tapebrief
WMT · Q4 2025

WMT · Q1 2027 Earnings

Bullish

Walmart

Reported May 21, 2026

30-second summary

Walmart beat its own Q1 FY27 guide on sales and EPS — adj. EPS $0.66 vs. $0.63–$0.65 guide, net sales +5.7% cc vs. +3.5–4.5% guide (120bps above the high end) — while adjusted OI growth of +5.1% cc landed in the middle of the +4–6% cc band, in line with management's own characterization despite a ~$175M/~250bps fuel headwind. Q2 is re-guided to +4–5% cc sales with adj. OI growth of +7–10% cc (vs. +4–6% prior quarter and +3–6% prior year). The signal worth flagging: management reaffirmed FY27 sales (+3.5–4.5% cc), OI (+6–8% cc), and EPS ($2.75–$2.85) unchanged despite the Q1 beat, while verbally guiding the Street to "the upper end" of the sales range — a soft raise dressed as a reaffirmation.

Headline numbers

EPS

Q1 FY2027

$0.66

Revenue

Q1 FY2027

$177.80B

+7.3% YoY

Gross margin

Q1 FY2027

24.3%

Free cash flow

Q1 FY2027

$-1.90B

Operating margin

Q1 FY2027

4.3%

Key financials

Q1 FY2027
MetricQ1 FY2027Q1 FY2026YoYQ4 FY2025QoQ
Revenue$177.80B$165.60B+7.4%$190.70B-6.8%
EPS$0.66$0.61+8.2%$0.74-10.8%
Gross margin24.3%24.2%+10bps24.0%+30bps
Operating margin4.3%4.4%-10bps4.6%-30bps
Free cash flow$-1.90B$0.42B-547.1%——

Guidance

Walmart beat Q1 FY2027 EPS and sales growth guidance but reaffirmed full-year targets, signaling management confidence despite Q1 outperformance; Q2 guidance raised with stronger operating income growth (7–10% vs. prior 4–6%) and sequential EPS expansion.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Adjusted EPSQ1 FY2027$0.63 to $0.65$0.66+$0.01 above guideBeat
Net sales (constant currency) growthQ1 FY20273.5% to 4.5%5.7%+1.2-2.2 pts above guideBeat

New guidance

MetricPeriodGuideYoY
Adjusted EPSQ2 FY2027$0.72 to $0.74—
Net sales (constant currency) growthQ2 FY20274% to 5%+2.3% to +3.7% YoY
Adjusted operating income (constant currency) growthQ2 FY20277% to 10%—

Reaffirmed unchanged this quarter: Adjusted EPS ($2.75 to $2.85), Net sales (constant currency) growth (3.5% to 4.5%), Adjusted operating income (constant currency) growth (6.0% to 8.0%), Interest, net (Increase approximately $200M to $300M), Effective tax rate (Approximately 23.5% to 24.5%), Capital expenditures (Approximately 3.5% of net sales)

Segment performance

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
Walmart U.S.$117.2B$112.2B+4.5%
Walmart International$35.1B$29.8B+17.8%
Sam's Club U.S.$23.4B$22.1B+5.9%

Platform metrics

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
eCommerce sales growth (global)26%——
Walmart U.S. comp sales (ex. fuel)4.1%——
Global advertising business growth37%——
Membership fee revenue growth (global)17.4%——
Walmart U.S. transactions growth3.0%——
Sam's Club U.S. comp sales (ex. fuel)3.9%——

Profitability

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
Operating margin4.3%——
Return on Investment (ROI)14.9%——

Management tone

From defending the margin algorithm to monetizing platform economics. This quarter the CFO quantified that advertising and membership combined represent "approximately one-third of operating income." The quote anchoring the shift: "these profit streams represented approximately one-third of operating income…that's very different from Walmart of 10 years ago." This is no longer a diversification narrative — it's a profit architecture disclosure. The signal: management is comfortable disclosing the alt-revenue share of profit because they want the Street to value Walmart on a different multiple structure.

From AI as experiment to AI as operating model. This quarter: "customers using Sparky have an average order value that's about 35% higher than non-Sparky customers," with weekly active users up over 100% in the quarter, and units purchased through Sparky up more than 4x since the prior quarter. The framing has moved from cost-saver to revenue-driver with specific economics. "We're becoming AI native" now carries operational specifics.

From delivery as customer experience to delivery as margin engine. This quarter: "speed becomes an engine of operating leverage, not just a better experience…fast fuels frequency." Combined with expedited delivery sales +50% and 60% of US population now reachable with 30-minute delivery, the language has shifted from cost discipline to operating leverage — i.e., delivery economics are now contributing to OI growth, not just managed against it.

From defensive on price investment to "we continue to play offense." "Despite the short-term pressure on profits, we're confident this was the right approach to reinforce customer trust and support share gains over the long term. We continue to play offense." This frames the $175M Q1 fuel headwind and continued price investment as deliberate strategic choices rather than constraints. Management is now signaling willingness to sacrifice near-term margin for share, which is a position of strength.

From conservative on FY raises to verbally walking up the range. Reaffirming FY27 ranges while telling the Street "we'd expect full-year sales growth to be toward the upper end of that initial range" is an unusual move for Walmart, which typically either raises ranges or leaves them alone. The verbal walk-up without a formal raise — paired with a Q2 OI growth band (+7–10% cc) that already exceeds the FY ceiling (+8%) — implies management is keeping dry powder for a Q2 or Q3 formal raise.

Recurring themes management leaned on this quarter:

Speed and delivery as competitive moat and margin leverAlternative revenue streams (advertising, membership, marketplace) as durable profit foundationAI-native operations and Sparky as customer acquisition and AOV driverGeneral merchandise (especially fashion) share gains despite food-heavy positioningOmnichannel platform replication across geographiesConsumer bifurcation: high-income spending with confidence vs. lower-income budget pressure

Risks management surfaced:

Higher fuel costs ($175M or ~250 bps operating income impact in Q1; potential persistence in H2)Lower-income consumer financial distress (fuel gallons per fill-up below 10 for first time since 2022)Potential retail price inflation from elevated fuel, fertilizer, and logistics costsCompetitive price investment from rivals attempting share recoveryExposure to macro shocks (tariffs, fuel, supply chain disruptions)

Q&A highlights

Scott Ciccarelli · Truist Securities

Questions on 30 and 60-minute delivery capabilities reaching 60% of U.S. population: what is total usage of fee-generating fast delivery services, and what is the rollout pace?

Fast delivery sales grew 50% YoY in Q1 with strong customer adoption and AOV growth. Achieved 1 millionth drone delivery in Q1 with 40% of lifetime drone deliveries completed in Q1, averaging just minutes per delivery. Currently live in 66 locations across Texas, Georgia, North Carolina, and Arkansas. Emphasized 11,000 retail locations with inventory as key enabler; automation at fulfillment centers is ~50% complete with more investments coming.

Fast delivery sales growth: 50% YoY in Q11 millionth drone delivery achieved; 40% of lifetime deliveries completed in Q1Drone delivery live in 66 locations across 4 states30-minute delivery available to 60% of U.S. population

Seth Sigman · Barclays

Health and wellness category moderation in Q1: what is underlying business performance and impact of GLP-1 adoption? Is GLP-1 pricing pressure freeing up consumer spending in other categories?

Health and wellness comps moderated due to maximum fair pricing (MFP) legislation starting January causing ~100 basis point headwind, disproportionately affecting in-store sales. Excluding MFP impact, health and wellness would have grown mid-high single digits. Prescription volumes growing with script gains continuing. Pharmacy delivery achieving ~20% of deliveries in under 3 hours. Business remains strong with focus on affordable healthcare and digital healthcare expansion.

MFP legislation headwind: ~100 basis pointsHealth and wellness ex-MFP growth: mid-high single digitsPrescription volumes growing with script gainsPharmacy delivery: ~20% delivered to customers' doorsteps in under 3 hours

Christina Katai · Deutsche Bank

Marketplace growth decomposition: seller counts, SKU expansion, AOV drivers; rollout pace for balance of year and biggest expansion opportunities?

Marketplace revenues grew 50% driven by assortment increases and seller growth. Early days with significant room to run. Walmart Fulfillment Services showing 150% increase in same-day, next-day units sold. More sellers leveraging fulfillment services creates win-win flywheel attracting additional sellers and products. International marketplace expansion ongoing.

Marketplace revenue growth: 50%Walmart Fulfillment Services same-day, next-day units: 150% increaseMarketplace expansion into international markets underwayAssortment growth as primary driver of customer engagement

Chuck Grom · Gordon Haskett

Category mix being margin tailwind in Q1—first time in years. What is opportunity set and how much has category mix held back margins historically due to health/wellness and grocery gains?

First time since analyst has been at Walmart (18 quarters) that merchandise category mix was tailwind to gross profit. Incremental fuel price increases obscured some progress. Q2 unlikely to show same level of improvement. Marketplace expansion driving shift to higher-margin general merchandise is multi-year journey. General merchandise via marketplace is key margin driver going forward.

First tailwind from category mix in 18 quartersFuel price headwind obscured some Q1 margin gainsGeneral merchandise higher GP than foodMarketplace as primary vehicle for GM mix expansion

Corey Tarlow · Jefferies

Q2 EBIT guidance shows YoY growth accelerating despite incremental fuel headwinds. How should we think about Q2 operating income growth particularly given margin moderation comment versus Q1?

Operating income guidance 7-10% currency-neutral (130 bps FX tailwind = 11.5% reported, essentially double-digit growth). Lapping higher prior year claims expense providing tailwind. Management expects Q2 and H2 acceleration after noting Q1 was most challenging from operating income perspective. Maintaining guidance despite hundreds of millions in fuel price pressure.

Operating income guidance (currency-neutral): 7-10%FX tailwind: 130 basis pointsReported operating income growth on guidance top end: ~11.5%Fuel price headwind: hundreds of millions of dollars

Answers to last quarter's watch list

Whether Q1 FY27 actual OI growth lands above the +6.0% high end of the guide. Q1 adjusted OI growth (cc) of +5.1% landed in the middle of the +4–6% guide, in line with management's prior framing. The beat was concentrated in sales and EPS; the ~$175M / ~250bps fuel headwind absorbed the OI upside that would otherwise have pushed the print toward the top of the band. Status: Resolved neutrally
Walmart US gross margin trajectory. Consolidated gross margin came in at 24.3% — roughly flat with Q1 FY26's 24.2%. The qualitative read from Chuck Grom's Q&A — first category-mix tailwind to GP in 18 quarters — implies underlying Walmart US GM is expanding faster than the consolidated print reveals.
Resolved positively
Sam's Club re-acceleration. Sam's Club US comp ex-fuel of +3.9% remains the softest segment data point. Segment revenue +6.1% reflects member count and ad/services contribution rather than core comp re-acceleration.
Continue monitoring
Walmart International ex-currency durability. International grew +18% reported / +10.1% cc in Q1. Flipkart, Walmex, and China remain the contributors; cross-border marketplace launches add an early tailwind.
Resolved positively
Capital return cadence under the new $30B authorization. Walmart repurchased 16.6 million shares for $2.1B in Q1; $28.2B remains of the $30B authorization approved in February 2026. Status: Resolved neutrally

What to watch into next quarter

Whether FY27 sales guide is formally raised at Q2. Management verbally walked the FY range to "upper end" while reaffirming. A formal raise of the sales band at Q2 (e.g., to +4.0–4.5% or +4.0–5.0% cc) would confirm the verbal positioning; a second consecutive reaffirmation despite a Q2 beat would imply H2 caution.

Whether Q2 OI growth actually lands above +7% cc. The +7–10% cc range is the most confident OI band Walmart has issued in two years and already exceeds the FY ceiling. A landing below +7% — particularly if fuel pressure persists — would force a re-think of the H2 acceleration story.

Walmart US gross margin disclosure in Q2. Q1 had a one-time mix tailwind the CFO said is unlikely to repeat in Q2. Watch whether the Q2 consolidated GM holds at ~24.3% or compresses, and whether segment-level GM is disclosed cleanly.

Whether marketplace cross-border (Canada, Mexico) is quantified. Management called early results "encouraging" but no metric was attached. A first quantified contribution — sellers added, GMV, fulfillment penetration — would mark the international marketplace transition from experiment to growth driver.

Sparky AOV claim durability. The 35% higher AOV for Sparky users and 100%+ weekly active user growth are the strongest customer-facing AI claims Walmart has made. Watch whether Q2 maintains the AOV math or introduces a cohort-adjusted version that softens the headline.

Sources

  1. Walmart FY27 Q1 Earnings Release — https://www.sec.gov/Archives/edgar/data/104169/000010416926000095/earningsreleasefy27q1.htm
  2. Walmart FY27 Q1 Earnings Call (prepared remarks and Q&A)
  3. Walmart FY26 Q4 Earnings Release (prior guidance baseline) — https://www.sec.gov/Archives/edgar/data/104169/000010416926000032/earningsreleasefy26q4.htm

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