Walmart delivered a solid QQ2 2026 performance with resilient top-line growth and improving contributions from higher-margin, faster-growing businesses. Revenue rose 5.6% in constant currency to $177.4 billion, led by a 25% rise in global e-commerce and double-digit growth across key segments, including Walmart US (comp up 4.6%), Sam’s Club US (comp up ~5.9%), and international sales (+10.5% in constant currency). The company continued to gain market share across geographies and channels, supported by a broad-based acceleration in advertising and membership revenue (advertising up 46%, US Walmart Connect up 31% ex Visio; membership income up >15% globally). On the margin side, gross margin expanded modestly (GAAP up 4 bps, adjusted up 9 bps excluding an $80 million Sam’s restructuring charge), while adjusted operating income grew about 0.4% in constant currency as higher US claims costs created a compression in the quarter. Management flagged a 560 basis-point headwind from US general liability and workers’ compensation claims, reflected in the guidance but not altering the long-term profit-growth trajectory. Inventory remained healthy (global +3.8%, US +2.2%), and management reaffirmed a path to growing profit faster than sales for FY26. The company also signaled a meaningful strategic push into AI with organizational and product roles established (Sparky, AI platforms) and a multi-agent vision to augment customers, associates, suppliers, and developers. Importantly, Walmart raised its full-year sales growth guidance by 75 basis points to 3.75%–4.75% in constant currency and provided a Q3 range of 3.75%–4.75% CC growth, underscoring confidence in the back-half dynamics and share gains. Investors should monitor tariff/currency trajectories, gross margin discipline, inventory flow, and the evolving contribution of non-grocery categories (advertising, membership, e-commerce profitability) to OFFSET near-term margin headwinds while leveraging AI-driven productivity and omni-channel advantages.
Gross profit: $44.631 billion; gross margin 25.16% (GAAP). Adjusted gross margin expanded by 9 basis points (vs. 4 basis points on a reported basis excluding an $80 million Sam's restructuring charge).
Operating income: $7.286 billion; operating margin 4.11% (GAAP). Adjusted operating income +0.4% in constant currency, net of higher claims expense.
Net income: $7.026 billion; net margin 3.96%; EPS $0.88 (diluted $0.88).
Cash flow:
- Net cash provided by operating activities: $12.941 billion
- Capital expenditures: $4.986 billion
- Free cash flow: $7.956 billion
Financial Highlights
Revenue and profitability
- QQ2 2026 revenue: $177.402 billion; YoY growth 4.76%; QoQ growth 7.12% (USD basis).
- Gross profit: $44.631 billion; gross margin 25.16% (GAAP). Adjusted gross margin expanded by 9 basis points (vs. 4 basis points on a reported basis excluding an $80 million Sam's restructuring charge).
- Operating income: $7.286 billion; operating margin 4.11% (GAAP). Adjusted operating income +0.4% in constant currency, net of higher claims expense.
- Net income: $7.026 billion; net margin 3.96%; EPS $0.88 (diluted $0.88).
- Cash flow:
- Net cash provided by operating activities: $12.941 billion
- Capital expenditures: $4.986 billion
- Free cash flow: $7.956 billion
- Balance sheet highlights:
- Cash and cash equivalents: $9.431 billion; total cash including equivalents: $9.877 billion at period end.
- Total assets: $270.837 billion; total liabilities: $173.980 billion; total stockholders’ equity: $90.111 billion.
- Debt: total debt $65.014 billion; net debt $55.583 billion; long-term debt $54.758 billion; short-term debt $10.256 billion.
- Inventory: $57.729 billion; total current assets: $82.033 billion; total current liabilities: $103.566 billion.
- Growth drivers and mix:
- E-commerce up 25% globally; Walmart US e-commerce +26%; marketplace up nearly 20%; WFS volumes up 44% (vs. last year).
- Advertising up ~46% including Visio; Walmart Connect US ex-Visio +>30%; Sam’s Club US advertising +24%; international advertising +15% led by Flipkart.
- Membership income up >15% across the enterprise; Walmart Plus membership income grew double digits.
- Inventory constructive: back-half setup with ~3.8% global inventory increase (2.2% in US).
- Guidance and outlook:
- Full-year revenue growth guidance raised to 3.75%–4.75% in constant currency; Q3 guide also 3.75%–4.75% CC growth.
- Full-year adjusted operating income growth guidance unchanged at 3.5%–5.5% CC; potential 150 bp headwind from Vizrila/ Vizya-related headwinds and leap-year effects factored in.
- If midpoint of updated FY26 guidance achieved, revenue +4.25% and OI +4.5% (before considering the 150 bps headwinds).
- Capital allocation:
- Stock buybacks: $6.0+ billion year-to-date; elevated activity vs. prior year due to tariff-driven price dislocations.
- Dividends paid: approximately $1.88 billion in the period.
- M&A/acquisitions: net acquisitions $0.75 billion recorded in the period.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
177.40B
4.76%
7.12%
Gross Profit
44.63B
4.95%
8.05%
Operating Income
7.29B
-8.24%
2.12%
Net Income
7.03B
56.10%
56.59%
EPS
0.88
57.14%
57.14%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key themes from management commentary and Q&A:
- Strategy and AI transformation:
- 'We’re building agents into the core of how we operate. Including four super agents...' and 'Sparky will be the primary digital vehicle for discovery, shop, and for managing everything from reorders to returns.' This signals a substantial investment in AI-enabled customer experience and internal workflow optimization. (Doug McMillon)
- Guidance and earnings trajectory:
- 'Today, we’re raising our full-year sales growth guidance in constant currency by 75 basis points to a range of 3.75% to 4.75% growth.' (John David Rainey)
- Margin dynamics and cost pressures:
- 'Adjusted operating income increased about half a percentage point on a constant currency basis, driven by stronger-than-expected sales and continued underlying operating margins, offset by higher claims cost.' and the explicit 560 bps headwind from US claims cost. (John David Rainey and Doug McMillon)
- Inventory and price strategy:
- 'We have approximately 7,400 price rollbacks across our assortment, about 2,000 more than last quarter.' and 'we’re keeping our prices as low as we can for as long as we can' illustrating ongoing price leadership amid tariff-related costs. (Doug McMillon)
- E-commerce profitability and mix:
- 'Global e-commerce sales up 25%', with e-commerce profitability improving via marketing and advertising, membership, and marketplace contributions; international e-commerce still operates at a loss but improving. (John David Rainey)
- International and channel expansion:
- comments on Canada, Mexico, India, and China illustrate ongoing platform integration and quick-commerce investments to position Walmart for long-term growth; China online-driven, Philippines, India small-city fulfilment economics discussed in the call multiple times. (Kath McLay, John Furner, Steph Wissink)
- Holiday readiness and execution:
- 'We’re positioned well going into the holiday season' with back-to-school dynamics signaling momentum for Halloween/Christmas; emphasis on inventory management and sell-through. (Doug McMillon)
- Customer incentives and value proposition:
- 'Opening price points ladder; more rollbacks; private brands' and 'OnePay cash rewards card coming before holiday' highlighting value-focused growth levers. (John Furner, Doug McMillon)
Our team delivered strong top-line results again this quarter with sales up 5.6% in constant currency.
— Doug McMillon
Today, we're raising our full-year sales growth guidance in constant currency by 75 basis points to a range of 3.75% to 4.75% growth.
— John David Rainey
Forward Guidance
Management guidance and assessment:
- FY26 guidance updates:
- Full-year constant-currency revenue growth raised to 3.75%–4.75%; Q3 implied range of 3.75%–4.75% CC growth. Margin dynamics remain a function of cost of goods, pricing, and mix; merchandise category mix expected to be a headwind while business mix (advertising, membership) remains a margin tailwind.
- The company expects an operating income growth range for Q3 of 3% to 6% (constant currency); with a longer-term target of operating income growth faster than sales, supported by higher-margin revenue streams (advertising, membership) and e-commerce economics.
- The 150 basis point drag from the VizIYA acquisition and leap-year effects are acknowledged as headwinds that are expected to moderate over time.
- Assessing achievability:
- The raised revenue guidance reflects year-to-date strength and continued share gains (US and international). The company emphasizes 'flexibility to invest for share gains' given ongoing trade policy tensions and uncertain demand, suggesting the guidance is prudent and achievable within the stated ranges.
- If the midpoint of updated guidance is achieved, Walmart would see mid-single-digit revenue growth with OI growth in the mid-single-digit range, aided by higher-margin contributions from advertising and membership and by improving e-commerce economics. Risk factors include sustained tariff pressure, currency volatility, and potential shifts in consumer demand, which the company flags as ongoing considerations.
- Monitoring factors for investors:
- Tariff and currency trajectory, which could influence net cost of goods and pricing decisions.
- Progress of AI initiatives ( Sparky and AI platforms) and their impact on efficiency, inventory management, and conversion economics.
- E-commerce profitability, advertising/membership contributions, and Sam’s Club dynamics as levers of margin expansion.
- Inventory turns and rollbacks pace as a response to inflation, consumer demand, and holiday seasonality.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WMT Focus
25.16%
N/A
N/A
N/A
TGT
30.10%
6.42%
8.26%
13.50%
COST
15.10%
3.63%
6.99%
66.54%
BJ
18.40%
3.91%
8.76%
19.83%
DLTR
30.10%
2.75%
1.79%
40.41%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Constructive and cautiously bullish. Walmart’s QQ2 2026 results demonstrate durable top-line momentum with a material reweighting toward higher-margin, high-growth digital initiatives (advertising, membership, marketplace) and AI-enabled efficiency. The company raised FY26 revenue guidance and maintained an optimistic view on the back-half, supported by strong e-commerce profitability, accelerated ad/membership income, and robust inventory management. The macro risks (tariffs and currency) and US claims cost headwinds pose near-term margin pressures, but the long-term thesis remains intact: profit growth should outpace sales driven by a higher-margin revenue mix and continued share gains. The AI roadmap (Sparky, multi-agent platforms) and the OnePay card represent potential accelerants to revenue growth, operating efficiency, and customer lifetime value. Investors should monitor tariff/currency trajectories, the pace of AI-driven margin expansion, inventory turns around peak-season demand, and the evolution of international profitability as scale expands.
Key Investment Factors
Growth Potential
E-commerce momentum (global growth 25% in Q2) and strong contribution from advertising and membership revenue indicate an accelerating, higher-margin growth engine beyond traditional store P&L. International expansion (China, India, Mexico, Canada) and the rollout of AI-enabled platforms (Sparky, AI platforms) present sizable long-term upside through increased conversion, faster delivery, and lower operating costs. The OnePay credit card and differentiated delivery speed (3 hours in ~93% of US population) support higher engagement and wallet share.
Profitability Risk
Tariff exposure and currency volatility remain material overhangs; ongoing claims cost in the US (general liability and workers’ comp) created a 560 bps headwind to adjusted operating income in Q2 and may recur. Margin compression in international due to pricing investments and channel/format mix remains a risk; competition in grocery/delivery could intensify price competition. execution risk around rapid AI deployment and integration across multiple business units.
Financial Position
Strong cash flow profile with operating cash flow of $12.94B and free cash flow of $7.96B, supporting aggressive share repurchases (~$6B YTD) and a flexible capital allocation framework. Solid balance sheet with total assets of $270.8B, cash balance ~ $9.4B, long-term debt of $54.8B and net debt of $55.6B. Inventory healthy at +3.8% globally, enabling back-half sales momentum while managing margin impact.
SWOT Analysis
Strengths
Scale advantage across 3P and 1P channels with a vast omnichannel network delivering fast delivery and wide assortment.
Strong growth in higher-margin, diversified businesses (advertising, membership, marketplace) contributing to a more profitable revenue mix.
Global e-commerce momentum (25% YoY) and accelerating US e-commerce profitability driven by delivery cost improvements and marketing efficiency.
Robust cash flow generation and capital allocation flexibility (share repurchases, dividend policy).
AI infrastructure investments (Sparky, AI platforms) to improve customer experience and internal productivity; potential to lower operating costs over time.
Weaknesses
Material near-term margin headwinds from US general liability and workers' compensation claims (560 bps drag to adjusted operating income in Q2).
International gross margin pressure due to channel/format mix, price investments, and quick-commerce capex in India/China.
Tariff and currency sensitivity creating uncertainty around cost-of-goods and pricing dynamics.
Reliance on pricing leadership to offset higher costs; potential limit to further rollbacks in a high-inflation environment.
Opportunities
Expanded AI capabilities driving inventory optimization, personalized shopping, and improved delivery windows (targeted 95% US households with dynamic delivery windows by year-end).
Strengthening non-grocery revenues (advertising, membership) to sustain margin expansion.
International platform consolidation (Canada/Mexico) and quick-commerce expansion (India/China) positioning Walmart for higher growth from online-first models.
Launching OnePay cash rewards card to boost wallet share and member loyalty (3% base, 5% for Walmart Plus).
Threats
Ongoing tariff policy uncertainty and currency volatility impacting COGS and pricing strategy.
Intense competition in e-commerce and delivery (grocery/grocery-delivery expansions by peers) impacting share gains and pricing power.
Macro volatility and consumer demand shifts could pressure top-line momentum in certain categories.