Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion weakened significantly in the current quarter, as operating cash flow was much lower relative to revenue compared with both the prior quarter and the same quarter a year ago. Revenue was higher than the year-ago period but operating cash flow and free cash flow were lower, resulting in a free cash flow margin that was lower than both comparative periods.
- Operating cash flow in the current quarter was lower than the revenue level would suggest, producing a free cash flow margin that was lower than both the prior quarter and the year-ago quarter. Capital expenditure was higher than the year-ago quarter but lower than the prior quarter, further contributing to the reduced free cash flow.
- Compared with the prior quarter, revenue was lower, operating cash flow was lower, and free cash flow was lower, causing a weakened free cash flow margin. Compared with the same quarter a year ago, revenue was higher, but operating cash flow and free cash flow were lower, resulting in a lower margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$4.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$294.9M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$367.9M
Cash generated by operations before capital spending.
CapEx
$72.9M
Capital spending and related asset purchases.
FCF margin
4.0%
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 |
|---|---|---|---|---|---|
| 2023-05-31 | $8.0B | $660.5M | $25.8M | $634.6M | 7.9% |
| 2023-08-31 | $8.7B | $951.9M | $22.3M | $929.5M | 10.6% |
| 2023-11-30 | $11.0B | $2.6B | $46.2M | $2.5B | 23.2% |
| 2024-02-29 | $7.3B | $367.9M | $72.9M | $294.9M | 4.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 41.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.0% | 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 Decline
The current quarter's operating cash flow was substantially lower than both the prior quarter and the year-ago quarter, despite revenue being higher than the year-ago period. This decline was the strongest observable driver of the lower free cash flow.
The decline in operating cash flow directly reduced free cash flow and led to a weakened free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow in the current quarter was lower than the revenue level would suggest, producing a free cash flow margin that was lower than both the prior quarter and the year-ago quarter. Capital expenditure was higher than the year-ago quarter but lower than the prior quarter, further contributing to the reduced free cash flow.
Compared with the prior quarter, revenue was lower, operating cash flow was lower, and free cash flow was lower, causing a weakened free cash flow margin. Compared with the same quarter a year ago, revenue was higher, but operating cash flow and free cash flow were lower, resulting in a lower margin.
Monitor the trend of operating cash flow relative to revenue, as it was the primary factor in the reduced free cash flow.