One-glance verdict
Undervalued
$46.26 our estimate vs market $13.22
Wall Street consensus: $14.38 (-68.9% lower than our fair-value estimate)
71% below our estimate, below the bear case
Fundamentals snapshot
Freshworks Inc.
FRSH · NMS · Technology · Software - Application
Current price
$13.22
52-week range
$6.79 - $13.99
Market cap
$3.45B
Balance sheet
Healthy
0.36x Concerning
Net cash $629.51M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 7.8% last year.
- Reward Returns 19.7% on equity, ahead of 83% of its peers.
- Reward Free cash flow was positive in 5/10 years.
- Risk Stock trades 8.0% above its 5-year average P/E.
What this company does
Freshworks Inc.
Freshworks provides businesses with software to manage customer service and support their own employees, such as running an IT help desk. The company makes its money primarily from recurring revenue (predictable income that comes in regularly from customers paying subscription fees), rather than one-time sales. This model is important because it can create a more stable and predictable stream of cash for the business.
How the company got here
Freshworks started in 2010 in Chennai, India, as Freshdesk, with a simple idea born from a founder's frustration with a bad customer service experience. Initially, it focused on making a more user-friendly and affordable customer support software for small and medium-sized businesses. Over the years, it expanded its offerings beyond just customer support, adding tools for sales, IT services, and marketing. To reflect this broader scope, the company rebranded as Freshworks in 2017 and eventually went public on the Nasdaq stock exchange in 2021.
What it actually does
Freshworks provides cloud-based software that helps businesses manage their interactions with customers and support their own employees. Think of it as a digital toolkit for a company's support, sales, and marketing teams, as well as their internal IT department. Instead of buying and installing software on their own computers, businesses pay a recurring subscription fee (a fee paid regularly, like a Netflix subscription) to access Freshworks' tools online. This approach, known as Software-as-a-Service (SaaS), makes powerful business software more accessible and affordable.
Customer Experience (CX)
This is the side of the business focused on helping companies interact with their customers. It includes tools like Freshdesk, for managing customer support tickets, and Freshchat, for talking with customers through messaging apps. It also offers Freshsales, a tool to help sales teams manage their deals, and Freshmarketer for automating marketing campaigns. Companies pay subscription fees, often based on the number of their employees using the software, to create a smoother experience for their customers from the first marketing email to after-sales support.
Employee Experience (EX)
This part of the company provides tools to make a company's internal operations run more smoothly, focusing on its own employees. The main product here is Freshservice, an IT service management platform that helps employees get help with tech issues, from a broken laptop to software access. Recently, Freshworks has expanded this segment by acquiring companies like Device42, which helps manage a company's IT assets, and FireHydrant for managing system outages. This is a growing area for Freshworks, as businesses look for better ways to support their own teams in a digital world.
What management is betting on now
Freshworks is heavily focused on integrating Artificial Intelligence (AI) into its products to automate tasks and provide smarter recommendations. A major priority is its 'Freddy AI' suite, which can do things like summarize customer conversations or suggest replies to support agents, which Freshworks sells as add-ons to its main subscriptions. The company is also concentrating on attracting larger business customers, not just the small and medium-sized businesses it started with, to secure bigger and more stable revenue (the money a company earns from its business activities). Finally, they are encouraging customers to use multiple Freshworks products together, creating a unified platform for all their customer and employee needs.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$41.27M
FY2024 Q4
$36.30M
FY2025 Q1
$56.68M
FY2025 Q2
$58.21M
FY2025 Q3
$61.68M
FY2025 Q4
$60.10M
FY2026 Q1
$58.49M
FY2026 Q2
$53.48M
Revenue
$237.38M
Net income
$3.24M
Diluted EPS
0.01
Operating cash flow
$58.52M
Free cash flow
$53.48M
Fetching…
Sources
Revenue
$228.63M
Net income
$-4.81M
Diluted EPS
-0.02
Operating cash flow
$62.39M
Free cash flow
$58.49M
Fetching…
Sources
Revenue
$222.74M
Net income
$191.45M
Diluted EPS
0.66
Operating cash flow
$62.33M
Free cash flow
$60.10M
Fetching…
Sources
Revenue
$215.12M
Net income
$-4.68M
Diluted EPS
-0.02
Operating cash flow
$63.47M
Free cash flow
$61.68M
Fetching…
Sources
Revenue
$204.68M
Net income
$-1.74M
Diluted EPS
-0.01
Operating cash flow
$58.59M
Free cash flow
$58.21M
Fetching…
Sources
Revenue
$196.27M
Net income
$-1.30M
Diluted EPS
0.00
Operating cash flow
$57.97M
Free cash flow
$56.68M
Fetching…
Sources
Revenue
$194.57M
Net income
$-21.90M
Diluted EPS
-0.07
Operating cash flow
$41.36M
Free cash flow
$36.30M
Fetching…
Sources
Revenue
$186.57M
Net income
$-29.96M
Diluted EPS
-0.10
Operating cash flow
$42.33M
Free cash flow
$41.27M
Fetching…
Sources
Is it cheap or expensive?
Fair value $46.26 vs current price $13.22
Wall Street consensus is the average analyst price target: $14.38 (-68.9% lower than our fair-value estimate).
Our most-likely fair value is $46.26 a share — about 249.8% above today's price of $13.22, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $629.5M - more cash than debt. Interest coverage 0.4x.
Net debt
$-629.51M
Interest coverage
0.36x
Freshworks Inc.'s profit covers its interest bill about 0.4 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
FRSH
BASELINE
Freshworks Inc.
Total debt $34.59M Interest coverage 0.36x This is the baseline the peer rows are being compared against.
Total debt $236.91M Interest coverage 13.03x +3,556% vs FRSH Carries about 36.6x more debt cushion than FRSH.
Total debt $1.23B Interest coverage 0.21x -41% vs FRSH Carries about 1.7x less debt cushion than FRSH.
Total debt $81.46M Interest coverage -392.30x -100% vs FRSH This peer has almost no interest-payment cushion compared with FRSH.
Total debt $45.88M Interest coverage -17.37x -100% vs FRSH This peer has almost no interest-payment cushion compared with FRSH.
What you should know
The case for and against FRSH
3 Rewards
1 Risk
Rewards
-
Revenue grew 7.8% last year.
-
Returns 19.7% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 5/10 years.
Risks
-
Stock trades 8.0% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.99x
Forward P/E
15.87x
P/B
3.88x
P/S
3.82x
EV/EBITDA
50.14x
PEG ratio
0.55x
Profitability
How much profit each dollar creates
Gross margin
85.0%
Operating margin
5.5%
Net margin
20.5%
ROE
19.7%
ROA
1.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.04x
Current ratio
1.69x
Quick ratio
1.51x
Total debt
$34.59M
Total cash
$664.11M
Growth
How the business has been compounding
Revenue TTM
$903.87M
Revenue 5Y CAGR
22.6%
EPS TTM
0.63
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$246.72M
Free CF TTM
$236.67M
FCF margin
26.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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