Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow increased compared to both the prior quarter and the same quarter a year ago. The improvement was supported by higher operating cash flow and a lower capital expenditure relative to the previous quarter.
- Revenue rose from the preceding quarter, while operating cash flow increased at a faster pace, lifting free cash flow and the free cash flow margin. The margin improved markedly versus both the earlier quarter and the year-ago quarter.
- Compared to the immediate prior quarter, free cash flow was higher on stronger operating cash flow and reduced capital spending. Versus the same quarter one year earlier, free cash flow was also higher, despite a lower reported revenue figure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$8.5B
Trailing twelve-month free cash flow.
Quarter free cash flow
$3.7B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$5.6B
Cash generated by operations before capital spending.
CapEx
$1.9B
Capital spending and related asset purchases.
FCF margin
27.0%
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 |
|---|---|---|---|---|---|
| 2022-08-31 | $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% |
| 2023-05-31 | $13.8B | $5.6B | $1.9B | $3.7B | 27.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 112.5% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 13.8% | 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
Operating cash flow increased compared to both the preceding quarter and the year-ago quarter, providing the primary lift to free cash flow. This occurred even as reported revenue showed a different pattern across periods.
The higher operating cash flow directly contributed to the improvement in free cash flow and the free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue rose from the preceding quarter, while operating cash flow increased at a faster pace, lifting free cash flow and the free cash flow margin. The margin improved markedly versus both the earlier quarter and the year-ago quarter.
Compared to the immediate prior quarter, free cash flow was higher on stronger operating cash flow and reduced capital spending. Versus the same quarter one year earlier, free cash flow was also higher, despite a lower reported revenue figure.
Monitor the level of capital expenditure, which declined from the prior quarter but remained higher than the year-ago quarter.