Freshworks (FRSH) AI Stock Analysis

• Market Cap: $4.62B
• Dividend Yield: N/A
• Average Volume (3M): 2.40M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.63
• Revenue Growth: 20.46%
• EPS Growth: 39.37%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 79
• Industry: Software - Application
• EPS (TTM): 0.18
• Shares Outstanding: 241,553,180
• 10 Day Avg. Volume: 2,307,847
• 30 Day Avg. Volume: 2,404,317
• PEG Ratio: 0.41
• Price to Book (P/B): 3.98
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -283.43
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 1.39
• Enterprise Value/Gross Profit: 6.18
• Enterprise Value/Ebitda: -7.69
• 1Y Price Target: $19.83
• Price Target Upside: 32.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

• Rating: 68 Neutral
• Price Target: $16.50 ▲(10.44%Upside)

Freshworks' overall stock score is bolstered by strong financial performance and promising earnings call highlights, including revenue growth and AI initiatives. However, the lack of current profitability and valuation concerns weigh on the score. Technical indicators suggest limited immediate upside, balancing the overall assessment.

Positive Factors

Financial Performance

Freshworks reported solid Q1 results, as revenue topped the high-end of guidance by more than $3M (+19% growth), operating margins improved by 10-points year-over-year, and calculated billings grew by 17%.

Market Expansion

Freshworks addresses a $78 billion total addressable market across its two product areas.

Product Innovation

Freshworks showcased its latest product innovations and strategic vision, highlighting the debut of the next generation of its Freddy Agentic AI platform.

Negative Factors

Economic Environment

Recession risks and inflationary pressures both in the U.S. and abroad could negatively impact Freshworks results.

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 2010 and is headquartered in San Mateo, California.

How the Company Makes Money

Freshworks 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 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

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

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

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
751.55M	720.42M	596.43M	498.00M	371.02M	249.66M
	Gross Profit
634.23M	607.09M	493.06M	402.23M	292.99M	197.17M
	EBIT
-116.86M	-138.61M	-170.17M	-233.37M	-204.78M	-56.11M
	EBITDA
-98.52M	-109.53M	-158.03M	-221.87M	-194.03M	-44.94M
	Net Income Common Stockholders
-73.35M	-95.37M	-137.44M	-232.13M	-192.00M	-57.29M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
995.32M	1.07B	1.19B	1.15B	1.32B	238.12M
	Total Assets
1.54B	1.61B	1.46B	1.38B	1.48B	367.42M
	Total Debt
39.86M	38.29M	29.49M	34.95M	0.00	0.00
	Net Debt
-554.38M	-582.02M	-458.63M	-269.13M	-747.86M	-95.38M
	Total Liabilities
479.35M	473.96M	384.51M	328.40M	244.77M	3.06B
	Stockholders Equity
1.06B	1.14B	1.07B	1.05B	1.24B	-2.70B
Cash Flow		Free Cash Flow
167.07M	151.47M	77.84M	-14.77M	2.34M	21.77M
	Operating Cash Flow
178.00M	160.65M	86.18M	-2.52M	11.46M	32.53M
	Investing Cash Flow
122.81M	38.80M	158.50M	-284.83M	-420.30M	-11.43M
	Financing Cash Flow
-174.58M	-67.26M	-60.62M	-156.35M	1.06B	-1.91M

Freshworks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 14.94
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 14.94 is below the 20-day moving average (MA) of 15.22, above the 50-day MA of 14.31, and above the 200-day MA of 14.66, indicating a neutral trend. The MACD of 0.26 indicates Positive momentum. The RSI at 46.99 is Neutral, neither overbought nor oversold. The STOCH value of 46.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FRSH.

Freshworks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GRND	73 Outperform	$4.53B	―	-63.52%	―	30.08%	-196.62%
FRSH	68 Neutral	$4.62B	―	-6.85%	―	20.46%	39.37%
BILL	68 Neutral	$4.52B	482.28	0.97%	―	14.52%	―
Sector *	62 Neutral	$11.97B	10.08	-7.46%	2.96%	7.37%	-8.22%
ASAN	61 Neutral	$3.25B	―	-83.36%	―	9.84%	13.74%
WK	54 Neutral	$3.72B	―	99.24%	―	17.36%	32.19%
KC	51 Neutral	$3.69B	―	-33.09%	―	13.85%	3.47%

Freshworks Corporate Events

Freshworks Holds Virtual Annual Stockholders Meeting

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.