Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow margin weakened sequentially as operating cash flow declined while revenue improved slightly. Compared to the same quarter last year, margin was slightly lower despite a higher revenue and operating cash flow.
- Revenue was higher than both the prior quarter and the year-ago quarter. Operating cash flow was lower than the prior quarter but higher than the year-ago quarter, while capital expenditure was lower than the prior quarter and higher than the year-ago quarter. The resulting free cash flow and its margin were lower than the prior quarter and slightly below the year-ago level.
- Sequentially, the free cash flow margin declined as operating cash flow decreased more than the reduction in capital expenditure. Year-over-year, the margin was broadly stable with a small decline, as the improvement in operating cash flow was partially offset by higher capital expenditure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$3.6B
Trailing twelve-month free cash flow.
Quarter free cash flow
$2.0B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$4.8B
Cash generated by operations before capital spending.
CapEx
$2.8B
Capital spending and related asset purchases.
FCF margin
7.9%
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 |
|---|---|---|---|---|---|
| 2024-03-31 | $21.3B | $242.0M | $2.8B | -$2.5B | -11.9% |
| 2024-06-30 | $25.5B | $3.6B | $2.3B | $1.3B | 5.3% |
| 2024-09-30 | $25.2B | $6.3B | $3.5B | $2.7B | 10.9% |
| 2024-12-31 | $25.7B | $4.8B | $2.8B | $2.0B | 7.9% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 95.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 10.8% | Lower capital intensity usually supports FCF margin. |
| Net cash | $10.6B | 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 Level
Capital expenditure decreased from the prior quarter but remained higher than the year-ago period. The filing notes that the company can adjust capital and operating expenditures by segment if needed, depending on the pace of manufacturing ramp.
The reduction in capital expenditure relative to the prior quarter helped narrow the gap between operating cash flow and free cash flow, but the overall free cash flow margin still declined.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher than both the prior quarter and the year-ago quarter. Operating cash flow was lower than the prior quarter but higher than the year-ago quarter, while capital expenditure was lower than the prior quarter and higher than the year-ago quarter. The resulting free cash flow and its margin were lower than the prior quarter and slightly below the year-ago level.
Sequentially, the free cash flow margin declined as operating cash flow decreased more than the reduction in capital expenditure. Year-over-year, the margin was broadly stable with a small decline, as the improvement in operating cash flow was partially offset by higher capital expenditure.
Monitor the trend of operating cash flow, which declined sequentially while the company's filing indicates an expectation of continued positive operating cash flow.