Freshworks (FRSH) AI Stock Analysis

• Market Cap: $3.72B
• Dividend Yield: N/A
• Average Volume (3M): 4.07M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.69
• Revenue Growth: 19.78%
• EPS Growth: 47.51%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.18
• Shares Outstanding: 237,933,260
• 10 Day Avg. Volume: 4,335,689
• 30 Day Avg. Volume: 4,069,467
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 4.47
• Enterprise Value/Gross Profit: 5.29
• Enterprise Value/Ebitda: -53.27
• 1Y Price Target: $19.90
• Price Target Upside: 59.97% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 67 Neutral
• Price Target: $14.50 ▲(16.56% Upside)

Freshworks' strong financial performance and positive earnings call insights are offset by technical weaknesses and valuation challenges. The company is on a growth trajectory with improving margins, but persistent net losses and bearish technical indicators weigh on the overall score.

Positive Factors

Strong Revenue Growth

The consistent revenue growth indicates strong market demand and effective product positioning, enhancing long-term business sustainability.

AI Product Expansion

The growth in AI products suggests a successful innovation strategy, likely leading to increased competitive advantage and future revenue streams.

Cash Flow Improvement

Improved cash flow enhances financial flexibility, allowing for strategic investments and resilience against market fluctuations.

Negative Factors

Persistent Net Losses

Ongoing net losses can hinder long-term profitability and limit the company's ability to reinvest in growth opportunities.

Increased Spending Forecast

Higher spending may pressure margins and reduce profitability, potentially impacting the company's ability to achieve financial targets.

Pressure on Net Dollar Retention

Lower net dollar retention indicates customer churn, which could affect future revenue growth and customer base stability.

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 shows strong revenue growth and cash flow management, with a robust equity position. However, persistent net losses and negative profit margins remain challenges.

Income Statement

Freshworks has demonstrated consistent revenue growth with a TTM revenue of $782.1M, marking a 8.56% increase from the previous year and a 23.61% increase from 2023. Gross Profit Margin remains strong at 84.62% TTM, although persistent losses keep net profit margins negative. EBIT and EBITDA margins continue to improve, reflecting progress towards profitability.

Balance Sheet

Freshworks maintains a robust equity position with a Debt-to-Equity ratio of 0.03 TTM, indicative of low leverage. The Equity Ratio stands at 66.48%, showing a strong capital structure. However, the company has yet to achieve positive ROE due to consistent net losses.

Cash Flow

The company has shown a solid improvement in cash flow generation, with a significant increase in free cash flow by 27.10% TTM. Operating cash flow has increased significantly, resulting in a favorable Operating Cash Flow to Net Income ratio of -3.65, indicating strong cash generation relative to accounting losses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	782.10M	720.42M	596.43M	498.00M	371.02M	249.66M
Gross Profit	661.81M	607.09M	493.06M	402.23M	292.99M	197.17M
EBITDA	-65.70M	-109.53M	-158.03M	-225.06M	-191.49M	-44.94M
Net Income	-54.90M	-95.37M	-137.44M	-232.13M	-192.00M	-57.29M
Balance Sheet
Total Assets	1.48B	1.61B	1.46B	1.38B	1.48B	367.42M
Cash, Cash Equivalents and Short-Term Investments	926.20M	1.07B	1.19B	1.15B	1.32B	238.12M
Total Debt	26.82M	38.29M	29.49M	34.95M	0.00	0.00
Total Liabilities	496.18M	473.96M	384.51M	328.40M	244.77M	3.06B
Stockholders Equity	984.64M	1.14B	1.07B	1.05B	1.24B	-2.70B
Cash Flow
Free Cash Flow	192.46M	151.47M	77.84M	-14.77M	2.34M	21.77M
Operating Cash Flow	200.25M	160.65M	86.18M	-2.52M	11.46M	32.53M
Investing Cash Flow	262.69M	38.80M	158.50M	-284.83M	-420.30M	-11.43M
Financing Cash Flow	-287.23M	-67.26M	-60.62M	-156.35M	1.06B	-1.91M

Freshworks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.44
• 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 12.44 is below the 20-day moving average (MA) of 12.95, below the 50-day MA of 13.28, and below the 200-day MA of 15.00, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 40.59 is Neutral, neither overbought nor oversold. The STOCH value of 33.84 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
BILL	69 Neutral	5.30B	-331.61	0.61%	―	13.36%	―
FRSH	67 Neutral	$3.72B	―	-5.23%	―	19.78%	47.51%
WK	65 Neutral	4.70B	-70.34	132.05%	―	19.02%	27.64%
KC	61 Neutral	4.80B	-15.51	-38.05%	―	20.42%	-9.39%
ASAN	51 Neutral	3.35B	-15.64	-92.63%	―	9.74%	22.36%
GRND	50 Neutral	3.06B	-40.06	-29.58%	―	28.35%	24.57%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

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.