Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
The quarter exhibited a sharp sequential improvement in cash conversion, with free cash flow and margin recovering strongly from the prior period. However, compared with the same quarter one year earlier, both operating cash flow and free cash flow were lower, resulting in a mixed year-over-year performance.
- Operating cash flow rose substantially from the preceding quarter, while capital expenditure increased modestly, driving a notable improvement in free cash flow and free cash flow margin. Relative to the same quarter one year earlier, operating cash flow was lower despite slightly higher revenue, leading to a lower free cash flow margin.
- Sequentially, revenue was slightly higher, operating cash flow improved markedly, and free cash flow more than recovered from the prior quarter's level. Year-over-year, revenue was marginally higher, but operating cash flow and free cash flow were lower, and the free cash flow margin weakened.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$5.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$2.5B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.9B
Cash generated by operations before capital spending.
CapEx
$364.0M
Capital spending and related asset purchases.
FCF margin
15.0%
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 |
|---|---|---|---|---|---|
| 2022-12-31 | $19.0B | $1.9B | $693.0M | $1.2B | 6.5% |
| 2023-03-26 | $15.1B | $1.6B | $294.0M | $1.3B | 8.4% |
| 2023-06-25 | $16.7B | $1.1B | $329.0M | $771.0M | 4.6% |
| 2023-09-24 | $16.9B | $2.9B | $364.0M | $2.5B | 15.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 150.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.2% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$13.8B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Sequential Operating Cash Flow Recovery
The most notable observable driver was the substantial sequential increase in operating cash flow, which more than offset a modest rise in capital expenditure. This recovery drove the strong improvement in free cash flow and margin from the prior quarter.
The sequential improvement in operating cash flow was the primary factor behind the quarter's enhanced cash conversion and 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 rose substantially from the preceding quarter, while capital expenditure increased modestly, driving a notable improvement in free cash flow and free cash flow margin. Relative to the same quarter one year earlier, operating cash flow was lower despite slightly higher revenue, leading to a lower free cash flow margin.
Sequentially, revenue was slightly higher, operating cash flow improved markedly, and free cash flow more than recovered from the prior quarter's level. Year-over-year, revenue was marginally higher, but operating cash flow and free cash flow were lower, and the free cash flow margin weakened.
The sustainability of operating cash flow generation in future quarters is a key area to watch, given the year-over-year decline despite stable revenue.