Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue rose compared to both the prior quarter and the same quarter last year, yet operating cash flow and free cash flow contracted sharply, leading to a substantially lower free cash flow margin. The decrease in capital expenditure was not enough to offset the decline in cash generation.
- Operating cash flow weakened considerably relative to revenue, resulting in a much lower free cash flow margin. The conversion of revenue into free cash flow was notably less efficient this quarter.
- Compared with the immediately preceding quarter, operating cash flow and free cash flow both decreased while revenue improved; versus the same quarter one year earlier, the pattern was similar, with revenue higher but cash flows lower. The free cash flow margin weakened from both comparison periods.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.7B
Trailing twelve-month free cash flow.
Quarter free cash flow
$164.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$191.7M
Cash generated by operations before capital spending.
CapEx
$26.9M
Capital spending and related asset purchases.
FCF margin
11.6%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $1.3B | $677.5M | $30.3M | $647.2M | 51.3% |
| 2023-06-30 | $1.3B | $515.1M | $76.8M | $438.3M | 33.9% |
| 2023-09-30 | $1.3B | $551.2M | $70.1M | $481.1M | 36.0% |
| 2023-12-31 | $1.4B | $191.7M | $26.9M | $164.8M | 11.6% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 53.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.9% | 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 Weakening
Operating cash flow dropped sharply from both the prior quarter and the year-ago period, far outpacing the modest revenue increase. This was the strongest observable factor behind the reduced free cash flow and margin.
The decline in operating cash flow compressed free cash flow and the free cash flow margin to multi-quarter lows.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow weakened considerably relative to revenue, resulting in a much lower free cash flow margin. The conversion of revenue into free cash flow was notably less efficient this quarter.
Compared with the immediately preceding quarter, operating cash flow and free cash flow both decreased while revenue improved; versus the same quarter one year earlier, the pattern was similar, with revenue higher but cash flows lower. The free cash flow margin weakened from both comparison periods.
Monitor the trajectory of operating cash flow given its significant decline this quarter, as it is a primary driver of free cash flow.