QXO, Inc. (QXO) Cash Flow Statement

The historical OCF/NI ratio above 1.0 in the legacy IT business indicated strong cash conversion, but recent quarters show significant divergence. In 2026Q2, a -$55.0M net loss was accompanied by a -$216.6M operating cash outflow, a ratio of 3.94, which implies that non-cash charges like depreciation and stock-based compensation are not fully explaining the cash burn. This pattern suggests that the aggressive M&A and integration activities are consuming cash far faster than the underlying business is generating it, a critical risk for a company in its 'build phase'.

The FCF trajectory shows a clear inflection point. After generating positive FCF in 2025Q3 and Q4, the company has burned significant cash in 2025Q2 and 2026Q2. This negative FCF is not driven by capital expenditures, which remain modest at ~1% of revenue, but by massive working capital outflows and acquisition spending. The trajectory implies that the company is now in a phase of heavy investment, where the cash generated from operations is insufficient to fund its growth ambitions, necessitating the use of its substantial cash reserves.

The massive working capital swings are the most material factor in QXO's cash flow profile. The -$417.5M outflow in 2026Q2, which dwarfed the net loss, indicates a substantial build-up in inventory or a significant extension of receivables, likely tied to onboarding new distribution operations. This pattern is typical of a rapid roll-up but introduces substantial execution risk; if the company cannot efficiently manage the working capital cycles of its acquired entities, it could face persistent cash drains that erode its liquidity advantage.

The deployment profile confirms the company's strategic priorities. The $2.0B acquisition spend in 2026Q2 is the single largest use of cash, far exceeding the combined $53.6M in dividends and $28.1M in buybacks from the prior quarter. This aggressive M&A spending, funded by the company's cash reserves, is the core of the 'capital-as-a-weapon' thesis. However, the lack of significant organic investment (low CapEx) suggests that the company is relying entirely on acquisitions for growth, which may not be sustainable if integration challenges arise or if target valuations increase.