Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue increased compared to both the prior quarter and the year-ago period, but operating cash flow and free cash flow declined sharply, resulting in a very low free cash flow margin. The company's filing notes that the transition to annual billings for multi-year contracts is expected to affect the timing of cash collections.
- Operating cash flow was small relative to revenue, and after modest capital expenditure, free cash flow was minimal. The free cash flow margin was significantly lower than historical levels.
- Compared to the immediately preceding quarter, revenue was slightly higher but operating cash flow and free cash flow were substantially lower, weakening the free cash flow margin. Versus the same quarter one year earlier, revenue was higher but cash flow metrics were drastically lower, with the margin declining sharply.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$13.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$18.0M
Cash generated by operations before capital spending.
CapEx
$5.0M
Capital spending and related asset purchases.
FCF margin
0.9%
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 |
|---|---|---|---|---|---|
| 2023-01-31 | $1.3B | $911.0M | $8.0M | $903.0M | 68.5% |
| 2023-04-30 | $1.3B | $723.0M | $9.0M | $714.0M | 56.3% |
| 2023-07-31 | $1.3B | $135.0M | $7.0M | $128.0M | 9.5% |
| 2023-10-31 | $1.4B | $18.0M | $5.0M | $13.0M | 0.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 5.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 0.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$774.0M | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Cash collection timing
The transition to annual billings for multi-year contracts is shifting the timing of cash collections, which significantly reduced operating cash flow this quarter despite higher revenue.
The timing shift is expected to continue affecting cash flow patterns in the near term.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was small relative to revenue, and after modest capital expenditure, free cash flow was minimal. The free cash flow margin was significantly lower than historical levels.
Compared to the immediately preceding quarter, revenue was slightly higher but operating cash flow and free cash flow were substantially lower, weakening the free cash flow margin. Versus the same quarter one year earlier, revenue was higher but cash flow metrics were drastically lower, with the margin declining sharply.
Monitor the effect of the annual billing transition on the timing and magnitude of cash collections in future quarters.