Freshworks, a publicly traded SaaS company, will acquire U.S.-based startup Device42 for $230 million, the company said in an SEC filing. Along with the acquisition disclosure, Freshworks also revealed that founder Girish Mathrubootham has stepped down as CEO. Dennis Woodside, who will join Freshworks as president in September 2022 and previously served as CEO of Motorola Mobility, will become the new CEO. Mr. Mathrubootham will become Executive Chairman.
Device42 helps businesses manage their IT infrastructure, providing insights into systems ranging from mainframes to the cloud. We recently started offering carbon emissions tracking. Device42 claims that by providing a comprehensive, real-time inventory of all IT assets, including hardware, software, and network components, it can help organizations optimize resource allocation with broad visibility into their systems. .
Device42 is Freshworks' first acquisition since the India-founded company, currently headquartered in San Mateo, went public in 2021. “We can further enhance our Freshservice offering,” Mathrubootham told analysts on Wednesday's earnings call.
“We have previously partnered with Device42 on large enterprise opportunities in this space and look forward to serving our customers as one integrated team once the transaction closes. We expect it to be completed in the second half of the second quarter,” he added.
According to Crunchbase, the startup has raised $38.5 million in previous funding rounds from investors including LongRiver Investments and Elm Street Ventures.
Mathrubootham has been a central figure in India's SaaS growth story for over a decade and founded Freshworks in Chennai in 2010. He will continue to serve on Freshworks' board, but the company's Nasdaq-listed shares fell 25% in 2010. The market would close, potentially wiping about $1.4 billion from the company's market capitalization. Freshworks, which competes with companies such as Salesforce, ServiceNow, Hubspot and Zoho, closed Wednesday with a market cap of about $5.3 billion.
“Management stated that Mr. Mathrubootham's transition to Chairman is planned as part of succession planning and that this transition will allow him to focus on long-term product strategy and AI. Changes at the top Although disconcerting, we take comfort in Mr. Woodside's strong track record and the critical role he has played in building Freshworks' enterprise GTM drive since joining the company,” Morgan Stanley analysts said Thursday. I'm writing it in a memo.
Freshworks reported first-quarter results on Wednesday, highlighting continued weakness in its small business business and customer service segment. Freshworks said it remains optimistic about the adoption of its AI-powered solutions (Freddy AI and Co-Pilot) across various customer segments.