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Freshworks has surpassed rival Zendesk Inc. in terms of market capitalization for the first time, after investors in the San Francisco-based firm punished the stock for the company’s decision to acquire Momentive Global, the makers of SurveyMonkey, for about $4 billion in stock.

As on Tuesday, Freshworks’ market cap stood at $13.56 billion compared to Zendesk’s $12.1 billion — a decline of 16% since Oct. 28 when the Momentive deal was announced. Zendesk had said it would pay 0.225 shares for every share of Momentive.

Zendesk’s revenue for the first half of 2021 stood at $616.2 million. Freshworks, in its filings with the US Securities and Exchange Commission before listing, had reported $168.9 million revenue in the six months ended June 30. In the quarter ended September 30, Zendesk’s revenue rose 32% year-on-year to $347 million. Freshworks will announce its first quarterly results since listing later today.

According to Finbox — a data platform for publicly traded stocks — Zendesk is trading at a revenue multiple of 10.7 times, compared to Freshworks’ 43.1 times. Revenue multiple measures a company’s value based on its gross sales.

Momentive Global, also a publicly traded stock on Nasdaq, has seen its share price slide by 8% since the acquisition announcement by Zendesk. Its market cap currently stands at $3.3 billion.

Freshworks surpassing Zendesk’s market cap assumes significance since both have been rivals for nearly a decade now. Zendesk was founded three years before Freshdesk (as Freshworks was previously known) in 2007.

In a 2011 blog post, Freshworks CEO Girish Mathrubootham had said he got the idea to start the company after reading an article on ‘Hacker News’ on how Zendesk’s customers were unhappy after the company raised its prices by 60-300%. Later that year, Zendesk founder and CEO of Mikkel Svane tweeted calling Freshdesk a “freaking ripoff”, with others on the microblogging platform attacking the Indian company for being an “unethical troll trying to cash in on Zendesk’s good name” and calling the company a “bunch of Indian cowboys”.

“…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,” Mathrubootham wrote in a blog post explaining Zendesk’s attack on it.

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