Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Arch Capital's free cash flow increased from the same quarter last year, driven by higher operating cash flow. However, compared to the prior quarter, free cash flow and margin declined slightly despite higher revenue.
- Revenue rose from both the prior quarter and the year-ago period, while operating cash flow increased from the year-ago quarter but decreased from the prior quarter. Capital expenditure remained stable, so free cash flow moved in line with operating cash flow, and the free cash flow margin improved compared to a year ago but weakened sequentially.
- Compared to the preceding quarter, revenue was higher but operating cash flow and free cash flow were lower, leading to a slightly weakened margin. Compared to the same quarter last year, revenue, operating cash flow, free cash flow, and margin were all higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$4.2B
Trailing twelve-month free cash flow.
Quarter free cash flow
$952.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$963.0M
Cash generated by operations before capital spending.
CapEx
$11.0M
Capital spending and related asset purchases.
FCF margin
30.1%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2022-06-30 | $2.2B | $902.0M | $12.0M | $890.0M | 40.2% |
| 2022-09-30 | $2.4B | $1.4B | $14.0M | $1.4B | 57.3% |
| 2022-12-31 | $3.1B | $982.0M | $13.0M | $969.0M | 31.6% |
| 2023-03-31 | $3.2B | $963.0M | $11.0M | $952.0M | 30.1% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 133.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 0.3% | Lower capital intensity usually supports FCF margin. |
| Net cash | n/a | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Operating cash flow growth
Operating cash flow increased substantially from the same quarter a year ago, lifting free cash flow and the margin to higher levels. This improvement was the primary factor behind the year-over-year gains.
Free cash flow and margin were both higher than the year-ago quarter, reflecting stronger cash generation.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue rose from both the prior quarter and the year-ago period, while operating cash flow increased from the year-ago quarter but decreased from the prior quarter. Capital expenditure remained stable, so free cash flow moved in line with operating cash flow, and the free cash flow margin improved compared to a year ago but weakened sequentially.
Compared to the preceding quarter, revenue was higher but operating cash flow and free cash flow were lower, leading to a slightly weakened margin. Compared to the same quarter last year, revenue, operating cash flow, free cash flow, and margin were all higher.
Monitor the sequential decline in operating cash flow despite revenue growth, as it directly affected free cash flow and margin.