Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In this quarter, free cash flow improved significantly compared to the same quarter last year, driven by higher operating cash flow and lower capital expenditure. However, free cash flow margin weakened sharply from the immediately preceding quarter due to a substantial decline in operating cash flow.
- Revenue increased from both the prior quarter and the year-ago quarter. Operating cash flow was higher than the year-ago quarter but much lower than the prior quarter. Capital expenditure decreased compared to both periods, contributing to free cash flow that was higher year-over-year but lower sequentially. Free cash flow margin improved from the year-ago quarter but weakened from the prior quarter.
- Compared to the immediately preceding quarter, free cash flow and free cash flow margin were substantially lower, primarily due to a sharp drop in operating cash flow. Compared to the same quarter one year earlier, free cash flow and free cash flow margin were higher, supported by stronger operating cash flow and reduced capital expenditure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$7.6B
Trailing twelve-month free cash flow.
Quarter free cash flow
$628.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$808.0M
Cash generated by operations before capital spending.
CapEx
$180.0M
Capital spending and related asset purchases.
FCF margin
7.3%
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 |
|---|---|---|---|---|---|
| 2022-10-31 | $7.8B | $313.0M | $198.0M | $115.0M | 1.5% |
| 2023-01-31 | $8.4B | $2.8B | $218.0M | $2.6B | 30.7% |
| 2023-04-30 | $8.2B | $4.5B | $243.0M | $4.2B | 51.5% |
| 2023-07-31 | $8.6B | $808.0M | $180.0M | $628.0M | 7.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 49.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.7B | 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 Volatility
Operating cash flow dropped sharply from the prior quarter, while revenue increased. This divergence is the strongest observable driver of the sequential decline in free cash flow and margin.
If operating cash flow does not recover, free cash flow generation could remain under pressure despite revenue growth.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue increased from both the prior quarter and the year-ago quarter. Operating cash flow was higher than the year-ago quarter but much lower than the prior quarter. Capital expenditure decreased compared to both periods, contributing to free cash flow that was higher year-over-year but lower sequentially. Free cash flow margin improved from the year-ago quarter but weakened from the prior quarter.
Compared to the immediately preceding quarter, free cash flow and free cash flow margin were substantially lower, primarily due to a sharp drop in operating cash flow. Compared to the same quarter one year earlier, free cash flow and free cash flow margin were higher, supported by stronger operating cash flow and reduced capital expenditure.
Monitor the sustainability of operating cash flow levels given the significant decline from the prior quarter.