Financial Review: Freshworks (NASDAQ:FRSH) & DocuSign (NASDAQ:DOCU)

Freshworks (NASDAQ:FRSH) and DocuSign (NASDAQ:DOCU) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, analyst recommendations, institutional ownership, earnings, dividends and risk.

Insider & Institutional Ownership

75.6% of Freshworks shares are owned by institutional investors. Comparatively, 77.6% of DocuSign shares are owned by institutional investors. 19.2% of Freshworks shares are owned by company insiders. Comparatively, 1.7% of DocuSign shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Freshworks has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, DocuSign has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares Freshworks and DocuSign’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freshworks	-15.72%	-9.08%	-6.67%
DocuSign	34.56%	16.18%	6.47%

Analyst Recommendations

This is a breakdown of current recommendations for Freshworks and DocuSign, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freshworks	0	6	9	0	2.60
DocuSign	2	7	2	0	2.00

Freshworks presently has a consensus price target of $17.86, suggesting a potential upside of 58.03%. DocuSign has a consensus price target of $63.40, suggesting a potential downside of 12.31%. Given Freshworks’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Freshworks is more favorable than DocuSign.

Valuation and Earnings

This table compares Freshworks and DocuSign”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freshworks	$652.94 million	5.17	-$137.44 million	($0.40)	-28.25
DocuSign	$2.86 billion	5.18	$73.98 million	$0.52	139.04

DocuSign has higher revenue and earnings than Freshworks. Freshworks is trading at a lower price-to-earnings ratio than DocuSign, indicating that it is currently the more affordable of the two stocks.

Summary

DocuSign beats Freshworks on 10 of the 14 factors compared between the two stocks.

About Freshworks

Freshworks Inc., a software development company, provides software-as-a-service products worldwide. It offers Freshworks Customer Service Suite, which provides automated, personalized self-service on various channels, including web, chat, mobile messaging, email, and social; Freshdesk, a ticketing-centric customer service solution; Freshsuccess, a customer success solution; and Freshchat that provides agents with a modern conversational experience to proactively engage customers across digital messaging channels. The company also provides Freshsales, an advanced and user-friendly sales automation solution; Freshmarketer, a marketing automation solution for businesses to redefine their marketing strategies; Freshsales Suite, which offers businesses a unified platform that facilitates cohesive engagement and detailed tracking of customers throughout their entire buying journey; Freshservice that offers virtual agents to help employees resolve issues, make requests, and answer questions without contacting the service desk; and Freshservice for Business Teams, which provides a unified employee service experience while ensuring the secure separation of departmental data. In addition, it offers Freshping to monitor website’s availability and get multichannel alerts if the website goes down; Freshstatus, which allows businesses to create a custom branded website status page for internal or external viewing to communicate website uptime and availability; and Freshsurvey to measure net promoter scores and other satisfaction metrics directly within Freshworks products. The company was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. Freshworks Inc. was incorporated in 2010 and is headquartered in San Mateo, California.

About DocuSign

DocuSign, Inc. provides electronic signature solution in the United States and internationally. The company provides e-signature solution that enables sending and signing of agreements on various devices; Contract Lifecycle Management (CLM), which automates workflows across the entire agreement process; Document Generation streamlines the process of generating new, custom agreements; and Gen for Salesforce, which allows sales representatives to automatically generate agreements with a few clicks from within Salesforce. It also provides Identify, a signer-identification option for checking government-issued IDs; Standards-Based Signatures, which support signatures that involve digital certificates; Monitor that uses advanced analytics to track DocuSign eSignature web, mobile, and API account; Notary which enables notaries public to conduct remote online notarization transactions; and Web Forms, a web forms that quickly draft agreements using pre-populated data from completed forms or external systems via APIs. In addition, the company offers Rooms for Real Estate that provides a way for brokers and agents to manage the entire real estate transaction digitally. Signature and CLM are FedRAMP, an authorized version of DocuSign eSignature for U.S. federal government agencies; and life sciences modules that support compliance with the electronic signature practices. The company sells its products through direct and partner-assisted sales, and digital self-service purchasing. DocuSign, Inc. was incorporated in 2003 and is headquartered in San Francisco, California.