Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue, operating cash flow, and free cash flow all improved compared to both the prior quarter and the same quarter last year. The free cash flow margin strengthened versus the year-ago period but weakened slightly from the preceding quarter.
- Operating cash flow as a proportion of revenue was higher than both the prior quarter and the year-ago quarter, supporting a free cash flow margin that improved markedly from the prior year but edged lower from the preceding quarter due to a larger increase in capital expenditure relative to operating cash flow.
- Compared to the immediately preceding quarter, revenue and operating cash flow were higher, capital expenditure increased, and free cash flow was stable, leading to a slightly lower free cash flow margin. Versus the same quarter one year earlier, all metrics improved, with free cash flow margin strengthening substantially.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$4.9B
Trailing twelve-month free cash flow.
Quarter free cash flow
$2.0B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.3B
Cash generated by operations before capital spending.
CapEx
$269.0M
Capital spending and related asset purchases.
FCF margin
15.5%
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 |
|---|---|---|---|---|---|
| 2022-08-31 | $12.7B | $357.0M | $264.0M | $93.0M | 0.7% |
| 2022-11-30 | $13.3B | $1.0B | $236.0M | $765.0M | 5.7% |
| 2023-02-28 | $12.4B | $2.2B | $200.0M | $2.0B | 16.4% |
| 2023-05-31 | $12.8B | $2.3B | $269.0M | $2.0B | 15.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 192.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$1.5B | 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 Growth
Operating cash flow increased from both the prior quarter and the year-ago quarter, providing the primary support for the higher free cash flow. The filing notes that for the full fiscal year, operating cash flow was driven by net income adjusted for non-cash items, with working capital changes having a smaller negative impact than the prior year.
The stronger operating cash flow enabled free cash flow to remain stable quarter-over-quarter and improve significantly year-over-year.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow as a proportion of revenue was higher than both the prior quarter and the year-ago quarter, supporting a free cash flow margin that improved markedly from the prior year but edged lower from the preceding quarter due to a larger increase in capital expenditure relative to operating cash flow.
Compared to the immediately preceding quarter, revenue and operating cash flow were higher, capital expenditure increased, and free cash flow was stable, leading to a slightly lower free cash flow margin. Versus the same quarter one year earlier, all metrics improved, with free cash flow margin strengthening substantially.
Monitor the trend in capital expenditure relative to operating cash flow, as its increase in the current quarter outpaced the growth in operating cash flow, compressing the free cash flow margin.