Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow turned sharply positive this quarter after a negative prior quarter, driven by lower capital expenditure. Revenue and operating cash flow were both higher than the same quarter last year, while free cash flow margin improved substantially.
- With revenue at a higher level than both comparison periods, operating cash flow exceeded capital expenditure by a wide margin, resulting in a strong free cash flow margin. The conversion from revenue to free cash flow improved markedly versus the prior quarter and the year-ago quarter.
- Compared to the preceding quarter, revenue was higher, operating cash flow improved, capital expenditure was lower, and free cash flow turned from negative to positive. Versus the same quarter one year earlier, revenue and operating cash flow were higher, capital expenditure was lower, and free cash flow and its margin were both higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$840.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
$895.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.4B
Cash generated by operations before capital spending.
CapEx
$519.0M
Capital spending and related asset purchases.
FCF margin
24.0%
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 | $3.3B | $939.0M | $870.0M | $69.0M | 2.1% |
| 2023-06-30 | -$1.6B | $1.3B | $1.4B | -$68.0M | 4.2% |
| 2023-09-30 | $842.0M | $1.1B | $1.1B | -$56.0M | -6.7% |
| 2023-12-31 | $3.7B | $1.4B | $519.0M | $895.0M | 24.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 131.8% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 13.9% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$11.2B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Lower Capital Expenditure
Capital expenditure this quarter was lower than both the prior quarter and the year-ago quarter by a significant margin. This reduction, combined with higher operating cash flow relative to revenue, drove the sharp improvement in free cash flow.
The lower capital expenditure allowed free cash flow to turn positive and achieve a substantially higher margin despite a similar operating cash flow profile.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
With revenue at a higher level than both comparison periods, operating cash flow exceeded capital expenditure by a wide margin, resulting in a strong free cash flow margin. The conversion from revenue to free cash flow improved markedly versus the prior quarter and the year-ago quarter.
Compared to the preceding quarter, revenue was higher, operating cash flow improved, capital expenditure was lower, and free cash flow turned from negative to positive. Versus the same quarter one year earlier, revenue and operating cash flow were higher, capital expenditure was lower, and free cash flow and its margin were both higher.
Monitor the level of capital expenditure in coming quarters, as its reduction was the primary factor behind the free cash flow swing.