Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion was negative as operating cash flow fell short of capital expenditure. Compared to the prior quarter, cash conversion weakened sharply; versus the same quarter last year, the deficit narrowed.
- Revenue was lower than the prior quarter, while operating cash flow declined more significantly and capital expenditure increased, resulting in negative free cash flow and a negative free cash flow margin. Compared to the same quarter a year ago, revenue was lower but operating cash flow was higher, capital expenditure was lower, and free cash flow improved from a larger deficit to a smaller deficit, with a less negative margin.
- Sequentially, revenue was slightly lower, operating cash flow declined substantially, capital expenditure rose, and free cash flow swung from positive to negative with a weakened margin. Year-over-year, revenue was lower, operating cash flow was higher, capital expenditure was lower, and free cash flow turned from a larger deficit to a smaller deficit, with an improved margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
-$40.9M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$306.9M
Cash generated by operations before capital spending.
CapEx
$347.8M
Capital spending and related asset purchases.
FCF margin
-1.0%
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 |
|---|---|---|---|---|---|
| 2023-10-28 | $7.3B | $505.8M | $541.4M | -$35.6M | -0.5% |
| 2024-02-03 | $5.0B | $1.3B | $123.4M | $1.1B | 22.8% |
| 2024-05-04 | $4.2B | $695.7M | $316.5M | $379.2M | 9.1% |
| 2024-08-03 | $4.1B | $306.9M | $347.8M | -$40.9M | -1.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -30.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 8.6% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$3.0B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Decline in Operating Cash Flow
The most observable driver was the substantial drop in operating cash flow from the prior quarter, which more than offset the slight revenue decrease and turned free cash flow negative. The filing indicates that for the year-to-date period, operating cash flow increased versus the prior year, supported by higher earnings, but the current quarter alone experienced a sharp decline.
The weakened operating cash flow was the primary factor behind the negative free cash flow and margin contraction.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower than the prior quarter, while operating cash flow declined more significantly and capital expenditure increased, resulting in negative free cash flow and a negative free cash flow margin. Compared to the same quarter a year ago, revenue was lower but operating cash flow was higher, capital expenditure was lower, and free cash flow improved from a larger deficit to a smaller deficit, with a less negative margin.
Sequentially, revenue was slightly lower, operating cash flow declined substantially, capital expenditure rose, and free cash flow swung from positive to negative with a weakened margin. Year-over-year, revenue was lower, operating cash flow was higher, capital expenditure was lower, and free cash flow turned from a larger deficit to a smaller deficit, with an improved margin.
Monitor the trajectory of operating cash flow in upcoming quarters, particularly given the seasonal working capital peak noted in the filing.