Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow turned negative this quarter as capital expenditure rose sharply, despite a slight increase in revenue and operating cash flow. The negative free cash flow margin reflects a significant gap between operating cash generation and investment spending.
- Revenue was higher than the prior quarter, and operating cash flow also improved modestly, but capital expenditure increased substantially, resulting in negative free cash flow. The free cash flow margin weakened from positive to negative, indicating that operating cash flow was insufficient to cover capital spending.
- Compared to the immediately preceding quarter, free cash flow declined from positive to negative, driven by a much higher capital expenditure. Versus the same quarter one year earlier, revenue was slightly lower, operating cash flow was lower, and capital expenditure was higher, resulting in a larger negative free cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$852.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
-$163.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$673.0M
Cash generated by operations before capital spending.
CapEx
$836.0M
Capital spending and related asset purchases.
FCF margin
-5.3%
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 | $3.1B | $1.2B | $428.0M | $745.0M | 23.8% |
| 2023-06-30 | $3.0B | $673.0M | $520.0M | $153.0M | 5.1% |
| 2023-09-30 | $3.0B | $660.0M | $543.0M | $117.0M | 3.9% |
| 2023-12-31 | $3.1B | $673.0M | $836.0M | -$163.0M | -5.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -30.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 27.2% | Lower capital intensity usually supports FCF margin. |
| Net cash | n/a | 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 Surge
Capital expenditure increased significantly from both the prior quarter and the year-ago quarter, while operating cash flow improved only modestly from the prior quarter and declined from the year-ago quarter. This divergence is the strongest observable driver of the negative free cash flow.
The higher capital expenditure directly caused free cash flow to turn negative, reversing the positive position seen in both comparison periods.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher than the prior quarter, and operating cash flow also improved modestly, but capital expenditure increased substantially, resulting in negative free cash flow. The free cash flow margin weakened from positive to negative, indicating that operating cash flow was insufficient to cover capital spending.
Compared to the immediately preceding quarter, free cash flow declined from positive to negative, driven by a much higher capital expenditure. Versus the same quarter one year earlier, revenue was slightly lower, operating cash flow was lower, and capital expenditure was higher, resulting in a larger negative free cash flow.
Monitor the level of capital expenditure relative to operating cash flow, as the current gap has driven free cash flow negative.