✦ Zoom’s recent financial reports show interesting amounts of free cash flows even if revenues and margins are not like when we were in the midst of the pandemic.
✦ However, in the cash flows reports, Stock-Based Compensations – as it should be – are added back since they’re not real cash expenses.
✦ Stock-Based Compensations accumulate over the years and at the same time they increase the amount of equity – which, in the future, can be exchanged for money.
✦ This type of compensation has exploded in Zoom, and some portions of it could one day have to be paid in cash.
✦ If we adjust free cash flows considering Stock-Based Compensations as cash expenses, free cash flow gets negative.
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