Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the fiscal second quarter, the company's free cash flow remained negative but improved significantly from both the prior quarter and the same quarter last year, driven by a less negative operating cash flow. Revenue was stable across all periods, while capital expenditure edged higher sequentially.
- Operating cash flow was negative for the quarter, and combined with capital expenditure, resulted in a negative free cash flow and a negative margin. Cash conversion remained weak as outflows from operations exceeded inflows.
- Compared with the immediately preceding quarter, operating cash flow improved (less negative) and free cash flow and margin strengthened. Year over year, all three metrics improved markedly from deeply negative levels. The sequential improvement was driven by a smaller cash outflow from operations.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$2.9B
Trailing twelve-month free cash flow.
Quarter free cash flow
-$119.5M
Free cash flow in the selected fiscal quarter.
Operating cash flow
-$99.4M
Cash generated by operations before capital spending.
CapEx
$20.1M
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $1.1B | -$895.7M | $23.5M | -$919.2M | -85.2% |
| 2022-12-31 | $1.0B | $4.2B | $57.9M | $4.1B | 392.9% |
| 2023-03-31 | $1.1B | -$164.9M | $11.5M | -$176.4M | -16.6% |
| 2023-06-30 | $1.1B | -$99.4M | $20.1M | -$119.5M | -10.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -36.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.8% | 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.
Operating Cash Flow Improvement
The sequential and year-over-year improvement in free cash flow was primarily driven by a less negative operating cash flow, which moved from a large deficit in the year-ago quarter and a moderate deficit in the prior quarter to a smaller deficit this quarter.
This driver narrowed the free cash flow deficit and improved the free cash flow margin, bringing them closer to breakeven.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was negative for the quarter, and combined with capital expenditure, resulted in a negative free cash flow and a negative margin. Cash conversion remained weak as outflows from operations exceeded inflows.
Compared with the immediately preceding quarter, operating cash flow improved (less negative) and free cash flow and margin strengthened. Year over year, all three metrics improved markedly from deeply negative levels. The sequential improvement was driven by a smaller cash outflow from operations.
Monitor whether operating cash flow can continue to narrow its deficit, as it remains the primary factor behind the negative free cash flow.