Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow declined sharply from the prior quarter despite stable revenue, as operating cash flow fell and capital expenditure rose. Compared to the same quarter last year, free cash flow weakened even though revenue grew, due to higher capital spending and a lower operating cash flow margin.
- Revenue held steady sequentially, but operating cash flow fell while capital expenditure increased, causing the free cash flow margin to narrow from the prior quarter. Relative to the same quarter last year, revenue was higher, yet the free cash flow margin contracted as operating cash flow did not keep pace with revenue growth and capital spending rose.
- Compared with the immediately preceding quarter, free cash flow was lower and the free cash flow margin weakened, driven by a decline in operating cash flow and higher capital expenditure. Versus the same quarter one year earlier, free cash flow was lower despite higher revenue, with the margin narrowing as capital expenditure rose more than operating cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.2B
Trailing twelve-month free cash flow.
Quarter free cash flow
$323.2M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$576.7M
Cash generated by operations before capital spending.
CapEx
$253.5M
Capital spending and related asset purchases.
FCF margin
8.2%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $3.4B | $400.6M | $219.7M | $180.8M | 5.3% |
| 2022-12-31 | $3.6B | $423.2M | $308.5M | $114.7M | 3.2% |
| 2023-03-31 | $3.9B | $704.1M | $139.8M | $564.2M | 14.6% |
| 2023-06-30 | $3.9B | $576.7M | $253.5M | $323.2M | 8.2% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 161.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 6.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.9B | 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 in the current quarter was substantially higher than both the prior quarter and the same quarter last year. This increase absorbed a larger portion of operating cash flow, directly reducing free cash flow.
The higher capital expenditure was the strongest observable driver of the decline in free cash flow this quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue held steady sequentially, but operating cash flow fell while capital expenditure increased, causing the free cash flow margin to narrow from the prior quarter. Relative to the same quarter last year, revenue was higher, yet the free cash flow margin contracted as operating cash flow did not keep pace with revenue growth and capital spending rose.
Compared with the immediately preceding quarter, free cash flow was lower and the free cash flow margin weakened, driven by a decline in operating cash flow and higher capital expenditure. Versus the same quarter one year earlier, free cash flow was lower despite higher revenue, with the margin narrowing as capital expenditure rose more than operating cash flow.
Monitor the trend in capital expenditure, which rose sharply in the current quarter and was a key factor in the lower free cash flow.