Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow weakened sharply in the current quarter as operating cash flow declined while capital expenditure remained stable. Revenue increased compared to both the prior quarter and the same quarter last year, but the free cash flow margin contracted significantly.
- Revenue was higher, yet operating cash flow was much lower, resulting in a free cash flow margin that was a fraction of the prior quarter and the year-ago quarter. Capital expenditure was nearly unchanged from the prior quarter and lower than the year-ago quarter, but the drop in operating cash flow drove the conversion weakness.
- Compared to the immediately preceding quarter, revenue improved while operating cash flow, free cash flow, and free cash flow margin all weakened. Versus the same quarter one year earlier, revenue was higher but operating cash flow, free cash flow, and free cash flow margin were all lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$7.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$289.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$538.0M
Cash generated by operations before capital spending.
CapEx
$249.0M
Capital spending and related asset purchases.
FCF margin
3.5%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $6.1B | $1.1B | $344.0M | $720.0M | 11.8% |
| 2023-06-30 | $7.0B | $4.1B | $271.0M | $3.8B | 54.9% |
| 2023-09-30 | $6.9B | $2.8B | $248.0M | $2.5B | 36.4% |
| 2023-12-31 | $8.2B | $538.0M | $249.0M | $289.0M | 3.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 37.7% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.0% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$53.7B | 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 Decline
The most observable driver was the sharp reduction in operating cash flow, which fell from the prior quarter and the year-ago quarter despite higher revenue. This single metric accounted for the majority of the free cash flow decline.
The lower operating cash flow directly caused free cash flow and free cash flow margin to weaken substantially.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher, yet operating cash flow was much lower, resulting in a free cash flow margin that was a fraction of the prior quarter and the year-ago quarter. Capital expenditure was nearly unchanged from the prior quarter and lower than the year-ago quarter, but the drop in operating cash flow drove the conversion weakness.
Compared to the immediately preceding quarter, revenue improved while operating cash flow, free cash flow, and free cash flow margin all weakened. Versus the same quarter one year earlier, revenue was higher but operating cash flow, free cash flow, and free cash flow margin were all lower.
Monitor whether operating cash flow can recover toward historical levels given its steep decline this quarter.