Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue was stable compared to the prior quarter and higher than a year ago. Free cash flow margin weakened sharply from both the preceding quarter and the same quarter last year, primarily due to a lower operating cash flow and a higher capital expenditure.
- Operating cash flow converted into free cash flow was lower than the preceding quarter and the year-ago quarter, as capital expenditure consumed a larger share of operating cash flow, resulting in a free cash flow margin that was less than half of the prior quarter's level.
- Compared to the immediately preceding quarter, revenue was essentially stable, but operating cash flow was lower and capital expenditure was higher, causing free cash flow to decline sharply. Versus the same quarter one year ago, revenue was higher, yet operating cash flow was notably lower and capital expenditure was higher, resulting in a weakened free cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$807.1M
Trailing twelve-month free cash flow.
Quarter free cash flow
$133.5M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$235.5M
Cash generated by operations before capital spending.
CapEx
$102.0M
Capital spending and related asset purchases.
FCF margin
8.7%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $1.4B | $273.1M | $25.0M | $248.1M | 17.4% |
| 2023-06-30 | $1.5B | $236.1M | $38.2M | $197.9M | 13.6% |
| 2023-09-30 | $1.5B | $285.9M | $58.3M | $227.6M | 15.6% |
| 2023-12-31 | $1.5B | $235.5M | $102.0M | $133.5M | 8.7% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 86.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 6.7% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.1B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Capital Expenditure Increase
Capital expenditure was substantially higher than both the preceding quarter and the same quarter last year, outpacing the growth in revenue and operating cash flow. This was the strongest observable driver of the reduction in free cash flow and free cash flow margin.
The higher capital expenditure directly absorbed a larger portion of operating cash flow, compressing free cash flow from the prior quarter's level.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow converted into free cash flow was lower than the preceding quarter and the year-ago quarter, as capital expenditure consumed a larger share of operating cash flow, resulting in a free cash flow margin that was less than half of the prior quarter's level.
Compared to the immediately preceding quarter, revenue was essentially stable, but operating cash flow was lower and capital expenditure was higher, causing free cash flow to decline sharply. Versus the same quarter one year ago, revenue was higher, yet operating cash flow was notably lower and capital expenditure was higher, resulting in a weakened free cash flow.
Monitor the trajectory of capital expenditure, as its increase relative to operating cash flow was the primary observable factor in the free cash flow decline.