“Looking ahead to fiscal '25, we expect to continue to drive a year-over-year increase in both free cash flow and our conversion rate.”

In context

“n Japan. And Emerging Markets remained strong, growing 13% and now comprises 18% of our total revenue. Looking down the P&L, our adjusted gross margin was roughly stable at 65.8% as our cost-out programs offset inflation. And our adjusted operating margin declined slightly more than expected, given higher sales incentives on the higher revenue, along with increased investments we've made in SG&A to support upcoming product launches. That said, we delivered operating profit in line with expectations. We also continued to drive strong improvement in our free cash flow during the quarter, as we focused across the organization on working capital. In fact, our free cash flow increased by 14% over last year to $5.2 billion, with a conversion rate well north of 100% in the back half of the year. Looking ahead to fiscal '25, we expect to continue to drive a year-over-year increase in both free cash flow and our conversion rate. Turning to capital allocation. Our robust balance sheet allows us to operate from a position of strength. As you know, we prioritize both investing in our future growth and returning capital to our shareholders. We continue to evaluate tuck-in M&A opportunities against a high bar as we prioritize profitable growth. And to our shareholders, we remain committed to returning a minimum of 50% of our free cash flow. In fact, in FY'24, we returned $5.5 billion through both dividends and share repurchases. And over the past few months, we've repurchased over $2.5 billion in the open market, reflecting the confidence we have, as we finalized our plan, in our ability to deliver ahead. This confidence is also evident in the decision by our Board to increase our dividend for the 47th consecutive yea”