Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the third quarter of fiscal 2023, free cash flow was higher than the prior quarter, supported by an increase in operating cash flow and revenue. Compared to the same quarter one year earlier, free cash flow was lower, as operating cash flow declined significantly.
- Revenue was higher than the prior quarter, while operating cash flow and free cash flow also increased, with free cash flow margin improving. This indicates a stronger conversion of revenue into cash during the quarter.
- Compared to the immediately preceding quarter, revenue, operating cash flow, and free cash flow were all higher, and the free cash flow margin improved. Versus the same quarter one year earlier, revenue was stable but operating cash flow and free cash flow were significantly lower, resulting in a weakened free cash flow margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$954.9M
Trailing twelve-month free cash flow.
Quarter free cash flow
$376.4M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$470.0M
Cash generated by operations before capital spending.
CapEx
$93.6M
Capital spending and related asset purchases.
FCF margin
22.5%
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 | $1.5B | -$135.2M | $60.4M | -$195.6M | -12.8% |
| 2023-03-31 | $1.5B | $511.7M | $60.7M | $451.0M | 29.3% |
| 2023-06-30 | $1.6B | $394.8M | $71.7M | $323.1M | 20.1% |
| 2023-09-30 | $1.7B | $470.0M | $93.6M | $376.4M | 22.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 83.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 5.6% | 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.
Operating Cash Flow Improvement
Operating cash flow was higher than the previous quarter, providing the primary support for the increase in free cash flow. This improvement occurred alongside higher revenue.
Higher operating cash flow drove the sequential increase in free cash flow and margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher than the prior quarter, while operating cash flow and free cash flow also increased, with free cash flow margin improving. This indicates a stronger conversion of revenue into cash during the quarter.
Compared to the immediately preceding quarter, revenue, operating cash flow, and free cash flow were all higher, and the free cash flow margin improved. Versus the same quarter one year earlier, revenue was stable but operating cash flow and free cash flow were significantly lower, resulting in a weakened free cash flow margin.
Monitor the level of capital expenditure, which increased both sequentially and year-over-year, as it reduces the free cash flow generated from operating cash flow.