Freshworks (FRSH): A Valuation Deep Dive After Strong Earnings, Raised Outlook, and AI Growth Signals

Freshworks (FRSH) delivered a closely watched quarterly earnings report that came in ahead of expectations, growing revenue by 15% and trimming net losses compared to last year. Management also raised full-year revenue guidance, which reflects rising demand for the company's AI-driven business solutions.

See our latest analysis for Freshworks.

Despite posting upbeat quarterly results and raising its full-year outlook, Freshworks’ share price is still down nearly 30% year-to-date, with a 1-year total shareholder return of -31.9%. While recent news has sparked some short-term gains, longer-term momentum remains challenged as the market waits for consistent signs of sustained growth and profitability.

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With results beating expectations and management raising guidance, investors may wonder whether Freshworks’ recent decline leaves the stock undervalued, or if the market is already factoring in all of its growth potential.

Most Popular Narrative: 43.0% Undervalued

At $11.19, Freshworks is trading well below the fair value estimate suggested by the most popular narrative. This points to significant upside potential if the projections play out. This gap between the last close and the anticipated value raises the stakes for what could drive a re-rating.

The rapid adoption of AI-powered features (such as Copilot and Agentic AI) across both new and existing Freshworks customers is outpacing internal expectations, with over 5,000 paying customers and high attach rates in large deals. As AI monetization expands and early-access Agentic products move to paid solutions, management expects this to materially boost revenue growth and average selling prices in 2026 and beyond.

Read the complete narrative.

Want to see why this valuation stands out? The narrative banks on a sweeping acceleration in tech adoption and future profit margins rivaling the industry’s elite. If you’re curious about the growth rates, profit assumptions, and one eye-watering multiple that powers this fair value, you’ll want to dig into the full narrative for the numbers behind the optimism.

Result: Fair Value of $19.64 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heightened competition from industry giants and the challenge of monetizing AI across Freshworks’ customer base could undermine the optimistic outlook for growth and margins.

Find out about the key risks to this Freshworks narrative.

Build Your Own Freshworks Narrative

If you have a different perspective or want to analyze the figures your own way, you can craft your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Freshworks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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