Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Freshworks had a strong fourth quarter in 2023, with revenue exceeding the high end of its financial estimates at $160.1 million.</li><li>They significantly improved their operating efficiency, changing from using cash for operations in 2022 to generating $78 million of free cash flow in 2023.</li><li>For the full year 2023, Freshworks finished with a revenue of $596.4 million and free cash flow margin of 13%.</li></ul>

Freshworks had a strong fourth quarter in 2023, with revenue exceeding the high end of its financial estimates at $160.1 million.They significantly improved their operating efficiency, changing from using cash for operations in 2022 to generating $78 million of free cash flow in 2023.For the full year 2023, Freshworks finished with a revenue of $596.4 million and free cash flow margin of 13%.

Freshworks Inc: Is Artificial Intelligence (AI) The Biggest Growth Catalyst? - Major Drivers

<ul><li>This is our first report on Freshworks Inc, a renowned customer service software player.</li><li>Increased free cash flow along with a rise in the free cash flow margin to 14% likewise surpassed estimates.</li><li>In this report, we have carried out a fundamental analysis of the historical financial statements of the company.</li></ul>

This is our first report on Freshworks Inc, a renowned customer service software player.Increased free cash flow along with a rise in the free cash flow margin to 14% likewise surpassed estimates.In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Freshworks Inc: Initiation of Coverage - 4 Reasons Responsible For Their Future Growth! – Major Drivers

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

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<a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  shares underperformed in 2022, with shares down ~47% YTD versus a 33% loss on the Nasdaq Composite. US software stocks lost ~51% on average over the year. </li>
<li>Insiders keep buying shares. VC firm Accel, a 5%+ shareholder, acquired ~$50 million worth of <a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  shares in 2H22. Strong insider buying indicates the stock could hit bottom. </li>
<li>We estimate <a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  crossed the $500M ARR mark in 3QCY22. The company may report strong 4QCY22 results and surprise investors and analysts.</li>
</ul>



Freshworks (FRSH US)  shares underperformed in 2022, with shares down ~47% YTD versus a 33% loss on the Nasdaq Composite. US software stocks lost ~51% on average over the year. 
Insiders keep buying shares. VC firm Accel, a 5%+ shareholder, acquired ~$50 million worth of Freshworks (FRSH US)  shares in 2H22. Strong insider buying indicates the stock could hit bottom. 
We estimate Freshworks (FRSH US)  crossed the $500M ARR mark in 3QCY22. The company may report strong 4QCY22 results and surprise investors and analysts.


Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear

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<a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  upgraded its revenue guidance to ~$502M at the top end for FY22 and reported a 42% year-over-year revenue growth rate in 1QFY22. </li>
<li>We were impressed with subscription revenue growth, lower-than-expected loss, customer expansion, and efficient SaaS metrics. </li>
<li>We analyzed multiples of 50 publicly listed software companies with various growth profiles and split SaaS/Fintech companies into four growth groups.</li>
</ul>



Freshworks (FRSH US)  upgraded its revenue guidance to ~$502M at the top end for FY22 and reported a 42% year-over-year revenue growth rate in 1QFY22. 
We were impressed with subscription revenue growth, lower-than-expected loss, customer expansion, and efficient SaaS metrics. 
We analyzed multiples of 50 publicly listed software companies with various growth profiles and split SaaS/Fintech companies into four growth groups.


Freshworks: Solid 1Q and Strong Outlook Despite Delays With Closing Deals in Europe

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<li>We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. </li>
<li>Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.</li>
<li>Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. </li>
</ul>


We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. 
Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.
Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. 


Freshworks: Six Months Post-IPO. Valuation Update

United States

Freshworks Inc. provides software as a service platform that enables small and medium-sized businesses to support customers through e-mail, phone, website, and social networks. The Company offers multi-product support, a knowledge base, self-service portal, community forums, and tools to leverage mainstream social media for customer support. Freshworks serves customers worldwide.

Freshworks (FRSH US)

Freshworks Inc: Is Artificial Intelligence (AI) The Biggest Growth Catalyst? - Major Drivers

Freshworks had a strong fourth quarter in 2023, with revenue exceeding the high end of its financial estimates at $160.1 million. They...

Baptista Research

Freshworks Inc: Initiation of Coverage - 4 Reasons Responsible For Their Future Growth! – Major Drivers

This is our first report on Freshworks Inc, a renowned customer service software player. Increased free cash flow along with a rise in the free...

Baptista Research

Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear

Strong insider buying and a recent buyout of Zendesk may indicate a bottom for Freshworks shares as valuations have improved. Freshworks...

Andrei Zakharov

Freshworks: Solid 1Q and Strong Outlook Despite Delays With Closing Deals in Europe

Freshworks reported solid 1QFY22 earnings results and raised outlook for FY22. We believe the company may sustain 30%+ subscription revenue growth...

Andrei Zakharov

Freshworks: Six Months Post-IPO. Valuation Update

Our new price target of $26 (vs. prior $47) is based on relative value methodology and implies ~39% upside, what is below IPO price of $36 per share

Andrei Zakharov