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Walmart Inc. (WMT)·Q3 2025 Earnings Summary

Executive Summary

  • Walmart delivered a solid quarter: total revenues $169.6B (+5.5% reported, +6.2% cc) and operating income $6.7B (+8.2% reported, +9.8% cc), with global eCommerce up 27% and Adjusted EPS $0.58 (+13.7% YoY) .
  • Strength was broad-based: Walmart U.S. comps +5.3% ex-fuel, Sam’s Club U.S. comps +7.0% ex-fuel; advertising +28% globally and membership income +22% supported margins despite mix headwinds from GLP-1 .
  • Guidance raised again for FY25: net sales growth to +4.8–5.1% (cc), adjusted operating income +8.5–9.25% (cc), and Adjusted EPS $2.42–$2.47; this marks the third upward revision this year .
  • Near-term stock catalysts: acceleration in high-margin revenue streams (ads/membership/marketplace), execution on delivery densification (net delivery cost/order down ~40%), and continued eCommerce scale, while hurricanes/port strike created transient OpEx deleverage but did not derail the framework of profit growing faster than sales .

What Went Well and What Went Wrong

What Went Well

  • Operating income grew faster than sales (+8.2% reported vs +5.5% revenues; +9.8% vs +6.2% cc), driven by higher gross margins and membership income and narrowing eCommerce losses .
  • Omnichannel flywheel: global eCommerce +27%, Walmart U.S. eCommerce +22%, Sam’s eCommerce +26%; marketplace SKUs approached ~700 million, and paid expedited delivery penetration surpassed 30% of orders .
  • Management execution: “Q3 sales, operating income and EPS all exceeded the top end of our guided ranges,” per CFO; delivery run-rate above $2.5B per month and three straight quarters of ~40% net delivery cost/order reduction .

What Went Wrong

  • Expense deleverage (+19 bps OpEx as % of net sales to 21.2%) due to hurricane recovery costs, increased marketing, and higher variable pay amid outperformance .
  • Mix pressures from Health & Wellness (GLP-1) vs. general merchandise continued to weigh on gross profit composition even as GM units improved; management emphasized GM improvement will be gradual .
  • International gross margin rate declined (-85 bps) due to Flipkart’s Big Billion Days timing shift into Q3 (benefiting Q3 sales but pressuring Q3 margin and creating a Q4 headwind) .

Financial Results

MetricQ1 FY25Q2 FY25Q3 FY25
Total Revenues ($USD Billions)$161.5 $169.3 $169.6
Net Sales ($USD Billions)$159.9 $167.8 $168.0
Operating Income ($USD Billions)$6.84 $7.94 $6.71
Diluted EPS ($USD)$0.63 $0.56 $0.57
Adjusted EPS ($USD)$0.60 $0.67 $0.58
Gross Profit Rate (%)24.1% (+42 bps YoY) 24.4% (+43 bps YoY) 24.2% (+21 bps YoY)
Operating Expenses / Net Sales (%)20.8% 20.6% 21.2%

Segment breakdown (Q3 FY25 vs Q3 FY24):

SegmentNet Sales Q3 FY24 ($B)Net Sales Q3 FY25 ($B)Operating Income Q3 FY24 ($B)Operating Income Q3 FY25 ($B)
Walmart U.S.$109.4 $114.9 $5.0 $5.4
Walmart International (reported)$28.0 $30.3 $1.12 $1.20
Sam’s Club U.S.$22.0 $22.9 $0.59 $0.63
International (constant currency)$28.0 $31.5 $1.12 $1.30

Key KPIs:

KPIQ1 FY25Q2 FY25Q3 FY25
Walmart U.S. Comp Sales ex-fuel (%)3.8% 4.2% 5.3%
Sam’s Club U.S. Comp ex-fuel (%)4.4% 5.2% 7.0%
Global eCommerce Growth (%)+21% +21% +27%
Walmart U.S. eCommerce Growth (%)+22% +22% +22%
Sam’s Club eCommerce Growth (%)+18% +22% +26%
International eCommerce Growth (%)+19% +18% +43%
Global Advertising Growth (%)+24% +26% +28%
Walmart Connect (U.S.) Growth (%)+26% +30% +26%
Membership Income Growth (Global) (%)n/an/a+22%
Sam’s Membership Income Growth (%)+13.3% +14.4% +15.1%
Inventory Change (Global) (%)-2.7% -2.0% -1.0%
Net Delivery Cost per Order~40% reduction (sequential progress) ~40% reduction ~40% reduction (third consecutive quarter)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (cc)FY25+3.75% to +4.75% (Aug 15) +4.8% to +5.1% (Nov 19) Raised
Adjusted Operating Income (cc)FY25+6.5% to +8.0% (Aug 15) +8.5% to +9.25% (Nov 19) Raised
Adjusted EPS ($)FY25$2.35–$2.43 (Aug 15) $2.42–$2.47 (Nov 19) Raised
Interest, netFY25Increase ~$100M (Aug 15) Approximately flat to last year (Nov 19) Improved
Effective Tax RateFY25Lower-end of original 25–26% (Aug 15) ~24.5% (Nov 19) Lower
Net Sales (cc)FY25+3.0% to +4.0% (Feb 20) +4.8% to +5.1% (Nov 19) Raised twice
Adjusted Operating Income (cc)FY25+4.0% to +6.0% (Feb 20) +8.5% to +9.25% (Nov 19) Raised twice
Adjusted EPS ($)FY25$2.23–$2.37 (Feb 20) $2.42–$2.47 (Nov 19) Raised twice

Q3 (intra-quarter) guidance context from August: net sales +3.25–4.25% (cc), operating income +3.0–4.5% (cc), Adjusted EPS $0.51–$0.52 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2 FY25)Current Period (Q3 FY25)Trend
eCommerce scale and marginseCommerce +21% Q1/Q2; delivery cost/order down ~40%; store-fulfilled delivery +50% Q2; automation rising eCommerce +27%; paid expedited delivery >30% of orders; delivery cost/order down ~40% for third quarter; >50% FC volume automated Improving margins and scalability
Advertising growth+24% Q1; +26% Q2 (Connect +30%) +28% global; International +50%; Connect +26% Accelerating, higher-margin mix
Membership momentumSam’s membership income +13–14% in Q1/Q2 Sam’s +15.1%; Walmart+ double-digit Stronger engagement
General merchandise (GM)GM softness Q1 amid deflation; mixed in Q2 GM inflected positive comps; units ahead of comps; caution on mix Gradual recovery
Health & Wellness (GLP-1) mixGLP-1 grew scripts; margin mix pressure implied GLP-1 contributed ~1pt to U.S. comp; margin headwind acknowledged Persistent mix headwind
International timing effectsQ1 timing benefits (Easter/CNY) Flipkart BBD shifted to Q3: boosts Q3 sales, pressures margins; headwind in Q4 Transient timing impact
AI initiativesProduct catalog improvements; My Assistant rollout (implied strategy)Personal shopping assistant in beta; My Assistant used by 50k associates (1.5M questions) Expanding practical AI use
Macro/currencyCurrency tailwind Q1; near-neutral Q2 Currency headwind Q3 (~70 bps sales, ~160 bps op income); expected Q4 headwind ~100–200 bps Deteriorated FX backdrop

Management Commentary

  • CEO: “Our associates delivered another strong quarter… Globally, we drove strong growth in e-commerce, up 27%. Advertising grew 28%, and membership income was up 22%. This helped us grow profits faster than sales…” .
  • CFO: “Q3 sales, operating income and EPS all exceeded the top end of our guided ranges… store fulfilled delivery increased nearly 50% and surpassed $2.5 billion monthly run rate… three consecutive quarters of ~40% reduction in U.S. net delivery cost per order” .
  • CEO on eCommerce profitability: “We don’t think we should race to it… the total works, and we’ve got a great opportunity to grow our e-commerce business” .
  • CEO on AI: “We’re learning and applying generative AI… personal shopping assistant… My Assistant deployed to home office associates… 50,000 users, 1.5 million questions” .

Q&A Highlights

  • GM trajectory and margins: Management expects continued GM improvement but notes ongoing deflation and mix headwinds; GM units are growing, with strength in home, hardlines, toys and marketplace fashion/apparel .
  • Investment balance vs. profit growth: Company is “appropriately aggressive” on price and wages while still growing operating income faster than sales; architecture targets ~4% sales and ~>sales growth in OI over multi-years .
  • Top-line inflection: Underlying momentum is consistent; Flipkart BBD timing added ~60 bps to Q3 top-line and will be a Q4 headwind .
  • eCommerce profitability stance: Management prefers long-term optimization over near-term profitability milestones; omni model with higher-margin streams (ads, membership, WFS, data) supports profit growth .
  • Upper-income share gains: Gains are driven by both grocery and GM, amplified by convenience (pickup/delivery) and marketplace assortment expansion .

Estimates Context

  • SPGI consensus data was unavailable at time of request due to API limit; as a result, Street comparisons for Q3 FY25 revenue/EPS are not shown here. Values would typically be retrieved from S&P Global; unavailable in this instance.
  • Management indicated Q3 sales, operating income, and EPS exceeded the top end of guided ranges, suggesting potential estimate beats, but we cannot confirm vs. SPGI consensus without the dataset .

Key Takeaways for Investors

  • High-margin vectors are scaling: advertising (+28%), membership (+22%), marketplace/WFS penetration—supporting sustainable profit growth faster than sales despite mix volatility .
  • Delivery economics continue to improve: three straight quarters of ~40% net delivery cost/order reductions; batch density and paid expedited delivery (>30% of orders) underpin margin trajectory .
  • GM recovery is underway but gradual: unit growth and improved comps alongside ongoing deflation and GLP-1 mix effects; expect GM to remain a swing factor for gross margin .
  • International timing effects matter near-term: Flipkart BBD lifted Q3 sales and will weigh on Q4; investors should normalize for event timing when modeling segments .
  • Expense discipline vs. investments: Q3 OpEx deleverage tied to hurricanes/marketing/incentives; expect continued investment in price/convenience while pursuing efficiency and automation .
  • FX headwinds emerging: Q3 reported growth was pressured by FX (~70–160 bps) with anticipated Q4 headwinds (~100–200 bps); model in constant currency where appropriate .
  • Near-term positioning: Raised FY25 guide for sales/OI/EPS, plus clear execution in omnichannel and ancillary revenue streams—supportive for medium-term thesis on margin durability and cash generation .

Appendix: Additional Q3 Press Release Highlights

  • Consolidated gross margin rate up 21 bps, led by Walmart U.S.; global inventory down 1.0%; global advertising +28% (U.S. Connect +26%) .
  • Walmart U.S.: comps +5.3% ex-fuel; transactions +3.1%; average ticket +2.1%; eCommerce +22% with strong store-fulfilled delivery; inventory down 0.6% .
  • Sam’s Club U.S.: net sales +3.9% (ex-fuel +7.2%), comps ex-fuel +7.0%; membership income +15.1%; eCommerce +26% .
  • International: net sales +8.0% reported (+12.4% cc); operating income +7.8% reported (+16.7% cc); eCommerce +43% .