Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow and margin weakened sequentially as operating cash flow declined and capital expenditure rose, while year-over-year free cash flow held stable with both revenue and operating cash flow higher. The cash conversion rate decreased from the prior quarter but was modestly lower compared to the same quarter last year.
- Revenue was lower sequentially but higher than a year ago. Operating cash flow followed a similar pattern, while capital expenditure increased both quarter-over-quarter and year-over-year. As a result, free cash flow declined from the prior quarter and remained flat compared to the same quarter last year, with the free cash flow margin narrowing sequentially and slightly narrowing year-over-year.
- Compared to the immediately preceding quarter, all key cash flow metrics weakened: operating cash flow was lower, capital expenditure was higher, and free cash flow and its margin were lower. Versus the same quarter one year earlier, revenue and operating cash flow were higher, capital expenditure was higher, and free cash flow was stable, though the margin was slightly lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$7.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.7B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.5B
Cash generated by operations before capital spending.
CapEx
$757.0M
Capital spending and related asset purchases.
FCF margin
27.0%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $5.9B | $2.4B | $503.0M | $1.9B | 32.5% |
| 2023-06-30 | $6.5B | $1.7B | $526.0M | $1.1B | 17.7% |
| 2023-09-30 | $6.7B | $3.0B | $570.0M | $2.5B | 36.7% |
| 2023-12-31 | $6.4B | $2.5B | $757.0M | $1.7B | 27.0% |
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 | 11.8% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$34.8B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Capital Expenditure Increase
Capital expenditure rose compared to both the prior quarter and the year-ago quarter. This increase, combined with a sequential decline in operating cash flow, drove the reduction in free cash flow. On a year-over-year basis, higher spending fully offset the gain in operating cash flow, leaving free cash flow unchanged.
The elevated capital expenditure dampened free cash flow generation and compressed the free cash flow margin in the current quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower sequentially but higher than a year ago. Operating cash flow followed a similar pattern, while capital expenditure increased both quarter-over-quarter and year-over-year. As a result, free cash flow declined from the prior quarter and remained flat compared to the same quarter last year, with the free cash flow margin narrowing sequentially and slightly narrowing year-over-year.
Compared to the immediately preceding quarter, all key cash flow metrics weakened: operating cash flow was lower, capital expenditure was higher, and free cash flow and its margin were lower. Versus the same quarter one year earlier, revenue and operating cash flow were higher, capital expenditure was higher, and free cash flow was stable, though the margin was slightly lower.
Monitor the trajectory of capital expenditure, as its increase outpaced operating cash flow growth both sequentially and year-over-year.