Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In Q2 2023, free cash flow turned positive after a negative prior quarter, though it was lower than the same quarter last year. The cash conversion improved due to operating cash flow recovering from a negative position, while capital expenditure remained stable relative to revenue.
- Revenue was higher than the prior quarter and the year-ago quarter. Operating cash flow shifted from negative to positive quarter-over-quarter but was lower year-over-year, resulting in free cash flow that was positive but lower than the same quarter one year ago. The free cash flow margin improved sharply from the preceding quarter but weakened compared to the year-ago period.
- Compared to the immediately preceding quarter, operating cash flow and free cash flow both improved strongly from negative to positive. Compared to the same quarter one year earlier, operating cash flow, free cash flow, and free cash flow margin were all lower, despite higher revenue.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$14.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$3.5B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$3.9B
Cash generated by operations before capital spending.
CapEx
$376.0M
Capital spending and related asset purchases.
FCF margin
37.6%
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 | $8.7B | $4.5B | $443.0M | $4.1B | 46.5% |
| 2022-12-31 | $9.1B | $8.4B | $513.0M | $7.9B | 87.3% |
| 2023-03-31 | $8.8B | -$377.0M | $360.0M | -$737.0M | -8.3% |
| 2023-06-30 | $9.4B | $3.9B | $376.0M | $3.5B | 37.6% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 163.2% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 4.0% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$5.0B | 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 recovery
Operating cash flow rebounded from a negative position in the prior quarter to a positive level in the current quarter, which was the strongest observable driver for the improvement in free cash flow. No specific causes are provided in the filing context beyond the metrics.
The large swing in operating cash flow directly turned free cash flow positive and sharply improved the free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher than the prior quarter and the year-ago quarter. Operating cash flow shifted from negative to positive quarter-over-quarter but was lower year-over-year, resulting in free cash flow that was positive but lower than the same quarter one year ago. The free cash flow margin improved sharply from the preceding quarter but weakened compared to the year-ago period.
Compared to the immediately preceding quarter, operating cash flow and free cash flow both improved strongly from negative to positive. Compared to the same quarter one year earlier, operating cash flow, free cash flow, and free cash flow margin were all lower, despite higher revenue.
Monitor whether operating cash flow can sustain its positive level in the next quarter given the year-over-year decline.