Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion weakened this quarter as free cash flow and margin declined compared to both the prior quarter and the same quarter last year. The decrease in operating cash flow outpaced the revenue reduction, leading to a lower free cash flow margin.
- Revenue was lower than both the preceding quarter and the year-ago quarter. Operating cash flow decreased more than the revenue decline, while capital expenditure was lower than the prior quarter but higher than the year-ago quarter, resulting in free cash flow that was lower than both comparison periods. The free cash flow margin narrowed accordingly.
- Compared to the immediately preceding quarter, free cash flow and margin were lower, driven by a larger drop in operating cash flow relative to the modest revenue decrease. Versus the same quarter one year earlier, all metrics were lower, with operating cash flow showing the most significant decline.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$11.1B
Trailing twelve-month free cash flow.
Quarter free cash flow
$2.7B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$3.0B
Cash generated by operations before capital spending.
CapEx
$278.0M
Capital spending and related asset purchases.
FCF margin
23.7%
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 | $11.9B | $2.3B | $272.0M | $2.0B | 16.7% |
| 2022-09-30 | $11.2B | $3.7B | $247.0M | $3.4B | 30.7% |
| 2022-12-31 | $11.4B | $3.3B | $346.0M | $3.0B | 26.0% |
| 2023-03-31 | $11.3B | $3.0B | $278.0M | $2.7B | 23.7% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 119.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$28.3B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Decline in Operating Cash Flow
Operating cash flow was lower than both the prior quarter and the year-ago quarter, reflecting a weaker conversion of revenue into cash. This decline was the largest observable change among the supplied metrics.
The reduction in operating cash flow directly drove the lower free cash flow and narrowed margin, outweighing the impact of capital expenditure changes.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower than both the preceding quarter and the year-ago quarter. Operating cash flow decreased more than the revenue decline, while capital expenditure was lower than the prior quarter but higher than the year-ago quarter, resulting in free cash flow that was lower than both comparison periods. The free cash flow margin narrowed accordingly.
Compared to the immediately preceding quarter, free cash flow and margin were lower, driven by a larger drop in operating cash flow relative to the modest revenue decrease. Versus the same quarter one year earlier, all metrics were lower, with operating cash flow showing the most significant decline.
Monitor the trend in operating cash flow relative to revenue, as its decline was the primary factor behind the weaker cash conversion this quarter.