Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
The company generated strong free cash flow this quarter, driven by a substantial improvement in operating cash flow despite lower revenue. Compared to the prior quarter, cash conversion improved markedly, while relative to the same quarter last year, free cash flow and margin were slightly lower.
- Revenue declined from the prior quarter, but operating cash flow increased sharply, while capital expenditure was significantly lower, resulting in a much higher free cash flow and margin. The free cash flow margin of this quarter was higher than the previous quarter but slightly lower than the same quarter one year earlier.
- Compared to the immediately preceding quarter, free cash flow and margin improved substantially due to higher operating cash flow and lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin were slightly lower, as the decline in operating cash flow was only partially offset by lower capital expenditure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$2.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$923.4M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$971.2M
Cash generated by operations before capital spending.
CapEx
$47.8M
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 |
|---|---|---|---|---|---|
| 2022-06-30 | $4.1B | $802.5M | $83.9M | $718.6M | 17.5% |
| 2022-09-30 | $4.1B | $869.0M | $103.9M | $765.1M | 18.8% |
| 2022-12-31 | $3.9B | $189.0M | $153.7M | $35.3M | 0.9% |
| 2023-03-31 | $3.7B | $971.2M | $47.8M | $923.4M | 24.8% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | n/a | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 1.3% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$18.1B | 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 Rebound
Operating cash flow increased significantly from the prior quarter, reversing a low level and driving a large improvement in free cash flow. The filing notes that net cash provided by operating activities decreased compared to the year-ago quarter, but the sequential improvement was the strongest observable factor this quarter.
The rebound in operating cash flow was the primary reason for the sharp increase in free cash flow and margin relative to the preceding quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue declined from the prior quarter, but operating cash flow increased sharply, while capital expenditure was significantly lower, resulting in a much higher free cash flow and margin. The free cash flow margin of this quarter was higher than the previous quarter but slightly lower than the same quarter one year earlier.
Compared to the immediately preceding quarter, free cash flow and margin improved substantially due to higher operating cash flow and lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin were slightly lower, as the decline in operating cash flow was only partially offset by lower capital expenditure.
Monitor the level of capital expenditure, which was lower than both the prior quarter and the year-ago quarter, to see if it remains at this reduced level.