How the VFLO Index's Free Cash Flow Screen Has Captured SaaS Resilience

Despite fears that artificial intelligence (AI) will disrupt the software-as-a-service (SaaS) business model, the approach of VFLO’s Index, centered on a free cash flow (FCF) screen, shows that mature software leaders like Adobe (ADBE), Salesforce (CRM), and Intuit (INTU) have been generating strong FCF. Skeptics often dub this market phenomenon the “SaaSpocalypse,” expecting traditional software business models to become obsolete in the face of generative automation. However, the underlying financial metrics of these industry leaders tell a fundamentally different story, one measured in FCF.

FCF is the cash a company has left after covering expenses, available to reinvest, pay dividends, or reduce debt. That focus on cash generation is what has screened these names in the VictoryShares Free Cash Flow ETF (VFLO), and by that measure, software is far from dead.

VFLO’s Index counters fears of software obsolescence by targeting mature industry leaders, like Adobe, Salesforce and Intuit, that have continued to generate consistent free cash flow. VFLO’s Index pairs an expected free cash flow yield metric (average of trailing 12-month and forward 12-month FCF ÷ EV) with a growth filter, excluding structurally declining companies while maintaining a value-oriented tilt. This cash-generation screen is designed to isolate profitable software companies at a discount on expected FCF yield, indicating that core SaaS models have still been generating cash despite AI disruption concerns.

VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the Index), which targets high-quality, large-cap U.S. companies that trade at a discount while possessing favorable growth characteristics. That discount screen gives VFLO a value tilt, which may be of interest to investors in the current market environment where mega-cap names could be overstretched.

The Index evaluates expected FCF rather than relying strictly on backward-looking data. Expected FCF is the average of trailing 12-month results and 12-month forward projections; the Index measures that average against enterprise value to derive expected FCF yield. By filtering for firms with high FCF yields and strong projected growth rates, the Index selects companies whose cash generation has held up across prior technology cycles. Additionally, the Index’s growth filter aims to remove structurally declining businesses, which can help the portfolio avoid value traps.

The Index holds 50 stocks, giving VFLO a concentrated portfolio.

When the screens isolate companies with high FCF yields and attractive projected growth, Adobe, Salesforce and Intuit have cleared the bar; evidence that these business models have kept generating cash through the current AI cycle. All three ranked among VFLO’s top 10 holdings as of August 31, 2026: Adobe at 3.96%, Salesforce at 3.92% and Intuit at 3.25%. Despite broad market anxiety over AI displacement, these companies have maintained market positions underpinned by deep customer integration and recurring revenue streams. Rather than funding speculative ventures, the Index screens for companies that can convert operational success into substantial FCF.

The inclusion of core software equities in VFLO’s portfolio pushes back on the disruption thesis. By anchoring on expected FCF and valuation rather than short-term sentiment, VFLO has held companies whose enterprise values were low relative to their expected FCF. It’s a classic case of the Index methodology’s ability to concentrate on the signal and mute the market noise.