Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue was unchanged from the prior quarter, while operating cash flow strengthened, boosting free cash flow and margin. Compared with the same quarter last year, free cash flow was slightly higher on higher revenue, but the margin narrowed as capital expenditure increased. The company notes that operating cash flows have historically been a key liquidity source, funding operations and expansion.
- Operating cash flow exceeded capital expenditure by a wide margin, resulting in healthy free cash flow and a margin that improved from the prior quarter. The conversion from revenue strengthened as operating cash flow rose while revenue remained steady.
- Sequentially, free cash flow and margin both improved, driven by higher operating cash flow on flat revenue. Year over year, free cash flow was roughly flat, as higher revenue and a modest rise in operating cash flow were offset by increased capital expenditure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$347.3M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$425.0M
Cash generated by operations before capital spending.
CapEx
$77.7M
Capital spending and related asset purchases.
FCF margin
15.9%
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 |
|---|---|---|---|---|---|
| 2022-05-31 | $2.1B | $550.6M | $74.8M | $475.7M | 22.9% |
| 2022-08-31 | $2.2B | $298.2M | $70.0M | $228.1M | 10.5% |
| 2022-11-30 | $2.2B | $321.0M | $76.4M | $244.6M | 11.2% |
| 2023-02-28 | $2.2B | $425.0M | $77.7M | $347.3M | 15.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 106.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.4B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Stronger operating cash generation
Operating cash flow increased significantly from the prior quarter, outpacing the modest rise in capital expenditure. This improvement was the primary factor behind the sequential growth in free cash flow and margin.
The higher operating cash flow drove the sequential improvement in free cash flow and margin, despite stable revenue.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow exceeded capital expenditure by a wide margin, resulting in healthy free cash flow and a margin that improved from the prior quarter. The conversion from revenue strengthened as operating cash flow rose while revenue remained steady.
Sequentially, free cash flow and margin both improved, driven by higher operating cash flow on flat revenue. Year over year, free cash flow was roughly flat, as higher revenue and a modest rise in operating cash flow were offset by increased capital expenditure.
Capital expenditure rose compared with both the prior quarter and the same quarter last year, and its impact on free cash flow margin should be monitored.