Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Free cash flow margin weakened sequentially but improved sharply year-over-year, driven by a lower operating cash flow conversion relative to revenue. Capital expenditure increased from both the prior quarter and the prior year, partially offsetting higher operating cash flow.
- Revenue was lower than the preceding quarter and the year-ago quarter, while operating cash flow decreased slightly from the prior quarter but rose from a year ago. Free cash flow weakened from the prior quarter but was nearly stable versus a year earlier, with a free cash flow margin that was lower sequentially yet higher annually.
- Compared to the immediately preceding quarter, revenue and operating cash flow were both lower, and capital expenditure was higher, resulting in a weaker free cash flow and margin. Versus the same quarter one year earlier, revenue was lower but operating cash flow improved, and although capital expenditure increased, free cash flow was marginally lower and the margin was stronger.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.5B
Trailing twelve-month free cash flow.
Quarter free cash flow
$767.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.4B
Cash generated by operations before capital spending.
CapEx
$610.0M
Capital spending and related asset purchases.
FCF margin
27.4%
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 | $5.0B | $1.5B | $841.0M | $649.0M | 13.1% |
| 2022-12-31 | $4.1B | $1.2B | $2.2B | -$932.0M | -22.6% |
| 2023-03-31 | $3.1B | $1.5B | $545.0M | $969.0M | 31.1% |
| 2023-06-30 | $2.8B | $1.4B | $610.0M | $767.0M | 27.4% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 166.7% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 21.8% | 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.
Capital Expenditure Increase
Capital expenditure was higher than both the prior quarter and the year-ago quarter, which reduced the free cash flow generated from operating cash flow. This was the strongest observable factor limiting free cash flow improvement despite higher year-over-year operating cash flow.
Free cash flow and its margin weakened sequentially as the higher capital outlay absorbed a larger portion of operating cash flow.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was lower than the preceding quarter and the year-ago quarter, while operating cash flow decreased slightly from the prior quarter but rose from a year ago. Free cash flow weakened from the prior quarter but was nearly stable versus a year earlier, with a free cash flow margin that was lower sequentially yet higher annually.
Compared to the immediately preceding quarter, revenue and operating cash flow were both lower, and capital expenditure was higher, resulting in a weaker free cash flow and margin. Versus the same quarter one year earlier, revenue was lower but operating cash flow improved, and although capital expenditure increased, free cash flow was marginally lower and the margin was stronger.
Monitor the trend in capital expenditure relative to operating cash flow, as a higher spending level this quarter reduced free cash flow conversion.