Freshworks Inc., an India-founded software startup, has filed for an initial public offering (IPO) in the United States. The company, now based in San Mateo, California, aims to offer its customer-relations management software as part of a broader shift toward unified cloud services.
The IPO filing on Friday lists the size of the offering as $100 million, which is likely a placeholder that will change when the terms of the share sale are finalized. Freshworks, a potential competitor to Salesforce.com Inc., was valued at $3.5 billion in a 2019 funding round.
In 2020, Freshworks saw its revenue increase by about 40% as businesses enhanced their digital capabilities in response to the COVID-19 pandemic. According to founder and CEO Girish Mathrubootham, customers in sectors such as healthcare, education, and government played a significant role in this growth. Earlier this year, Mathrubootham mentioned that the company was considering several options, including an IPO, a merger with a special purpose acquisition company (SPAC), a direct listing, or raising additional capital from private investors.
Despite moving its headquarters to Silicon Valley to be closer to its customers, Freshworks maintains a substantial workforce in Chennai, India. During the pandemic, the company hired a chief financial officer, acquired companies to enhance its AI tools, and won new customers. Freshworks now serves 52,500 customers and reported revenue of $169 million for the first six months of 2021, up from $110 million during the same period in 2020. Its net loss also decreased significantly to $9.8 million from $57 million a year earlier.
Major stakeholders in Freshworks include affiliates of Accel India and Tiger Global Management, which together control more than a quarter of the company’s Class B shares. In his letter to investors, Mathrubootham compared Freshworks software to the iPhone, emphasizing the need for businesses to have a unified, intuitive, and delightful experience rather than relying on multiple tools to engage with customers.
Morgan Stanley, JPMorgan Chase & Co., and Bank of America Corp. are leading the IPO, with Freshworks planning to list its shares on the Nasdaq Global Select Market under the symbol FRSH.
