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 increased sequentially, driving free cash flow higher. However, free cash flow margin weakened compared to the same quarter last year due to a larger increase in capital expenditure relative to operating cash flow.
- Cash conversion improved sequentially as operating cash flow grew faster than revenue, and free cash flow margin expanded. Compared to the prior year, operating cash flow was lower despite higher revenue, and capital expenditure was significantly higher, resulting in a lower free cash flow margin.
- Compared to the previous quarter, revenue, operating cash flow, and free cash flow were all higher, and free cash flow margin improved. Versus the same quarter last year, revenue was higher but operating cash flow was lower, capital expenditure was higher, and free cash flow was slightly lower with a weakened margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$2.6B
Trailing twelve-month free cash flow.
Quarter free cash flow
$699.9M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$937.6M
Cash generated by operations before capital spending.
CapEx
$237.7M
Capital spending and related asset purchases.
FCF margin
17.2%
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 | $3.8B | $961.0M | $159.9M | $801.1M | 21.1% |
| 2022-12-31 | $3.6B | $795.2M | $174.5M | $620.7M | 17.0% |
| 2023-03-31 | $3.7B | $713.8M | $223.3M | $490.5M | 13.2% |
| 2023-06-30 | $4.1B | $937.6M | $237.7M | $699.9M | 17.2% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 111.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 5.8% | 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.
Capital Expenditure Growth
Capital expenditure increased from both the prior quarter and the same quarter last year, while operating cash flow did not keep pace with revenue growth compared to the prior year.
The higher capital expenditure relative to operating cash flow compressed free cash flow margin compared to the prior year.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Cash conversion improved sequentially as operating cash flow grew faster than revenue, and free cash flow margin expanded. Compared to the prior year, operating cash flow was lower despite higher revenue, and capital expenditure was significantly higher, resulting in a lower free cash flow margin.
Compared to the previous quarter, revenue, operating cash flow, and free cash flow were all higher, and free cash flow margin improved. Versus the same quarter last year, revenue was higher but operating cash flow was lower, capital expenditure was higher, and free cash flow was slightly lower with a weakened margin.
Monitor the trend in capital expenditure relative to operating cash flow, as its increase has outpaced operating cash flow growth compared to the prior year.