fresh jobsThe publicly traded SaaS company is acquiring US startup Device42 for $230 million, the company revealed in a filing with the SEC. In addition to the acquisition disclosure, Freshworks revealed that founder Girish Mathrubootham has resigned as CEO. Dennis Woodside, who joined Freshworks as president in September 2022 and previously served as CEO of Motorola Mobility, will take on the role of new CEO. Mathrubootham will become executive chairman.
Device42 helps companies manage their IT infrastructure and provides insights into their systems, from mainframes to the cloud. It recently started offering carbon emissions tracking. By providing a comprehensive, real-time inventory of all IT assets, including hardware, software and network components, Device42 claims it can help organizations optimize resource allocation along with broader visibility into their systems.
Device42 is Freshworks’ first acquisition since the company, founded in India but now based in San Mateo, became a public company in 2021. “With more than 800 customers worldwide, Device42 offers asset management capabilities of enterprise-grade IT, which we believe “We can further strengthen our Freshservice offering,” Mathrubootham told analysts on Wednesday’s earnings call.
“We have historically partnered with Device42 on opportunities for large companies in the field. And once the transaction closes, we look forward to serving clients as an integrated team. We expect the transaction to close later in the second quarter,” he added.
The startup had raised $38.5 million in previous funding rounds from investors such as LongRiver Investments and Elm Street Ventures, according to Crunchbase.
Mathrubootham has been a key player in India’s SaaS growth story for more than a decade (he founded Freshworks in Chennai in 2010), and while he will remain on Freshworks’ board of directors, Freshworks shares listed on Nasdaq They fell 25% in trading after the markets closed, potentially erasing about $1.4 billion from the company’s market capitalization. Freshworks, which competes with companies such as Salesforce, ServiceNow, Hubspot and Zoho, closed trading on Wednesday with a market capitalization of around $5.3 billion.
“Management stated that Mr. Mathrubootham’s transition to President was planned as part of succession planning and the change will allow him to focus on long-term product strategy and AI. “While a change at the top is disconcerting, we are comforted by Mr. Woodside’s strong track record and the key role he has played in building Freshworks’ Enterprise GTM movement since joining the company,” Morgan Stanley analysts wrote in a note on Thursday.
Freshworks reported its first-quarter earnings on Wednesday, revealing continued weakness in its small and medium-sized business and customer service segments. Freshworks said it remains optimistic about the adoption of its AI-powered solutions (Freddy AI and Co-Pilot) across various customer segments.
