Freshworks Inc, a software as a service (SaaS) firm, is looking to raise $912 million via an initial public offering (IPO) in the US, according to a regulatory filing. The San Mateo, California-headquartered company, will sell 28.5 million of its Class A common stock between the price range of $28 to $32 per share, translating to $798 million- $912 million.
Christened as Freshdesk that is now Freshworks, the company was founded in 2010 by Girish Mathrubootham and Shan Krishnasamy in Chennai. It has raised funds from marquee investors, including Accel and Tiger Global Management.
“Freshworks Inc is offering 28,500,000 shares of our Class A common stock. It is our initial public offering, and no public market currently exists for our Class A common stock shares. We anticipate that the initial public offering price will be between $28 and $32 per share,” the US Securities and Exchange Commission (SEC) filing said.
Warehouse corner to Nasdaq listing Freshworks had a long journey
The SaaS startup commenced its operation in 2010 in a 700-square-foot warehouse in Chennai, India. The goal was to provide a better customer service experience. In August 2021, Freshworks, a rival to Salesforce. com revealed its plans to list its shares on the Nasdaq.
The IPO could value the startup at $10 billion, Reuter reported in April. Morgan Stanley, J.P. Morgan, and Bank of America are the underwriters on the deal.
“Our simple idea was to create a ‘fresh’ help desk in response to a poor customer service experience I had,” Mathrubootham said in an investor letter detailed in the Freshworks prospectus. Mathrubootham later moved his company to Silicon Valley to be closer to its customers.
Freshworks software automates routine and repetitive tasks, like sending welcome emails and follow-up reminders for executives, that help employees in IT, customer service, sales, marketing, and human resources do their job. About 52,500 businesses use the software.
Customers include American Express, Discover Financial Services, Bridgestone, Delivery Hero, and Klarna. Competitors include Salesforce, Zendesk as well as legacy vendors like Oracle and SAP.
Funds to be used for acquisitions or strategic investments
The company said it might also use a portion of the net proceeds for “acquisitions or strategic investments in complementary businesses, products, services or technologies. However, we do not have agreements or commitments to enter into any such acquisitions or investments at this time.”
The company said its total revenue was $249.7 million in the year ended December 31, 2020, up 45 percent year-over-year. Its total revenue was $110.5 million and $168.9 million in the six months ended June 30, 2020, and 2021, respectively, representing an increase of 53 percent year-on-year.
“The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our Class A common stock. We currently intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures,” the filing said.
