Quality Investor

Freshworks Inc.

Rank #86Capital Return

FRSH · Nasdaq · Technology

Freshworks Inc. (FRSH) — Rank #86 by gross profitability (GP/assets 0.48) · ROE 20.5% · Piotroski F-Score 7 / 9.

As-of 2026-09-15 · CIK 0001544522 · all metrics point-in-time as of the filing date.

About

Freshworks Inc., a software development company, provides software-as-a-service products in North America, Europe, the Middle East, Africa, the Asia Pacific, and internationally.

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The company's software-as-a-service solutions includes Customer Experience (CX) and Employee Experience (EX). Its Customer Experience products include Freshdesk Omni, an AI-powered omnichannel customer service solution that unifies customer interactions, support operations, and empowers agents to deliver exceptional experiences; Freshdesk, a ticketing and case management solution; Freshchat that provides agents with a modern conversational experience to proactively engage customers across digital messaging channels; Freshcaller, a cloud-based contact center solution for scalable voice operations; Freshsales, a sales CRM for pipeline management and deal closure solution; and Freshmarketer, a marketing automation platform designed to help businesses to attract, nurture, convert, and retain customers. The company's Employee Experience products include Freshservice, an IT and enterprise service management platform to AI agents to help employees resolve issues, make requests, and access information through conversational interfaces without requiring direct interaction with the service desk; Freshservice for Business Teams, which provides a unified employee service experience while ensuring the secure separation of departmental data; Device42 which provides IT discovery and dependency mapping solutions; and FireHydrant, a modern incident management platform that enables engineering and operations teams to manage the full incident lifecycle. In addition, it provides Freshworks platform, an AI-powered, enterprise-grade foundation that unifies customer experience and employee experience product lines. The company was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. Freshworks Inc.

was incorporated in 2010 and is headquartered in San Mateo, California.

Industry
Software - Application
Sector
Technology
State
DE
Filer Category
Large accelerated filer
Fiscal Year End
December 31

Price History

FRSH-75.0% · -24.4% CAGRSPY+86.2% · +13.4% CAGR

Company Snapshot

P/E and reverse DCF are the primary valuation lenses at this stage.

Market Cap

$3.33B

P/E (annual)

20.3

P/S (annual)

4.0

P/B

3.7

P/OCF (annual)

13.8

Shareholder Yield

2.4%

Employees

4,500

Industry

Software - Application

Exchange

Nasdaq

Signal Flags

3 green
Deferred revenue growingRevenue and deferred revenue both growing — retention signal
RPO outpacing revenueRemaining performance obligations growing faster than recognized revenue — forward demand building
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 1-quarter streak

Quality Profile

Profitability

1/1 pass
GP / assets
0.48
Return on equity
20.5%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.66
Current ratio
1.69×
Net cash
$664.11M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
17.5%

Growth

2/2 pass
Revenue growth
16.4%
Piotroski F-Score
7 / 9
Share dilution
-2.4%

Terry Smith quality gate

Passes 2/5 Terry Smith thresholds

1 of 5 threshold not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

4.5%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Buyback tailwind: -2.4% — per-share value needs a total required return of 2.2% once share-count change is priced in.

vs. own 6-year median revenue growth: 27.5%

within its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

0.4%

r = 10% (base)

4.5%

r = 12%

8.1%

Net debt / market cap: -17.7%

Note: current FCF margin is 1.6σ above its historical mean — implied growth may understate valuation risk if the margin reverts.

Base FCF: $236.7M3Y mean FCF: $157.4M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / S

Price / revenue per share

2.8xCheap
2.8xmed 7.4x10.2x

P / B

Price / book value per share

2.3xCheap
1.8xmed 4.2x5.7x

P / GP

Price / gross profit per share

3.3xCheap
3.3xmed 9.0x12.3x

P / FCF

Price / free cash flow per share

9.9xCheap
9.9xmed 45.8x371.2x

FCF yield, shareholder yield, and buyback activity are the primary reads at this stage.

Profitability

Gross profitability (GP / assets)

0.48

Primary signal (Novy-Marx).

70th pctl of 38 SIC 7372 peers

Return on equity

20.5%

Gross margin

85.0%

97th pctl of 38 SIC 7372 peers

Revenue growth (YoY)

16.4%

RPO growth (YoY)

22.7%

Remaining performance obligations growth — RPO > revenue = forward demand building.

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

19.0%

Revenue CAGR (5Y)

27.4%

Earnings CAGR (3Y)

FCF CAGR (3Y)

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.66

53rd pctl of 33 SIC 7372 peers (best = lowest)

Current ratio

1.69×

41st pctl of 38 SIC 7372 peers

Quick ratio

1.51×

Net cash

$664.11M

Cash & equivalents minus total debt.

Cash-flow health

Free cash flow

$236.67M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

0.29

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

17.5%

Stock-based comp intensity.

Piotroski F-Score

F-Score

7 / 9

Fundamental-strength score (0-9).

Lifecycle Phase History

20202025
Hypergrowth
Startup
Capital Return