Capital expenditure (capex)
Money a company spends on long-lived assets such as factories, equipment, data centers and capitalized software.
Capital expenditure, or capex, is spending on assets expected to produce value for more than one year, such as property, plant, equipment and capitalized software. It appears in the cash flow statement under investing activities. Capex is often split into maintenance spending, which keeps operations running, and growth spending, which expands capacity.
On our site, capex is shown quarterly and as a percentage of revenue. Management guidance on capex often reveals the plan for growth.
Traders care because rising capex can depress free cash flow in the short term. It can signal growth or an arms race, depending on the returns it earns.
Worked example (illustrative numbers, not real data): a company spends 400 million dollars on capex against 2 billion dollars of revenue, or 20 percent. Analysts estimate 250 million of that is maintenance. The remaining 150 million is growth spending, which should be judged against the return it generates.