Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow turned negative this quarter, driven by a large operating cash outflow that outweighed capital spending. Revenue was lower than both the prior quarter and the same quarter last year, while the free cash flow margin weakened sharply.
- Revenue of three billion dollars generated negative operating cash flow of thirty-two million dollars, and after capital expenditure of thirty-nine million dollars, free cash flow was negative seventy-one million dollars, yielding a negative free cash flow margin.
- Compared to the prior quarter, revenue was lower and operating cash flow swung from positive to negative, causing free cash flow to turn from positive to negative and the margin to decline. Versus the same quarter one year earlier, revenue was lower, operating cash flow was lower, and free cash flow was lower, with the margin also lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$353.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
-$71.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
-$32.0M
Cash generated by operations before capital spending.
CapEx
$39.0M
Capital spending and related asset purchases.
FCF margin
-2.4%
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 |
|---|---|---|---|---|---|
| 2023-04-01 | $3.1B | $27.0M | $31.0M | -$4.0M | -0.1% |
| 2023-07-01 | $3.1B | $274.0M | $37.0M | $237.0M | 7.6% |
| 2023-09-30 | $3.2B | $231.0M | $40.0M | $191.0M | 6.0% |
| 2023-12-30 | $3.0B | -$32.0M | $39.0M | -$71.0M | -2.4% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -394.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.3% | 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 Swing
Operating cash flow moved from positive two hundred thirty-one million dollars in the prior quarter to negative thirty-two million dollars this quarter, a decline that fully accounts for the negative free cash flow. The filing notes that working capital requirements tend to be higher from the end of the third quarter to the end of the first quarter of the following year, which is consistent with the observed cash outflow.
The negative operating cash flow was the strongest observable driver, turning free cash flow negative despite capital expenditure remaining relatively stable.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue of three billion dollars generated negative operating cash flow of thirty-two million dollars, and after capital expenditure of thirty-nine million dollars, free cash flow was negative seventy-one million dollars, yielding a negative free cash flow margin.
Compared to the prior quarter, revenue was lower and operating cash flow swung from positive to negative, causing free cash flow to turn from positive to negative and the margin to decline. Versus the same quarter one year earlier, revenue was lower, operating cash flow was lower, and free cash flow was lower, with the margin also lower.
Monitor whether operating cash flow returns to positive levels in the next quarter, as the current negative swing is the primary factor behind the free cash flow deficit.