Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion improved sharply as revenue rose and operating cash flow turned strongly positive, yielding a free cash flow margin that was higher than the prior quarter and the year-ago period. The quarter marked a significant reversal from the negative free cash flow reported one year earlier.
- Revenue increased from the prior quarter, while operating cash flow rose more than sixfold, resulting in free cash flow that was substantially higher. Capital expenditure remained stable, so the improvement in free cash flow was driven primarily by the increase in operating cash flow, lifting the free cash flow margin to a higher level than both the preceding quarter and the same quarter last year.
- Compared with the immediately preceding quarter, revenue, operating cash flow, free cash flow, and free cash flow margin all improved. Versus the same quarter one year earlier, the same metrics also strengthened, with free cash flow turning from negative to positive.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$365.3M
Trailing twelve-month free cash flow.
Quarter free cash flow
$227.8M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$253.6M
Cash generated by operations before capital spending.
CapEx
$25.8M
Capital spending and related asset purchases.
FCF margin
13.1%
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 | $1.5B | $4.4M | $23.5M | -$19.1M | -1.3% |
| 2022-12-31 | $1.7B | $180.7M | $38.3M | $142.4M | 8.6% |
| 2023-03-31 | $1.5B | $42.0M | $27.8M | $14.2M | 0.9% |
| 2023-06-30 | $1.7B | $253.6M | $25.8M | $227.8M | 13.1% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 273.8% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.7B | 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 rose substantially compared to both the prior quarter and the year-ago quarter, far outpacing the change in revenue. This surge was the strongest observable factor behind the improvement in free cash flow and margin.
The higher operating cash flow enabled the company to generate positive free cash flow after covering capital expenditures, reversing the negative free cash flow seen one year earlier.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue increased from the prior quarter, while operating cash flow rose more than sixfold, resulting in free cash flow that was substantially higher. Capital expenditure remained stable, so the improvement in free cash flow was driven primarily by the increase in operating cash flow, lifting the free cash flow margin to a higher level than both the preceding quarter and the same quarter last year.
Compared with the immediately preceding quarter, revenue, operating cash flow, free cash flow, and free cash flow margin all improved. Versus the same quarter one year earlier, the same metrics also strengthened, with free cash flow turning from negative to positive.
Monitor whether operating cash flow can sustain its current level relative to revenue, as this quarter’s significant increase was the primary driver of free cash flow.