Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow and its margin weakened substantially from both the prior quarter and the same quarter last year, driven primarily by a sharp decline in operating cash flow despite a modest drop in capital expenditure. Revenue rose sequentially but was slightly lower year over year.
- The conversion of revenue into operating cash flow deteriorated markedly, as revenue remained relatively stable while operating cash flow contracted sharply. Capital expenditure increased slightly from the prior quarter but was lower than a year ago, which did not offset the cash flow decline.
- Compared to the immediately preceding quarter, operating cash flow and free cash flow were substantially lower despite higher revenue, and the free cash flow margin weakened. Versus the same quarter one year earlier, revenue was slightly lower, and both operating and free cash flow declined, though capital expenditure was reduced.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.0B
Trailing twelve-month free cash flow.
Quarter free cash flow
$97.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$135.0M
Cash generated by operations before capital spending.
CapEx
$38.0M
Capital spending and related asset purchases.
FCF margin
6.2%
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 |
|---|---|---|---|---|---|
| 2023-01-27 | $1.5B | $377.0M | $58.0M | $319.0M | 20.9% |
| 2023-04-28 | $1.6B | $235.0M | $39.0M | $196.0M | 12.4% |
| 2023-07-28 | $1.4B | $453.0M | $35.0M | $418.0M | 29.2% |
| 2023-10-27 | $1.6B | $135.0M | $38.0M | $97.0M | 6.2% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 41.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$457.0M | 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 Decline
Operating cash flow fell sharply from the prior quarter and was also lower than the year-ago period, even though revenue did not show a comparable contraction. This decline was the strongest observable force behind the weakening free cash flow.
The steep drop in operating cash flow directly caused free cash flow to contract, despite lower capital expenditure providing a partial offset.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
The conversion of revenue into operating cash flow deteriorated markedly, as revenue remained relatively stable while operating cash flow contracted sharply. Capital expenditure increased slightly from the prior quarter but was lower than a year ago, which did not offset the cash flow decline.
Compared to the immediately preceding quarter, operating cash flow and free cash flow were substantially lower despite higher revenue, and the free cash flow margin weakened. Versus the same quarter one year earlier, revenue was slightly lower, and both operating and free cash flow declined, though capital expenditure was reduced.
Monitor the trend in operating cash flow, as its recent sharp drop is the primary factor compressing free cash flow.