Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Operating cash flow declined relative to the prior quarter and the year-ago quarter, while capital expenditure rose sequentially. Free cash flow and free cash flow margin weakened substantially compared with both prior periods.
- Revenue was lower than the previous quarter and much lower than a year ago. Operating cash flow declined more steeply than revenue, and with capital expenditure higher sequentially, free cash flow contracted further. The free cash flow margin narrowed versus both comparison periods.
- Compared with the prior quarter, revenue was slightly lower, operating cash flow and free cash flow were significantly lower, and free cash flow margin weakened. Versus the year-ago quarter, revenue, operating cash flow, free cash flow, and margin were all substantially lower, while capital expenditure was higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$27.6B
Trailing twelve-month free cash flow.
Quarter free cash flow
$2.5B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$6.3B
Cash generated by operations before capital spending.
CapEx
$3.8B
Capital spending and related asset purchases.
FCF margin
5.4%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $63.5B | $15.3B | $3.0B | $12.3B | 19.3% |
| 2022-12-31 | $54.5B | $12.5B | $3.8B | $8.7B | 15.9% |
| 2023-03-31 | $48.8B | $7.2B | $3.0B | $4.2B | 8.5% |
| 2023-06-30 | $47.2B | $6.3B | $3.8B | $2.5B | 5.4% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 42.3% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 8.0% | 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.
Operating cash flow decline
Operating cash flow was lower than both the preceding quarter and the same quarter last year, representing the primary factor behind the weakening free cash flow. The filing notes that cash from operations in the first six months was down versus the year-ago period.
Lower operating cash flow, with capital expenditure rising sequentially, resulted in a materially smaller free cash flow and margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower than the previous quarter and much lower than a year ago. Operating cash flow declined more steeply than revenue, and with capital expenditure higher sequentially, free cash flow contracted further. The free cash flow margin narrowed versus both comparison periods.
Compared with the prior quarter, revenue was slightly lower, operating cash flow and free cash flow were significantly lower, and free cash flow margin weakened. Versus the year-ago quarter, revenue, operating cash flow, free cash flow, and margin were all substantially lower, while capital expenditure was higher.
Monitor the trend in capital expenditure relative to operating cash flow, as higher spending combined with lower cash generation compressed free cash flow.