Freshworks Inc. FRSH shares have rallied 41.4% in the past six months, outperforming the Zacks Internet - Software industry, the S&P500 index and Zacks Computer and Technology sector’s return of 27.3%, 8.3% and 8.5%, respectively.

6-Month Price Return Performance

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As a leading provider of AI and SaaS-based customer and employee experience solutions to more than 72,000 companies globally, Freshworks is rapidly capturing market share by making its place among organizations that want to move away from costly and complex legacy systems. With all these factors in the backdrop, investors are left wondering: Is it the right time to buy the stock?

Strategies of Freshworks to Gain Market Share

Freshworks provides solutions for IT service management, IT asset management, IT operations management, enterprise service management and customer service management. The wide range of solutions enables FRSH to offer customers flexibility, scalability, and efficiency across different business functions, enabling Freshwork to upsell and cross-sell its products effectively.

Both of Freshworks' business segments — employee experience (EX) and customer experience (CX) — are experiencing significant growth. EX segment, which accounts for solutions like Freshservice, Freshservice for Business Teams and Device42, grew 35% year over year in the fourth quarter of 2024, surpassing $400 million in annual recurring revenues.

FRSH’s CX business, which includes Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer, grew 7% year over year to account for more than $360 million in annual recurring revenues in the fourth quarter of 2024. FRSH entered the GenAI arena with the launch of Freddy Copilot and Freddy AI Agent in 2024. Strong traction in these two solutions enabled Freddy Copilot to gain 2,200 customers and Freddy AI Agent to gain more than 1,300 paying customers in 2024.

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Robust adoption of its solutions has prompted the company to anticipate its revenue to remain in the range of $809-$821 million for 2025. The Zacks Consensus Estimate for revenues is pegged at $815.1 million, indicating year-over-year growth of 13.14%.

Freshworks is also effectively managing its costs to improve its bottom-line growth. For 2025, FRSH expects its bottom line to be in the range of 52-54 cents per share. The Zacks Consensus Estimate for the same has been pegged at 53 cents per share, indicating year-over-year growth of 23.3%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Freshworks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 34%.

Freshworks Wins Over Competition

Freshworks has a large room to expand in the customer relationship management space, replacing legacy solutions offered by companies, including Oracle ORCL, SAP SAP, and Sage. In the employee experience suite market, FRSH is targeting the customers of traditional vendors like ServiceNow and pureplay vendors like Atlassian TEAM.

Since legacy systems are costly and complex to maintain, companies are switching from solutions provided by ServiceNow, Oracle and SAP to Freshworks. Since pure-play vendors like Atlassian only provide workflow management tools instead of full-suite business platform, organizations with larger needs are choosing Freshworks.

Since most services available in the market provide solutions that are comparable to a component of Freshworks’ platform, customers avoid them. Customers avoid multiple vendors and integration headaches by using a unified suite. Using Freshworks’ platform also lowers the total cost of ownership compared to maintaining separate systems, thereby making it a preferred choice.

Conclusion: Buy FRSH Now

Freshworks is rapidly capturing market share in customer relationship management and employment experience suite space by gaining popularity among organizations that want to shift from legacy systems. Strong traction in FRSH AI solutions is also gaining the company active customers, driving its top line. Those seeking to capitalize on this opportunity should buy this Zacks Rank #2 (Buy) stock for long-term rewards. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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