FRSH
Freshworks Inc.
$13.46
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 60.6% below fair value
You pay
$13.46
Bear
$16.98
Fair
$34.20
Bull
$54.43
Bear
$16.98
+26.1%
16% rev growth, 21% terminal margin
Fair
$34.20
+154.1%
27% rev growth, 29% terminal margin
Bull
$54.43
+304.4%
35% rev growth, 33% terminal margin
Adjust Assumptions
27.0%
29.0%
12.0%
Key Value Driver
Revenue growth (27%) × margin expansion to 29%
Terminal Value % of EV
57%
Implied Market Multiple
3.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$13.75
Divergence from AlphaVal
149%
Summary
Projecting 27% revenue growth with FCF margins expanding from 29% to 29% over 10 years, discounted at 12%, the base-case value is $34.20 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 $13.75 (from 18 analysts). Our estimate is 149% 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