Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion improved sharply versus the prior year as operating cash flow increased while capital expenditure remained stable, yielding a higher free cash flow margin. Compared to the immediate prior quarter, operating cash flow and free cash flow both decreased moderately, causing a slightly lower free cash flow margin.
- Revenue was unchanged from the prior quarter but rose from a year ago; operating cash flow improved versus last year and weakened sequentially, while capital expenditure was lower year-over-year and sequentially. The resulting free cash flow margin was higher than a year earlier but lower than the prior quarter.
- Sequentially, operating cash flow and free cash flow weakened, and free cash flow margin was lower. Year-over-year, all metrics improved: revenue, operating cash flow, free cash flow, and free cash flow margin were higher, while capital expenditure was lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$5.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.4B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.5B
Cash generated by operations before capital spending.
CapEx
$1.1B
Capital spending and related asset purchases.
FCF margin
7.8%
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 |
|---|---|---|---|---|---|
| 2023-06-30 | $15.9B | $2.5B | $1.2B | $1.2B | 7.8% |
| 2023-09-30 | $16.2B | $2.5B | $1.1B | $1.3B | 8.2% |
| 2023-12-31 | $17.3B | $2.7B | $1.2B | $1.5B | 8.8% |
| 2024-03-31 | $17.3B | $2.5B | $1.1B | $1.4B | 7.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 84.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 6.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$38.9B | 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 Strength
Operating cash flow increased substantially compared to the same quarter last year, supported by a combination of working capital changes and higher net income, as noted in the filing.
This was the strongest observable driver of the improved free cash flow margin versus the prior year.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was unchanged from the prior quarter but rose from a year ago; operating cash flow improved versus last year and weakened sequentially, while capital expenditure was lower year-over-year and sequentially. The resulting free cash flow margin was higher than a year earlier but lower than the prior quarter.
Sequentially, operating cash flow and free cash flow weakened, and free cash flow margin was lower. Year-over-year, all metrics improved: revenue, operating cash flow, free cash flow, and free cash flow margin were higher, while capital expenditure was lower.
Monitor the trajectory of working capital changes, as the filing notes that the increase in operating cash flow from the prior year was primarily related to changes in accounts payable and accrued expenses.