Freshworks Stock Rallies 39% in 3 Months: Is This a Good Time to Buy?

Freshworks FRSH shares have rallied 39% over the past three months, outperforming the Zacks Computer & Technology sector’s growth of 8.7% and the Zacks Internet - Software industry’s return of 10.2%.FRSH shares are benefiting from the strong demand for its AI-powered solutions. The company’s expanding customer base and solid top-line growth have also increased investor confidence.The company achieved a 22% year-over-year increase in total revenues to $186.6 million in the third quarter of 2024. It added more than 800 customers over the last 12 months, increasing its total customer base to above 69,600.Freshworks Inc. Price and Consensus  Freshworks Inc. price-consensus-chart | Freshworks Inc. QuoteFRSH Drives Growth With Platform & Customer ExpansionFreshworks provides AI-driven software that helps organizations deliver exceptional experiences for customers and employees. Its offerings are split into two main categories — Customer Experience (CX), which includes Freshdesk, Freshchat, Freshsales and Freshmarketer, and Employee Experience (EX), with products like Freshservice, Freshservice for Business Teams, and Device42. These solutions enhance efficiency and satisfaction for customers and employees.FRSH has significantly expanded its customer base to more than 69,600 companies. This growth includes high-profile clients across various industries, such as American Express AXP in financial services, Bridgestone BRDCY in automotive, Nucor in steel manufacturing, and Sony SONY in entertainment and technology. This broad customer base not only demonstrates the effectiveness of Freshworks' offerings but also increases investor confidence in its long-term growth potential and market reach.The company added more than 800 net new customers, achieving its highest organic customer growth in the past four quarters. This strong performance reflects the increasing demand for its products and services, indicating solid business momentum and the company's ability to attract clients.Freshworks considers its key customers as businesses or individuals generating above $5,000 in annual recurring revenue (ARR) through paid subscriptions. In the third quarter of 2024, this number reached 22,359, reflecting a 14% year-over-year increase. This growth highlights the company's success in attracting and retaining larger customers.FRSH Prospect Rides on AI InnovationIn October 2024, Freshworks launched the Freddy AI Agent to enhance CX and EX by improving speed and productivity. The new generative AI solutions, Freddy AI Agent and Freddy AI Copilot, aim to elevate the experience for customers and employees.In the second quarter of 2024, FRSH outlined key strategies for sustainable growth, focusing on investing in fast-growing areas like IT Service Management (ITSM), IT Asset Management, IT Operations and Enterprise Service Management. The company is also enhancing its AI capabilities across the platform to improve productivity and deliver better experiences for employees and customers.AI is becoming a strong driver for Freshworks' CX business, with most companies turning to trusted partners like FRSH for the latest AI capabilities. This is reflected in the growing customer adoption each quarter and higher attach rates for copilot and self-service.Leading innovators across industries rely on Freshworks’ AI-powered EX software to deliver exceptional employee experiences. Renowned institutions like Oxford, Georgetown and Pennsylvania use Freshservice, with the University of Oxford selecting Freshservice and Freddy Copilot for their simplicity and scalability across IT, finance and HR ITSM needs.FRSH’s 2024 Outlook Looks PromisingFor the fourth quarter of 2024, Freshwork expects non-GAAP revenues of $187.8-$190.8 million and non-GAAP earnings of 9-10 cents per share.The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $189.38 million, indicating year-over-year growth of 18.28%.The consensus mark for earnings is pinned at 10 cents per share, suggesting 25% growth from the figure reported in the year-ago quarter.For 2024, non-GAAP revenues are projected between $713.6 million and $716.6 million, suggesting 20% year-over-year growth. The non-GAAP earnings are expected to be 38-39 cents per share.The Zacks Consensus Estimate for revenues is pegged at $715.21 million, indicating year-over-year growth of 19.91%.The consensus mark for earnings is pegged at 38 cents per share, indicating year-over-year growth of 46.15%.FRSH’s Zacks Rank & ValuationFreshworks’ robust AI-powered portfolio strength and growing customer base make it a compelling investment option. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. 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