Freshworks to raise over $1 billion through IPO, valuation jumps to over $10 billion

Freshworks founder and CEO Girish Mathrubootham [Image: Facebook/rathnagirish]

Customer engagement software maker Freshworks has priced its initial public offering (IPO) at $36 per share, boosting its IPO share price for the second time in the past week and taking its valuation over $10 billion.

The company is set to begin trading on the Nasdaq Global Select Market under the symbol “FRSH” later on September 22.

Freshworks had earlier started plans to sell shares in the price range of $32-34 per share, after raising the range from $28-$32 per share.

At the current share price, Freshworks will raise a total $1.03 billion from the offering. Including an over-allotment of 2.85 million shares, the company's total offer amount rises to about $1.13 billion.

Freshworks had previously stated plans to use the net 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.

Decoding IPO-bound Freshworks in 5 charts

This public offering 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 sparked a new wave of enthusiasm from venture capitalists, private equity funds and hedge funds.

Founded in 2010 by Girish 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.

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.

Morgan Stanley, J.P. Morgan and BofA Securities are the lead book-running managers for the offering.