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Freshworks (FRSH)

Freshworks makes it fast and easy for businesses to delight their customers and employees. Freshworks does this by taking a fresh approach to building and delivering software that is affordable, quick to implement, and designed for the end user. Headquartered in San Mateo, California, Freshworks has a dedicated team operating from 13 global offices to serve 50,000+ customers including Bridgestone, Chargebee, DeliveryHero, ITV, Klarna, Multichoice, OfficeMax, TaylorMade and Vice Media.

Company profile

Ticker
FRSH
Exchange
Employees
Incorporated
Location
Fiscal year end
Former names
FreshDesk Inc.
SEC CIK
IRS number
331218825

FRSH stock data

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

5 Aug 22
1 Oct 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Cash burn rate (est.) Burn method: Change in cash Burn method: Operating income Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 590.18M 590.18M 590.18M 590.18M 590.18M 590.18M
Cash burn (monthly) 4.45M 49.15M 22.53M 25.96M 516.67K (no burn)
Cash used (since last report) 13.62M 150.27M 68.89M 79.36M 1.58M n/a
Cash remaining 576.56M 439.91M 521.29M 510.82M 588.6M n/a
Runway (months of cash) 129.4 9.0 23.1 19.7 1139.2 n/a

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
28 Sep 22 Barry L. Padgett Class B Common Stock Class A Common Stock Option exercise Acquire M No No 0 9,370 0 37,500
28 Sep 22 Barry L. Padgett RSU Class B Common Stock Option exercise Dispose M No No 0 1,560 0 54,690
28 Sep 22 Barry L. Padgett RSU Class B Common Stock Option exercise Dispose M No No 0 7,810 0 132,810
20 Sep 22 Leaders 3 GP Associates L.L.C. Accel Class A Common Stock Buy Acquire P Yes No 14.66 23,832 349.38K 98,964
20 Sep 22 Leaders 3 GP Associates L.L.C. Accel Class A Common Stock Buy Acquire P Yes No 14.66 16,533 242.37K 68,653
20 Sep 22 Leaders 3 GP Associates L.L.C. Accel Class A Common Stock Buy Acquire P Yes No 14.66 399,343 5.85M 1,658,273
20 Sep 22 Gandhi Sameer K Class A Common Stock Buy Acquire P Yes No 14.66 23,832 349.38K 98,964
20 Sep 22 Gandhi Sameer K Class A Common Stock Buy Acquire P Yes No 14.66 16,533 242.37K 68,653
20 Sep 22 Gandhi Sameer K Class A Common Stock Buy Acquire P Yes No 14.66 399,343 5.85M 1,658,273
19 Sep 22 Leaders 3 GP Associates L.L.C. Accel Class A Common Stock Buy Acquire P Yes No 14.78 18,759 277.26K 75,132
13F holders Current Prev Q Change
Total holders 146 124 +17.7%
Opened positions 47 53 -11.3%
Closed positions 25 28 -10.7%
Increased positions 42 35 +20.0%
Reduced positions 33 22 +50.0%
13F shares Current Prev Q Change
Total value 1.17B 1.22B -4.3%
Total shares 139.52M 118.81M +17.4%
Total puts 757.9K 878.6K -13.7%
Total calls 663.6K 832.7K -20.3%
Total put/call ratio 1.1 1.1 +8.2%
Largest owners Shares Value Change
Accel Leaders Fund 30.12M $0 0.0%
CapitalG 2013 20.64M $0 0.0%
Ward Ferry Management 11.6M $152.49M +72.3%
Vanguard 9.14M $120.18M +238.5%
Steadview Capital Management 6.06M $79.74M 0.0%
Champlain Investment Partners 5.65M $74.36M +10099.9%
MS Morgan Stanley 4.45M $58.49M +24.7%
Alliancebernstein 3.64M $47.84M -1.7%
BEN Franklin Resources 3.42M $45.03M +22.8%
JPM JPMorgan Chase & Co. 3.11M $40.84M +13.0%
Largest transactions Shares Bought/sold Change
Vanguard 9.14M +6.44M +238.5%
Champlain Investment Partners 5.65M +5.6M +10099.9%
Ward Ferry Management 11.6M +4.87M +72.3%
Capital Research Global Investors 0 -3.28M EXIT
MTH Meritage 2.91M +2.91M NEW
Gilder Gagnon Howe & Co 594.43K -2.57M -81.2%
Hound Partners 2.36M -1.74M -42.4%
BLK Blackrock 2.28M +1.43M +167.8%
Polar Capital 1.37M +1.37M NEW
MS Morgan Stanley 4.45M +881.95K +24.7%

Financial report summary

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Competition
ServiceNowHubSpotZendeskAtlassian
Risks
  • We have a history of losses, and we may not be able to achieve profitability or, if achieved, sustain profitability.
  • We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our future growth.
  • We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
  • We track certain key business metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition.
  • We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability.
  • Our quarterly results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts.
  • If we are unable to attract new customers, convert customers using our trial versions into paying customers, and expand usage of our products within or across organizations, our revenue growth would be harmed.
  • Our ability to attract new customers and increase revenue from existing customers depends on our ability to develop new features, integrations, capabilities, and enhancements, and to partner with third parties to design complementary products.
  • We recognize revenue over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern.
  • Our business depends substantially on our customers renewing their subscriptions and purchasing additional subscriptions from us. Any decline in our customer retention would harm our future operating results.
  • The COVID-19 pandemic has affected how we and our customers operate, including our productivity, and has adversely affected the global economy. The duration and extent to which this will affect our business, future results of operations, and financial condition remains uncertain.
  • We operate in a highly competitive industry, and competition presents an ongoing threat to the success of our business.
  • Failure to effectively develop and expand our direct sales capabilities would harm our ability to expand usage of our products within our customer base and achieve broader market acceptance of our products.
  • If we are unable to develop and maintain successful relationships with channel partners, our business, operating results, and financial condition could be adversely affected.
  • The loss of one or more of our key executives, including our Chief Executive Officer, Rathna Girish Mathrubootham, would harm our business.
  • We must continue to attract and retain highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans.
  • Our sites, networks, and systems have experienced and may in the future experience security incidents or breaches. Any security incidents or breaches could affect our confidential information or the confidential information of our users, customers, or other third parties, which could damage our reputation and brand, and substantially harm our business and results of operations.
  • If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our products, our results of operations may be harmed.
  • If we are unable to ensure that our products interoperate with a variety of software applications that are developed by others, including our integration partners, we may become less competitive and our business, results of operations, and financial condition may be harmed.
  • We rely on traditional web search engines to direct traffic to our website. If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business would be adversely affected.
  • We rely on third parties maintaining open digital marketplaces to distribute our mobile applications for our Freshdesk (Freshdesk Omnichannel Suite, Freshdesk Support Desk, Freshdesk Messaging, Freshdesk Contact Center, Freshdesk Customer Success), Freshservice, Freshsales, Freshmarketer, Freshsales Suite, and Freshteam products. If such third parties interfere with the distribution of our mobile applications, our business would be adversely affected.
  • Real or perceived errors, failures, vulnerabilities, or bugs in our products would harm our business, results of operations, and financial condition.
  • If we experience excessive fraudulent activity, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer base to decline significantly.
  • We employ a pricing model that subjects us to various challenges that could make it difficult for us to derive sufficient value from our customers particularly because we do not have the history with our subscription or pricing models that we need to accurately predict optimal pricing necessary to attract and retain customers.
  • We derive, and expect to continue to derive, substantially all of our revenue from a limited number of products.
  • Sales efforts to large customers involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.
  • Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of customers may be impaired, and our business and results of operations will be harmed.
  • If we fail to offer high-quality customer support, our business and reputation will suffer.
  • A substantial portion of our business and operations are located in India, and we are subject to regulatory, economic, social, and policy uncertainties in India.
  • We are subject to various labor laws, regulations, and standards in India. Non-compliance with and changes in such laws may adversely affect our business, results of operations, and financial condition.
  • Wage increases in India may diminish our competitive advantage against companies located in the United States and European Union and may reduce our profit margins.
  • Government regulation on e-commerce and foreign investment, including investment in e-commerce in India, is evolving, and unfavorable changes to, or failure by us to comply with, these evolving regulations could adversely affect our business, financial condition, and results of operations.
  • Changes in the taxation system in India could adversely affect our business.
  • Our ability to receive dividends and other payouts from our Indian subsidiaries is subject to Indian legal restrictions and withholding tax.
  • We may become subject to intellectual property rights claims and other litigation that are expensive to support, and if resolved adversely, could have a material adverse effect on us.
  • If we are unable to protect our intellectual property rights both in the United States and abroad, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.
  • Our failure to obtain or maintain the right to use certain of our intellectual property would negatively affect our business.
  • Our use of “open source” and third-party software could impose unanticipated conditions or restrictions on our ability to commercialize our products and could subject us to possible litigation.
  • Our international operations and sales to customers outside the United States expose us to risks inherent in international operations and sales.
  • We process business and personal information of our customers and employees, which subjects us to stringent and changing laws, regulations, industry standards, information security policies, self-regulatory schemes, contractual obligations, and other legal obligations related to data processing, protection, privacy, and security, and our actual or perceived failure to comply with such obligations could harm our business, financial condition, results of operations, and prospects and could expose us to liability.
  • We are subject to anti-corruption, anti-bribery, and similar laws, and our failure to comply with these laws could subject us to criminal penalties or significant fines and harm our business and reputation.
  • We are subject to various export control, import, and trade and economic sanction laws and regulations that could impair our ability to compete in international markets and subject us to liability for noncompliance.
  • Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our products and could harm our business.
  • We face exposure to foreign currency exchange rate fluctuations.
  • Restrictive changes to immigration laws may hamper our growth.
  • Our business, results of operations, and financial condition may be harmed if we are required to collect sales or other related taxes for subscriptions to our products in jurisdictions where we have not historically done so.
  • Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited.
  • Our international operations may subject us to potential adverse tax consequences.
  • The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock.
  • The concentration of our share ownership in those stockholders who held our stock prior to our initial public offering, including our executive officers, directors and holders of more than 5% of our capital stock, may limit your ability to influence corporate matters.
  • Additional stock issuances could result in significant dilution to our stockholders.
  • The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment.
  • Substantial future sales of shares of our Class A common stock by existing holders in the public market could cause the market price of our Class A common stock to decline.
  • Our Class A common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business.
  • We incur and will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.
  • We are an “emerging growth company,” and we intend to comply only with reduced disclosure requirements applicable to emerging growth companies. As a result, our Class A common stock could be less attractive to investors.
  • Our culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the high employee engagement fostered by our culture, which could harm our business.
  • If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
  • Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
  • A failure to establish and maintain an effective system of disclosure controls and internal control over financial reporting, could adversely affect our ability to produce timely and accurate financial statements or comply with applicable regulations.
  • We are currently planning and designing information systems enhancements, and problems with the design or implementation of these enhancements could interfere with our business and operations.
  • We may engage in merger and acquisition activities, which would require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our business, results of operations, and financial condition.
  • Increased government scrutiny of the technology industry could negatively affect our business.
  • We may need additional capital, and we cannot be sure that additional financing will be available.
  • Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
  • Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
  • We do not intend to pay dividends for the foreseeable future.
  • Catastrophic events may disrupt our business.
Management Discussion
  • (2) For the three and six months ended June 30, 2022, general and administrative expense includes $13.9 million and $27.7 million of stock-based compensation expense associated with RSUs and PRSUs primarily granted to the CEO in September 2021, respectively.

Content analysis

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