Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion weakened sequentially and year-over-year as operating cash flow remained stable while revenue changed. Free cash flow improved slightly from the prior quarter but was significantly lower than the same quarter last year.
- Revenue increased from the prior quarter but operating cash flow was unchanged, resulting in a lower cash conversion rate. Capital expenditure was stable sequentially, so free cash flow rose modestly, but the free cash flow margin declined.
- Compared to the prior quarter, revenue was higher, operating cash flow was stable, capital expenditure was stable, free cash flow was higher, and free cash flow margin was lower. Compared to the same quarter last year, all metrics were lower except capital expenditure which was higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$6.8B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.5B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$3.1B
Cash generated by operations before capital spending.
CapEx
$1.6B
Capital spending and related asset purchases.
FCF margin
20.8%
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 |
|---|---|---|---|---|---|
| 2022-12-31 | $8.3B | $4.0B | $1.5B | $2.5B | 29.5% |
| 2023-03-31 | $7.1B | $2.9B | $1.5B | $1.4B | 19.8% |
| 2023-06-30 | $6.6B | $3.1B | $1.6B | $1.4B | 21.6% |
| 2023-09-30 | $7.3B | $3.1B | $1.6B | $1.5B | 20.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 109.8% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 22.3% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$18.4B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Stable operating cash flow and rising capital expenditure
Operating cash flow was unchanged from the prior quarter while capital expenditure remained at the same level, which was higher than a year ago. This combination led to a lower free cash flow margin.
The ability to generate free cash flow may be constrained if capital expenditure does not decrease.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue increased from the prior quarter but operating cash flow was unchanged, resulting in a lower cash conversion rate. Capital expenditure was stable sequentially, so free cash flow rose modestly, but the free cash flow margin declined.
Compared to the prior quarter, revenue was higher, operating cash flow was stable, capital expenditure was stable, free cash flow was higher, and free cash flow margin was lower. Compared to the same quarter last year, all metrics were lower except capital expenditure which was higher.
Monitor the trend in capital expenditure relative to operating cash flow, as it remained elevated compared to the prior year.