Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow declined as revenue and operating cash flow decreased while capital expenditure rose. The cash conversion margin weakened significantly compared to the prior quarter and the year-ago period.
- Operating cash flow as a percentage of revenue decreased, indicating a weaker conversion of sales into cash. The free cash flow margin also contracted due to higher capital spending relative to operating cash flow.
- Compared to the prior quarter, revenue and operating cash flow were lower, while capital expenditure was higher, resulting in a lower free cash flow margin. Year-over-year, all cash flow metrics were lower, with free cash flow margin falling substantially.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$2.5B
Trailing twelve-month free cash flow.
Quarter free cash flow
$328.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$486.0M
Cash generated by operations before capital spending.
CapEx
$158.0M
Capital spending and related asset purchases.
FCF margin
6.1%
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 |
|---|---|---|---|---|---|
| 2022-06-25 | $6.5B | $1.0B | $132.0M | $906.0M | 13.8% |
| 2022-09-24 | $5.6B | $965.0M | $123.0M | $842.0M | 15.1% |
| 2022-12-31 | $5.6B | $567.0M | $124.0M | $443.0M | 7.9% |
| 2023-04-01 | $5.4B | $486.0M | $158.0M | $328.0M | 6.1% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -236.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.0% | 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.
Revenue Decline and Capex Increase
The strongest observable driver is a combination of lower revenue and higher capital expenditure compared to both the prior quarter and the year-ago quarter. This pressured operating cash flow and free cash flow margins.
The downward trend in revenue and rising capex could further strain free cash flow if not offset by improvements in operating cash flow.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow as a percentage of revenue decreased, indicating a weaker conversion of sales into cash. The free cash flow margin also contracted due to higher capital spending relative to operating cash flow.
Compared to the prior quarter, revenue and operating cash flow were lower, while capital expenditure was higher, resulting in a lower free cash flow margin. Year-over-year, all cash flow metrics were lower, with free cash flow margin falling substantially.
Monitor changes in capital expenditure as its increase has been a significant burden on free cash flow generation.