Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow improved from the year-ago quarter but weakened significantly from the prior quarter, as operating cash flow declined sharply. Revenue was lower sequentially but higher year over year, while capital expenditure rose year over year and fell quarter over quarter.
- Operating cash flow exceeded capital expenditure, generating positive free cash flow but at a much lower margin than the prior quarter. The conversion of revenue into cash was higher year over year but declined sequentially.
- Compared with the preceding quarter, free cash flow and its margin were lower, driven by a weaker operating cash flow despite a reduction in capital expenditure. Versus the same quarter last year, both free cash flow and margin were higher, as revenue and operating cash flow improved.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$7.0B
Trailing twelve-month free cash flow.
Quarter free cash flow
$655.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$3.1B
Cash generated by operations before capital spending.
CapEx
$2.4B
Capital spending and related asset purchases.
FCF margin
1.8%
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 |
|---|---|---|---|---|---|
| 2022-06-30 | $32.6B | $3.1B | $2.2B | $956.0M | 2.9% |
| 2022-09-30 | $38.7B | $5.2B | $2.1B | $3.1B | 8.0% |
| 2022-12-31 | $39.8B | $5.6B | $3.3B | $2.3B | 5.8% |
| 2023-03-31 | $36.6B | $3.1B | $2.4B | $655.0M | 1.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 27.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 6.6% | 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 Volatility
Operating cash flow was substantially higher year over year but dropped significantly from the prior quarter, outpacing the change in revenue. This drove the mixed free cash flow performance.
If operating cash flow continues to decline, free cash flow may remain under pressure even with lower capital spending.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow exceeded capital expenditure, generating positive free cash flow but at a much lower margin than the prior quarter. The conversion of revenue into cash was higher year over year but declined sequentially.
Compared with the preceding quarter, free cash flow and its margin were lower, driven by a weaker operating cash flow despite a reduction in capital expenditure. Versus the same quarter last year, both free cash flow and margin were higher, as revenue and operating cash flow improved.
Monitor the trend in operating cash flow, as its sharp sequential decline was the primary factor behind the weakened free cash flow.