Freshworkspublicly traded SaaS company, acquires US startup Device42 for $230 million, the company revealed in an SEC filing. In addition to the acquisition disclosure, Freshworks revealed that founder Girish Mathrubootham has stepped down as CEO. Dennis Woodside, who joined Freshworks as president in September 2022 and previously served as CEO of Motorola Mobility, will change into the new CEO. Mathrubootham becomes executive chairman.
Device42 helps corporations manage their IT infrastructure and provides visibility into their systems, from mainframe to the cloud. It recently began offering carbon tracking. By providing a comprehensive, real-time inventory of all IT assets – including hardware, software and network components – Device42 claims it may help organizations optimize resource allocation along with 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. “Serving more than 800 customers worldwide, Device42 provides enterprise-class IT asset management capabilities that we believe we can further strengthen our Freshservice offering,” Mathrubootham told analysts on an earnings call Wednesday.
“We have worked with Device42 in the past on large enterprise opportunities in this space. Once the transaction closes, we sit up for serving clients as one integrated team. We expect the transaction to be finalized later in the second quarter,” he added.
The startup had raised $38.5 million Previous rounds of funding from investors including LongRiver Investments and Elm Street Ventures, in keeping with Crunchbase.
Mathrubootham has played a key role in India’s SaaS growth story for over a decade – he founded Chennai-based Freshworks in 2010 – and while he’ll proceed to serve on Freshworks’ board, shares of Nasdaq-listed Freshworks fell 25% in trading after markets closed , potentially removing roughly $1.4 billion from the company’s market capitalization. Freshworks, which competes with corporations including Salesforce, ServiceNow, Hubspot and Zoho, finished trading Wednesday with a market capitalization of about $5.3 billion.
“The board stated that Mr. Mathrubootham’s transition to the CEO position was planned as part of succession planning and that this transition would allow him to focus on his long-term product and artificial intelligence strategy. While the change at the top is concerning, we are heartened by Mr. Woodside’s strong track record and the key role he has played in building the Enterprise GTM Freshworks movement since joining the company,” Morgan Stanley analysts wrote in a note on Thursday.
On Wednesday, Freshworks released its first-quarter earnings report, revealing continued weakness in its small and medium-sized business and customer support segments. Freshworks said it stays optimistic about the adoption of its AI-based solutions – Freddy AI and Co-Pilot – across customer segments.