When a company’s stock is cut in half within a year, management faces a choice: wait for the market to reconsider, or step in and buy its own shares. Freshworks has chosen the latter.
The San Mateo, California-based customer experience software company said its board has authorized a share repurchase program of up to $400 million of its outstanding Class A common stock. The announcement comes after a prolonged slide in its share price. The stock, which traded around $17.31 on February 26, 2025, was hovering near $7.93 a year later.
The buyback gives Freshworks the ability to repurchase shares through open market purchases, privately negotiated transactions, or other methods permitted under U.S. securities laws. The timing and amount will be decided by the company, and the program may be modified or halted depending on market conditions.
Chief Executive Officer Dennis Woodside framed the decision as a sign of confidence in the business. In a statement, he said the program reflects belief in the company’s long-term direction and disciplined use of capital. He pointed to Freshworks achieving GAAP profitability in 2025 and generating more than $223 million in free cash flow during the year. Earnings per weighted average diluted share reached $0.76, nearly triple the level reported in 2023.
The contrast between improved financial metrics and a declining share price is central to the story. In theory, higher profitability and cash generation should support a stronger stock valuation. In practice, software companies have faced pressure from investors concerned about slowing growth and rising competition, particularly as artificial intelligence reshapes the enterprise software market.
Freshworks builds service software for employee and customer support functions. Its products are used by nearly 75,000 companies, including well-known brands such as Bridgestone, New Balance, Nucor, S&P Global and Sony Music. The company positions itself as offering enterprise-grade capabilities with simpler interfaces than larger competitors.
The repurchase program signals that management believes the market is undervaluing the business. By buying back shares, the company reduces the number of outstanding shares in circulation. That can increase earnings per share if profits remain steady, even without top-line expansion. It can also serve as a message to investors that leadership views the current valuation as too low.
Still, buybacks do not change the fundamentals of a business. They do not increase revenue or create new products. They are a capital allocation choice. Freshworks has said it intends to retain sufficient cash to invest in both revenue growth and profitability, even as it repurchases stock.
The authorization comes at a time when many technology companies are weighing similar decisions. After years of prioritizing growth over profits, firms are now under pressure to show discipline in spending. Investors have become more focused on cash flow and margins, particularly in an environment of higher interest rates and tighter financing conditions.
Freshworks’ board approved the program under rules that allow repurchases in compliance with the Securities Exchange Act of 1934. Open market transactions may follow Rule 10b-18, which provides a safe harbor for companies buying back their own shares. The company may also enter into Rule 10b5-1 trading plans, which permit repurchases according to pre-set conditions, reducing the risk of trading based on material non-public information.
The company’s stock performance over the past year has been difficult for shareholders. A drop from above $17 to under $8 represents a decline of more than 50%. While broader market movements and sector-specific concerns have played a role, the scale of the fall suggests investors have reassessed the company’s growth outlook.
Freshworks has sought to position itself as an alternative to larger enterprise software providers by focusing on usability and faster deployment. It has also leaned into artificial intelligence features aimed at improving customer service workflows and employee help desks. These features are intended to reduce manual tasks and improve response times.
However, the competitive field is crowded. Established players and newer entrants are racing to incorporate AI into their offerings. That environment can make it harder for mid-sized software firms to stand out or command premium valuations.
From a financial standpoint, the company’s recent results present a mixed picture. Revenue growth in 2025 was steady, and free cash flow improved. Achieving GAAP profitability marked a milestone for a firm that had previously reported losses. Yet the market’s reaction suggests investors are looking for clearer signals of durable revenue growth or differentiation.
Share repurchases can have several effects. They may support the stock price in the short term by increasing demand. They can also signal management’s confidence in the business. On the other hand, some critics argue that buybacks divert cash that could otherwise fund research, hiring, or acquisitions.
Freshworks has indicated that the program does not commit the company to repurchase a specific amount on a set timetable. The board has authorized up to $400 million, but actual purchases will depend on conditions. The program can be suspended or discontinued at any time.
