Investing

CEO Slashes Freshworks Stake

Trey Thoelcke

Published: February 6, 2024 8:27 am

Last Updated: February 6, 2024 8:56 am

You can learn a lot by following the behavior of company insiders when it comes to how they handle positions in their own company. People may sell for many reasons (buying a house, paying for college, or estate planning). They generally only buy for one reason: to make more money.

The chief executive officer is often one of the largest and best-informed shareholders in any company. Let’s see whether Freshworks Inc. (NASDAQ: FRSH) CEO Girish Mathrubootham has been increasing or decreasing his shares over the past year and whether he knows something we don’t.

What You Need to Know About Freshworks

Freshworks is a software development company that provides modern software-as-a-service products worldwide. Its offerings include the following:

• Freshdesk Support Desk enables businesses to delight their customers at every service engagement touchpoint across traditional channels, including email, and modern channels, such as messaging and social media.
• Freshdesk Contact Center offers agents with cloud-based telephony system to connect with customers that supports complex call-flows, number and call management, interactive voice response, and routing needs, as well as live dashboard and reports.
• Freshdesk Customer Success helps customer success managers at business-to-business (B2B) subscription companies.
• Freshchat provides agents with a modern conversational user interface to engage with their customers across web, mobile, and social messaging applications.
• Freshsales offers a multitiered approach to automating sales workflow and processes, as well as configure-price-quote functionality to quickly create quotes and AI-driven pipeline management.
• Freshsales Suite delivers a single unified sales and marketing solution that allows businesses to engage and track customers across their buying journey.
• Freshservice is an intuitive service management solution.
• Freshping is a solution to monitor a website’s availability and get multichannel alerts.
• Freshstatus allows businesses to create a custom branded website status page for internal or external viewing to communicate website uptime and availability.
• Freshsurvey is a tool to measure net promoter score and other satisfaction metrics.

Freshworks was formerly known as Freshdesk and changed its name in June 2017. The company was incorporated in 2010 and is headquartered in San Mateo, California. That is also the home of Franklin Resources Inc. (NYSE: BEN), GoPro Inc. (NASDAQ: GPRO), and Roblox Corp. (NYSE: RBLX). Competitors of Freshworks include HubSpot Inc. (NYSE: HUBS) and Salesforce Inc. (NYSE: CRM). Mathrubootham has been CEO since he founded the company.

The company reported about $569.5 million in revenue and has a market capitalization of more than $6.6 billion. The stock has gained 36% in the past year, outperforming the Nasdaq and the S&P 500 in that time. However, the stock is down about 5% year to date.

How Freshworks’ CEO Is Trading

One year ago, Mathrubootham owned almost 16.0 million shares, worth about $207.3 million. Today, he owns less than 12.9 million shares, which is a stake of more than 4%. Despite that 3.1 million share decrease in the total, the share price gain boosted the value of the stake by about 39% to around $288.2 million.

CEO Girish Mathrubootham could have sold for a variety of reasons, and we may never know the truth. If we take it as a sign of a lack of confidence, could it be that the recent pullback is more than ordinary volatility? Do he and other selling insiders know something we don’t? The company’s fourth-quarter and full-year earnings report is due soon. Insiders are typically prohibited from buying or selling shares until after quarterly results are released. Any insider transactions that take place after the report could provide a further clue to what Mathrubootham and others think about the stock’s prospects.

Other internal shareholders to watch include Chief Financial Officer Tyler Sloat. He owns 0.2% of shares outstanding, worth about $12.6 million. Director Sameer Gandhi owns 0.2% of shares outstanding, worth about $11.5 million, while Chief Product Officer Srinivasagopalan Ramamurthy owns less than 0.2% of shares outstanding, worth about $10.8 million. Note that both Sloat and Ramamurthy have parted with shares in the year. (These 19 executives pay themselves over $150 million a year.)