Freshworks, the publicly traded SaaS company, is acquiring U.S. startup Device42 for $230 million, the company announced in an SEC filing. In parallel with the acquisition disclosure, Freshworks announced 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 be the new CEO. Mathrubootham becomes executive chairman.
Device42 helps companies manage their IT infrastructure and provides insights into their systems, from the mainframe to the cloud. The company has recently also started offering tracking of CO2 emissions. By providing a comprehensive, real-time inventory of all IT resources – including hardware, software and network components – Device42 can help companies optimize resource allocation while ensuring greater visibility into their systems.
Device42 is Freshworks’ first acquisition since the company – which was founded in India but is now headquartered in San Mateo – became a public company in 2021. “With more than 800 customers around the world, we believe Device42 offers enterprise-class IT asset management capabilities “We can further strengthen our Freshservice offering,” Mathrubootham told analysts on Wednesday’s earnings call.
“We have worked with Device42 in the past on large corporate opportunities in this space. And once the transaction is complete, we look forward to serving our customers as one integrated team. We expect the transaction to close later in the second quarter,” he added.
According to Crunchbase, the startup had raised $38.5 million in previous funding rounds from investors including LongRiver Investments and Elm Street Ventures.
Mathrubootham has been a key part of India’s SaaS growth story for more than a decade – he founded Freshworks in Chennai in 2010 – and while he will continue to serve on Freshworks’ board, shares of Nasdaq-traded Freshworks fell 25 in trading thereafter % Markets closed, potentially resulting in a loss of approximately $1.4 billion from the company’s market capitalization. Freshworks, which competes with the likes of Salesforce, ServiceNow, Hubspot and Zoho, ended trading on Wednesday with a market capitalization of about $5.3 billion.
“Management indicated that Mr. Mathrubootham’s transition to chairman was planned as part of succession planning and the transfer will allow him to focus on long-term product strategy and AI.” “While a change at the top is troubling, there is comfort “We appreciate Mr. Woodside’s strong track record and the key role he has played in expanding Freshworks’ Enterprise GTM movement since joining the company,” Morgan Stanley analysts wrote in a note on Thursday.
Freshworks reported its first-quarter results on Wednesday, revealing continued weakness in its small and medium-sized business and customer service segments. The company remains optimistic about the adoption of its AI-powered solutions – Freddy AI and Co-Pilot – across various customer segments, Freshworks said.