Nasdaq-listed Freshworks Inc on Tuesday was faced by class action lawsuits by US-based The Schall Law Firm and Scott+Scott Attorneys at Law for violations of federal securities laws.
The lawsuits alleged that the firm made false and misleading statements in its IPO documents for its Nasdaq listing.
“The Company made false and misleading statements to the market. Freshworks was facing considerable business difficulties at the time of the IPO. The Company’s net dollar retention rate had plateaued, and both the revenue growth rate and billings were slowing down. Based on these facts, the Company’s public statements were false and materially misleading throughout the IPO period,” as per a statement by The Schall Law Firm.
The US-based law firm urged investors with losses amounting $100,000 to contact the firm, and asked shareholders to reach out before 3 January 2023.
Freshworks was facing obstacles during the time of its listing. With investors learning about the company’s factual operational position, a chunk of its shares’ value eroded, leading to losses to shareholders, Scott+Scott Attorneys at Law said in its statement.
The software-as-a-service (SaaS) firm made its Nasdaq debut in September last year at $36 apiece, slightly higher than its IPO issue price range $32-34, while offering about 28.5 million shares for the public issue. The firm raised about $1 billion during its listing at a valuation of about $10.13 billion. Its stock currently trades at about $12.06 on Nasdaq.
Freshworks is one of the enterprise software business firms that took advantage of the US capital market’s positive sentiment towards public listings. Most software IPOs during that period were well-received by investors who saw room for growth in the sector even after the pandemic.
The US-based company reported its Q3 revenues this week, posting a 37% year-on-year jump in its consolidated net revenue at $128.8 million, while its operational loss during the period shrunk to $58.3 million from $67.4 million, sequentially.
Founded in Chennai, India, in 2010, Freshworks helps businesses with customer management, offering products including a messaging platform, an artificial intelligence-powered chatbot for customer support and call-centre solutions that promise shorter wait times.
