Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue declined sharply compared to both the prior quarter and the same quarter last year, while operating cash flow fell only modestly. Free cash flow decreased, but the free cash flow margin improved substantially due to the relative stability of cash generation against a much lower revenue base.
- Operating cash flow was lower than both the prior quarter and the year-ago quarter, while capital expenditure was higher than the previous quarter but similar to the same period last year. The resulting free cash flow was lower, yet the free cash flow margin was much higher, reflecting a stronger conversion of revenue into cash.
- Compared to the prior quarter, revenue was lower, operating cash flow was lower, capital expenditure was higher, free cash flow was lower, and the free cash flow margin improved. Versus the same quarter one year earlier, revenue was lower, operating cash flow was lower, capital expenditure was slightly higher, free cash flow was lower, and the margin improved.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$3.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.0B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.5B
Cash generated by operations before capital spending.
CapEx
$484.0M
Capital spending and related asset purchases.
FCF margin
47.3%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $10.2B | $482.0M | $352.0M | $130.0M | 1.3% |
| 2023-06-30 | $10.3B | $1.3B | $301.0M | $989.0M | 9.6% |
| 2023-09-30 | $10.6B | $1.7B | $394.0M | $1.3B | 12.0% |
| 2023-12-31 | $2.2B | $1.5B | $484.0M | $1.0B | 47.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 551.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 22.4% | 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.
Revenue and cash flow divergence
Operating cash flow decreased moderately while revenue dropped substantially, resulting in a much higher free cash flow margin. This divergence is the strongest observable factor in the quarter's cash conversion performance.
The elevated free cash flow margin may not be sustained if revenue normalizes relative to operating cash flow.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was lower than both the prior quarter and the year-ago quarter, while capital expenditure was higher than the previous quarter but similar to the same period last year. The resulting free cash flow was lower, yet the free cash flow margin was much higher, reflecting a stronger conversion of revenue into cash.
Compared to the prior quarter, revenue was lower, operating cash flow was lower, capital expenditure was higher, free cash flow was lower, and the free cash flow margin improved. Versus the same quarter one year earlier, revenue was lower, operating cash flow was lower, capital expenditure was slightly higher, free cash flow was lower, and the margin improved.
Monitor the company's shareholder return targeting, which aims for 70% of free cash flow over the long term, as stated in the liquidity and capital resources discussion.