"I feel like an Indian athlete who has won the gold medal at the Olympics," said Freshworks cofounder Girish Mathrubootham during the iconic bell ringing ceremony at Nasdaq MarketSite on Wednesday as the company became the first Indian software-as-a-service (SaaS) firm to go public on the US stock exchanges.
Business software maker Freshworks has been one of the most anticipated IPOs of 2021, amid increased digitisation and growing adoption for remote work during the COVID-19 pandemic. Mathrubootham has also been the flagbearer of India's SaaS industry that has boomed in recent years.
"We are showing the world what a global product company from India can achieve. The fact that we are doing it first in the US markets is truly amazing. Today is day zero for Freshworks all over again and the beginning of so much more" said Mathrubootham who was dressed in formals during the ceremony and was flanked by his wife and two sons by his side. He was also joined by Freshworks employees on the stage and virtually from offices in India.
"I am really proud of how far we have come but more importantly, I am excited about what's next for Freshworks. Today is day zero for Freshworks all over again and the beginning of so much more" he said.
"Listing brings a great deal of discipline in defining and driving a multi-horizon strategy for high-quality, sustainable growth and stakeholder returns. It helps strengthen the trust with clients through transparent governance and also share wealth with a broader canvas of employees who are the bedrock of a company's success and culture," said Ramkumar Ramamoorthy, former Chairman and Managing Director, Cognizant India who has worked closely with global investors for over two decades ever since the company got listed on the NASDAQ stock exchange in June, 1998. In the first two decades of listing, Cognizant gave a whopping 37,000% returns to its shareholders during which period the company's revenues grew from under $50 million to about $17 billion.
The public offering also comes at a time when SaaS IPOs in the US have performed spectacularly, popping (rising sharply) and creating billionaires overnight. The listings of Snowflake, Zoom, Cloudflare and Palantir — already-large private companies becoming even larger public companies — has also sparked a new wave of enthusiasm from venture capitalists, private equity funds and hedge funds.
Earlier today, the San Mateo, California-based company said it had priced its initial public offering above the target range to raise $1.03 billion from the offering, at a valuation of over $10 billion. On September 20, the firm had stated plans to sell shares in the price range of $32-34 per share, after raising the range from $28-$32 per share.
Freshworks plans to use the proceeds from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. It may also use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies.
Founded in 2010 by Mathrubootham and Shan Krishnasamy as Freshdesk, the company rebranded as Freshworks in 2017. It counts the likes of Accel, Sequoia Capital, and Tiger Global among its investors and was last valued at $3.5 billion when it raised $150 million financing in November 2019.
While outlining the company's vision, Mathrubootham had drawn an analogy with Apple in the IPO prospectus, stating that he wanted to reimagine business software the same way by "blending existing technology with unified, intuitive, and delightful experiences"
"One innovation marked a sea change in consumer behavior, transforming the tech industry forever: the iPhone. Before 2007, we were all using multiple devices - I personally had a Nokia cellphone, a Garmin GPS, a Sandisk MP3 Player, and a Canon point-and-shoot camera.
As consumers, we were quick to ditch our gadgets for a single product with a superior unified, intuitive, and delightful experience. What most people don’t realize is that when Apple introduced the first iPhone, they didn’t invent a single new chip - it was assembled with commercially available technology. It was how they packaged the technology and their relentless focus on user experience that enabled Apple to create a superior product experience."
Mathrubootham had said they are designing products "for a future where businesses are ready to embrace our vision of a unified customer cloud - and someday, a unified employee cloud".
For the first six months of the year, Freshworks saw its revenue grow to $169 million from $110 million in the corresponding period in 2020. Net loss shrunk to $9.8 million from $57 million a year ago. It has over 52,500 customers and 4,300 employees as of August 31.
More than 13,326 of these customers contributed for more than $5,000 in annual recurring revenue (ARR) for the company as of June 30,2021, as compared to 9,822 customers a year ago. Over 50 percent of its ARR comes from customers with more than 250 employees and about 1,164 customers each contributed $50,000 or more in ARR, the company had said in its IPO filing.