Publicly traded SaaS company Freshworks is acquiring US startup Device42 for $230 million, the company revealed in an SEC filing. Along with the disclosure of the acquisition, Freshworks revealed that founder Girish Mathrubootham has resigned as CEO. Dennis Woodside, who joined Freshworks as president in September 2022 and was previously CEO of Motorola Mobility, will take over as the new CEO. Mathrubootham becomes executive chairman.
Device42 helps businesses manage their IT infrastructure and provides insights into their systems, from mainframes to the cloud. It recently began offering carbon emissions tracking. By providing a comprehensive, real-time inventory of all IT assets, including hardware, software and network components, Device42 claims to be able to help organizations optimize resource allocation as well as broader visibility into their systems .
Device42 is Freshworks’ first acquisition since the company – founded in India but now based in San Mateo – became a public company in 2021. “With more than 800 customers worldwide, Device42 offers IT asset management capabilities of enterprise level, which we believe can further strengthen our Freshservice offering,” Mathrubootham told analysts during the earnings conference call Wednesday.
“We have a long history of working with Device42 on opportunities for large companies in this space. And once the transaction closes, we look forward to serving our clients as one integrated team. We expect the transaction to be completed later in the second quarter,” he added.
The startup had raised $38.5 million in previous funding rounds from investors including LongRiver Investments and Elm Street Ventures, according to Crunchbase.
Mathrubootham has been a key part of India’s SaaS growth for over a decade – he founded Freshworks in Chennai in 2010 – and while he will continue to serve on the Freshworks board, Freshworks shares, traded on Nasdaq, fell 25% in trading after the markets closed, potentially wiping about $1.4 billion from the company’s market capitalization. Freshworks, which competes with companies including Salesforce, ServiceNow, Hubspot and Zoho, closed trading Wednesday with a market capitalization of about $5.3 billion.
“Management stated that the transition to President for Mr. Mathrubootham was planned as part of succession planning and that this change will allow him to focus on long-term product strategy and AI. While a change at the top is disconcerting, we are reassured by Mr. Woodside’s strong track record and the key role he has played in building Freshworks’ Enterprise GTM movement since joining the company. wrote Morgan Stanley analysts in a note Thursday.
Freshworks reported its first quarter results on Wednesday, revealing continued weakness in its small and medium business and customer service segments. The company remains optimistic about the adoption of its AI-based solutions – Freddy AI and Co-Pilot – across various customer segments, Freshworks said.
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