NIKE, Inc. (NKE) Cash Flow Statement

The nine quarters with reported operating cash flow produced about $7.6B of OCF against $8.7B of net income, but that aggregate masks wide dispersion: conversion ranged from 0.19x to 2.26x, indicating that reported earnings are not a reliable proxy for internal cash generation at present. The 2027Q1 result — $712M of net income translating to only $135M of operating cash flow with working capital reported flat — is particularly telling, implying the shortfall originates in items outside working capital, which warrants further investigation of non-cash charges and non-operating income.

Free cash flow margin has collapsed from 19.1% in 2024Q4 to -0.6% in 2027Q1, with only the 15.2% print in 2025Q3 interrupting what now reads as a persistent downtrend rather than a cycle. Because this erosion runs alongside the revenue contraction and gross margin compression already flagged in the income statement review, it suggests the cash flow weakness is being driven by both operating profitability and working capital volatility, not a one-off timing effect. Investors should note that the cumulative FCF shortfall versus net income appears durable rather than reversible on current trajectory.

Depreciation of approximately $176M-$242M per quarter has exceeded capex in nearly every reported quarter, which implies the existing asset base is being maintained — and in some periods run down — rather than expanded, consistent with an outsourced manufacturing model. This low capital intensity supports a structurally positive free cash flow profile, but combined with the flat SG&A base noted in the income statement review, it may also signal that limited reinvestment in distribution, technology, or owned retail could be constraining the revenue recovery. The pattern warrants monitoring against peers with higher reinvestment rates.

Roughly $770M of net working capital drains occurred in 2025Q1, 2026Q1 and 2026Q2 alone, reflecting what appears to be inventory build that later unwound into releases — a pattern consistent with the wholesale destocking cycle already evident in the reported revenue declines. The 2027Q1 quarter complicates this read: working capital change was reported at zero, yet operating cash flow still came in at only $135M against $712M of net income, meaning the conversion shortfall cannot be explained by inventory or receivables dynamics alone. This divergence between cash conversion and working capital should be a focal point in subsequent filings.

Cumulative dividends over the last ten quarters approximate $5.7B against cumulative free cash flow of roughly $6.3B, implying that essentially the entire internally generated cash pool is being directed to shareholders, leaving no visible margin for debt reduction, acquisitions, or organic reinvestment. The abrupt suspension of buybacks from 2026Q2 onward appears consistent with a shift toward balance sheet preservation, but it also raises the question of whether the dividend commitment is sustainable if operating cash flow does not recover. Investors should monitor dividend coverage as the single clearest test of management's confidence in the recovery narrative.