Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the quarter ended September 30, 2023, free cash flow turned positive, supported by higher operating cash flow relative to capital expenditure. Revenue was lower than both the prior quarter and the same quarter last year, but the cash conversion profile improved markedly.
- Operating cash flow was higher than capital expenditure, resulting in positive free cash flow and a positive free cash flow margin. This marks a shift from the negative free cash flow margins seen in both the preceding quarter and the year-ago quarter.
- Compared to the immediately preceding quarter, revenue was higher, operating cash flow improved, capital expenditure was lower, and free cash flow turned from negative to positive. Versus the same quarter one year earlier, revenue was lower, but operating cash flow was higher, capital expenditure was lower, and free cash flow also turned from negative to positive.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
-$1.9B
Trailing twelve-month free cash flow.
Quarter free cash flow
$554.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.8B
Cash generated by operations before capital spending.
CapEx
$1.3B
Capital spending and related asset purchases.
FCF margin
11.8%
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 |
|---|---|---|---|---|---|
| 2022-12-31 | $4.0B | $1.1B | $1.6B | -$468.0M | -11.7% |
| 2023-03-31 | $4.0B | -$90.0M | $1.3B | -$1.4B | -35.7% |
| 2023-06-30 | $4.0B | $802.0M | $1.4B | -$585.0M | -14.8% |
| 2023-09-30 | $4.7B | $1.8B | $1.3B | $554.0M | 11.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 261.3% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 27.2% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$32.0B | 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 Improvement
Operating cash flow was substantially higher than both the prior quarter and the year-ago quarter, while capital expenditure was lower. This combination drove the swing to positive free cash flow.
The improvement in operating cash flow relative to capital expenditure was the strongest observable driver of the positive free cash flow this quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was higher than capital expenditure, resulting in positive free cash flow and a positive free cash flow margin. This marks a shift from the negative free cash flow margins seen in both the preceding quarter and the year-ago quarter.
Compared to the immediately preceding quarter, revenue was higher, operating cash flow improved, capital expenditure was lower, and free cash flow turned from negative to positive. Versus the same quarter one year earlier, revenue was lower, but operating cash flow was higher, capital expenditure was lower, and free cash flow also turned from negative to positive.
Monitor the trajectory of capital expenditure relative to operating cash flow, as the current quarter's positive free cash flow depends on this relationship.