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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.

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1.b. Last Insights on FRSH

Freshworks' recent performance has been impacted by several factors. The company's Q3 results, released on November 5, showed strong growth, with revenue and EPS beating estimates. This momentum was sustained as CFO Tyler Sloat purchased $2 million worth of shares, increasing his ownership by 17.6%. Additionally, Edgestream Partners L.P. significantly increased its stake by 744.6% during Q2. However, not all investors are bullish, as Bank of New York Mellon Corp reduced its holdings by 2.6%. The company's AI-driven products, such as Freddy Copilot, are driving customer spend and retention.

1.c. Company Highlights

2. Freshworks' Q3 Earnings: A Showcase of Robust Growth and Profitability

Freshworks delivered an impressive Q3, with revenue growing 15% year-over-year to $215.1 million, surpassing estimates. The company's non-GAAP gross margin remained stable at 86%, and its non-GAAP operating margin stood at 21%. The actual EPS came out at $0.16, beating estimates of $0.13. The company's free cash flow margin was 27%, driven by operational discipline and strong collections, resulting in an adjusted free cash flow of $57.2 million.

Publication Date: Nov -15

📋 Highlights
  • Q3 Revenue Growth: Surpassed 15% YoY to $215.1 million, driven by EX and CX businesses.
  • AI ARR Doubling: Year-over-year, with Freddy Copilot ARR surging 160% YoY and AI Agent usage rising sixfold in 7 months.
  • Free Cash Flow Margin: Hit 27% in Q3, with $57.2 million generated, projecting $222 million for 2025 full year.
  • EX Business ARR: Exceeded $480 million (24% YoY growth), fueled by upmarket expansion and Device42 integration.
  • Customer Base Expansion: Reached 75,000 total, adding 260 net new customers in Q3 despite discontinuing quarterly customer count reporting.

Business Segment Performance

The EX business achieved over $480 million in ARR, representing 24% year-over-year growth, driven by expansion into departments outside of IT and growth upmarket. The CX business grew to over $390 million in ARR, reflecting 8% year-over-year growth, driven by healthy and predictable demand for Freshdesk products. Freshworks' AI momentum is driving exceptional results, with AI ARR doubling year-over-year and customers using Freddy AI to resolve millions of problems every week.

Growth Prospects and Guidance

The company expects revenue for Q4 2025 to be in the range of $217 million to $220 million, growing 12% to 13% year-over-year. Freshworks reaffirmed its long-term model, expecting full-year 2026 revenue growth of 13% to 14% and remaining on track to achieve GAAP profitability by the end of the year. The company's guidance is based on several assumptions, including FX rates as of October 31, 2025.

Valuation and Outlook

With a P/S Ratio of 4.59 and an EV/EBITDA of -47.62, the market has priced in a certain level of growth for Freshworks. Analysts estimate next year's revenue growth at 13.4%, which is in line with the company's guidance. The company's strong financial performance, driven by its EX and CX businesses, positions it well for future growth. The Free Cash Flow Yield of 5.36% is also attractive, indicating a potential buying opportunity.

Share Repurchase and Capital Management

Freshworks successfully completed its inaugural $400 million share repurchase program, buying back an additional 12 million shares in Q3 at an average price of $13.28 per share. The company's share count decreased by 7% year-over-year to approximately 309 million fully diluted shares, demonstrating its commitment to effective capital management.

3. NewsRoom

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Freshworks Inc. $FRSH Shares Bought by Edgestream Partners L.P.

Dec -03

Source: defenseworld.net

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Whetstone Sells All Freshworks Shares

Nov -23

Source: fool.com

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Bank of New York Mellon Corp Reduces Holdings in Freshworks Inc. $FRSH

Nov -18

Source: defenseworld.net

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Freshworks: Underappreciated Growth And Cash Flow At A Discount Price

Nov -18

Source: seekingalpha.com

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This Freshworks Exec Just Bought $2 Million in Stock Despite Steep Share Plunge — What Should Long-Term Investors Know?

Nov -17

Source: fool.com

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Freshworks Inc. (FRSH) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Freshworks Inc. (FRSH) Surpasses Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

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Freshworks expects strong fourth-quarter revenue on AI-driven software demand

Nov -05

Source: reuters.com

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: 4.4/10

Value: 2.6

Growth: 4.7

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
DoubleVerify Holdings

A-Score: 4.2/10

Value: 4.2

Growth: 9.0

Quality: 7.1

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Freshworks

A-Score: 4.2/10

Value: 5.9

Growth: 5.1

Quality: 4.3

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Intapp

A-Score: 4.0/10

Value: 5.0

Growth: 7.8

Quality: 4.5

Yield: 0.0

Momentum: 2.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
GBTG

A-Score: 3.9/10

Value: 5.4

Growth: 2.3

Quality: 3.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Unity Software

A-Score: 3.8/10

Value: 2.9

Growth: 6.0

Quality: 2.8

Yield: 0.0

Momentum: 9.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.84$

Current Price

12.84$

Potential

-0.00%

Expected Cash-Flows