While free cash flow margins reached 25.6% in 2026Q1, this performance is significantly impacted by non-operating items and aggressive capital allocation, including $48.4 million in share repurchases during the same period.
| Cash from Operations | 255.33M | 250.92M | 160.65M | 86.18M | -2.52M | 11.46M | 32.53M | -8.16M | 10.24M | 15.54M | 16.8M | 23.74M | 15.51M |
| Operating CF Margin % | - | 29.91% | 22.3% | 14.45% | -0.51% | 3.09% | 13.03% | -4.74% | 8.1% | 13.09% | 13.24% | 19.75% | 15.92% |
| Operating CF Growth % | 190.18% | 56.19% | 86.41% | 3512.99% | -122.03% | -64.77% | 498.46% | -179.73% | -34.09% | -7.54% | -29.23% | 53.09% | - |
| Net Income | 180.22M | 183.72M | -95.37M | -137.44M | -232.13M | -192M | -57.29M | -31.13M | 4.32M | -7K | 2.65M | 4.91M | 1.25M |
| Depreciation & Amortization | 27.36M | 25.86M | 19.41M | 12.14M | 11.5M | 13.29M | 11.17M | 6.26M | 7.24M | 10.45M | 12.24M | 10M | 8.62M |
| Stock-Based Compensation | 139.08M | 146.82M | 216.71M | 210.71M | 207.7M | 173.44M | 0 | 273K | 495K | 687K | 898K | 1.08M | 1.9M |
| Deferred Taxes | -2.77M | 2.64M | -12.64M | -1.32M | -2.4M | -1.91M | -2.36M | -939K | 1.3M | -19.72M | 1.72M | 1.71M | 1.12M |
| Other Non-Cash Items | -98.66M | -117.95M | 22.8M | 16.17M | 23.92M | -9.39M | 52.09M | 3.65M | -875K | 32.84M | 3.83M | 9.07M | 5.65M |
| Working Capital Changes | 16.09M | 9.83M | 9.73M | -14.08M | -11.1M | 28.02M | 28.92M | 13.72M | -2.24M | -8.71M | -4.53M | -3.02M | -3.03M |
| Change in Receivables | -13.74M | -28.06M | -17.14M | -26.98M | -18.89M | -17.51M | -9.93M | -9.37M | 238K | 1.54M | -522K | 0 | 0 |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 19.46M | 9.03M | 6.88M | 0 | -32K |
| Change in Payables | 15.94M | 9.57M | -2.2M | -2.42M | 77K | 1.99M | 53K | 2.67M | -1.21M | -783K | -1.1M | 3.63M | -766K |
| Cash from Investing | 77.64M | 206.13M | 38.8M | 158.5M | -284.83M | -420.3M | -11.43M | -148.95M | 6.99M | -1.65M | -19.39M | -19.55M | -9.53M |
| Capital Expenditures | -8.3M | -5.7M | -9.18M | -2.07M | -12.24M | -5.57M | -10.76M | -11.51M | -576K | -3.99M | -18.01M | -10.43M | -4.07M |
| CapEx % of Revenue | 0.95% | 0.68% | 1.27% | 0.35% | 2.46% | 1.5% | 4.31% | 6.67% | 0.46% | 3.36% | 14.19% | 8.68% | 4.18% |
| Acquisitions | -56.91M | 0 | -213.91M | 0 | 137K | 0 | -5.08M | -5.97M | -134K | 0 | -2.56M | -9.69M | -4.61M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -34.71M | -32.24M | -5.21M | -6.16M | 0 | -2.93M | 0 | -3.32M | 7.72M | 2.34M | 1.27M | 1.08M | 2.67M |
| Cash from Financing | -370.46M | -445.2M | -67.26M | -60.62M | -156.35M | 1.06B | -1.91M | 150.23M | -13.63M | -13.78M | -2.21M | -2.38M | -4.63M |
| Debt Issued (Net) | -8.55M | -8.55M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity Issued (Net) | -266.45M | -380M | -13.69M | 7.36M | 10.87M | 1.07B | 246K | 149.82M | 0 | 0 | 0 | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -321.06M | -386.31M | -13.69M | 0 | 0 | 0 | 0 | -100M | -29K | -5K | -84K | -10K | -1.52M |
| Other Financing | -95.46M | -56.65M | -53.57M | -67.98M | -167.22M | -10.98M | -2.15M | 412K | -13.63M | -13.78M | -2.21M | -2.38M | -4.63M |
| Net Change in Cash | -45.02M | 11.85M | 132.19M | 184.06M | -443.71M | 649.53M | 19.2M | -6.88M | 3.59M | 105K | -4.8M | 1.81M | 1.35M |
| Free Cash Flow | 254.48M | 245.22M | 145.98M | 77.84M | -14.77M | 2.34M | 23.52M | -22.99M | 9.66M | 11.55M | -1.21M | 13.31M | 11.44M |
| FCF Margin % | 29.21% | 29.23% | 20.26% | 13.05% | -2.97% | 0.63% | 9.42% | -13.34% | 7.64% | 9.73% | -0.95% | 11.07% | 11.75% |
| FCF Growth % | 52.32% | 67.98% | 87.55% | 627% | -730.39% | -90.04% | 202.28% | -337.91% | -16.33% | 1057.71% | -109.06% | 16.35% | - |
| FCF per Share | 0.90 | 0.83 | 0.49 | 0.27 | -0.05 | 0.01 | 0.09 | -0.49 | 0.57 | 0.68 | -0.07 | 0.79 | 0.95 |
| FCF Conversion (FCF/Net Income) | 1.41x | 1.37x | -1.68x | -0.63x | 0.01x | -0.06x | -0.57x | 0.26x | 2.37x | -2219.57x | 6.34x | 4.83x | 12.43x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 11.95M | 12.03M | 13.41M | 10.46M | 0 | 3.46M | 0 | 0 | 0 | 0 | 0 |
AI-driven seat pricing erosion
As reported in recent financial statements, Freshworks exhibits a persistent disconnect between net income and operating cash flow, with stock-based compensation consistently exceeding $40 million per quarter, which suggests that the company's cash-generating ability is significantly lower than headline GAAP profitability metrics might otherwise imply to investors.
The consistent gap between net income and operating cash flow highlights a reliance on non-cash adjustments to maintain a positive cash profile. Investors should monitor whether this reliance on equity-based incentives continues to dilute shareholder value while failing to translate into sustainable, cash-backed operational earnings.
Based on the company's reported figures, free cash flow margins have shown volatility, peaking at 36.2% in 2025Q4, yet this performance appears heavily influenced by non-operating income rather than core operational efficiency, warranting further investigation into the sustainability of these cash flows as interest rate environments shift.
While the FCF trajectory appears positive on the surface, the underlying data suggests that the company's ability to generate cash is tethered to its substantial cash reserves. This implies that the core software business may not yet be generating the self-sustaining cash flow required to justify current valuation multiples.
According to recent SEC filings, Freshworks maintains a remarkably low capital intensity, with CapEx as a percentage of revenue consistently remaining below 2% over the last ten quarters, which suggests a highly scalable cloud-native infrastructure that requires minimal ongoing investment to support its current customer base.
The low CapEx requirement is a structural advantage for a SaaS provider, allowing the company to direct more resources toward sales and marketing. However, this also implies that the company's competitive moat is not built on heavy physical assets, making it potentially more vulnerable to rapid technological shifts.
As indicated by quarterly cash flow data, Freshworks has utilized significant capital for share repurchases and acquisitions, including a $159.1 million outlay in 2025Q3, which suggests a management priority on offsetting dilution and inorganic growth rather than reinvesting solely into organic product development or debt reduction.
The aggressive use of cash for buybacks and acquisitions appears to be a strategic attempt to manage the company's equity structure and fill product gaps. Investors should monitor whether these capital allocation decisions provide a sufficient return on investment or if they merely serve to mask the underlying operational challenges.
Quick answers to the most common questions about buying FRSH stock.
Freshworks Inc. (FRSH) generated $250.9M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Freshworks Inc. (FRSH) generated $245.2M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Freshworks Inc. (FRSH) spent $5.7M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Freshworks Inc. (FRSH) spent $386.3M on share repurchases. This shows the company's commitment to returning capital to its equity investors.