Freshworks Inc. (NASDAQ: FRSH), a leading software company, today announced a significant early legal victory in a federal securities case related to its 2021 initial public offering (IPO).
On Thursday, the U.S. District Court for the Northern District of California granted Freshworks’ motion for summary judgment, dismissing claims in a proposed investor class action lawsuit. The court found that the alleged omissions concerning revenue and billing growth did not cause shareholder losses below the IPO price of $36 per share.
U.S. District Judge Charles R. Breyer concluded that the market had already absorbed the company’s post-IPO earnings report—showing a deceleration in growth—before any decline below the IPO price occurred.
“Defendants have shown, and the plaintiff has not rebutted, that the market fully absorbed Freshworks’ first post-IPO earnings statement well before the stock price dropped below $36 per share,” stated Judge Breyer in the order.
The lawsuit, filed in November 2022 by investor Mohan Sundaram, alleged that Freshworks and its IPO underwriters misrepresented the company’s growth trajectory in offering documents. However, the court determined that the plaintiff could not demonstrate any recoverable losses as required under federal securities law.
Freshworks’ legal team, led by Cooley LLP, argued successfully that there was no basis for damages, as both parties’ market experts agreed the earnings information had already been factored into the stock price prior to any relevant drop.
This ruling marks an important milestone for the company as it continues to deliver modern customer and employee experience solutions to businesses worldwide.
About Freshworks
Freshworks Inc. creates AI-powered business software for IT, customer support, sales, and marketing teams to make work easier and more productive. The company is headquartered in San Mateo, California.
