Freshworks had has a difficult time at the stock markets since going public in 2021, and it’s beginning to show in its operations.
Freshworks has laid off 660 employees in a fresh round of layoffs. The layoffs will impact Freshworks staff across the US, India and its other locations. Freshworks told employees that the layoffs were a part of its efforts to streamline the company’s operations.
“In November 2024, the company committed to a restructuring plan to better align the company’s talent with its strategic priorities and to improve operating efficiency,” Freshworks CEO Dennis Woodside told employees in an email. “The company estimates that this will result in approximately 13% reduction in headcount and approximately $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs,” he added.
Freshworks had around 5,000 employees before the restructuring, so it’s laying off nearly 15 percent of its workforce. Freshworks’ shares had ended up 5 percent at market close yesterday, and further rose sharply in after hours trading.
This isn’t the first time that Freshworks has laid off employees in large numbers. In December 2022, Freshworks had laid off 90 emplyoyees, of which 60 had been in the India team. In March 2023, Freshworks had undertaken job cuts to “enhance operational and organizational efficiencies”, and had again laid off more people in June 2023.
These layoffs come after the company’s tepid showing at the stock markets. Freshworks’ stock had popped when it was listed on the NASDAQ in 2021, and was worth $46 a share. The stock touched a high of $50, but has since been steadily losing value, and currently trades at just $13.
Freshworks had been founded as Freshdesk in 2010 by Girish Mathrabootham as a means to let companies manage their customer interactions. The Chennai-based company quickly raised funding and found customers, with many international brands relying on its services. In 2018, Freshworks became a unicorn with a valuation of $1 billion. In 2021, the company went public on the NASDAQ at a valuation of $10 billion.
But a difficult market for SaaS companies and indifferent results seem to have put pressure on its stock, and the company currently trades at a valuation of around $4 billion. On 1st May this year, founder Girish Mathrabootham had stepped aside to become Executive Chairman, and the company had appointed Dennis Woodside as CEO. And as regular layoffs show, the company’s professional management seems to be looking to streamline operations and extract operational efficiencies from the customer-service software operator.