Freshworks Inc., the poster child of Indian SaaS, has surpassed competitor Zendesk Inc. in terms of market capitalization for the first time, after investors penalised the stock for the company's plan to purchase Momentive Global, the manufacturers of SurveyMonkey, for around $4 billion in shares.

Freshworks' market worth was $13.56 billion on Tuesday, compared to Zendesk's $12.1 billion — a 16% drop since the Momentive purchase was disclosed on October 28. Zendesk had said that it will pay 0.225 shares for each Momentive share.

Zendesk made $616.2 million in sales in the first half of 2021. Freshworks reported $168.9 million in sales for the six months ended June 30 in its filings with the US Securities and Exchange Commission prior to listing. Zendesk's sales increased 32% year over year to $347 million in the quarter ending September 30. Freshworks will release its first quarterly earnings since its Initial Public Offering (IPO) later today.

Momentive Global, which is also a Nasdaq-listed company, has seen its stock price fall by 8% since Zendesk announced its acquisition. Its current market capitalization is $3.3 billion.

Freshworks' market cap exceeding Zendesk's is significant because the two companies have been rivals for over a decade. Zendesk was started in 2007, three years before Freshworks (as it was originally known).

Freshworks CEO Girish Mathrubootham wrote in a 2011 blog post that he got the idea for the firm after reading an article on ‘Hacker News’ about Zendesk’s customers being dissatisfied after the company upped its pricing by 60-300% . Later that year, Zendesk founder and CEO Mikkel Svane tweeted that Freshdesk was a “freaking ripoff”, with others blasting the Indian firm as a “unethical troll trying to cash in on Zendesk's good brand” and a “bunch of Indian cowboys” on the microblogging site.

In a blog post, Mathrubootham explains Zendesk's attack on it, “...with all the customers who have been switching over from Zendesk and our recent funding from Accel Partners, they probably realise we are not going to go away anytime soon. So they came up with this brilliant, half-baked social strategy of bad-mouthing us on Twitter”.

Freshworks is now positioned as a competitor to CRM behemoth Salesforce Inc., which had a market worth of $293 billion as of Tuesday. Salesforce reported $6.34 billion in revenue in the second quarter of this fiscal year and forecasted $26.2 billion to $26.3 billion in total revenue for FY22.

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