Freshworks acquires Device42 for $230M, appoints Dennis Woodside new CEO

Freshworks, the publicly listed SaaS firm, is acquiring U.S.-based startup Device42 for $230 million, the company disclosed in an SEC filing. Alongside 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 take over as the new CEO. Mathrubootham is becoming executive chairman.

Device42 helps companies manage their IT infrastructure and provides insights into their systems, from mainframes to cloud. It recently began offering carbon emissions tracking. By providing a comprehensive and real-time inventory of all IT assets — including hardware, software, and network components — Device42 claims it can help organizations optimize resource allocation alongside broader visibility into their systems.

Device42 is Freshworks’ first acquisition since the company — founded in India but now headquartered in San Mateo — became a public company in 2021. “With more than 800 customers around the world, Device42 provides enterprise-grade IT asset management capabilities, which we believe can further strengthen our Freshservice offering,” Mathrubootham told analysts on the earnings call Wednesday.

“We have historically partnered with Device42 on large enterprise opportunities in the field. And after the transaction closes, we look forward to serving customers as one integrated team. We expect the transaction to close later in Q2,” he added.

The startup had raised $38.5 million in previous financing rounds from investors including LongRiver Investments and Elm Street Ventures, according to Crunchbase.

Mathrubootham has been a key fixture in India’s SaaS growth story for more than a decade — he founded Freshworks in Chennai in 2010 — and although he will continue to serve on Freshworks’ board, shares of Nasdaq-traded Freshworks fell 25% in trades after the markets closed, potentially erasing about $1.4 billion from the firm’s market cap. Freshworks, which competes with firms including Salesforce, ServiceNow, Hubspot and Zoho, ended trading on Wednesday with a market cap of about $5.3 billion.

“Management stated that the transition to the Chairman for Mr. Mathrubootham was planned as part of succession planning and the shift will allow him to focus on long-term product strategy and AI. While a shift at the top is disconcerting, we gain comfort from Mr. Woodside’s strong track record and key role he has played in building out Freshworks’ Enterprise GTM motion since joining the company,” Morgan Stanley analysts wrote in a note Thursday.

Freshworks reported its first-quarter earnings on Wednesday, revealing continued weakness in its small and medium-sized business and customer service segments. It remains optimistic about the adoption of its AI-powered solutions —  Freddy AI and Co-Pilot — across various customer segments, Freshworks said.