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Freshworks, a leading Software as a Service (SaaS) firm, has announced the acquisition of U.S.-based startup Device42 for $230 million. Alongside this acquisition, Freshworks revealed a significant leadership change, with founder Girish Mathrubootham stepping down as CEO. Dennis Woodside, former CEO of Motorola Mobility and current president of Freshworks, will succeed Mathrubootham as the new CEO, while Mathrubootham will assume the role of executive chairman.
Device42 specializes in helping companies manage their IT infrastructure and provides insights into their systems, from mainframes to cloud platforms. Recently, the company has also begun offering carbon emissions tracking services. By offering a comprehensive and real-time inventory of all IT assets, including hardware, software, and network components, Device42 aims to help organizations optimize resource allocation and gain broader visibility into their systems.
This acquisition marks Freshworks' first since becoming a publicly listed company in 2021. With more than 800 customers globally, Device42 provides enterprise-grade IT asset management capabilities that are expected to strengthen Freshworks' Freshservice offering.
Founder and former CEO of Freshworks, Girish Mathrubootham, commented on the acquisition during the company's recent earnings call, stating, “We have historically partnered with Device42 on large enterprise opportunities in the field. And after the transaction closes, we look forward to serving customers as one integrated team. We expect the transaction to close later in Q2.”
Device42 had previously raised $38.5 million in financing from investors such as LongRiver Investments and Elm Street Ventures.
Mathrubootham, a key figure in India’s SaaS growth story, founded Freshworks in Chennai in 2010. While he will continue to serve on Freshworks' board, the announcement of his transition from CEO resulted in a 25% drop in Freshworks' Nasdaq-traded shares after the markets closed, potentially erasing about $1.4 billion from the firm’s market cap. Freshworks, which competes with firms including Salesforce, ServiceNow, Hubspot, and Zoho, ended trading on Wednesday with a market cap of about $5.3 billion.
Despite the significant leadership change and market reaction, analysts remain optimistic about Freshworks' future under new CEO Dennis Woodside. Freshworks reported its first-quarter earnings on Wednesday, acknowledging continued weakness in its small and medium-sized business and customer service segments. However, the company remains confident in the adoption of its AI-powered solutions, Freddy AI and Co-Pilot, across various customer segments. With the acquisition of Device42, Freshworks aims to further strengthen its position in the SaaS market and continue its growth trajectory.
