Freshworks first Indian SaaS firm to get Nasdaq listing; m-cap hits $12 billion

Software firm Freshworks on Wednesday became the first Indian SaaS firm to get listed on Nasdaq, the American stock exchange when it launched a $1-billion-dollar initial public offering. The company is a software-as-a-service firm and is based in San Mateo, California although it has a significant staff in Chennai.

The Indian SaaS company’s debut on Nasdaq meant that it was valued at $12.2 billion, following its opening, which was 21 percent higher than the initial offering price which was $36 per share. The company sold 28.5 million common shares, as part of the initial opening, reports noted.

News reports show that the company had a $3.5-billion valuation when it raised funding worth $150 million in November 2019. Following the IPO, the SaaS company intends to use the funds to acquire businesses, services, products, or tech that complements its core business.

According to a SaaS founder community report in July 2021, India’s software-as-a-service sector is likely to touch a valuation of $1 trillion and may employ nearly half a million come 2030. The report also noted that the SaaS global market is likely to exceed $500 billion in terms of revenues come 2025. Further, the report added that at least ten out of close to 1000 firms in the SaaS landscape in India that have received funding are unicorns, with a $1-billion or higher valuation, including Freshworks, which is a cloud-based customer service firm. Nine out of the 10 Saas unicorns in the country were created from 2018 onwards, according to data. The first Indian SaaS company to go public and on the Nasdaq became a unicorn in 2018 as well. India has 65 unicorns across sectors and 28 of them have been created in 2021 alone, as per news reports.

Currently, the annual revenue generated by SaaS companies in India is between $2 and $3 billion, with approximately 40,000 as a workforce. Reports suggest that SaaS start-ups in India have raised nearly $4.3 billion in terms of funding ever since the beginning of 2020, by way of 282 deals.

IPO bandwagon in India and US

The US IPO market has remained active through the current fiscal, with the first quarter of the year seeing 275 IPOs. According to reports, as of August 31, the year has seen 698 IPOs, inclusive of special purpose acquisition companies (SPACs), and have raised over $226 billion. As many as 91 tech IPOs have been part of the IPO rush in the US.

Meanwhile, India has also seen a surge in start-up IPOs, with online food delivery startup Zomato going public, followed by automobile classifieds platform Cartrade. Many startups including online payments platform and online beauty and fashion platform, among others have filed their draft red herring prospectus (DRHP) in the recent past. These new-age tech companies and start-ups are joining the IPO boom this year. Reports suggest that in the ongoing fiscal year, 20 companies have raised over Rs 45,000 crore through IPOs thus far, exceeding the Rs 31,277 crore that was raised by 30 companies for fiscal 2020-21.

The Freshworks IPO on the Nasdaq comes on the back of other SaaS firms such as Snowflake and Zoom, which have made a mark in the US markets. On the domestic front, reports suggest that another SaaS firm that operates in the travel and hospitality tech space, Rategain Travel Technologies, is planning an IPO and has filed its draft papers recently.

Freshworks, which has now gone public, as per reports, has more than 52,500 customers globally and has reported $169 million in revenue for the first half of 2021. The SaaS firm’s revenues have grown by almost $60 million when compared to the same period in 2020. Freshworks began as a help desk/customer support software in 2010.

Conclusion

Indian SaaS company Freshworks made its debut on the US stock exchange on Wednesday and became the first Indian SaaS startup to list on Nasdaq. The company raised $1 billion via its IPO and now has a market cap of over $12 billion.

FAQs

Which is the first Indian SaaS startup to get listed on Nasdaq?

Freshworks became the first Indian SaaS company to make its debut on the US stock exchange, Nasdaq, after it raised $1 billion via an IPO. It currently has an over $12 billion market cap.

What is a software as a service company?

Software as a service company is one that hosts applications that customers can avail of via the Internet. These firms create, develop and host, apart from updating the product. India has nearly 1000 funded SaaS firms.