Freshworks (FRSH) Stock Forecast & Price Target

Freshworks Inc. has demonstrated a robust financial performance, guiding for revenues of $222.0M to $225.0M, reflecting a year-over-year growth of 13%-15% and exceeding previous estimates and consensus expectations. The company recorded an impressive annual recurring revenue (ARR) of $510M+, with employee experience (EX) ARR achieving a significant growth rate of 26.0% year-over-year, further indicating solid demand and market positioning. Additionally, Freshworks reported a notable operating cash flow of $62.3M and a free cash flow margin of 25.2%, underscoring strong profitability and operational efficiency.

Freshworks Inc is experiencing a slowdown in its Customer Experience (CX) business, which comprises approximately 45% of its revenue, reporting a year-over-year constant currency growth rate of only 5%, down from 7-8% in the previous quarters. Additionally, the company has lost around 400 customers, resulting in a total customer count of approximately 74.5k, indicating a significant decline in customer acquisition compared to previous periods. Management has also indicated that the FireHydrant acquisition will negatively impact non-GAAP operating margins by about 100 basis points in the first quarter and fiscal year 2026, further contributing to the negative outlook on the stock.