Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Ulta Beauty’s free cash flow turned strongly positive in the current quarter, supported by a significant increase in operating cash flow relative to revenue. The free cash flow margin improved meaningfully compared with both the prior quarter and the same quarter a year earlier.
- Revenue rose compared with the prior quarter, and operating cash flow increased substantially, resulting in a higher free cash flow margin. Capital expenditure was moderately higher than both the prior quarter and the year-ago quarter, but the improvement in operating cash flow more than offset the increase.
- Compared with the immediate prior quarter, free cash flow shifted from a negative level to a positive level, and the free cash flow margin improved from negative to positive. Versus the same quarter one year earlier, free cash flow and free cash flow margin were higher, while revenue and operating cash flow also increased.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.2B
Trailing twelve-month free cash flow.
Quarter free cash flow
$800.3M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$908.5M
Cash generated by operations before capital spending.
CapEx
$108.2M
Capital spending and related asset purchases.
FCF margin
24.8%
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 |
|---|---|---|---|---|---|
| 2022-04-30 | $2.3B | $426.3M | $71.1M | $355.2M | 15.1% |
| 2022-07-30 | $2.3B | $114.4M | $49.4M | $64.9M | 2.8% |
| 2022-10-29 | $2.3B | $32.8M | $83.5M | -$50.7M | -2.2% |
| 2023-01-28 | $3.2B | $908.5M | $108.2M | $800.3M | 24.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 234.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.4% | 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 Surge
Operating cash flow increased sharply from the prior quarter and was higher than the year-ago quarter, driving free cash flow into positive territory. Revenue also increased compared with both periods, supporting the cash generation.
The improvement in operating cash flow was the strongest observable factor behind the positive free cash flow this quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue rose compared with the prior quarter, and operating cash flow increased substantially, resulting in a higher free cash flow margin. Capital expenditure was moderately higher than both the prior quarter and the year-ago quarter, but the improvement in operating cash flow more than offset the increase.
Compared with the immediate prior quarter, free cash flow shifted from a negative level to a positive level, and the free cash flow margin improved from negative to positive. Versus the same quarter one year earlier, free cash flow and free cash flow margin were higher, while revenue and operating cash flow also increased.
Monitor whether operating cash flow can sustain its elevated level relative to revenue in future periods.