Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow improved sequentially as operating cash flow rose and capital expenditure fell, but declined from the same quarter last year. The free cash flow margin strengthened from the prior quarter but weakened year over year.
- Revenue was lower than both the prior quarter and the year-ago quarter. Operating cash flow increased from the previous quarter but decreased from a year earlier; capital expenditure declined sequentially but rose compared to the same quarter last year, resulting in a free cash flow margin that improved from the prior quarter yet was lower than the year-ago period.
- Compared to the immediately preceding quarter, free cash flow was higher and the margin improved, driven by a combination of higher operating cash flow and lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin were lower, as operating cash flow was slightly down and capital expenditure was markedly higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$15.0B
Trailing twelve-month free cash flow.
Quarter free cash flow
$4.6B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$7.2B
Cash generated by operations before capital spending.
CapEx
$2.7B
Capital spending and related asset purchases.
FCF margin
15.4%
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 | $30.0B | $6.3B | $2.4B | $3.9B | 13.0% |
| 2022-09-30 | $29.8B | $6.9B | $2.8B | $4.2B | 13.9% |
| 2022-12-31 | $30.6B | $5.9B | $3.6B | $2.3B | 7.6% |
| 2023-03-31 | $29.7B | $7.2B | $2.7B | $4.6B | 15.4% |
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 | 9.0% | 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.
Capital Expenditure Reduction
Capital expenditure decreased from the prior quarter, contributing to a higher free cash flow despite lower revenue. This was the strongest observable factor in the sequential improvement.
The reduction in capital expenditure was the primary driver of the sequential free cash flow margin improvement.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower than both the prior quarter and the year-ago quarter. Operating cash flow increased from the previous quarter but decreased from a year earlier; capital expenditure declined sequentially but rose compared to the same quarter last year, resulting in a free cash flow margin that improved from the prior quarter yet was lower than the year-ago period.
Compared to the immediately preceding quarter, free cash flow was higher and the margin improved, driven by a combination of higher operating cash flow and lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin were lower, as operating cash flow was slightly down and capital expenditure was markedly higher.
Monitor the level of capital expenditure relative to operating cash flow, as the filing indicates the company expects to continue using a substantial portion of operating cash flow to fund capital expenditures and debt repayment.