Stock-based compensation (SBC) is a real expense. The company paid employees in shares instead of cash. Because no cash went out, it gets added back on the cash flow statement, which raises both operating cash flow and free cash flow.
Many investors say that flatters the numbers. SBC creates real dilution, and existing shareholders bear the cost. The better practice is to subtract SBC from free cash flow to get a truer "owner's free cash flow."
SBC as a share of revenue varies a lot by industry. Tech companies often run 5% to 15%, while mature industrial companies are under 1%. If SBC eats up a large chunk of reported free cash flow, the headline number overstates what is really left for shareholders.