One-glance verdict
Undervalued
$43.25 our estimate vs market $10.36
Wall Street consensus: $11.75 (-72.8% lower than our fair-value estimate)
76% below our estimate, below the bear case
Fundamentals snapshot
Freshworks Inc.
FRSH · NMS · Technology · Software - Application
Current price
$10.36
52-week range
$6.79 - $15.05
Market cap
$2.86B
Balance sheet
Healthy
0.36x Concerning
Net cash $740.44M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 3.9% last year.
- Reward Returns 17.3% on equity, ahead of 83% of its peers.
- Reward Free cash flow was positive in 5/10 years.
What this company does
Freshworks Inc.
Freshworks sells online business software that other companies pay for through subscriptions, which provides a steady stream of recurring revenue (income that is expected to continue in the future). Their main products help businesses manage everything from customer support and sales to internal employee needs like IT help desks. This is important because companies use these tools to operate more efficiently and keep both their customers and employees happy.
How the company got here
Freshworks was started in 2010 in Chennai, India, by two former employees of another software company, Zoho. The founder, Girish Mathrubootham, was inspired after reading about a bad customer service experience and saw an opportunity to create more user-friendly and affordable customer support software. The company's first product was called Freshdesk, and it quickly gained customers globally. After expanding its products beyond just customer support, the company changed its name to Freshworks in 2017 and became the first Indian software-as-a-service (SaaS) company to be listed on the Nasdaq stock exchange in the U.S. in 2021.
What it actually does
Freshworks creates and sells cloud-based software that helps businesses manage their interactions with both customers and employees. Think of it as a digital toolbox for a company's support, sales, marketing, and IT departments. For example, when you chat with a support agent on a website or when a company's IT team fixes your computer issue, they might be using Freshworks' tools to keep things organized and efficient. The company aims to make its software easy to use and quick to set up, so businesses can start seeing benefits right away.
Customer Experience (CX)
This part of the business focuses on how companies interact with their customers. It includes products like Freshdesk, which helps manage customer support questions (like a super-organized shared inbox for the support team), and Freshsales, a tool for the sales team to track potential customers and deals. Other tools help with marketing campaigns and live-chatting with customers on a website. Businesses pay a subscription fee to use these tools to help them find new customers and keep their current ones happy.
Employee Experience (EX)
This is a large and fast-growing part of Freshworks that provides software to make work life smoother for a company's own employees. The main product here is Freshservice, which acts as an internal helpdesk for things like IT support, human resources (HR), and other departments. If an employee's laptop breaks or they have a question for HR, they can submit a 'ticket' through Freshservice to get help. This segment has become a major growth engine for the company, expected to make up about 60% of its recurring revenue (the predictable income from subscriptions).
What management is betting on now
Freshworks is heavily focused on artificial intelligence (AI) to make its software smarter and more automated. They are embedding their AI, named 'Freddy', across all products to do things like automatically answer common customer questions or help IT staff solve problems faster. The company is also concentrating on its Employee Experience (EX) business, seeing it as the primary driver of future growth. Additionally, Freshworks is aiming to attract larger business customers and encourage existing clients to use more of its different software products together.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q2
$34.02M
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
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
Revenue
$174.13M
Net income
$-20.18M
Diluted EPS
-0.07
Operating cash flow
$36.34M
Free cash flow
$34.02M
Fetching…
Sources
Is it cheap or expensive?
Fair value $43.25 vs current price $10.36
Wall Street consensus is the average analyst price target: $11.75 (-72.8% lower than our fair-value estimate).
Our most-likely fair value is $43.25 a share — about 317.5% above today's price of $10.36, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $740.4M - more cash than debt. Interest coverage 0.4x.
Net debt
$-740.44M
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 $38.80M Interest coverage 0.36x This is the baseline the peer rows are being compared against.
Total debt $247.29M Interest coverage 13.03x +3,556% vs FRSH Carries about 36.6x more debt cushion than FRSH.
Total debt $1.24B Interest coverage -4.27x -100% vs FRSH This peer has almost no interest-payment cushion compared with 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 $46.55M 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
0 Risks
Rewards
-
Revenue grew 3.9% last year.
-
Returns 17.3% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 5/10 years.
Risks
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)
16.98x
Forward P/E
12.97x
P/B
2.84x
P/S
3.29x
EV/EBITDA
61.29x
PEG ratio
0.56x
Profitability
How much profit each dollar creates
Gross margin
85.0%
Operating margin
-3.5%
Net margin
20.7%
ROE
17.3%
ROA
0.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.04x
Current ratio
1.94x
Quick ratio
1.75x
Total debt
$38.80M
Total cash
$779.24M
Growth
How the business has been compounding
Revenue TTM
$871.17M
Revenue 5Y CAGR
22.6%
EPS TTM
0.61
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$246.79M
Free CF TTM
$236.67M
FCF margin
27.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—