Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the second quarter of fiscal 2024, free cash flow remained negative and the margin weakened compared to both the prior quarter and the same quarter last year. Operating cash flow was relatively stable versus the prior quarter but lower than a year earlier, while capital expenditure increased sequentially and year over year.
- Revenue improved sequentially and was stable versus a year earlier, but operating cash flow did not keep pace, resulting in a lower free cash flow margin. The gap between operating cash flow and capital expenditure widened, leaving free cash flow more negative.
- Compared to the first quarter of fiscal 2024, operating cash flow was essentially unchanged, but capital expenditure was higher, leading to a weaker free cash flow margin. Versus the same quarter last year, operating cash flow was lower and capital expenditure was higher, further depressing free cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
-$626.1M
Trailing twelve-month free cash flow.
Quarter free cash flow
-$360.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$317.5M
Cash generated by operations before capital spending.
CapEx
$677.5M
Capital spending and related asset purchases.
FCF margin
-25.6%
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 |
|---|---|---|---|---|---|
| 2023-09-30 | $1.6B | $836.5M | $553.7M | $282.8M | 17.3% |
| 2023-12-31 | $1.2B | $428.5M | $676.1M | -$247.6M | -21.4% |
| 2024-03-31 | $1.3B | $317.3M | $618.6M | -$301.3M | -23.5% |
| 2024-06-30 | $1.4B | $317.5M | $677.5M | -$360.0M | -25.6% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -176.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 48.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$12.7B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Higher Capital Expenditure
Capital expenditure increased versus both the prior quarter and the same quarter last year, outpacing the slight improvement in operating cash flow and driving a larger negative free cash flow. This is the strongest observable driver of the quarter's cash flow performance.
The higher capital expenditure directly weakened free cash flow and the free cash flow margin, making cash conversion less efficient compared to prior periods.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue improved sequentially and was stable versus a year earlier, but operating cash flow did not keep pace, resulting in a lower free cash flow margin. The gap between operating cash flow and capital expenditure widened, leaving free cash flow more negative.
Compared to the first quarter of fiscal 2024, operating cash flow was essentially unchanged, but capital expenditure was higher, leading to a weaker free cash flow margin. Versus the same quarter last year, operating cash flow was lower and capital expenditure was higher, further depressing free cash flow.
Monitor the trajectory of capital expenditure, as it has risen sequentially and year over year and is the primary factor widening the free cash flow deficit.