Executive Summary
Costco reported Q3 2025 (calendar year 2025) results showing a topline decline and a still-healthy expense structure that preserved operating profitability and free cash flow. Revenue came in at $63.205 billion, down 20.69% year over year (YoY) and down 0.81% quarter over quarter (QoQ), while gross profit was $8.209 billion for a gross margin of 12.99%. Operating income of $2.53 billion yielded an operating margin of 4.00%, with net income of $1.903 billion and diluted EPS of $4.28-$4.29, suggesting disciplined cost control offsetting the revenue headwinds. Free cash flow reached $2.329 billion, supporting a net cash position (net debt of approximately -$5.66 billion) and capital returns through dividends and modest buybacks. The balance sheet remains liquidity-rich, with cash and cash equivalents of $13.836 billion and total cash + short-term investments of $14.85 billion, while inventory sits at $18.606 billion and current liabilities total $37.579 billion, resulting in a net working-capital-leaning but adequate liquidity profile (current ratio ~1.01). Management commentary around the quarter emphasized continuing focus on value delivery, inventory discipline, and ongoing cost controls in a challenging macro environment. While formal forward guidance was not updated in the press release, the company’s cash-generative model and membership-based moat remain the principal drivers of the investment thesis for COST.
Key Performance Indicators
QoQ: -0.81% | YoY:-20.69%
QoQ: -14.61% | YoY:-18.80%
Key Insights
Revenue: $63.205B (YoY -20.69%, QoQ -0.81%); Gross Profit: $8.209B (Gross margin 12.99%); Operating Income: $2.53B (OP margin 4.00%); Net Income: $1.903B (Net margin 3.01%); EPS (diluted): $4.28-$4.29; EBITDA: $3.167B (EBITDA margin ~5.01%); Free Cash Flow: $2.329B; CFO: $3.46B; Capex: $1.131B; FCF/Revenue: ~3.7%; Cash, equivalents & short-term investments: $14.85B; Net Debt: -$5.656B (Net cash); Total Assets: $75.482B; Total Liabilities: $48.357B; Equity: $27.125B; Current Ratio: ~1.01; Inv...
Financial Highlights
Revenue: $63.205B (YoY -20.69%, QoQ -0.81%); Gross Profit: $8.209B (Gross margin 12.99%); Operating Income: $2.53B (OP margin 4.00%); Net Income: $1.903B (Net margin 3.01%); EPS (diluted): $4.28-$4.29; EBITDA: $3.167B (EBITDA margin ~5.01%); Free Cash Flow: $2.329B; CFO: $3.46B; Capex: $1.131B; FCF/Revenue: ~3.7%; Cash, equivalents & short-term investments: $14.85B; Net Debt: -$5.656B (Net cash); Total Assets: $75.482B; Total Liabilities: $48.357B; Equity: $27.125B; Current Ratio: ~1.01; Inventory: $18.606B; Dividends Paid: $0.515B; Shares Repurchased: $0.211B.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
63.21B |
-20.69% |
-0.81% |
| Gross Profit |
8.21B |
-18.80% |
-14.61% |
| Operating Income |
2.53B |
-16.83% |
9.24% |
| Net Income |
1.90B |
-19.16% |
6.43% |
| EPS |
4.29 |
-19.06% |
6.45% |
Management Commentary
Themes from the quarter’s management discussion focused on (1) value-based member economics and price discipline, (2) disciplined operating expense management and efficiency gains, (3) inventory discipline and optimization to protect margin in a softer top-line environment, (4) ongoing emphasis on international and e-commerce awareness to sustain growth, and (5) capital return discipline given robust operating cash flow.
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Forward Guidance
No formal forward guidance was issued in the release for QQ4 2025 or beyond. Management typically signals a continued emphasis on membership renewal strength, cost containment, and inventory efficiency. Given COST’s historical reliance on membership revenue and price leadership, investors should monitor: (a) membership renewal rates and new member sign-ups, (b) sustained operating expense control and supply-chain resilience, (c) trajectory of international expansion and e-commerce contribution, and (d) cash-flow conversion and capital return policy. Based on current cash generation and a strong balance sheet, COST appears able to fund moderate buybacks and dividends even in a slower revenue environment, though topline stagnation remains the primary overhang on profitability upside.