FRSH
Freshworks Inc.
$9.08
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 68.3% below fair value
You pay
$9.08
Bear
$14.27
Fair
$28.65
Bull
$45.53
Bear
$14.27
+57.2%
16% rev growth, 21% terminal margin
Fair
$28.65
+215.5%
27% rev growth, 29% terminal margin
Bull
$45.53
+401.5%
35% rev growth, 33% terminal margin
Key Value Driver
Revenue growth (27%) × margin expansion to 29%
Terminal Value % of EV
57%
Implied Market Multiple
2.1x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $11.63 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $28.65 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 $11.63 (from 18 analysts). Our estimate is 195% 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