Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow and margin weakened significantly from both the prior quarter and the same quarter a year ago, as operating cash flow declined while capital spending increased.
- Revenue was slightly lower quarter over quarter and stable year over year. The decrease in operating cash flow relative to revenue, combined with a small increase in capital expenditure, reduced the conversion of revenue into free cash flow, resulting in a much lower free cash flow margin.
- Compared with the immediately preceding quarter, revenue, operating cash flow, free cash flow, and free cash flow margin all declined, while capital expenditure increased slightly. Versus the same quarter one year earlier, revenue was stable, but operating cash flow, free cash flow, and margin were all lower, and capital expenditure was slightly higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$3.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$231.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.6B
Cash generated by operations before capital spending.
CapEx
$1.4B
Capital spending and related asset purchases.
FCF margin
1.1%
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 |
|---|---|---|---|---|---|
| 2023-05-31 | $21.9B | $3.4B | $1.8B | $1.7B | 7.7% |
| 2023-08-31 | $21.7B | $2.2B | $1.3B | $940.0M | 4.3% |
| 2023-11-30 | $22.2B | $1.8B | $1.3B | $469.0M | 2.1% |
| 2024-02-29 | $21.7B | $1.6B | $1.4B | $231.0M | 1.1% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 26.3% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 6.3% | 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 fell compared to both the prior quarter and the same quarter last year, outweighing the modest capital expenditure increase and causing free cash flow to contract sharply.
If operating cash flow remains subdued, free cash flow generation will likely continue to be constrained even if capital spending does not rise further.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was slightly lower quarter over quarter and stable year over year. The decrease in operating cash flow relative to revenue, combined with a small increase in capital expenditure, reduced the conversion of revenue into free cash flow, resulting in a much lower free cash flow margin.
Compared with the immediately preceding quarter, revenue, operating cash flow, free cash flow, and free cash flow margin all declined, while capital expenditure increased slightly. Versus the same quarter one year earlier, revenue was stable, but operating cash flow, free cash flow, and margin were all lower, and capital expenditure was slightly higher.
Monitor whether operating cash flow can stabilize or improve, as it is the primary driver of free cash flow and has weakened in two consecutive comparisons.