks repurchased $111.8M of stock, reducing the fully diluted share count and demonstrating commitment to shareholder value.
Negative Factors
Economic Environment
Recession risks and inflationary pressures both in the U.S. and abroad could negatively impact Freshworks results.

Freshworks (FRSH) vs. SPDR S&P 500 ETF (SPY)

Freshworks Business Overview & Revenue Model

Company DescriptionFreshworks Inc. (FRSH) is a global software company that provides innovative customer engagement solutions to businesses of all sizes. The company is headquartered in San Mateo, California, and operates in the enterprise software sector. Freshworks offers a suite of software products designed to improve customer engagement, including Freshdesk, Freshservice, Freshsales, and several other tools that simplify customer support, IT service management, CRM, and sales management.
How the Company Makes MoneyFreshworks generates revenue primarily through a subscription-based model for its cloud-based software solutions. The company's key revenue streams include subscription fees from its diverse product offerings, which cater to customer support, IT service management, sales, and marketing automation. Freshworks' products are typically offered as Software-as-a-Service (SaaS), with customers paying recurring fees for access to the platform. The company leverages a freemium model, where basic features are available for free, and advanced features are offered through paid tiers. Additionally, Freshworks benefits from strategic partnerships and integrations with other technology providers, enhancing its value proposition and expanding its customer base. The company also invests in expanding its global presence, targeting small and medium-sized businesses as well as larger enterprises, which contributes to its earnings growth.

Freshworks Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 2.86%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive quarter for Freshworks, with strong revenue growth, improved profitability, and significant progress in AI adoption and enterprise customer wins. However, the company faces challenges with slower CX growth, economic uncertainty, and leadership transitions.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Revenue grew 19% year-over-year to $196.3 million in Q1, driven by both EX (Employee Experience) and CX (Customer Experience) segments.
Significant Profitability Improvements
Delivered a non-GAAP operating margin of 24% and adjusted free cash flow margin of 28%, achieving a Rule of 47 due to revenue growth and cash flow margin.
Employee Experience (EX) Segment Success
EX business surpassed $420 million in ARR, growing 33% year-over-year on a constant currency basis, with significant upmarket success.
AI Adoption and Impact
Freddy AI products have seen significant adoption, with over 2,700 Copilot customers and AI driving productivity improvements and operational efficiencies.
Strategic Enterprise Wins
Secured large enterprise customers like Travis Perkins and Sophos, replacing legacy systems with Freshworks solutions.
Negative Updates
Moderate CX Growth
CX business grew only 7% year-over-year on a constant currency basis, indicating slower growth compared to EX segment.
Concerns Over Economic Uncertainty
Acknowledged market volatility and economic uncertainty, which could impact future performance.
Leadership Transition
Departure of Head of Sales, Abe, for personal reasons, with interim leadership in place, could lead to potential instability in sales operations.
Company Guidance
During Freshworks' first quarter 2025 earnings call, the company reported a 19% year-over-year revenue growth to $196.3 million, with a non-GAAP operating margin of 24% and an adjusted free cash flow margin of 28%, achieving a Rule of 47 for the quarter. The company added over 1,000 net customers, ending with more than 73,300 customers, and maintained a net dollar retention rate of 105% on a constant currency basis. Freshworks highlighted its strategic focus areas, including the expansion of its employee experience (EX) business, which surpassed $420 million in ARR, growing 33% year-over-year. The company also emphasized its AI product adoption, noting substantial improvements in customer resolution times and operational efficiencies. Additionally, Freshworks raised its full-year 2025 revenue guidance to between $815.3 million and $824.3 million, reflecting a year-over-year growth of 13% to 15% on a constant currency basis.

Freshworks Financial Statement Overview

Summary
Freshworks demonstrates strong revenue growth and robust gross profit margins, indicating efficient cost management. The balance sheet is stable with minimal leverage, and cash flow management is excellent, supporting long-term growth. However, achieving net profitability remains a significant challenge.
Income Statement
78
Positive
Freshworks has shown strong revenue growth with a TTM increase from $720.42M to $751.55M, translating to a growth rate of 4.32%. The gross profit margin is robust at 84.42% for TTM, indicative of efficient cost management. However, the company has yet to achieve profitability, with negative net profit and EBIT margins at -9.76% and -15.55% respectively. The EBITDA margin, though negative, shows an improving trend.
Balance Sheet
70
Positive
The balance sheet reflects stability with a low debt-to-equity ratio of 0.03, suggesting low financial leverage. The equity ratio stands at 68.90%, showing a strong equity base. However, consistent net losses impact return on equity, which remains negative at -6.91% TTM, indicating challenges in generating shareholder returns.
Cash Flow
82
Very Positive
Freshworks displays solid cash flow metrics, with a significant increase in free cash flow to $167.07M TTM, a growth of 10.32% from the previous year. The operating cash flow to net income ratio is impressive at -2.43, reflecting robust cash generation relative to net losses. The company maintains a healthy free cash flow to net income ratio of -2.28, signaling efficient cash utilization despite ongoing profitability challenges.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue751.55M720.42M596.43M498.00M371.02M249.66M
Gross Profit634.23M607.09M493.06M402.23M292.99M197.17M
EBITDA-98.52M-109.53M-158.03M-221.87M-194.03M-44.94M
Net Income-73.35M-95.37M-137.44M-232.13M-192.00M-57.29M
Balance Sheet
Total Assets1.54B1.61B1.46B1.38B1.48B367.42M
Cash, Cash Equivalents and Short-Term Investments995.32M1.07B1.19B1.15B1.32B238.12M
Total Debt39.86M38.29M29.49M34.95M0.000.00
Total Liabilities479.35M473.96M384.51M328.40M244.77M3.06B
Stockholders Equity1.06B1.14B1.07B1.05B1.24B-2.70B
Cash Flow
Free Cash Flow167.07M151.47M77.84M-14.77M2.34M21.77M
Operating Cash Flow178.00M160.65M86.18M-2.52M11.46M32.53M
Investing Cash Flow122.81M38.80M158.50M-284.83M-420.30M-11.43M
Financing Cash Flow-174.58M-67.26M-60.62M-156.35M1.06B-1.91M

Freshworks Technical Analysis

Technical Analysis Sentiment
Positive
Last Price14.75
Price Trends
50DMA
14.93
Positive
100DMA
15.07
Positive
200DMA
14.88
Positive
Market Momentum
MACD
-0.02
Positive
RSI
52.71
Neutral
STOCH
59.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRSH, the sentiment is Positive. The current price of 14.75 is below the 20-day moving average (MA) of 15.18, below the 50-day MA of 14.93, and below the 200-day MA of 14.88, indicating a bullish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 52.71 is Neutral, neither overbought nor oversold. The STOCH value of 59.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRSH.

Freshworks Risk Analysis

Freshworks disclosed 65 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$4.42B-63.52%30.08%-196.62%
71
Outperform
$4.48B-6.85%20.46%39.37%
63
Neutral
$4.80B482.280.97%14.52%
63
Neutral
£566.00M24.41-6.00%2.49%3.52%-29.29%
WKWK
58
Neutral
$3.86B99.24%17.36%32.19%
58
Neutral
$3.18B-83.36%9.84%13.74%
KCKC
53
Neutral
$3.37B-33.09%13.85%3.47%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FRSH
Freshworks
15.20
2.33
18.10%
WK
Workiva
69.22
-2.84
-3.94%
BILL
Bill.com Holdings
48.21
-4.47
-8.49%
KC
Kingsoft Cloud Holdings
12.02
9.44
365.89%
ASAN
Asana
13.97
0.64
4.80%
GRND
Grindr
22.53
10.56
88.22%

Freshworks Corporate Events

Executive/Board ChangesShareholder Meetings
Freshworks Holds Virtual Annual Stockholders Meeting
Neutral
Jun 6, 2025

On June 5, 2025, Freshworks Inc. held its Annual Meeting of Stockholders virtually, where key proposals were voted upon. The stockholders elected Class I directors Johanna Flower, Randy Gottfried, and Barry Padgett to serve until the 2028 Annual Meeting. Additionally, Deloitte & Touche LLP was ratified as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

The most recent analyst rating on (FRSH) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Freshworks stock, see the FRSH Stock Forecast page.

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.Date of analysis: Jul 03, 2025