The Chennai- and San Mateo, California-headquartered SaaS firm, which focuses on providing CRM (customer relationship management) software tools to enterprises, has named its president Dennis Woodside as the new CEO.
Mathrubootham will take on the role of executive chairman at Freshworks.
“This decision was not made lightly and comes with a deep belief in our collective vision and the future of our company,” Mathrubootham wrote to employees in an email that the company shared publicly.
The news sparked a massive selloff in the company stock as shares of Freshworks dropped nearly 25% during after-market hours trading on Nasdaq on Wednesday.
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“A couple of years ago, I started talking with our board about my longer-term plans for Freshworks. I shared that when the time is right, I would like to shift my focus to our long-term product vision and invest in our presence in India. These are areas where I get the most energy and where I’m also playing to my strengths,” Mathrubootham added.
Performance under pressure
Freshworks, founded in Chennai in 2010, primarily targets small and medium businesses with its CRM software. It has been diversifying its target market over the last two years to sustain the downturn as small and medium businesses tighten technology spends.
Currently, the company services over 67,000 customers globally and employs over 4,900 staffers.
The latest development comes months after the board of the software service provider cancelled the performance-based stock award of 6 million shares to Mathrubootham.
“As a result of macroeconomic conditions that are entirely outside the control of the company’s leadership team, the stock price hurdles were too far ahead of the current stock price for the CEO PRSU award to have the retention value expected at the time the award was granted,” the company had said in the filing with the US Securities and Exchange Commission (SEC) on February 16.
These performance-based restricted stock units were awarded to Mathrubootham in 2021. It was tied to achievement of various stock price hurdle requirements. This included the requirement of having the company’s stock price average around $200 before January 2029.
Also in February, Freshworks had reported a net loss of $28 million for the fourth quarter compared with a $55.4 million loss a year earlier. Revenue increased by 20% year-on-year to $160.1 million.
For the year ended December 31, Freshworks posted an operating profit of $44.5 million, its first since the firm’s US listing. This excluded certain non-cash expenses such as stock-based compensation, employer payroll taxes and amortisation of acquired intangibles. Its loss for the year narrowed to $137 million from $232 million in 2022.
