Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow turned positive this quarter after a negative prior quarter, supported by a significant improvement in operating cash flow. Revenue was slightly higher than the preceding quarter but lower than the same quarter last year, while free cash flow margin recovered from a negative level to a positive figure.
- Operating cash flow was substantially higher than the prior quarter, and capital expenditure was slightly lower, resulting in a positive free cash flow. The free cash flow margin improved from a negative level in the prior quarter to a positive level, indicating a stronger conversion of revenue into free cash flow.
- Compared to the immediately preceding quarter, revenue was higher, operating cash flow was significantly higher, and free cash flow turned from negative to positive. Compared to the same quarter one year earlier, revenue was lower, operating cash flow was lower, and free cash flow was lower, with a weakened free cash flow margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$3.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.7B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.2B
Cash generated by operations before capital spending.
CapEx
$509.0M
Capital spending and related asset purchases.
FCF margin
28.7%
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 |
|---|---|---|---|---|---|
| 2022-05-01 | $8.3B | $1.7B | $361.0M | $1.4B | 16.5% |
| 2022-07-31 | $6.7B | $1.3B | $433.0M | $837.0M | 12.5% |
| 2022-10-30 | $5.9B | $392.0M | $530.0M | -$138.0M | -2.3% |
| 2023-01-29 | $6.1B | $2.2B | $509.0M | $1.7B | 28.7% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 123.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 8.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$7.6B | 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 Recovery
Operating cash flow improved markedly from the prior quarter, driving free cash flow from negative to positive. The filing context notes that cash provided by operating activities decreased for the full fiscal year compared to the prior year, primarily due to lower net income adjusted for non-cash items and higher tax payments, partially offset by working capital changes.
The recovery in operating cash flow was the strongest observable driver, enabling a positive free cash flow margin this quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was substantially higher than the prior quarter, and capital expenditure was slightly lower, resulting in a positive free cash flow. The free cash flow margin improved from a negative level in the prior quarter to a positive level, indicating a stronger conversion of revenue into free cash flow.
Compared to the immediately preceding quarter, revenue was higher, operating cash flow was significantly higher, and free cash flow turned from negative to positive. Compared to the same quarter one year earlier, revenue was lower, operating cash flow was lower, and free cash flow was lower, with a weakened free cash flow margin.
Monitor the trend in operating cash flow, as its substantial increase was the primary factor behind the swing to positive free cash flow this quarter.