Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
The company reported negative free cash flow for the quarter, as operating cash flow was insufficient to cover capital expenditure. Compared to the prior quarter, free cash flow turned negative, but compared to the same quarter last year, the deficit narrowed.
- Revenue decreased from the prior quarter, and operating cash flow declined more sharply, resulting in a lower cash conversion rate and a negative free cash flow margin. Capital expenditure remained elevated relative to operating cash flow, driving the negative free cash flow.
- Compared to the immediately preceding quarter, revenue was lower, operating cash flow was lower, capital expenditure was slightly lower, free cash flow turned from positive to negative, and the free cash flow margin weakened. Compared to the same quarter one year earlier, revenue was lower, operating cash flow was higher, capital expenditure was slightly higher, free cash flow improved (less negative), and the free cash flow margin improved.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
-$1.5B
Trailing twelve-month free cash flow.
Quarter free cash flow
-$721.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.8B
Cash generated by operations before capital spending.
CapEx
$2.5B
Capital spending and related asset purchases.
FCF margin
-11.9%
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 |
|---|---|---|---|---|---|
| 2023-03-31 | $6.5B | $844.0M | $1.9B | -$1.0B | -15.5% |
| 2023-06-30 | $5.7B | $2.1B | $2.0B | $8.0M | 0.1% |
| 2023-09-30 | $7.0B | $2.8B | $2.7B | $177.0M | 2.5% |
| 2023-12-31 | $6.0B | $1.8B | $2.5B | -$721.0M | -11.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -78.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 41.9% | 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 coverage
Operating cash flow declined from the prior quarter while capital expenditure remained elevated, causing free cash flow to turn negative. The decline in operating cash flow was the strongest observable driver of the sequential change.
The company's ability to fund capital spending from operations weakened sequentially, resulting in a negative free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue decreased from the prior quarter, and operating cash flow declined more sharply, resulting in a lower cash conversion rate and a negative free cash flow margin. Capital expenditure remained elevated relative to operating cash flow, driving the negative free cash flow.
Compared to the immediately preceding quarter, revenue was lower, operating cash flow was lower, capital expenditure was slightly lower, free cash flow turned from positive to negative, and the free cash flow margin weakened. Compared to the same quarter one year earlier, revenue was lower, operating cash flow was higher, capital expenditure was slightly higher, free cash flow improved (less negative), and the free cash flow margin improved.
Monitor the trend of operating cash flow relative to capital expenditure, as the gap widened sequentially and remains a key factor for free cash flow.