Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
The quarter's free cash flow turned deeply negative despite higher revenue, driven by a large negative swing in operating cash flow. Cash conversion weakened sharply versus both the prior quarter and the same quarter last year.
- With a negative free cash flow margin, the company generated negative free cash flow for every dollar of revenue, contrasting with positive margins in both comparison periods. Operating cash flow was negative while revenue grew, indicating a cash conversion gap that outweighed lower capital expenditure.
- Revenue was higher than both the immediately preceding quarter and the same quarter one year earlier. However, operating cash flow, free cash flow, and free cash flow margin were all lower than both comparison periods, with the sequential decline from a positive margin to a deeply negative margin being the most conspicuous shift.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$87.9M
Trailing twelve-month free cash flow.
Quarter free cash flow
-$64.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
-$56.3M
Cash generated by operations before capital spending.
CapEx
$8.5M
Capital spending and related asset purchases.
FCF margin
-18.8%
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 | $285.6M | $19.4M | $12.7M | $6.6M | 2.3% |
| 2022-09-30 | $311.8M | $40.9M | $14.4M | $26.5M | 8.5% |
| 2022-12-31 | $333.4M | $131.1M | $11.6M | $119.5M | 35.9% |
| 2023-03-31 | $344.3M | -$56.3M | $8.5M | -$64.8M | -18.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -141.3% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.5% | 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 Swing
The primary observable driver of the weak free cash flow was the negative operating cash flow, which reversed from strongly positive levels in both comparison quarters. Capital expenditure was lower in the current quarter, but this did not offset the operating cash flow shortfall.
The negative operating cash flow turned free cash flow deeply negative, creating a cash conversion deficit despite revenue growth.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
With a negative free cash flow margin, the company generated negative free cash flow for every dollar of revenue, contrasting with positive margins in both comparison periods. Operating cash flow was negative while revenue grew, indicating a cash conversion gap that outweighed lower capital expenditure.
Revenue was higher than both the immediately preceding quarter and the same quarter one year earlier. However, operating cash flow, free cash flow, and free cash flow margin were all lower than both comparison periods, with the sequential decline from a positive margin to a deeply negative margin being the most conspicuous shift.
Monitor whether operating cash flow can return to positive territory in the coming quarter, as the current negative level is the weakest link in cash conversion.