Vanguard Takes a Stake as Freshworks Prepares for Key Earnings Report

Freshworks shares rally 12% after Vanguard discloses 6.4% stake. AI platform Freddy targets $100M revenue by 2028 as Q1 earnings loom.

The software sector may be facing headwinds in 2026, but Freshworks is bucking the trend with a sharp share price rally ahead of its quarterly results. The stock surged more than 12% in today's session, propelled by news that investment heavyweight Vanguard has built a meaningful position in the company.

The asset manager disclosed a 6.4% stake, representing roughly 15.9 million Class A shares. Market observers view the move as a vote of confidence, particularly given the stock's recent slide well below its historical peaks. At €7.76, the shares have lost over 21% since the start of the year, though today's jump has trimmed some of those losses.

AI Suite and Enterprise Growth Drive Optimism

Freshworks is betting heavily on its "Freddy AI" platform, which currently generates around $25 million in annual recurring revenue. Management has set an ambitious target of pushing that figure to $100 million by 2028. Meanwhile, the employee experience (EX) segment continues to flex its muscles, with annual recurring revenue already exceeding $510 million. The growth in large accounts—those with contract values above $100,000—is seen as a key gauge of long-term momentum.

Analysts at Needham remain bullish, reiterating a buy rating with a $15 price target. They point to stabilizing demand and improved visibility in the company's operations. The consensus among analysts places the fair value at roughly $13. The picture is more mixed elsewhere, however. Jefferies downgraded the stock to "Hold" earlier this year, and the relative strength index at 76 suggests the shares may be technically overbought after today's rally.

Earnings and Share Buyback in Focus

All eyes are now on the first-quarter earnings report due later this week. The market is forecasting revenue of approximately $223.6 million, representing year-over-year growth of nearly 14%. Earnings per share are expected to come in at $0.11. Alongside the numbers, investors are keen to hear updates on the planned $400 million share buyback program.

A conference call with management is scheduled for the evening of May 5, where executives are expected to provide color on operating margins and new customer acquisition. The annual general meeting follows at the end of May, with shareholders voting on board composition and compensation structure. These upcoming events will test whether Freshworks can sustain its fundamental turnaround.