Freshworks (FRSH) AI Stock Analysis

• Market Cap: $3.36B
• Dividend Yield: N/A
• Average Volume (3M): 2.80M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.59
• Revenue Growth: 18.18%
• EPS Growth: 70.94%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.16
• Shares Outstanding: 246,987,810
• 10 Day Avg. Volume: 1,822,544
• 30 Day Avg. Volume: 2,799,445
• PEG Ratio: 1.60
• Price to Book (P/B): 4.28
• Price to Sales (P/S): 6.75
• P/FCF Ratio: 32.12
• Enterprise Value/Market Cap: 0.77
• Enterprise Value/Revenue: 3.20
• Enterprise Value/Gross Profit: 3.78
• Enterprise Value/Ebitda: -278.71
• 1Y Price Target: $18.88
• Price Target Upside: 60.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $14.00 ▲(19.25% Upside)

Freshworks' overall stock score reflects strong financial performance and positive earnings call outcomes, driven by robust revenue growth and strategic initiatives in AI and employee experience. Technical analysis supports a bullish short-term trend, though valuation concerns persist due to negative earnings. The Investor Day event further bolstered confidence in the company's strategic direction.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, enhancing long-term business sustainability.

AI-Driven Growth

Strong AI adoption underscores Freshworks' innovation capabilities, positioning it well in the evolving tech landscape.

Balance Sheet Health

A strong balance sheet with low leverage provides financial stability and flexibility for strategic investments and growth.

Negative Factors

Profitability Challenges

Ongoing profitability issues may limit reinvestment capabilities and affect long-term financial health if not addressed.

Moderate CX Segment Growth

Slower growth in the CX segment could indicate competitive pressures or market saturation, affecting overall revenue potential.

Impact of Device42 on NRR

Challenges in integrating acquisitions like Device42 can hinder growth and dilute the effectiveness of strategic expansions.

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

Freshworks demonstrates strong revenue growth and improving cash flow metrics. Despite ongoing profitability challenges, the company is narrowing losses and maintaining a robust gross profit margin. The balance sheet is stable with low leverage and a solid equity base, providing financial stability.

Income Statement

Freshworks shows a consistent revenue growth trajectory with a TTM growth rate of 3.65%, indicating a positive trend in sales. The gross profit margin remains strong at 84.62%, reflecting efficient cost management. However, the company is still facing challenges in achieving profitability, as evidenced by negative net profit and EBIT margins. The narrowing of losses over time suggests potential for future profitability.

Balance Sheet

The balance sheet is relatively stable with a low debt-to-equity ratio of 0.027, indicating minimal leverage and financial risk. However, the negative return on equity highlights ongoing challenges in generating returns for shareholders. The equity ratio of 62.06% suggests a solid equity base, providing a cushion against liabilities.

Cash Flow

Cash flow metrics are improving, with a notable free cash flow growth rate of 10.60% in the TTM period. The operating cash flow to net income ratio of 0.46 indicates that cash generation is improving relative to accounting profits. The strong free cash flow to net income ratio of 0.96 suggests efficient cash management despite net losses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	810.64M	720.42M	596.43M	498.00M	371.02M	249.66M
Gross Profit	687.21M	607.09M	493.06M	402.23M	292.99M	197.17M
EBITDA	-9.31M	-109.53M	-158.03M	-225.06M	-191.49M	-44.94M
Net Income	-29.62M	-95.37M	-137.44M	-232.13M	-192.00M	-57.29M
Balance Sheet
Total Assets	1.37B	1.61B	1.46B	1.38B	1.48B	367.42M
Cash, Cash Equivalents and Short-Term Investments	813.24M	1.07B	1.19B	1.15B	1.32B	238.12M
Total Debt	31.42M	38.29M	29.49M	34.95M	0.00	0.00
Total Liabilities	520.47M	473.96M	384.51M	328.40M	244.77M	3.06B
Stockholders Equity	851.49M	1.14B	1.07B	1.05B	1.24B	-2.70B
Cash Flow
Free Cash Flow	208.39M	145.98M	77.84M	-14.77M	2.34M	23.52M
Operating Cash Flow	221.40M	160.65M	86.18M	-2.52M	11.46M	32.53M
Investing Cash Flow	258.08M	38.80M	158.50M	-284.83M	-420.30M	-11.43M
Financing Cash Flow	-449.64M	-67.26M	-60.62M	-156.35M	1.06B	-1.91M

Freshworks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.74
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 11.74 is below the 20-day moving average (MA) of 12.37, below the 50-day MA of 12.02, and below the 200-day MA of 13.23, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 40.59 is Neutral, neither overbought nor oversold. The STOCH value of 34.20 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
BRZE	76 Outperform	$3.59B	-27.32	-22.05%	―	22.95%	3.12%
AGYS	73 Outperform	$3.34B	140.06	8.74%	―	17.77%	-76.05%
FRSH	72 Outperform	$3.36B	-118.95	-2.98%	―	18.18%	70.94%
INTA	63 Neutral	$3.72B	-126.27	-6.04%	―	17.11%	-19.12%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NCNO	61 Neutral	$2.90B	-132.93	-2.04%	―	12.14%	-19.29%
ASAN	57 Neutral	$3.21B	-14.24	-102.48%	―	9.47%	16.97%

Freshworks Corporate Events

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.