Two main personal tech corporations introduced IPO worth ranges this morning, with Toast concentrating on a market worth of almost $18 billion on the high finish of its vary and Freshworks trying to worth its fairness between $28 and $32 per share. BadilHost calculates that the corporate can be value round $8.9 billion at $32 per share, not using a totally diluted share depend.
Inclusive of shares represented by totally vested choices and the like, Freshworks’ valuation might attain $9.6 billion, Renaissance Capital stories.
In contrast to Toast, with a income combine together with 4 distinct merchandise, Freshworks is a extra easy software program firm. Meaning we are able to do rather more attention-grabbing work to grasp its valuation. So, this morning, let’s unpack how Freshworks is contemplating valuing itself in its IPO at its current vary, take a look at some market comps, and are available to a conclusion relating to whether or not or not we anticipate the unicorn to boost its valuation earlier than it floats.
Lies, damned lies and income multiples
As a refresher, within the first half of 2021 (Q1 and Q2), Freshworks posted revenues of $168.9 million. That annualizes to $337.9 million, due to numerical rounding.
At a valuation of $9.6 billion — recall that straightforward IPO valuations for the corporate and decrease share-price factors from its IPO vary generate decrease valuations and due to this fact extra conservative multiples than what we’ll be discussing right here — Freshworks can be value 28.4x its present income run charge, set throughout H1 2021.