Freshworks Inc. (NASDAQ:FRSH) experienced a notable surge in trading activity on Thursday, with volume reaching 29.7 million shares—more than 2.5 times its 65-day average. The stock slipped 1.12% to $9.265 in afternoon trading, but the focus remained on the elevated turnover as the market anticipated upcoming index changes.
Over the past two sessions, the software company has seen more than 64 million shares change hands, including 34.69 million on Wednesday and 24.33 million on Tuesday. Despite the heavy volume, the stock price has remained relatively stable, hovering near $9.26.
The heavy trading comes as FTSE Russell prepares to reconstitute its U.S. indexes after the close on Friday, June 26. Freshworks' market capitalization of approximately $2.62 billion falls within the Russell 2000 range of $146.4 million to $5.7 billion, though no index change has been confirmed. The annual reconstitution is expected to drive significant trading volume, with $114.7 billion in stocks traded on the NYSE and $102.5 billion on Nasdaq during last year's event.
Freshworks' balance sheet remains a key strength. Cash, cash equivalents, restricted cash, and marketable securities totaled $780.4 million as of March 31, representing about 30% of its current market value. Excluding cash, the enterprise value stands at roughly $1.84 billion, or about 1.9 times the midpoint of its 2026 revenue forecast of $958 million to $964 million.
The company's operational performance has been solid but not spectacular. First-quarter revenue rose 16% year-over-year to $228.6 million, with adjusted free cash flow of $55.8 million and a non-GAAP operating margin of 17.9%. CEO Dennis Woodside highlighted the "sixth straight quarter of exceeding expectations."
Freshworks is also undergoing a cost restructuring, announcing in May a workforce reduction of 11%—approximately 500 jobs. Woodside noted that "over half of our code is written by AI," emphasizing automation's role in eliminating routine tasks. The savings are expected to be redirected into the company's Employee Experience business.
Analyst sentiment remains positive, with seven buy ratings and nine holds, and no sell ratings. The median price target stands at $11, offering potential upside from current levels near $9.28. The broader software sector was slightly lower on Thursday, with the iShares Expanded Tech-Software Sector ETF (IGV) down 1.36% and Salesforce (CRM) falling 1.76%.
