Freshworks (FRSH) AI Stock Analysis

• Market Cap: $3.49B
• Dividend Yield: N/A
• Average Volume (3M): 4.24M
• 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: 3,551,465
• 30 Day Avg. Volume: 4,244,755
• 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: 0.74
• Enterprise Value/Revenue: 3.20
• Enterprise Value/Gross Profit: 3.78
• Enterprise Value/Ebitda: -278.71
• 1Y Price Target: $18.71
• Price Target Upside: 51.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 0.63
• Revenue Forecast (FY): $834.79M

• Rating: 72 Outperform
• Price Target: $14.00 ▲(12.99% 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. is a global software company that provides customer engagement solutions designed to enhance the customer experience. Established in 2010, the company operates across multiple sectors, including customer support, sales, marketing, and IT service management. Freshworks offers a suite of products, including Freshdesk, Freshsales, Freshmarketing, and Freshservice, which are designed to streamline communication and improve operational efficiency for businesses of all sizes.

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: Positive
• Last Price: 12.39
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 12.39 is below the 20-day moving average (MA) of 12.48, above the 50-day MA of 11.78, and below the 200-day MA of 13.43, indicating a neutral trend. The MACD of 0.25 indicates Positive momentum. The RSI at 54.33 is Neutral, neither overbought nor oversold. The STOCH value of 13.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRSH.

Freshworks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AGYS	76 Outperform	$3.39B	141.99	8.74%	―	17.77%	-76.05%
BRZE	76 Outperform	$3.90B	-32.26	-22.05%	―	22.95%	3.12%
FRSH	72 Outperform	$3.49B	-127.56	-2.98%	―	18.18%	70.94%
INTA	63 Neutral	$3.76B	-132.99	-6.04%	―	17.11%	-19.12%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NCNO	61 Neutral	$2.91B	-133.88	-2.04%	―	12.14%	-19.29%
ASAN	57 Neutral	$3.44B	-15.47	-102.48%	―	9.47%	16.97%

Freshworks Corporate Events

Freshworks Hosts Investor Day 2025 to Showcase Growth

Freshworks Inc. announced its Investor Day 2025, scheduled for September 11, 2025, where it will present its strategic vision and financial performance. The company has demonstrated significant growth, with a 20% two-year compound annual growth rate and a notable expansion in its annual recurring revenue, surpassing $840 million. Freshworks attributes its durable growth to AI-driven innovations and strategic market positioning, particularly in mid-market and enterprise segments, highlighting its competitive edge against larger competitors.