FRSH
Freshworks Inc.
$13.74
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 53.7% below fair value
You pay
$13.74
Bear
$16.09
Fair
$29.69
Bull
$45.81
Bear
$16.09
+17.1%
14% rev growth, 21% terminal margin
Fair
$29.69
+116.1%
23% rev growth, 29% terminal margin
Bull
$45.81
+233.4%
30% rev growth, 33% terminal margin
Adjust Assumptions
23.0%
29.0%
12.0%
Key Value Driver
Revenue growth (23%) × margin expansion to 29%
Terminal Value % of EV
55%
Implied Market Multiple
3.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$14.60
Divergence from AlphaVal
103%
Summary
Projecting 23% revenue growth with FCF margins expanding from 29% to 29% over 10 years, discounted at 12%, the base-case value is $29.69 per share.
Warnings
Gross margin of 85% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $14.60 (from 18 analysts). Our estimate is 103% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep