Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue and operating cash flow both improved versus the prior quarter and the same quarter a year ago. However, free cash flow and free cash flow margin weakened compared to both periods due to a significant increase in capital expenditure.
- Operating cash flow as a proportion of revenue was higher than the prior quarter but slightly lower than a year earlier. The conversion into free cash flow was weakened by capital expenditure that was higher than both comparison periods, resulting in a free cash flow margin that declined sequentially and year-over-year.
- Compared to the immediately preceding quarter, revenue and operating cash flow improved, but capital expenditure increased more sharply, causing free cash flow and free cash flow margin to decline. Relative to the same quarter one year earlier, revenue and operating cash flow were slightly higher, while capital expenditure was substantially higher, resulting in lower free cash flow and a weaker margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$11.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$3.3B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$6.1B
Cash generated by operations before capital spending.
CapEx
$2.8B
Capital spending and related asset purchases.
FCF margin
23.0%
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 |
|---|---|---|---|---|---|
| 2023-08-31 | $12.5B | $7.0B | $1.3B | $5.7B | 45.5% |
| 2023-11-30 | $12.9B | $143.0M | $1.1B | -$937.0M | -7.2% |
| 2024-02-29 | $13.3B | $5.5B | $1.7B | $3.8B | 28.6% |
| 2024-05-31 | $14.3B | $6.1B | $2.8B | $3.3B | 23.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 104.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 19.6% | 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.
Capital Expenditure Increase
Capital expenditure rose sharply compared to both the prior quarter and the same quarter one year earlier. This was the strongest observable driver of the decline in free cash flow and free cash flow margin, despite higher operating cash flow.
The higher capital expenditure absorbed a larger share of operating cash flow, reducing free cash flow and compressing the free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow as a proportion of revenue was higher than the prior quarter but slightly lower than a year earlier. The conversion into free cash flow was weakened by capital expenditure that was higher than both comparison periods, resulting in a free cash flow margin that declined sequentially and year-over-year.
Compared to the immediately preceding quarter, revenue and operating cash flow improved, but capital expenditure increased more sharply, causing free cash flow and free cash flow margin to decline. Relative to the same quarter one year earlier, revenue and operating cash flow were slightly higher, while capital expenditure was substantially higher, resulting in lower free cash flow and a weaker margin.
Capital expenditure was materially higher than both the prior quarter and the year-ago quarter; monitor whether this elevated spending level continues in future periods.