Free cash flow rebounded to $48.3M in Q2 2026 (6.9% margin) after a -$26.6M dip in Q1, but working capital swings caused OCF/NI to fluctuate from 1.75 to -4.37, and capital returns remain minimal at under $1M.
Arhaus, Inc. (ARHS) cash flow statement — 7-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 |
|---|
| Cash from Operations | 182.27M | 136.6M | 147.11M | 172.3M | 77.46M | 139.83M | 148.26M | 20.04M |
| Operating CF Margin % | - | 9.9% | 11.57% | 13.38% | 6.3% | 17.55% | 29.22% | 4.05% |
| Operating CF Growth % | 53% | -7.14% | -14.62% | 122.43% | -44.6% | -5.68% | 639.87% | - |
| Net Income | 64.78M | 67.26M | 68.55M | 125.24M | 136.63M | 36.93M | 17.04M | 15.84M |
| Depreciation & Amortization | 87.08M | 89.58M | 76.02M | 62.75M | 53.95M | 23.92M | 16.96M | 15.96M |
| Stock-Based Compensation | 11.32M | 9.18M | 7.64M | 7.91M | 4.29M | 6.38M | 403K | 272K |
| Deferred Taxes | -5.71M | 1.55M | -1.96M | -2.29M | 9.77M | -10.22M | 0 | 0 |
| Other Non-Cash Items | 47.63M | 32.31M | 27.07M | 22.51M | 12.35M | 42.08M | 13.63M | -3.82M |
| Working Capital Changes | -22.83M | -63.28M | -30.21M | -43.82M | -139.53M | 40.73M | 100.23M | -8.22M |
| Change in Receivables | 751K | 589K | 1.14M | -660K | -1.51M | 372K | -160K | -180K |
| Change in Inventory | -31.77M | -41.8M | -42.72M | 32.07M | -78.08M | -100.32M | 2.05M | -7.82M |
| Change in Payables | 1.5M | 9.86M | 5.62M | 1.22M | 10.3M | 14.51M | 1.61M | 2.13M |
| Cash from Investing | -76.26M | -77.82M | -99.53M | -96.72M | -55.67M | -41.46M | -13.01M | -9.87M |
| Capital Expenditures | -77.51M | -77.87M | -107.37M | -97.06M | -55.67M | -41.46M | -13.01M | -9.88M |
| CapEx % of Revenue | 4.44% | 5.65% | 8.45% | 7.54% | 4.53% | 5.2% | 2.56% | 2% |
| Acquisitions | 193K | 54K | 0 | 0 | 0 | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - |
| Other Investing | 1.06M | 0 | 7.84M | 333K | 0 | 0 | 0 | 12K |
| Cash from Financing | -52.51M | -3.48M | -72.95M | -1.8M | -177K | -31.47M | -91.31M | -14.33M |
| Debt Issued (Net) | -846K | -705K | -927K | -763K | -177K | -107K | -59.22M | -9.2M |
| Equity Issued (Net) | -1.81M | -2.17M | -1.77M | -1.04M | 0 | 157.26M | -12.5M | 0 |
| Dividends Paid | -49.61M | -361K | -70.25M | 0 | 0 | -61.91M | -8.55M | 0 |
| Share Repurchases | -1.81M | -2.17M | -1.77M | -1.04M | 0 | 0 | 0 | 0 |
| Other Financing | -245K | -245K | 0 | 0 | 0 | -126.7M | -11.04M | -5.13M |
| Net Change in Cash | 53.5M | 55.55M | -25.38M | 73.78M | 21.62M | 66.91M | 43.94M | -4.15M |
| Free Cash Flow | 104.76M | 58.98M | 39.74M | 75.24M | 21.8M | 98.37M | 135.25M | 10.16M |
| FCF Margin % | 6% | 4.28% | 3.13% | 5.84% | 1.77% | 12.34% | 26.65% | 2.05% |
| FCF Growth % | 29.68% | 48.41% | -47.19% | 245.22% | -77.84% | -27.27% | 1230.95% | - |
| FCF per Share | 0.74 | 0.42 | 0.28 | 0.54 | 0.16 | 0.72 | 0.99 | 0.36 |
| FCF Conversion (FCF/Net Income) | 1.62x | 2.03x | 2.15x | 1.38x | 0.57x | 6.62x | 24.38x | 2.66x |
| Interest Paid | 5.19M | 5.03M | 4.67M | 5.3M | 5.16M | 5.12M | 9.29M | 11.26M |
| Taxes Paid | 28M | 24.47M | 8.78M | 47.13M | 34.94M | 1.4M | 1.3M | 538K |
Quick answers to the most common questions about buying ARHS stock.
Arhaus, Inc. (ARHS) generated $136.6M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Arhaus, Inc. (ARHS) generated $59.0M 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.
Arhaus, Inc. (ARHS) spent $77.9M 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, Arhaus, Inc. (ARHS) returned $0.4M to shareholders via cash dividends and spent $2.2M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Demand normalization and margin volatility
Metrics are mathematically derived from official filings.
Cash Conversion Volatility Signals Earnings Timing
Arhaus's operating cash flow to net income ratio swung from 1.75 in Q2 2026 to -4.37 in Q1 2026, indicating significant timing effects in cash conversion. According to recent SEC filings, this volatility suggests earnings quality is heavily influenced by working capital swings.
The OCF/NI ratio of 1.75 in Q2 2026 indicates that operating cash flow exceeded net income by a wide margin, likely due to favorable working capital movements. However, the negative ratio in Q1 2026, where OCF was -$9.7M against net income of $2.2M, highlights the lumpy nature of cash collections and payments. This pattern suggests that reported earnings may not consistently translate into cash, and investors should monitor the sustainability of these swings.
Free Cash Flow Recovery After Seasonal Dip
Free cash flow rebounded to $48.3M in Q2 2026 from -$26.6M in Q1 2026, with FCF margin improving to 6.9%. Based on reported figures, this recovery appears driven by strong operating cash flow, though the trajectory remains uneven across quarters.
The FCF margin of 6.9% in Q2 2026 is the highest in the ten-quarter period, but it follows a negative margin in Q1 2026, reflecting the seasonality of the business. Over the trailing twelve months, FCF has been positive but volatile, suggesting that the company's cash generation is not yet stable. The gap between net income and FCF, particularly in Q1 2026, indicates that capital expenditures and working capital needs can significantly impact cash available for shareholders.
Capital Intensity Moderates as Expansion Matures
CapEx as a percentage of revenue declined to 3.0% in Q2 2026 from 11.7% in Q2 2024, indicating a shift toward lower capital intensity. As reported in financial statements, this may reflect a transition to smaller-format showrooms and reduced expansion spending.
The reduction in CapEx intensity suggests that Arhaus is becoming more efficient in its capital deployment, possibly due to the shift toward Design Studios which require less capital per location. However, the absolute CapEx levels remain significant, and the company's ability to maintain this lower intensity while growing will be key. If the company accelerates expansion, CapEx could rise, pressuring free cash flow.
Working Capital Swings Drive Cash Flow Volatility
Working capital changes were a major source of cash flow volatility, with a -$47.6M impact in Q1 2026 and -$11.1M in Q2 2026. According to recent filings, these swings appear tied to inventory and customer deposit timing, affecting quarterly cash generation.
The negative working capital changes in most quarters indicate that cash is being tied up in inventory and receivables, likely due to the company's order backlog and delivery-based revenue recognition. The large negative swing in Q1 2026 suggests a build-up in inventory or a delay in collections, which may be a leading indicator of demand softness. Investors should monitor customer deposits as a forward-looking signal for revenue and cash flow.
Minimal Capital Returns Despite Cash Generation
Dividends and buybacks totaled less than $1M in Q2 2026, despite $48.3M in free cash flow. Based on reported figures, Arhaus appears to be retaining nearly all cash for reinvestment, with no significant shareholder returns.
The company's capital deployment strategy appears conservative, with negligible dividends and buybacks. This suggests that management is prioritizing internal reinvestment and balance sheet strength over returning cash to shareholders. While this may support growth, it also implies that investors are relying on capital appreciation rather than income. The low payout ratio could change if the company matures, but currently, cash is being retained.
Cumulative Earnings Outpace Cash Flow
Over the past ten quarters, cumulative net income of $177.6M exceeds cumulative operating cash flow of $353.7M, but the gap narrows when excluding working capital swings. As reported in financial statements, this suggests earnings quality is supported by non-cash items like D&A.
The cumulative OCF of $353.7M is significantly higher than cumulative net income, indicating that earnings are backed by strong cash generation. However, the volatility in working capital changes suggests that the timing of cash flows can diverge from earnings. The consistent positive OCF/NI ratios in most quarters, except Q1 2026, indicate that the company's accruals are not excessive, but the negative working capital changes warrant monitoring for potential inventory or receivables issues.
What Could Invalidate the Base Case
The cash flow statement may obscure the impact of stock-based compensation and capitalized costs, which could overstate true cash generation. According to recent filings, SBC of $3.4M in Q2 2026 is a non-cash expense that may not fully reflect the economic cost to shareholders.
While operating cash flow appears robust, the company's use of stock-based compensation and potential capitalization of certain costs could inflate reported cash flow relative to economic reality. Additionally, the significant working capital swings, particularly the negative changes in Q1 2026, may indicate that cash flow is being supported by delaying payments or drawing down deposits, which may not be sustainable. Investors should scrutinize the sustainability of working capital improvements and the true cash cost of growth initiatives.