Executive Summary
Costco delivered a solid QQ2 2025 quarter, highlighted by continued top-line growth and strong cash generation against a backdrop of a cautious consumer environment. Revenue rose 8.9% year over year to $63.72 billion, reflecting sustained demand across core categories and the favorable effects of a robust membership base. Despite a higher sales mix in lower-margin categories, gross margin remained resilient at approximately 12.5%, contributing to an operating margin of about 3.64% and a net margin near 2.81%. Earnings per share came in at $4.03 (GAAP), with diluted EPS of $4.02, underscoring Costco’s ability to translate volume into earnings through disciplined cost management and private-label efficiency.
Cash flow and liquidity remained exceptional. Net cash from operating activities was $2.748 billion for the quarter, with capital expenditures of $1.138 billion, yielding a free cash flow of roughly $1.611 billion. Costco ended the period with cash and cash equivalents of $12.356 billion and a net cash position of approximately $4.317 billion (net debt negative), signaling substantial balance-sheet flexibility to fund store expansion, share repurchases, and potential strategic investments. The balance sheet shows total assets of $73.224 billion and total equity of $25.577 billion, with a current ratio near 1.0, underscoring liquidity alongside moderate leverage (debt to equity ~0.31).
Looking ahead, the company’s leverage-free balance sheet and strong cash flow generation position Costco well to navigate a constructive macro backdrop while continuing investments in the membership model, international expansion, and omnichannel capabilities. However, valuation remains premium, and investors should monitor membership renewal dynamics, price sensitivity in core categories, wage costs, and currency effects as the company maintains its disciplined capital allocation stance.
Key Performance Indicators
Key Insights
Revenue: $63.723 billion (YoY +8.90%; QoQ +2.53%).
Gross Profit: $7.979 billion; Gross Margin: 12.52% (0.1252).
Operating Income: $2.316 billion; Operating Margin: 3.64% (0.0363).
Net Income: $1.789 billion; Net Margin: 2.81% (0.0281).
EPS: $4.03 (GAAP); Diluted EPS: $4.02.
EBITDA: $1.801 billion; EBITDA Margin: 2.83%.
Cash Flow: Net cash provided by operating activities $2.748 billion; Capital expenditures $1.138 billion; Free cash flow $1.611 billion.
Balance Sheet: Cash and equivalents $12.3...
Financial Highlights
Revenue: $63.723 billion (YoY +8.90%; QoQ +2.53%).
Gross Profit: $7.979 billion; Gross Margin: 12.52% (0.1252).
Operating Income: $2.316 billion; Operating Margin: 3.64% (0.0363).
Net Income: $1.789 billion; Net Margin: 2.81% (0.0281).
EPS: $4.03 (GAAP); Diluted EPS: $4.02.
EBITDA: $1.801 billion; EBITDA Margin: 2.83%.
Cash Flow: Net cash provided by operating activities $2.748 billion; Capital expenditures $1.138 billion; Free cash flow $1.611 billion.
Balance Sheet: Cash and equivalents $12.356 billion; Short-term investments $0.802 billion; Total cash & short-term investments $13.158 billion; Inventory $18.754 billion; Total current assets $36.897 billion; Property, plant and equipment (net) $32.340 billion; Total assets $73.224 billion.
Liabilities & Equity: Total current liabilities $36.999 billion; Long-term debt $8.039 billion; Total liabilities $47.647 billion; Total stockholders’ equity $25.577 billion; Net debt position negative by ~$4.317 billion (net cash).
Liquidity/Turnover: Current ratio ~0.997; Quick ratio ~0.490; Inventory turnover ~2.89x; Days payable ~30.95; Days inventory on hand ~31.19; CCC ~4.56 days.
Valuation (as of period): Price to Earnings ~66.5x; Price to Book ~18.6x; Price to Sales ~7.5x; Dividend yield ~0.11% (low, reflecting growth-oriented capital allocation).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
63.72B |
8.90% |
2.53% |
| Gross Profit |
7.98B |
8.68% |
-0.78% |
| Operating Income |
2.32B |
5.42% |
5.46% |
| Net Income |
1.79B |
6.37% |
-0.56% |
| EPS |
4.03 |
6.33% |
-0.49% |
Key Financial Ratios
operatingProfitMargin
3.63%
operatingCashFlowPerShare
$6.19
freeCashFlowPerShare
$3.63
dividendPayoutRatio
28.8%
Management Commentary
No earnings call transcript data provided in the dataset; unable to extract management quotes or thematic remarks from the QQ2 2025 call. Expected themes in a typical Costco call include membership traction, price/Value strategy, store productivity, international expansion plans, and ongoing supply-chain discipline. The absence of transcript data limits verbatim quotes and management-specific nuances in this analysis.
Forward Guidance
No formal forward guidance was provided in the supplied dataset for QQ2 2025. Based on the quantitative results and industry dynamics, the following qualitative outlook can be inferred:
- Revenue trajectory: Expect mid-single-digit expansion driven by ongoing membership strength and stable same-store performance in core geographies, with incremental gains from international expansion and e-commerce scale.
- Profitability: Operating margin around the low-to-mid 3% range may be sustained given cost discipline and mix; gross margin may face modest pressure from ongoing mix shifts but could be supported by continued private-label penetration.
- Cash flow and capital allocation: Costco’s strong operating cash flow supports disciplined capital expenditure on new warehouses and upgrades, continued share repurchases, and potential selective investments in international markets and digital infrastructure.
- Key uncertainties: Macro consumer spending, currency movements affecting international results, and competitive responses in e-commerce and discount channels.
- Monitoring factors for investors: Membership renewal rates, traffic trends in core markets, price/value dynamics in staple categories, wage and benefits costs, and the pace of international expansion.