Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue was lower compared to the prior quarter but higher than the same quarter last year. However, operating cash flow turned negative, leading to a weakened free cash flow and a negative margin, which was a notable decline from the preceding quarter and a further deepening versus the year-ago period.
- The conversion of revenue to cash was significantly strained during the quarter, as operating cash flow was negative despite revenue growth on a year-over-year basis. Capital expenditures, while lower than the prior quarter, consumed cash but were not the primary driver of the negative free cash flow.
- Compared to the immediately preceding quarter, operating cash flow shifted from a large positive to a large negative, while capital expenditure declined. This resulted in a dramatic weakening of free cash flow and margin. Versus the same quarter last year, operating cash flow also worsened, as the prior year had a smaller negative, and free cash flow deficit increased.
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
-$1.0B
Free cash flow in the selected fiscal quarter.
Operating cash flow
-$702.0M
Cash generated by operations before capital spending.
CapEx
$309.0M
Capital spending and related asset purchases.
FCF margin
-10.9%
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 |
|---|---|---|---|---|---|
| 2022-06-30 | $8.8B | -$197.0M | $263.0M | -$460.0M | -5.2% |
| 2022-09-30 | $9.0B | $1.3B | $296.0M | $1.0B | 11.6% |
| 2022-12-31 | $10.0B | $2.3B | $632.0M | $1.6B | 16.1% |
| 2023-03-31 | $9.3B | -$702.0M | $309.0M | -$1.0B | -10.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -120.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.3% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$12.4B | 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 Turn Negative
Operating cash flow dropped from a large positive in the prior quarter to a negative figure, and also worsened compared to the same quarter last year. This shift was the dominant factor behind the negative free cash flow and margin.
Without a recovery in operating cash flow, free cash flow will remain pressured even if capital spending is reduced further.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
The conversion of revenue to cash was significantly strained during the quarter, as operating cash flow was negative despite revenue growth on a year-over-year basis. Capital expenditures, while lower than the prior quarter, consumed cash but were not the primary driver of the negative free cash flow.
Compared to the immediately preceding quarter, operating cash flow shifted from a large positive to a large negative, while capital expenditure declined. This resulted in a dramatic weakening of free cash flow and margin. Versus the same quarter last year, operating cash flow also worsened, as the prior year had a smaller negative, and free cash flow deficit increased.
Monitor whether operating cash flow can return to positive territory in the coming quarters, as the large negative swing was the primary driver of the quarter's weak cash generation.