Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow improved sharply compared to the prior quarter, supported by higher operating cash flow and lower capital expenditure. The free cash flow margin also increased relative to the same quarter last year, despite a slight decrease in revenue.
- Operating cash flow was higher than the prior quarter and consistent with the year-ago quarter, while capital expenditure was lower in both comparisons. These factors drove a free cash flow margin that was higher than the prior quarter and the year-ago quarter.
- Compared to the prior quarter, revenue was stable while operating cash flow was higher, capital expenditure was lower, and free cash flow was higher. Compared to the year-ago quarter, revenue was slightly lower, operating cash flow was similar, capital expenditure was lower, and free cash flow was higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$5.9B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.3B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.5B
Cash generated by operations before capital spending.
CapEx
$284.0M
Capital spending and related asset purchases.
FCF margin
11.8%
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 |
|---|---|---|---|---|---|
| 2022-10-01 | $10.7B | $1.9B | $547.0M | $1.4B | 13.0% |
| 2022-12-31 | $11.4B | $3.5B | $550.0M | $2.9B | 25.7% |
| 2023-04-01 | $10.7B | $729.0M | $458.0M | $271.0M | 2.5% |
| 2023-07-01 | $10.7B | $1.5B | $284.0M | $1.3B | 11.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 92.2% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.7% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$30.7B | 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 strength
Operating cash flow was substantially higher than the prior quarter and remained at the same level as the year-ago quarter, while revenue was flat sequentially. The filing notes tax planning initiatives and foreign exchange effects on intercompany debt refinancing, which contributed to the tax rate but not directly to operating cash flow.
This driver was the primary factor behind the improvement in free cash flow and margin relative to the prior quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was higher than the prior quarter and consistent with the year-ago quarter, while capital expenditure was lower in both comparisons. These factors drove a free cash flow margin that was higher than the prior quarter and the year-ago quarter.
Compared to the prior quarter, revenue was stable while operating cash flow was higher, capital expenditure was lower, and free cash flow was higher. Compared to the year-ago quarter, revenue was slightly lower, operating cash flow was similar, capital expenditure was lower, and free cash flow was higher.
Monitor the level of capital expenditure, as it decreased notably from both the prior quarter and the year-ago period.