Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Fortinet generated strong free cash flow in the current quarter, with the margin expanding substantially from both the prior quarter and the same period a year earlier. Revenue was higher year over year and steady sequentially, while operating cash flow increased and capital expenditure declined compared to the year-ago period.
- The company converted a significant portion of revenue into free cash flow, supported by improved operating cash flow and reduced capital spending relative to the year-ago quarter. The free cash flow margin reached a level well above that of the prior quarter and the same quarter last year.
- Compared to the previous quarter, revenue was stable while operating cash flow and free cash flow were markedly higher, leading to a stronger free cash flow margin. Versus the same quarter one year earlier, revenue, operating cash flow, and free cash flow all increased, and capital expenditure was lower, resulting in a significant improvement in free cash flow margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$647.2M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$677.5M
Cash generated by operations before capital spending.
CapEx
$30.3M
Capital spending and related asset purchases.
FCF margin
51.3%
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 |
|---|---|---|---|---|---|
| 2022-06-30 | $1.0B | $323.4M | $39.9M | $283.5M | 27.5% |
| 2022-09-30 | $1.1B | $483.0M | $87.8M | $395.2M | 34.4% |
| 2022-12-31 | $1.3B | $528.1M | $30.9M | $497.2M | 38.8% |
| 2023-03-31 | $1.3B | $677.5M | $30.3M | $647.2M | 51.3% |
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 | 2.4% | 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 Improvement
The primary driver of the free cash flow expansion was the increase in cash from operations, which rose substantially compared to both the prior quarter and the same quarter last year, while capital expenditure remained low.
Higher operating cash flow combined with disciplined capital spending enabled a markedly higher free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
The company converted a significant portion of revenue into free cash flow, supported by improved operating cash flow and reduced capital spending relative to the year-ago quarter. The free cash flow margin reached a level well above that of the prior quarter and the same quarter last year.
Compared to the previous quarter, revenue was stable while operating cash flow and free cash flow were markedly higher, leading to a stronger free cash flow margin. Versus the same quarter one year earlier, revenue, operating cash flow, and free cash flow all increased, and capital expenditure was lower, resulting in a significant improvement in free cash flow margin.
Monitor deferred revenue trends, as they represent a significant portion of future free cash flow and revenue to be recognized.