Critical Contrast: Freshworks (NASDAQ:FRSH) & Klaviyo (NYSE:KVYO)

Klaviyo (NYSE:KVYO) and Freshworks (NASDAQ:FRSH) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Institutional & Insider Ownership

45.4% of Klaviyo shares are owned by institutional investors. Comparatively, 75.6% of Freshworks shares are owned by institutional investors. 49.9% of Klaviyo shares are owned by insiders. Comparatively, 11.2% of Freshworks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Klaviyo	-2.57%	2.03%	1.58%
Freshworks	21.90%	4.69%	3.07%

Analyst Ratings

This is a summary of current recommendations and price targets for Klaviyo and Freshworks, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Klaviyo	1	3	18	0	2.77
Freshworks	1	9	6	0	2.31

Klaviyo presently has a consensus target price of $33.90, suggesting a potential upside of 81.79%. Freshworks has a consensus target price of $12.92, suggesting a potential upside of 51.25%. Given Klaviyo’s stronger consensus rating and higher probable upside, analysts plainly believe Klaviyo is more favorable than Freshworks.

Volatility and Risk

Klaviyo has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Freshworks has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Earnings & Valuation

This table compares Klaviyo and Freshworks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Klaviyo	$1.23 billion	4.61	-$31.77 million	($0.12)	-155.42
Freshworks	$838.81 million	2.89	$183.72 million	$0.64	13.34

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

Summary

Freshworks beats Klaviyo on 8 of the 14 factors compared between the two stocks.

About Klaviyo

Klaviyo, Inc., a technology company, provides a software-as-a-service platform in the United States, other Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company offers Klaviyo, a cloud-native platform for data store, segmentation engine, campaigns and flows, and messaging infrastructure. It also provides email to send personalized marketing emails, including drag-and-drop email templates to edit and customize pre-built templates; email campaigns and automations with smart send time features, generative artificial intelligence for subject line creation, A/B testing tools, and consumer list segmentation; short message services to send targeted marketing text messages to consumers, as well as built-in contact cards to ensure that texts does not appear as random numbers; and push, a personalized push notification to engage with consumer. In addition, the company offers other applications, such as reviews, which collect product reviews; and customer data platform that allows to manage, deploy, transform, and sync data. It serves its products to entrepreneurs, small and medium-sized businesses to mid-market businesses, and enterprises. The was incorporated in 2012 and is headquartered in Boston, Massachusetts.

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.