Freshworks Inc. (FRSH Quick QuoteFRSH - Free Report) is expanding Freshservice into SaaS management and AI spend governance through its planned acquisition of Torii. The deal could support growth by broadening Freshworks’ addressable market, creating opportunities to cross-sell Torii’s capabilities to existing customers and strengthening Freshservice’s appeal to enterprises seeking tighter control over software and AI costs. As AI adoption accelerates, the combined platform could drive greater customer adoption and deepen account relationships. However, the revenue contribution will depend on successful integration, customer uptake and Freshworks’ ability to monetize the expanded offering.

Freshservice helps organizations manage IT services, automate workflows and improve employee support. The addition of Torii is expected to extend these capabilities to software asset management and AI spend governance, giving businesses a more comprehensive view of their technology environments. Torii is designed to identify applications, track software usage, manage licenses and help organizations control spending across their software ecosystem. Its AI governance capabilities also track consumption down to the token level, attribute usage to individual employees and teams, and forecast future spending.

By integrating Torii with Freshservice, FRSH aims to connect IT operations with software and AI cost management. The combined platform could help organizations streamline workflows, reduce manual reconciliation between IT and finance teams, and provide employees with faster access to the tools they need. The acquisition is expected to close in fourth-quarter fiscal 2026, subject to customary closing conditions.

EX expansion, enterprise adoption, AI monetization and disciplined profitability provide Freshworks with multiple avenues to compound revenue and cash flow. Management estimates the addressable EX market at roughly $45 billion, growing 13% annually, with businesses of up to 20,000 employees representing about 60% of that opportunity. EX ARR reached $567 million in the second quarter of 2026, up 24% year over year on a constant-currency basis and about five times the level at the start of 2021. It expects EX ARR growth to remain in the mid-twenties and to exceed $600 million by the end of 2026. The breadth of the platform gives FRSH multiple ways to expand within existing customers as service management extends beyond the IT department.

FRSH Must Prove Its Edge in a Crowded Market

Freshworks operates in service management and customer support markets that management describes as competitive and rapidly changing. The company is pushing further into mid-market and enterprise accounts, where customers often require broader functionality, integrations and governance. Freshworks is investing in EX sales capacity, AI R&D and a wider platform spanning ITSM, ITAM, ITOM and ESM to support this move. That expansion also raises the execution bar because growth depends on winning larger accounts while continuing to improve product depth. Management expects EX ARR to grow in the mid-twenties and exceed $600 million exiting 2026, making sustained win rates and larger deal sizes important to the growth plan. If product development, deployments or customer acquisition lag expectations, the company has identified those areas as factors that could cause results to differ from its outlook.

It faces competition from established players such as Salesforce, Inc. (CRM Quick QuoteCRM - Free Report) , Atlassian Corporation (TEAM Quick QuoteTEAM - Free Report) and ServiceNow Inc. (NOW Quick QuoteNOW - Free Report) across IT service management and customer support.

How are FRSH’s Peers Expanding Their Software Platforms?

Acquisitions remain a lever to fill product gaps and deepen the data, content and automation layers around Salesforce’s platform. Informatica contributed $456 million to second-quarter fiscal 2027 revenues, including $440 million of subscription and support revenues, while Informatica Cloud ARR remained part of the Data 360 base. Salesforce has also completed the acquisitions of Contentful and Fin in September 2026. It expects Contentful and Fin acquisitions to contribute about $200 million to fiscal 2027 revenue. Over time, these assets can broaden content management, autonomous service and trusted data capabilities across the Agentforce platform.

Fiscal 2027 revenue guidance is now $46.1 billion to $46.4 billion, including acquisition contributions, while non-GAAP operating margin guidance remains at 34.3%. However, Salesforce’s acquisition strategy keeps goodwill elevated and adds execution demands. Goodwill was $59.3 billion as of July 31, 2026, more than half of total assets. Pending purchases of Contentful and Fin add about $5.1 billion of cash consideration. Integration delays or weaker performance from acquired products could slow margin improvement.

Atlassian has made strategic acquisitions to expedite growth. Over the past five years, it has acquired 10 businesses, including DX, The Browser Company, Rewatch, AirTrack and Loom. Atlassian bought The Browser Company in October 2025 to develop an AI-powered browser optimized for SaaS applications. The goal is to move beyond traditional browsers, which were not built for the modern work environment and create a browser that acts as an intelligent assistant, integrating with tools like Jira to help manage workflows, tasks and work-related information.  The acquisition of Rewatch in 2024, a video intelligence platform, integrates AI-driven search and transcription, streamlining knowledge-sharing within Jira, Confluence and Trello.

The buyout of AirTrack in 2023 has enhanced its Jira Service Management offering with advanced asset and configuration management capabilities. Acquired in 2023, Loom has reduced the need for approximately more than 200 million meetings for customers, thereby increasing productivity across enterprises. More than 38 million AI-powered Loom videos were created in 2024, improving asynchronous communication and workflow efficiency. These acquisitions expand Atlassian’s total addressable market while differentiating its platform from competitors. However, continued acquisition activity adds complexity while reducing balance-sheet flexibility.

ServiceNow’s acquisitions of Moveworks, Armis and Veza broaden its reach across employee workflows, cybersecurity and identity governance. In September 2026, management said Armis and Veza were helping pull demand into core security and risk products, ITOM and the broader IT portfolio, while Armis was closing deals faster under ServiceNow. The security and risk portfolio had already crossed $1 billion in CACV in the third quarter of 2025, and management described ServiceNow as a top-10 security vendor. Combining asset intelligence, identity governance and AI Control Tower enables customers to identify, assess and remediate security issues on one platform. Management said acquired products can be integrated within months, supporting cross-selling as AI governance and security needs expand. 

Moveworks, Armis and Veza broaden ServiceNow’s platform, and management said Armis and Veza exceeded their initial plans. However, these acquisitions increased debt and integration obligations. ServiceNow still expects an 81% subscription gross margin for 2026, reflecting greater hyperscaler usage and faster AI adoption.