Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the quarter ended May 31, 2024, free cash flow improved from the prior quarter but weakened compared to the same quarter one year earlier. Revenue was stable sequentially yet lower than the year-ago level, while operating cash flow drove the sequential improvement.
- Free cash flow margin increased sequentially, supported by higher operating cash flow relative to a stable revenue base. Capital expenditure was moderately higher than both the prior and year-ago quarters, partially offsetting the cash generation.
- Compared to the prior quarter, operating cash flow and free cash flow were higher, with an improved margin. Versus the same quarter one year earlier, all cash metrics were lower, reflecting a significant weakening in operating cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$869.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
$94.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$163.1M
Cash generated by operations before capital spending.
CapEx
$68.3M
Capital spending and related asset purchases.
FCF margin
5.8%
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 |
|---|---|---|---|---|---|
| 2023-08-31 | $1.7B | $265.9M | $68.6M | $197.3M | 11.7% |
| 2023-11-30 | $1.8B | $577.2M | $76.7M | $500.5M | 28.6% |
| 2024-02-29 | $1.6B | $138.4M | $62.0M | $76.4M | 4.8% |
| 2024-05-31 | $1.6B | $163.1M | $68.3M | $94.8M | 5.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 51.5% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 4.2% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$3.9B | 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 Volatility
Operating cash flow improved sequentially, which is a positive sign, but it fell substantially from the year-ago quarter. This divergence makes it the strongest observable driver of free cash flow performance.
If operating cash flow does not sustain its sequential improvement, free cash flow may remain pressured relative to year-ago levels.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Free cash flow margin increased sequentially, supported by higher operating cash flow relative to a stable revenue base. Capital expenditure was moderately higher than both the prior and year-ago quarters, partially offsetting the cash generation.
Compared to the prior quarter, operating cash flow and free cash flow were higher, with an improved margin. Versus the same quarter one year earlier, all cash metrics were lower, reflecting a significant weakening in operating cash flow.
Monitor the trajectory of operating cash flow, as it sharply declined year over year and is the primary input to free cash flow.