Freshworks (FRSH): A Bull Case Theory

We came across a bullish thesis on Freshworks on Hidden Gems Research’s Substack. As of 14ᵗʰ July, Freshworks’s share was trading at $14.12. FRSH’s forward P/E was 27.69 according to Yahoo Finance.

Freshworks, a $4B software business, is trading at a steep discount to its fair value following a management transition. The company’s stock has dropped ~30% since its founder and CEO, Girish Mathrubootham, stepped down to focus on product development. Despite this, the new CEO, Dennis Woodside, has a strong track record of execution in various leadership roles, including President of Impossible Foods and COO of Dropbox. Woodside’s experience and leadership appear under-appreciated by the market, presenting an investment opportunity.

The company’s software portfolio has strong product reviews and is winning more mid and large enterprise deals, despite competing with major incumbents like ServiceNow, Zendesk, and Hubspot. Freshworks’ focus on ease of use, affordability, and customer satisfaction is ideal in a tight software spending environment. The company has consistently performed above analyst expectations, beating top and bottom line estimates in recent years. This trend may lead to a re-rating of the stock as investor confidence improves following the management transition.

Freshworks trades at a steep discount to the industry median EV/NTM revenue multiple, ~40% below the median, and ~90% below the industry multiple on a growth-adjusted basis. A discounted cash flow model implies that the stock trades ~40% below fair value today. With a strong growth and margin profile, newer AI products and features may add to the future upside case. The company’s guidance has already been de-risked, making the current stock price an attractive entry point with limited downside risk. In the best-case scenario, the stock could re-rate significantly, offering an exceptional risk/reward skew for investors.

Previously, we covered a bullish thesis on ServiceNow, Inc. by Francesco Ferrari in June 2025, which highlighted the company’s strong free cash flow, scalable margins, and long-term compounding potential. The company’s stock price has depreciated by approximately 3.46% since our coverage. This is because valuation concerns outweighed near-term performance. The thesis still stands as long-term fundamentals remain intact. The author of the Freshworks thesis shares a similar view but emphasizes on underappreciated execution in a discounted SaaS peer.

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Disclosure: None.