NIKE, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS NIKE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED AUGUST 31, (In millions, except per share data) 2025 2024 Revenues $ 11,720 $ 11,589 Cost of sales 6,777 6,332 Gross profit 4,943 5,257 Demand creation expense 1,188 1,226 Operating overhead expense 2,828 2,822 Total selling and administrative expense 4,016 4,048 Interest expense (income), net ( 18 ) ( 43 ) Other (income) expense, net 23 ( 55 ) Income before income taxes 922 1,307 Income tax expense 195 256 NET INCOME $ 727 $ 1,051 Earnings per common share: Basic $ 0.49 $ 0.70 Diluted $ 0.49 $ 0.70 Weighted average common shares outstanding: Basic 1,476.6 1,497.7 Diluted 1,479.0 1,502.0 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement. 1 Table of Contents NIKE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED AUGUST 31, (Dollars in millions) 2025 2024 Net income $ 727 $ 1,051 Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment 134 138 Change in net gains (losses) on cash flow hedges ( 186 ) ( 227 ) Change in net gains (losses) on other 2 9 Total other comprehensive income (loss), net of tax ( 50 ) ( 80 ) TOTAL COMPREHENSIVE INCOME $ 677 $ 971 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement. 2 Table of Contents NIKE, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AUGUST 31, MAY 31, (In millions) 2025 2025 ASSETS Current assets: Cash and equivalents $ 7,024 $ 7,464 Short-term investments 1,551 1,687 Accounts receivable, net 4,962 4,717 Inventories 8,114 7,489 Prepaid expenses and other current assets 2,247 2,005 Total current assets 23,898 23,362 Property, plant and equipment, net 4,861 4,828 Operating lease right-of-use assets, net 2,727 2,712 Identifiable intangible assets, net 259 259 Goodwill 240 240 Deferred income taxes and other assets 5,349 5,178 TOTAL ASSETS $ 37,334 $ 36,579 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable 4 5 Accounts payable 3,772 3,479 Current portion of operating lease liabilities 506 502 Accrued liabilities 5,923 5,911 Income taxes payable 706 669 Total current liabilities 10,911 10,566 Long-term debt 7,996 7,961 Operating lease liabilities 2,555 2,550 Deferred income taxes and other liabilities 2,404 2,289 Commitments and contingencies (Note 11) Redeemable preferred stock — — Shareholders' equity: Common stock at stated value: Class A convertible — 289 and 290 shares outstanding — — Class B — 1,188 and 1,186 shares outstanding 3 3 Capital in excess of stated value 14,473 14,195 Accumulated other comprehensive income (loss) ( 308 ) ( 258 ) Retained earnings (deficit) ( 700 ) ( 727 ) Total shareholders' equity 13,468 13,213 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 37,334 $ 36,579 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement. 3 Table of Contents NIKE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED AUGUST 31, (Dollars in millions) 2025 2024 Cash provided (used) by operations: Net income $ 727 $ 1,051 Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation and amortization 190 188 Deferred income taxes ( 25 ) ( 53 ) Stock-based compensation 185 183 Impairment and other 8 ( 4 ) Net foreign currency adjustments 34 ( 7 ) Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable ( 215 ) ( 312 ) (Increase) decrease in inventories ( 610 ) ( 679 ) (Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets ( 165 ) ( 265 ) Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities 93 292 Cash provided (used) by operations 222 394 Cash provided (used) by investing activities: Purchases of short-term investments ( 355 ) ( 968 ) Maturities of short-term investments 209 144 Sales of short-term investments 294 778 Additions to property, plant and equipment ( 207 ) ( 120 ) Cash provided (used) by investing activities ( 59 ) ( 166 ) Cash provided (used) by financing activities: Increase (decrease) in notes payable, net ( 1 ) 6 Proceeds from exercise of stock options and other stock issuances 127 131 Repurchase of common stock ( 126 ) ( 1,184 ) Dividends — common and preferred ( 591 ) ( 558 ) Other financing activities ( 7 ) ( 17 ) Cash provided (used) by financing activities ( 598 ) ( 1,622 ) Effect of exchange rate changes on cash and equivalents ( 5 ) 19 Net increase (decrease) in cash and equivalents ( 440 ) ( 1,375 ) Cash and equivalents, beginning of period 7,464 9,860 CASH AND EQUIVALENTS, END OF PERIOD $ 7,024 $ 8,485 Supplemental disclosure of cash flow information: Non-cash additions to property, plant and equipment $ 101 $ 48 Dividends declared and not paid 594 554 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement. 4 Table of Contents NIKE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS (DEFICIT) TOTAL CLASS A CLASS B (In millions, except per share data) SHARES AMOUNT SHARES AMOUNT Balance at May 31, 2025 290 $ — 1,186 $ 3 $ 14,195 $ ( 258 ) $ ( 727 ) $ 13,213 Stock options exercised 3 126 126 Conversion to Class B Common Stock ( 1 ) 1 — Repurchase of Class B Common Stock ( 2 ) ( 17 ) ( 106 ) ( 123 ) Dividends on common stock ($ 0.40 per share) and preferred stock ($ 0.10 per share) ( 594 ) ( 594 ) Issuance of shares to employees, net of shares withheld for employee taxes ( 16 ) ( 16 ) Stock-based compensation 185 185 Net income 727 727 Other comprehensive income (loss) ( 50 ) ( 50 ) Balance at August 31, 2025 289 $ — 1,188 $ 3 $ 14,473 $ ( 308 ) $ ( 700 ) $ 13,468 COMMON STOCK CAPITAL IN EXCESS OF STATED VALUE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) RETAINED EARNINGS (DEFICIT) TOTAL CLASS A CLASS B (In millions, except per share data) SHARES AMOUNT SHARES AMOUNT Balance at May 31, 2024 298 $ — 1,205 $ 3 $ 13,409 $ 53 $ 965 $ 14,430 Stock options exercised 3 124 124 Repurchase of Class B Common Stock ( 15 ) ( 132 ) ( 1,061 ) ( 1,193 ) Dividends on common stock ($ 0.37 per share) and preferred stock ($ 0.10 per share) ( 554 ) ( 554 ) Issuance of shares to employees, net of shares withheld for employee taxes ( 27 ) 10 ( 17 ) Stock-based compensation 183 183 Net income 1,051 1,051 Other comprehensive income (loss) ( 80 ) ( 80 ) Balance at August 31, 2024 298 $ — 1,193 $ 3 $ 13,557 $ ( 27 ) $ 411 $ 13,944 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement. 5 Table of Contents NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 Summary of Significant Accounting Policies 7 NOTE 2 Accrued Liabilities 7 NOTE 3 Fair Value Measurements 8 NOTE 4 Income Taxes 9 NOTE 5 Stock-Based Compensation 10 NOTE 6 Earnings Per Share 11 NOTE 7 Risk Management and Derivatives 12 NOTE 8 Accumulated Other Comprehensive Income (Loss) 14 NOTE 9 Revenues 15 NOTE 10 S egment Informat ion 16 NOTE 11 Commitments and Contingencies 18 NOTE 12 Supplier Finance Programs 18 6 Table of Contents NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the "Company" or "NIKE") and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim period. The year-end Condensed Consolidated Balance Sheet data as of May 31, 2025, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). The interim financial information and notes thereto should be read in conjunction with the Company's latest Annual Report on Form 10-K for the fiscal year ended May 31, 2025 (the "Annual Report"). The results of operations for the three months ended August 31, 2025, are not necessarily indicative of results for the entire fiscal year. RECENT ACCOUNTING PRONOUNCEMENTS In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning June 1, 2025 and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company's annual periods beginning June 1, 2027, and interim periods beginning June 1, 2028, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. NOTE 2 — ACCRUED LIABILITIES Accrued liabilities included the following: AUGUST 31, MAY 31, (Dollars in millions) 2025 2025 Sales-related reserves $ 1,788 $ 1,834 Compensation and benefits, excluding taxes 1,244 1,245 Dividends payable 599 598 Other 2,292 2,234 TOTAL ACCRUED LIABILITIES $ 5,923 $ 5,911 7 Table of Contents NOTE 3 — FAIR VALUE MEASUREMENTS The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity securities and available-for-sale debt securities. The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of August 31, 2025 and May 31, 2025, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement: AUGUST 31, 2025 (Dollars in millions) ASSETS AT FAIR VALUE CASH AND EQUIVALENTS SHORT-TERM INVESTMENTS Cash $ 1,409 $ 1,409 $ — Level 1: U.S. Treasury securities 897 — 897 Level 2: Commercial paper and bonds 672 35 637 Money market funds 5,309 5,309 — Time deposits 271 271 — U.S. Agency securities 17 — 17 Total Level 2 6,269 5,615 654 TOTAL $ 8,575 $ 7,024 $ 1,551 MAY 31, 2025 (Dollars in millions) ASSETS AT FAIR VALUE CASH AND EQUIVALENTS SHORT-TERM INVESTMENTS Cash $ 1,221 $ 1,221 $ — Level 1: U.S. Treasury securities 1,046 — 1,046 Level 2: Commercial paper and bonds 675 45 630 Money market funds 5,902 5,902 — Time deposits 297 295 2 U.S. Agency securities 10 1 9 Total Level 2 6,884 6,243 641 TOTAL $ 9,151 $ 7,464 $ 1,687 As of August 31, 2025, the Company held $ 582 million of available-for-sale debt securities with maturity dates within one year and $ 969 million with maturity dates greater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated Balance Sheets. The fair value of the Company's available-for-sale debt securities approximates their amortized cost. Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $ 83 million and $ 120 million for the three months ended August 31, 2025 and 2024, respectively. 8 Table of Contents The following tables present information about the Company's derivative assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement: AUGUST 31, 2025 DERIVATIVE ASSETS DERIVATIVE LIABILITIES (Dollars in millions) ASSETS AT FAIR VALUE OTHER CURRENT ASSETS OTHER LONG-TERM ASSETS LIABILITIES AT FAIR VALUE ACCRUED LIABILITIES OTHER LONG-TERM LIABILITIES Level 2: Foreign exchange forwards and options (1) $ 133 $ 107 $ 26 $ 518 $ 348 $ 170 Interest rate swaps (1) 55 — 55 — — — TOTAL $ 188 $ 107 $ 81 $ 518 $ 348 $ 170 (1) If the foreign exchange and interest rate swap derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 188 million as of August 31, 2025. As of that date, the Company posted $ 175 million cash collateral to various counterparties on the derivative liability balance and no amount of collateral was received from counterparties on the derivative asset balance. MAY 31, 2025 DERIVATIVE ASSETS DERIVATIVE LIABILITIES (Dollars in millions) ASSETS AT FAIR VALUE OTHER CURRENT ASSETS OTHER LONG-TERM ASSETS LIABILITIES AT FAIR VALUE ACCRUED LIABILITIES OTHER LONG-TERM LIABILITIES Level 2: Foreign exchange forwards and options (1) $ 107 $ 85 $ 22 $ 368 $ 226 $ 142 Interest rate swaps (1) 24 — 24 3 — 3 TOTAL $ 131 $ 85 $ 46 $ 371 $ 226 $ 145 (1) If the foreign exchange and interest rate swap derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $ 131 million as of May 31, 2025. As of that date, the Company posted $ 166 million cash collateral to various counterparties on the derivative liability balance and no amount of collateral was received from counterparties on the derivative asset balance. For additional information related to the Company's derivative financial instruments and credit risk, refer to Note 7 — Risk Management and Derivatives. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value. FINANCIAL ASSETS AND LIABILITIES NOT RECORDED AT FAIR VALUE The Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts, debt issuance costs and interest rate swap fair value adjustments. The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company's Long-term debt, excluding interest rate swap fair value adjustments, was approximately $ 6,794 million at August 31, 2025 and $ 6,673 million at May 31, 2025. NOTE 4 — INCOME TAXES The effective tax rate was 21.1 % and 19.6 % for the three months ended August 31, 2025 and 2024, respectively. The increase in the Company's effective tax rate was primarily due to decreased benefits from stock-based compensation. On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions were effective for NIKE beginning June 1, 2025. Based on the Company's current analysis of the provisions, the Company does not expect these tax law changes to have a material impact on the Company's financial statements; however, the Company will continue to evaluate their impact as further information becomes available. As of August 31, 2025, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 1,021 million, $ 748 million of which would affect the Company's effective tax rate if recognized in future periods. The majority of total gross unrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets. As of May 31, 2025, total gross unrecognized tax benefits, excluding related interest and penalties, were $ 1,026 million. As of August 31, 2025 and May 31, 2025, accrued interest and penalties 9 Table of Contents related to uncertain tax positions were $ 392 million and $ 376 million, respectively, (excluding federal benefit) and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets. The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under audit by the U.S. Internal Revenue Service ("IRS") for fiscal years 2017 through 2023. The Company has closed all U.S. federal income tax matters through fiscal year 2016, with the exception of certain transfer pricing adjustments. In certain major foreign jurisdictions, tax years after 2014 remain subject to examination. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit issues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible the total gross unrecognized tax benefits could decrease by up to $ 228 million within the next 12 months primarily as a result of the expected resolution with the IRS of certain U.S. federal income tax matters for fiscal years 2017 through 2019 related to transfer pricing adjustments, research and development credits and other items. In January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when granting certain tax rulings to the Company. The Company believes the investigation is without merit. If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the Netherlands could increase. NOTE 5 — STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION The NIKE, Inc. Stock Incentive Plan (the "Stock Incentive Plan") provides for the issuance of up to 843 million previously unissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights and stock awards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units as well as performance-based restricted stock units ("PSUs"). In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market price under employee stock purchase plans ("ESPPs"). The following table summarizes the Company's total stock-based compensation expense recognized within Cost of sales or Operating overhead expense, as applicable: THREE MONTHS ENDED AUGUST 31, (Dollars in millions) 2025 2024 Stock options (1) $ 76 $ 71 ESPPs 15 13 Restricted stock and restricted stock units (2) 94 99 TOTAL STOCK-BASED COMPENSATION EXPENSE $ 185 $ 183 (1) Expense for stock options includes the expense associated with stock appreciation rights. (2) Expense for restricted stock units includes an immaterial amount of expense for PSUs. STOCK OPTIONS As of August 31, 2025, the Company had $ 309 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized within Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.4 years. RESTRICTED STOCK AND RESTRICTED STOCK UNITS As of August 31, 2025, the Company had $ 522 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized within Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.3 years. 10 Table of Contents NOTE 6 — EARNINGS PER SHARE The following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations of diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, to purchase an estimated additional 68.3 million and 61.1 million shares of common stock outstanding for the three months ended August 31, 2025 and 2024, respectively, because the awards were assumed to be anti-dilutive. THREE MONTHS ENDED AUGUST 31, (In millions, except per share data) 2025 2024 Net income available to common stockholders $ 727 $ 1,051 Determination of shares: Weighted average common shares outstanding 1,476.6 1,497.7 Assumed conversion of dilutive stock options and awards 2.4 4.3 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,479.0 1,502.0 Earnings per common share: Basic $ 0.49 $ 0.70 Diluted $ 0.49 $ 0.70 11 Table of Contents NOTE 7 — RISK MANAGEMENT AND DERIVATIVES The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. As of and for the three months ended August 31, 2025, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report. The majority of derivatives outstanding as of August 31, 2025, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, Chinese Yuan/U.S. Dollar, British Pound/Euro and Japanese Yen/U.S. Dollar currency pairs. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date. The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets: DERIVATIVE ASSETS BALANCE SHEET LOCATION AUGUST 31, MAY 31, (Dollars in millions) 2025 2025 Derivatives formally designated as hedging instruments: Foreign exchange forwards and options Prepaid expenses and other current assets $ 95 $ 75 Foreign exchange forwards and options Deferred income taxes and other assets 26 22 Interest rate swaps Deferred income taxes and other assets 55 24 Total derivatives formally designated as hedging instruments 176 121 Derivatives not designated as hedging instruments: Foreign exchange forwards and options Prepaid expenses and other current assets 12 10 Total derivatives not designated as hedging instruments 12 10 TOTAL DERIVATIVE ASSETS $ 188 $ 131 DERIVATIVE LIABILITIES BALANCE SHEET LOCATION AUGUST 31, MAY 31, (Dollars in millions) 2025 2025 Derivatives formally designated as hedging instruments: Foreign exchange forwards and options Accrued liabilities $ 339 $ 216 Foreign exchange forwards and options Deferred income taxes and other liabilities 170 142 Interest rate swaps Deferred income taxes and other liabilities — 3 Total derivatives formally designated as hedging instruments 509 361 Derivatives not designated as hedging instruments: Foreign exchange forwards and options Accrued liabilities 9 10 Total derivatives not designated as hedging instruments 9 10 TOTAL DERIVATIVE LIABILITIES $ 518 $ 371 12 Table of Contents The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income: (Dollars in millions) AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES (1) AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME (1) THREE MONTHS ENDED AUGUST 31, LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME THREE MONTHS ENDED AUGUST 31, 2025 2024 2025 2024 Derivatives designated as cash flow hedges: Foreign exchange forwards and options $ 43 $ ( 44 ) Revenues $ ( 7 ) $ ( 21 ) Foreign exchange forwards and options ( 153 ) ( 98 ) Cost of sales 50 70 Foreign exchange forwards and options ( 48 ) ( 29 ) Other (income) expense, net ( 14 ) 30 Interest rate swaps (2) — — Interest expense (income), net ( 2 ) ( 2 ) TOTAL DESIGNATED CASH FLOW HEDGES $ ( 158 ) $ ( 171 ) $ 27 $ 77 (1) For the three months ended August 31, 2025 and 2024, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial. (2) Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt. AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES THREE MONTHS ENDED AUGUST 31, (Dollars in millions) 2025 2024 Derivatives not designated as hedging instruments: Foreign exchange forwards and options $ 17 $ — Other (income) expense, net CASH FLOW HEDGES The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $ 18.5 billion and $ 18.4 billion as of August 31, 2025 and May 31, 2025, respectively. Approximately $ 183 million of deferred net losses (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of August 31, 2025, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of August 31, 2025, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 33 months. FAIR VALUE HEDGES The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $ 2.4 billion as of August 31, 2025 and May 31, 2025. UNDESIGNATED DERIVATIVE INSTRUMENTS The total notional amount of outstanding undesignated derivative instruments was $ 4.1 billion and $ 4.0 billion as of August 31, 2025 and May 31, 2025, respectively. CREDIT RISK As of August 31, 2025, the Company was in compliance with all credit risk-related contingent features and considers the impact of the risk of counterparty default to be immaterial. For additional information related to the Company's derivative financial instruments and collateral, refer to Note 3 — Fair Value Measurements. 13 Table of Contents NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in Accumulated other comprehensive income (loss), net of tax, were as follows: (Dollars in millions) FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1) CASH FLOW HEDGES NET INVESTMENT HEDGES (1) OTHER TOTAL Balance at May 31, 2025 $ ( 114 ) $ ( 207 ) $ 115 $ ( 52 ) $ ( 258 ) Other comprehensive income (loss): Other comprehensive gains (losses) before reclassifications (2) 134 ( 155 ) — 2 ( 19 ) Reclassifications to net income of previously deferred (gains) losses (2)(3) — ( 31 ) — — ( 31 ) Total other comprehensive income (loss) 134 ( 186 ) — 2 ( 50 ) Balance at August 31, 2025 $ 20 $ ( 393 ) $ 115 $ ( 50 ) $ ( 308 ) (1) The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity. (2) Net of immaterial tax impact. (3) Reclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation adjustment, net investment hedges, and other. (Dollars in millions) FOREIGN CURRENCY TRANSLATION ADJUSTMENT (1) CASH FLOW HEDGES NET INVESTMENT HEDGES (1) OTHER TOTAL Balance at May 31, 2024 $ ( 256 ) $ 247 $ 115 $ ( 53 ) $ 53 Other comprehensive income (loss): Other comprehensive gains (losses) before reclassifications (2) 137 ( 151 ) — 7 ( 7 ) Reclassifications to net income of previously deferred (gains) losses (2)(3) 1 ( 76 ) — 2 ( 73 ) Total other comprehensive income (loss) 138 ( 227 ) — 9 ( 80 ) Balance at August 31, 2024 $ ( 118 ) $ 20 $ 115 $ ( 44 ) $ ( 27 ) (1) The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity. (2) Net of immaterial tax impact. (3) Reclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation adjustment, net investment hedges, and other. For additional information related to the Company's cash flow hedges refer to Note 7 — Risk Management and Derivatives. 14 Table of Contents NOTE 9 — REVENUES DISAGGREGATION OF REVENUES The following tables present the Company's Revenues by reportable operating segment, disaggregated by major product line and distribution channel: THREE MONTHS ENDED AUGUST 31, 2025 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues by: Footwear $ 3,219 $ 2,021 $ 1,109 $ 1,061 $ — $ 7,410 $ 321 $ — $ 7,731 Apparel 1,474 1,106 362 371 — 3,313 11 — 3,324 Equipment 327 204 41 58 — 630 8 — 638 Other — — — — 9 9 26 ( 8 ) 27 TOTAL REVENUES $ 5,020 $ 3,331 $ 1,512 $ 1,490 $ 9 $ 11,362 $ 366 $ ( 8 ) $ 11,720 Revenues by: Sales to Wholesale Customers $ 2,736 $ 2,261 $ 893 $ 949 $ — $ 6,839 $ 195 $ — $ 7,034 Sales through Direct to Consumer 2,284 1,070 619 541 — 4,514 145 — 4,659 Other — — — — 9 9 26 ( 8 ) 27 TOTAL REVENUES $ 5,020 $ 3,331 $ 1,512 $ 1,490 $ 9 $ 11,362 $ 366 $ ( 8 ) $ 11,720 THREE MONTHS ENDED AUGUST 31, 2024 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues by: Footwear $ 3,212 $ 1,952 $ 1,246 $ 1,052 $ — $ 7,462 $ 436 $ — $ 7,898 Apparel 1,331 993 360 348 — 3,032 17 — 3,049 Equipment 283 198 60 62 — 603 12 — 615 Other — — — — 14 14 36 ( 23 ) 27 TOTAL REVENUES $ 4,826 $ 3,143 $ 1,666 $ 1,462 $ 14 $ 11,111 $ 501 $ ( 23 ) $ 11,589 Revenues by: Sales to Wholesale Customers $ 2,475 $ 2,074 $ 971 $ 890 $ — $ 6,410 $ 275 $ — $ 6,685 Sales through Direct to Consumer 2,351 1,069 695 572 — 4,687 190 — 4,877 Other — — — — 14 14 36 ( 23 ) 27 TOTAL REVENUES $ 4,826 $ 3,143 $ 1,666 $ 1,462 $ 14 $ 11,111 $ 501 $ ( 23 ) $ 11,589 Global Brand Divisions revenues included NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Converse Other revenues were primarily attributable to licensing businesses. Corporate revenues primarily consisted of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through the Company's central foreign exchange risk management program. As of August 31, 2025 and May 31, 2025, the Company did no t have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets. 15 Table of Contents NOTE 10 — SEGMENT INFORMATION The Company's reportable operating segments reflect the structure of the Company's internal organization and the financial information the Chief Operating Decision Maker ("CODM"), the Company's Chief Executive Officer, regularly reviews to assess Company performance and allocate resources. The CODM evaluates the performance of the Company's segments and allocates resources based on earnings before interest and taxes ("EBIT"), which represents Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income. The Company's segments are defined as follows: NIKE BRAND The NIKE Brand reportable operating segments are: North America; Europe, Middle East & Africa ("EMEA"); Greater China; and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands. Each NIKE Brand segment represents a geographic region operating predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and equipment. Global Brand Divisions is included within NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Global Brand Divisions primarily represents costs, including product creation and design expenses, that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. CONVERSE Converse operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. CORPORATE Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. As part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in the Company's geographic segments and to Converse. Inventories and Cost of sales for geographic segments and Converse reflect the use of these standard rates to recognize non-functional currency product purchases in the entity's functional currency. Differences between these standard rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses and other conversion gains and losses. 16 Table of Contents THREE MONTHS ENDED AUGUST 31, 2025 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues $ 5,020 $ 3,331 $ 1,512 $ 1,490 $ 9 $ 11,362 $ 366 $ ( 8 ) $ 11,720 Cost of Sales 2,897 1,900 798 838 168 6,601 193 ( 17 ) 6,777 Gross profit 2,123 1,431 714 652 ( 159 ) 4,761 173 9 4,943 Demand creation expense 442 313 99 97 203 1,154 33 1 1,188 Operating overhead expense 547 382 238 208 831 2,206 102 520 2,828 Total selling and administrative expense 989 695 337 305 1,034 3,360 135 521 4,016 Other segment items (1) — 1 — ( 3 ) ( 1 ) ( 3 ) ( 1 ) 27 23 EARNINGS (LOSS) BEFORE INTEREST AND TAXES $ 1,134 $ 735 $ 377 $ 350 $ ( 1,192 ) $ 1,404 $ 39 $ ( 539 ) Interest expense (income), net ( 18 ) TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 922 Supplemental information: Depreciation and amortization (2) $ 38 39 12 16 54 159 2 29 $ 190 (1) At NIKE Brand segments and Converse, other segment items consist of unusual or non-operating transactions that occur outside the normal course of business. At Corporate, this also includes foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments. (2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable. THREE MONTHS ENDED AUGUST 31, 2024 (Dollars in millions) NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA GREATER CHINA ASIA PACIFIC & LATIN AMERICA GLOBAL BRAND DIVISIONS TOTAL NIKE BRAND CONVERSE CORPORATE TOTAL NIKE, INC. Revenues $ 4,826 $ 3,143 $ 1,666 $ 1,462 $ 14 $ 11,111 $ 501 $ ( 23 ) $ 11,589 Cost of Sales 2,627 1,695 855 782 153 6,112 233 ( 13 ) 6,332 Gross profit 2,199 1,448 811 680 ( 139 ) 4,999 268 ( 10 ) 5,257 Demand creation expense 452 290 114 90 242 1,188 35 3 1,226 Operating overhead expense 529 366 240 188 846 2,169 113 540 2,822 Total selling and administrative expense 981 656 354 278 1,088 3,357 148 543 4,048 Other segment items (1) 2 — ( 45 ) — — ( 43 ) ( 1 ) ( 11 ) ( 55 ) EARNINGS (LOSS) BEFORE INTEREST AND TAXES $ 1,216 $ 792 $ 502 $ 402 $ ( 1,227 ) $ 1,685 $ 121 $ ( 542 ) Interest expense (income), net ( 43 ) TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 1,307 Supplemental information: Depreciation and amortization (2) $ 36 35 13 11 57 152 4 32 $ 188 (1) At NIKE Brand segments and Converse, other segment items consist of unusual or non-operating transactions that occur outside the normal course of business. At Corporate, this also includes foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments. (2) The amounts of depreciation and amortization disclosed by segment are included within Cost of sales and Operating overhead expense, as applicable. 17 Table of Contents AUGUST 31, MAY 31, (Dollars in millions) 2025 2025 INVENTORIES (1) North America $ 3,524 $ 3,198 Europe, Middle East & Africa 2,128 2,042 Greater China 1,097 951 Asia Pacific & Latin America 1,066 905 Global Brand Divisions 142 148 TOTAL NIKE BRAND 7,957 7,244 Converse 247 272 Corporate ( 90 ) ( 27 ) TOTAL NIKE, INC. INVENTORIES $ 8,114 $ 7,489 (1) Inventories as of August 31, 2025 and May 31, 2025 were substantially all finished goods. NOTE 11 — COMMITMENTS AND CONTINGENCIES In the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations relating to its business, products and actions of its employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters is inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts above management's expectations, the Company's financial position, operating results and cash flows for that reporting period could be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with counsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the Company's results of operations, financial position or cash flows, except as described below. BELGIAN CUSTOMS CLAIM The Company has received claims for certain years from Belgian Customs for alleged underpaid duties related to products imported beginning in fiscal 2018. The Company disputes these claims and has engaged in the appellate process. The Company has issued bank guarantees in order to appeal the claims. At this time, the Company is unable to estimate the range of loss and cannot predict the final outcome as it could take several years to reach a resolution on this matter. If this matter is ultimately resolved against the Company, the amounts owed, including fines, penalties and other consequences relating to the matter, could have a material adverse effect on the Company's results of operations, financial position and cash flows. NOTE 12 — SUPPLIER FINANCE PROGRAMS Certain financial institutions offer voluntary supplier finance programs facilitated through a third-party platform that provide participating suppliers the option to finance valid payment obligations from the Company. The Company is not a party to agreements negotiated between participating suppliers and third-party financial institutions. The Company's obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs and the Company does not provide guarantees to third parties in connection with these programs. As of August 31, 2025 and May 31, 2025, the Company had $ 1,314 million and $ 1,101 million, respectively, of outstanding supplier obligations confirmed as valid under these programs. These amounts are included within Accounts payable on the Unaudited Condensed Consolidated Balance Sheets. 18 Table of Contents