B2B software companies are the backbone of modern enterprises, running everything from workflow automation to cybersecurity and data management. Unlike many consumer tech businesses, these companies often enjoy sticky customer relationships, subscription-driven recurring revenue, and high switching costs that make their revenue streams durable.
The real differentiator, though, is free cash flow. When free cash flow margins climb above 20%, it shows that a company has achieved operating leverage, efficient cost structures, and pricing power. These qualities allow software leaders to reinvest aggressively in growth while still rewarding shareholders through buybacks or dividends.
For investors, companies with strong free cash flow margins stand out as rare businesses that combine growth, resilience, and financial discipline.
Here are 5 B2B software stocks with 20% or higher free cash flow margins that highlight the strength of this model.
| Company Name (Ticker) | FCF Margins | Analyst Upside |
| Salesforce (CRM) | 31.6% | 38% |
| Adobe (ADBE) | 41.4% | 26% |
| Microsoft (MSFT) | 25.4% | 21% |
| ServiceNow (NOW) | 31.9% | 20% |
| ZoomInfo Technologies (GTM) | 22.7% | -3% |
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Here are 3 stocks that analysts think could be most undervalued today:
Salesforce (CRM)
Salesforce is a global leader in customer relationship management software with a broad suite of cloud-based enterprise solutions.
The company generated revenues of approximately $37.9 billion in fiscal 2025, reflecting strong year-over-year growth. Salesforce has recently initiated a quarterly cash dividend, with a current forward dividend yield of approximately 0.69%, while still reinvesting in product innovation and acquisitions. Its recurring subscription revenues and focus on artificial intelligence integration through tools like Einstein provide stability and growth opportunities.
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Adobe (ADBE)
Adobe is one of the most established names in creative and digital media software, offering widely used products such as Photoshop, Illustrator, and Acrobat.
The company reported revenues of approximately $21.51 billion in fiscal 2024, with a trailing twelve-month net income margin of about 29%, highlighting the strength of its high-margin subscription model. While Adobe has not paid a dividend since 2005, it generates consistent free cash flow that it uses to reinvest in research and development and to pursue acquisitions in digital marketing and analytics.
Its shift to Creative Cloud has secured a large base of recurring revenues, and its continued integration of AI tools enhances customer engagement and retention.
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Microsoft (MSFT)
Microsoft is a global technology leader with a diversified business spanning cloud computing, software, hardware, and digital services.
Its Azure platform has become one of the largest players in cloud infrastructure, contributing significantly to overall revenue growth alongside its Office productivity suite and LinkedIn. In its most recent fiscal year, Microsoft reported revenues of approximately $281.72 billion and achieved a return on equity of about 33%, highlighting its strong profitability and efficient capital use.
The company pays a dividend yield of around 0.66% while consistently reinvesting in growth areas such as artificial intelligence, cybersecurity, and enterprise software. With its wide moat, recurring revenue streams, and continued expansion into next-generation technologies, Microsoft remains one of the most resilient and scalable companies in the tech sector.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
