Freshworks Inc. (NASDAQ:FRSH) saw its shares climb about 9% on Thursday after the company’s board approved a $400 million repurchase program for Class A common stock. The move comes in the wake of the company attaining GAAP profitability in 2025 and reporting materially stronger cash generation and per-share results versus the prior year.
For the year, Freshworks produced in excess of $223 million in free cash flow and delivered $0.76 per weighted average diluted share, outcomes described by the company as nearly triple the comparable metrics from 2023. The board’s authorization empowers Freshworks to repurchase up to $400 million of its Class A common stock.
Chief Executive Officer Dennis Woodside said the repurchase program is intended to signal confidence in the company’s long-term strategy and its approach to disciplined capital allocation. He also noted that Freshworks intends to buy back shares when management believes the market is substantially undervaluing the stock, while preserving sufficient liquidity to continue investing in future growth initiatives.
The company said it may execute repurchases through a variety of channels, including open market purchases, privately negotiated transactions or other permitted means consistent with the Securities Exchange Act of 1934. When conducted in public markets, open market repurchases could be structured in accordance with Rule 10b-18 under the Exchange Act.
Freshworks emphasized that the timing, manner, price and amount of any repurchases will be determined at its discretion and will depend on multiple factors. Those factors include business and market conditions, prevailing stock prices and applicable regulatory requirements. The board also reserved the right to suspend or discontinue the repurchase program at any time.
Summary
Freshworks has launched a $400 million buyback after reporting GAAP profitability in 2025 and a strong rise in free cash flow and diluted earnings per share versus 2023, prompting a single-day share increase of roughly 9%.
Key points
- Board authorized $400 million repurchase program for Class A common stock.
- Company achieved GAAP profitability in 2025 and generated over $223 million in free cash flow; diluted EPS was $0.76, nearly triple 2023 levels.
- Repurchases may occur via open market transactions, privately negotiated deals, or other means compliant with the Securities Exchange Act of 1934, and may follow Rule 10b-18 when applicable.
Risks and uncertainties
- The program’s timing, size, price and execution are discretionary and depend on business and market conditions and regulatory requirements, which could affect the actual amount repurchased - impacting equity markets and investor allocations in the software sector.
- Freshworks may suspend or discontinue the buyback at any time, introducing uncertainty for shareholders and market participants focused on short-term capital return expectations.