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, driven by a sharp increase in operating cash flow. Revenue was stable sequentially, while capital expenditure rose moderately.
- Operating cash flow improved significantly from the prior quarter, leading to a positive free cash flow despite higher capital expenditure. The free cash flow margin strengthened compared to the previous quarter but remained lower than the year-ago level.
- Compared to the prior quarter, free cash flow improved from negative to positive, driven by a much higher operating cash flow. Versus the same quarter last year, free cash flow and margin were lower, as capital expenditure increased substantially while operating cash flow rose only modestly.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$7.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.6B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$4.3B
Cash generated by operations before capital spending.
CapEx
$2.6B
Capital spending and related asset purchases.
FCF margin
13.3%
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 |
|---|---|---|---|---|---|
| 2022-05-31 | $42.4B | $4.0B | $1.4B | $2.6B | 6.0% |
| 2022-08-31 | $11.4B | $6.4B | $1.7B | $4.7B | 40.8% |
| 2022-11-30 | $12.3B | $849.0M | $2.4B | -$1.6B | -12.9% |
| 2023-02-28 | $12.4B | $4.3B | $2.6B | $1.6B | 13.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 86.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 21.2% | 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.
Operating Cash Flow Recovery
Operating cash flow rebounded strongly from the prior quarter, reversing the negative free cash flow. This was the strongest observable driver of the quarter's cash conversion improvement.
The recovery in operating cash flow was the primary factor enabling positive free cash flow this quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow improved significantly from the prior quarter, leading to a positive free cash flow despite higher capital expenditure. The free cash flow margin strengthened compared to the previous quarter but remained lower than the year-ago level.
Compared to the prior quarter, free cash flow improved from negative to positive, driven by a much higher operating cash flow. Versus the same quarter last year, free cash flow and margin were lower, as capital expenditure increased substantially while operating cash flow rose only modestly.
Monitor the trend in capital expenditure, as it increased notably from both the prior quarter and the year-ago quarter.