Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow and margin improved sharply in the current quarter compared to both the prior quarter and the same quarter a year ago, driven by a significant increase in operating cash flow while revenue remained stable. The company's filing discusses allowances for credit losses and revenue adjustments for customer rebates and returns, which are factors that could affect future cash flows.
- Revenue was nearly unchanged from the prior quarter and the year-ago quarter. Operating cash flow increased substantially, while capital expenditure was slightly higher than the prior quarter but lower than a year ago. As a result, free cash flow and free cash flow margin improved markedly.
- Compared to the prior quarter, operating cash flow, free cash flow, and margin all improved. Versus the same quarter last year, the improvement was even more pronounced as operating cash flow was much higher despite similar revenue, and capital expenditure was lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$533.4M
Trailing twelve-month free cash flow.
Quarter free cash flow
$126.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$140.3M
Cash generated by operations before capital spending.
CapEx
$13.5M
Capital spending and related asset purchases.
FCF margin
13.2%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $874.2M | $160.3M | $20.2M | $140.1M | 16.0% |
| 2022-12-31 | $936.1M | $176.7M | $19.4M | $157.3M | 16.8% |
| 2023-03-31 | $966.4M | $119.9M | $10.7M | $109.2M | 11.3% |
| 2023-06-30 | $960.8M | $140.3M | $13.5M | $126.8M | 13.2% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 80.8% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | $172.9M | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Improved operating cash flow
Operating cash flow rose sharply from the prior quarter and from the same quarter last year, while capital expenditure was lower than a year ago. This drove a substantial improvement in free cash flow and margin.
The higher free cash flow margin reflects stronger cash conversion from each dollar of revenue.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was nearly unchanged from the prior quarter and the year-ago quarter. Operating cash flow increased substantially, while capital expenditure was slightly higher than the prior quarter but lower than a year ago. As a result, free cash flow and free cash flow margin improved markedly.
Compared to the prior quarter, operating cash flow, free cash flow, and margin all improved. Versus the same quarter last year, the improvement was even more pronounced as operating cash flow was much higher despite similar revenue, and capital expenditure was lower.
Monitor the company's allowance for credit losses and the estimation of variable consideration for customer rebates and returns, as these affect reported revenue and cash flow.