Freshworks (FRSH) AI Stock Analysis

• Market Cap: $2.28B
• Dividend Yield: N/A
• Average Volume (3M): 6.57M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 1.68
• Revenue Growth: 18.18%
• EPS Growth: 70.94%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.14
• Shares Outstanding: 246,987,810
• 10 Day Avg. Volume: 5,688,396
• 30 Day Avg. Volume: 6,573,745
• PEG Ratio: -0.07
• Price to Book (P/B): 3.45
• Price to Sales (P/S): 4.25
• P/FCF Ratio: 14.54
• Enterprise Value/Market Cap: 0.79
• Enterprise Value/Revenue: 2.13
• Enterprise Value/Gross Profit: 2.51
• Enterprise Value/Ebitda: 29.70
• 1Y Price Target: $12.89
• Price Target Upside: 64.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 0.57
• Revenue Forecast (FY): $956.32M

• Rating: 73 Outperform
• Price Target: $8.00 ▲(2.30% Upside)
• Action: Reiterated Date: 02/26/26
• Date: Action: Reiterated 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.

Conservative balance sheet and liquidity

Very low leverage and a sizable equity base lower financial risk and give management flexibility to invest in product/cloud migration or acquisitions. Combined with strong cash reserves, the capital structure supports multi-quarter execution without pressure from debt servicing or forced capital raises.

Upmarket expansion and AI product traction

Growing >$50k and >$100k customer cohorts and early AI monetization (Freddie: 8k customers, ~$25M ARR) signal durable revenue quality improvement. Upmarket wins and AI cross-sell raise NRR potential and average contract value, supporting sustainable ARR growth and margin improvement over coming quarters.

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.

GAAP profitability boosted by one-time items

Material one-time accounting items inflated GAAP profits, meaning reported full-year GAAP profitability is partly non-recurring. This complicates assessing sustainable net income and could temper investor confidence in near-term earnings power until recurring operating profit is demonstrated without similar accounting benefits.

Device 42 on‑premises limits addressable market

A key product remaining on-prem constrains cloud-first customer adoption and shortens contract dynamics today. Until the native cloud release, Device 42’s addressable market and attach rates may be capped and can create durable mix headwinds to billings, NRR and cloud-centric upmarket expansion.

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, 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, encouraging scalability and flexibility. Key revenue streams include monthly or annual subscriptions for its core products, along with additional fees for premium features and services. Freshworks also benefits from partnerships with other technology firms, integrations with popular platforms, and a growing global customer base, which collectively contribute to its earnings.

Freshworks Financial Statement Overview

Summary

Strong and improving fundamentals: robust and rising free cash flow, very strong gross margins (~mid-80s), and a low-leverage balance sheet. The main offset is that GAAP profitability/returns have not been consistently strong historically, with net margin still only recently improving toward sustained profitability.

Income Statement

Revenue has scaled meaningfully over the last several years, with strong growth historically and a still-positive trajectory into TTM (Trailing-Twelve-Months). Profitability has improved sharply: operating losses seen in 2021–2024 narrowed and the business is now near break-even at the operating level in TTM, while gross margin remains very strong (~mid-80s). The key weakness is that bottom-line profitability is not yet consistently solid—net margins are still slightly negative in TTM and were deeply negative in prior years, highlighting ongoing cost and investment pressure even as the trend improves.

Balance Sheet

The balance sheet looks conservatively financed with very low leverage (debt-to-equity remains ~0.03–0.04 in recent periods) and a sizable equity base relative to total assets. This provides flexibility and lowers financial risk. The main drawback is that returns on equity remain negative in recent years (including TTM), consistent with the company still working through the transition to sustained profitability.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow are solidly positive in recent years and improved further in TTM (Trailing-Twelve-Months), with strong free cash flow growth. Free cash flow is high relative to net income, suggesting earnings quality is supported by cash conversion. A watch item is that cash flow was volatile earlier (including negative free cash flow in 2022), indicating execution and investment cycles can still create swings.

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

• Technical Analysis Sentiment: Negative
• Last Price: 7.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 7.82 is below the 20-day moving average (MA) of 8.06, below the 50-day MA of 10.32, and below the 200-day MA of 12.47, indicating a neutral trend. The MACD of -0.81 indicates Negative momentum. The RSI at 42.53 is Neutral, neither overbought nor oversold. The STOCH value of 91.98 is Negative, 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
FRSH	73 Outperform	$2.28B	12.47	16.93%	―	18.18%	70.94%
AGYS	71 Outperform	$2.07B	68.56	10.68%	―	17.77%	-76.05%
INTA	66 Neutral	$1.88B	-80.27	-5.41%	―	17.11%	-19.12%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BRZE	60 Neutral	$2.09B	-16.86	-22.05%	―	22.95%	3.12%
NCNO	59 Neutral	$1.85B	-85.39	-2.04%	―	12.14%	-19.29%
ASAN	58 Neutral	$1.73B	-7.83	-102.48%	―	9.47%	16.97%

Freshworks Corporate Events

Freshworks Authorizes $400 Million Stock Repurchase Program

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 products are used by major brands to cut complexity, enhance productivity and support long-term customer loyalty, reinforcing its role in the cloud-based business software segment.

On February 26, 2026, Freshworks announced that its board authorized a stock repurchase program for up to $400 million of its Class A common shares, following a year in which it reached GAAP profitability in 2025 and nearly tripled free cash flow to more than $223 million, or $0.76 per diluted share, versus 2023. Management framed the buyback as a sign of confidence in its long-term strategy and current valuation, with repurchases to be executed at the company’s discretion through various compliant mechanisms and with the option to suspend or discontinue the program as conditions warrant.

The most recent analyst rating on (FRSH) stock is a Hold with a $9.00 price target. To see the full list of analyst forecasts on Freshworks stock, see the FRSH Stock Forecast page.

Freshworks announces board transition following director retirement

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 disagreement over its operations, policies or practices. As a result of his retirement, the board will be reduced to eight members with only one remaining Class III director, and, upon Nelson’s resignation, director Johanna Flower will join the Board’s Audit Committee, signaling a reconfiguration of the company’s board structure and committee composition.

The most recent analyst rating on (FRSH) stock is a Hold with a $13.00 price target. To see the full list of analyst forecasts on Freshworks stock, see the FRSH Stock Forecast page.