Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow generation remained solid in the quarter as revenue increased and margin held relatively firm. Cash conversion improved markedly from the prior year while showing a slight sequential pullback.
- Revenue grew sequentially and from a year ago. Operating cash flow was stable versus the prior quarter and much higher than the same quarter last year. Capital expenditure increased compared with both periods, leading to free cash flow that was slightly below the prior quarter but sharply above the year-ago level. Free cash flow margin narrowed a bit from the prior quarter yet expanded notably versus last year.
- Compared with the immediately preceding quarter, free cash flow and margin were slightly lower as capital expenditure rose, despite a modest revenue increase. Versus the same quarter one year ago, all cash flow and margin metrics improved substantially, with revenue also higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$11.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$3.5B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$4.0B
Cash generated by operations before capital spending.
CapEx
$536.0M
Capital spending and related asset purchases.
FCF margin
20.3%
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 | $15.9B | $1.6B | $422.0M | $1.2B | 7.3% |
| 2023-06-30 | $17.3B | $3.2B | $261.0M | $3.0B | 17.3% |
| 2023-09-30 | $16.8B | $4.1B | $378.0M | $3.7B | 21.9% |
| 2023-12-31 | $17.1B | $4.0B | $536.0M | $3.5B | 20.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 129.7% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.1% | 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.
Year-over-year free cash flow margin expansion
The free cash flow margin for the quarter improved markedly compared with the same period last year, indicating stronger cash conversion from revenue. This improvement was achieved even with higher capital expenditure.
The higher margin strengthens the company's ability to generate free cash flow from each dollar of revenue compared with a year ago.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue grew sequentially and from a year ago. Operating cash flow was stable versus the prior quarter and much higher than the same quarter last year. Capital expenditure increased compared with both periods, leading to free cash flow that was slightly below the prior quarter but sharply above the year-ago level. Free cash flow margin narrowed a bit from the prior quarter yet expanded notably versus last year.
Compared with the immediately preceding quarter, free cash flow and margin were slightly lower as capital expenditure rose, despite a modest revenue increase. Versus the same quarter one year ago, all cash flow and margin metrics improved substantially, with revenue also higher.
Monitor the trajectory of capital expenditure, which increased sequentially and year over year, as it directly impacts free cash flow generation.