Download PDF

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on FRSH

Freshworks Inc.'s recent performance has been impacted by analyst downgrades, including a lowered price target from Citizens Jmp from $27.00 to $16.00. Despite strong Q4 and FY results, with 14-16% revenue growth, the company faces growth headwinds. However, its AI-powered software and deep integration into customer operations create high switching costs. A $400 million buyback plan is in place, which could benefit shareholders. Recently, SG Americas Securities LLC increased its stake by 136.7%, and the company was upgraded to "Buy" due to its compelling valuation.

1.c. Company Highlights

2. Freshworks Q1 2026: EX Engine Drives Strong Growth

Freshworks posted Q1 revenue of $228.6 million, up 16% YoY, with a non‑GAAP operating margin of 18% and an adjusted free cash flow margin of 24%. Non‑GAAP EPS matched consensus at $0.11 (Staff, Q1 Call). The stock trades at a P/E of 13.88 and a P/B of 2.45, suggesting modest upside if momentum continues.

Publication Date: May -10

📋 Highlights
  • Revenue Growth:: Q1 2026 revenue reached $228.6M, up 16% YoY, with a non-GAAP operating margin of 18% and 24% adjusted free cash flow margin.
  • EX Business Momentum:: Employee Experience (EX) ARR grew 27% YoY to $540M+; two largest deals in company history, including a first 7-figure EX ARR deal, were closed.
  • Customer Growth:: Customers with >$100K ARR increased 29% YoY, and those with >$50K ARR grew 22% YoY, driven by upmarket expansion.
  • Restructuring Impact:: 11% global headcount reduction and $8M restructuring charge to streamline operations and invest in AI/automation, targeting 20%+ free cash flow per share growth over three years.
  • Full-Year Guidance:: Revenue projected between $958M–$964M (14%–15% YoY growth), with $265M in adjusted free cash flow and $0.61–$0.63 non-GAAP EPS.

Revenue and Margin Highlights

Quarterly top line grew 16% to $228.6 million, while operating margin expanded to 18% from 15% last year. Adjusted free cash flow margin hit 24%, reflecting disciplined cost controls and the impact of the $8 million one‑time restructuring charge. Guidance for Q2 projects revenue of $232‑$235 million, a 13‑15% YoY increase.

EX Business Dominance

The Employee Experience (EX) segment was the primary growth engine, with ARR climbing 27% YoY to $540 million. Two landmark deals, including Freshworks’ first 7‑figure EX ARR contract, underscore the pipeline’s strength. Net dollar retention for EX surpassed 110%, and large‑account growth (ARR > $100k) rose 29% YoY.

Cost Discipline and Restructuring

Freshworks announced a consolidation of overlapping GTM functions, trimming global headcount by 11%. The restructuring also yielded a one‑time charge of $8 million, yet the company still reported a 26 million increase in non‑GAAP operating profit, signaling a leaner operating model.

Guidance and Forward Outlook

For 2026, the firm projects revenue of $958‑$964 million, a 14‑15% YoY rise, with non‑GAAP net income per share expected between $0.61 and $0.63. Adjusted free cash flow for the full year is forecast at $265 million, and the company commits to at least 20% annual growth in free cash per share over the next three years.

Product Innovation and AI Integration

Freshworks is accelerating AI adoption through Freddy AI Agent and the upcoming AI Agent Studio for EX, as well as the MCP Gateway that enables customers to build proprietary agentic capabilities. These initiatives dovetail with the company’s shift to consumption‑based offerings and promise new monetization avenues.

Competitive Landscape and Market Dynamics

Despite ServiceNow and Atlassian dominating the EX space, Freshworks has mitigated AI anxiety, with most large deals now featuring an AI component. Pricing adjustments were non‑material to guidance, and the channel strategy—driven by regional service providers—continues to generate favorable momentum.

Valuation Snapshot

With an EV/EBITDA of 30.18 and a ROE of 18.54%, Freshworks sits at a valuation that reflects its high growth prospects yet maintains a reasonable premium relative to peers. The negative Net Debt/EBITDA of –8.14 indicates a strong balance sheet foundation for future expansion.

3. NewsRoom

Card image cap

Does Freshworks (FRSH) Have the Potential to Rally 38.43% as Wall Street Analysts Expect?

May -08

Source: zacks.com

Card image cap

Freshworks to Participate in the 21st Annual Needham Technology, Media & Consumer Conference

May -07

Source: globenewswire.com

Card image cap

Freshworks to Host Financial Analyst Session at Refresh 2026

May -06

Source: globenewswire.com

Card image cap

Freshworks Inc. (FRSH) Q1 2026 Earnings Call Transcript

May -06

Source: seekingalpha.com

Card image cap

Freshworks Inc. (FRSH) Matches Q1 Earnings Estimates

May -06

Source: zacks.com

Card image cap

Freshworks to cut 11% jobs as AI reshapes software sector

May -05

Source: reuters.com

Card image cap

Freshworks Reports First Quarter 2026 Results

May -05

Source: globenewswire.com

Card image cap

Freshworks Inc. $FRSH Stock Holdings Boosted by Cwm LLC

Apr -27

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (21.88%)

6. Segments

Subscription

Expected Growth: 22.1%

Freshworks' subscription growth of 22.1% is driven by increasing adoption of its customer engagement and productivity software, expansion into new markets, and strategic partnerships. The company's cloud-based offerings, such as Freshdesk and Freshsales, are attracting more customers seeking scalable and cost-effective solutions. Additionally, Freshworks' focus on AI-powered automation and customer experience is resonating with businesses seeking to enhance their customer relationships.

Professional

Expected Growth: 12.53%

Freshworks Inc.'s 12.53% growth is driven by increasing adoption of its customer engagement and SaaS-based solutions, expansion into new markets, strategic partnerships, and innovative product offerings. Additionally, the company's focus on customer success, efficient sales and marketing strategies, and effective cost management contribute to its rapid growth.

7. Detailed Products

Freshdesk

A cloud-based customer support software that helps businesses manage customer inquiries and issues across multiple channels.

Freshsales

A CRM software that helps businesses manage sales pipelines, track leads, and analyze sales performance.

Freshmarketer

A marketing automation software that helps businesses automate and personalize customer engagement across multiple channels.

Freshservice

A cloud-based IT service management software that helps businesses manage IT services, assets, and incidents.

Freshchat

A modern messaging software that helps businesses provide real-time customer support and engagement.

Freshcaller

A cloud-based call center software that helps businesses manage customer calls, track conversations, and analyze call metrics.

Freshrelease

A product management software that helps businesses plan, develop, and launch products efficiently.

Freshsuccess

A customer success platform that helps businesses manage customer relationships, track health scores, and reduce churn.

8. Freshworks Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Freshworks Inc. operates in a niche market with a unique product offering, reducing the threat of substitutes. However, the company still faces competition from other customer engagement and support software providers.

Bargaining Power Of Customers

Freshworks Inc. has a large customer base, which reduces the bargaining power of individual customers. The company's subscription-based model also helps to mitigate the impact of customer bargaining power.

Bargaining Power Of Suppliers

Freshworks Inc. has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong financial position also gives it negotiating power with suppliers.

Threat Of New Entrants

The customer engagement and support software market is highly competitive, and new entrants can easily enter the market. Freshworks Inc. needs to continuously innovate and improve its products to stay ahead of new entrants.

Intensity Of Rivalry

The customer engagement and support software market is highly competitive, with many established players. Freshworks Inc. faces intense competition from companies like Zendesk, Salesforce, and Microsoft.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 2.68%
Debt Cost 3.95%
Equity Weight 97.32%
Equity Cost 8.32%
WACC 8.20%
Leverage 2.75%

11. Quality Control: Freshworks Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Calix

A-Score: 4.6/10

Value: 3.3

Growth: 4.6

Quality: 4.4

Yield: 0.0

Momentum: 9.5

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Unity Software

A-Score: 4.3/10

Value: 4.2

Growth: 6.0

Quality: 4.4

Yield: 0.0

Momentum: 9.5

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
DoubleVerify Holdings

A-Score: 4.2/10

Value: 4.3

Growth: 8.9

Quality: 7.1

Yield: 0.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
Intapp

A-Score: 3.8/10

Value: 4.7

Growth: 7.8

Quality: 4.1

Yield: 0.0

Momentum: 1.5

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Freshworks

A-Score: 3.8/10

Value: 5.7

Growth: 5.1

Quality: 4.5

Yield: 0.0

Momentum: 2.5

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
GBTG

A-Score: 3.1/10

Value: 3.6

Growth: 2.2

Quality: 5.4

Yield: 0.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.7$

Current Price

8.7$

Potential

-0.00%

Expected Cash-Flows