Free Cash Flow Margin Calculator

What is FCF Margin?

Free cash flow margin divides free cash flow by revenue and expresses the result as a percent. It is the cash-efficiency leg of Rule of X and a direct read on whether growth converts to cash in the period you measure.

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Formula

Version v1. See methodology and the public formula repo for sources and change history.

Worked example

Using the default example inputs (Revenue: $1,000,000; Free cash flow: $80,000), FCF Margin equals 8% (FCF margin). Pin one free cash flow definition for this period (operating cash flow minus capex, or your board's adjusted FCF) and reuse it on Rule of X.

What good looks like

Later-stage SaaS boards increasingly track FCF margin alongside growth. Negative FCF margin is common while investing; the trend matters. Pin one FCF definition per period, operating cash flow minus capex, or your board's adjusted FCF, and reuse it on Rule of X.

Directional guidance only, not a cohort benchmark claim. Premium cohort bands appear when sample thresholds are met for your profile.

FAQ

What is FCF Margin?

Free cash flow margin divides free cash flow by revenue and expresses the result as a percent. It is the cash-efficiency leg of Rule of X and a direct read on whether growth converts to cash in the period you measure.

What is the FCF Margin formula?

FCF margin % = Free cash flow / Revenue × 100

How is free cash flow defined here?

Enter the free cash flow figure your finance team uses for board reporting in this period. Most teams use operating cash flow minus capital expenditures; others use an adjusted FCF that excludes one-time items. Document the basis and keep it consistent on Rule of X.

FCF margin vs EBITDA margin?

EBITDA is an accrual operating proxy; free cash flow reflects cash actually generated after working-capital and capex effects. Rule of 40 uses EBITDA margin; Rule of X uses FCF margin.

Can FCF margin exceed EBITDA margin?

Yes, for example when collections run ahead of revenue recognition or capex is deferred. Divergence between the two margins is a signal to inspect cash conversion, not an error.