Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue increased slightly compared to the prior quarter and the same quarter last year. However, operating cash flow declined sharply, resulting in a lower free cash flow and a weakened free cash flow margin.
- The cash conversion ratio, as measured by free cash flow margin, weakened substantially due to a larger decline in operating cash flow relative to the modest revenue increase. Capital expenditure remained relatively stable.
- Compared to the immediately preceding quarter, operating cash flow and free cash flow were significantly lower, while revenue was slightly higher. Versus the same quarter one year earlier, the pattern was similar: revenue was higher but cash flows were substantially lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$856.6M
Trailing twelve-month free cash flow.
Quarter free cash flow
$138.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$145.3M
Cash generated by operations before capital spending.
CapEx
$6.5M
Capital spending and related asset purchases.
FCF margin
37.3%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $356.9M | $262.2M | $6.9M | $255.3M | 71.5% |
| 2022-12-31 | $369.2M | $216.9M | $7.7M | $209.2M | 56.7% |
| 2023-03-31 | $364.4M | $259.0M | $5.7M | $253.3M | 69.5% |
| 2023-06-30 | $372.0M | $145.3M | $6.5M | $138.8M | 37.3% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 74.7% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.7% | 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 decline
Operating cash flow decreased markedly from both the prior quarter and the year-ago quarter, despite a slight increase in revenue. This decline was the strongest observable driver of the lower free cash flow and margin.
The reduced operating cash flow directly caused free cash flow to fall and the margin to contract.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
The cash conversion ratio, as measured by free cash flow margin, weakened substantially due to a larger decline in operating cash flow relative to the modest revenue increase. Capital expenditure remained relatively stable.
Compared to the immediately preceding quarter, operating cash flow and free cash flow were significantly lower, while revenue was slightly higher. Versus the same quarter one year earlier, the pattern was similar: revenue was higher but cash flows were substantially lower.
Monitor the trend in operating cash flow, as it was the primary factor behind the quarter's weakened cash conversion.