Shares of Freshworks (FRSH 28.00%) rocketed 27.7% on Thursday as of 12:34 p.m. ET.

The software company, which makes easy-to-use enterprise software for IT, customer relationship management (CRM), and customer service, rallied after its third-quarter earnings report last night.

Despite the surge, the beaten-down stock is still well below its 52-week highs. Is it time to buy the bounce, or stay away?

Earnings coming in fresh

In the third quarter, Freshworks grew revenue 22% to $186.6 million, with adjusted non-GAAP (generally accepted accounting principles) earnings per share of $0.11, up 37.5% from a year ago. Both figures beat expectations for $181.6 million and $0.08, respectively. Management also guided to a solid 18% revenue growth at the midpoint of guidance for the fourth quarter, and the company's board of directors authorized a new $400 million share repurchase program.

Freshworks has been implementing artificial intelligence (AI) into more of its offerings, with CEO Dennis Woodside highlighting two of these that have been rolled out already and are currently making money: the Freddy self-service customer service offering, and Freddy Copilot for IT teams, which goes for $29 per seat per month.

An earnings beat along with positive AI commentary is what Wall Street investors are looking for these days, so it's no surprise to see that combination having a positive effect on the stock.

This beaten-down software name may be worth a look

Freshworks had had a rough year up to this point, which may have helped fuel the massive gain seen today. Prior to earnings, shares had been down nearly 50% for 2024. Thus, it's perhaps no surprise to see such a big gain on better-than-feared results.

Freshworks may be worth a look now for software investors, with just over $1 billion in cash against just a $5 billion market cap, positive free cash flow, and a modest 7 times price-to-sales ratio.