Analysts have slightly reduced their fair value target for Freshworks to approximately $19.71 from $20.23. They cite cautious sentiment amid modest multiple compression in comparable companies and largely steady growth expectations for the firm's key business segments.
Analyst Commentary
Freshworks has drawn mixed reactions from analysts, reflecting both optimism around the company’s growth strategy and some caution regarding its future prospects.
Bullish Takeaways- Bullish analysts highlight Freshworks’ consistent revenue growth in its Employee Experience (EX) segment. The company is on track to achieve an $845 million revenue target as outlined during its recent Investor Day.
- Freshworks is positioned as an uncomplicated, AI-native service platform that aims to bridge the gap between basic point solutions and more complex, costly enterprise platforms.
- Steady growth in key business segments has reinforced confidence in management’s ability to execute on longer-term objectives.
- The clear articulation of market positioning and product differentiation is seen as supportive of maintaining solid valuation multiples in the sector.
- Bearish analysts note continued caution around the Customer Experience (CX) segment, where growth has not matched the momentum seen in other parts of the business.
- Peer multiple compression in the current environment has contributed to downward revisions in price targets, despite minimal changes in sales forecasts.
- There is some concern that Freshworks’ Equal Weight ratings reflect uncertainty about its ability to outpace broader industry trends amid a cautious market backdrop.
- Execution risks remain, particularly as the company competes against entrenched providers offering more comprehensive or highly scalable platforms.
What's in the News
- Freshworks repurchased 8,180,399 shares from April 1 to June 30, 2025, completing a total buyback of 15,898,023 shares, representing 5.29% of shares outstanding for $240.89 million (Buyback Tranche Update).
- The company held an Analyst/Investor Day to share its long-term strategy, vision, product innovation initiatives, and financial outlook, emphasizing its AI-assisted customer and employee service software (Analyst/Investor Day).
- Freshworks raised its full-year 2025 revenue guidance to $822.9 million to $828.9 million and issued third-quarter revenue guidance of $207.0 million to $210.0 million (Corporate Guidance: Raised/New).
- The company announced a multi-year partnership with McLaren Racing, becoming an Official Partner of the McLaren Formula 1 Team and integrating its Freshservice ITSM solution to streamline the team’s global IT operations (Client Announcements).
Valuation Changes
- Fair Value Estimate: decreased modestly from $20.23 to $19.71 per share.
- Discount Rate: increased slightly from 8.44% to 8.49%.
- Revenue Growth: decreased marginally from 13.76% to 13.75%.
- Net Profit Margin: declined slightly from 12.66% to 12.50%.
- Future P/E: decreased modestly from 45.84x to 45.34x.
Disclaimer
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