TL;DR – What You Need to Know
eCommerce is the Growth Engine: Global eCommerce was up 27%, with Walmart U.S. at 28% and every segment growing above 20% — powered by store-fulfilled delivery, marketplace, and advertising. Operating income is growing faster than sales, which is growing faster than inventory.
Ads + Membership is the Profit Engine: Walmart spoke for a long time in the past about transforming its P&L. Well, it’s transformed. Now fully 33% of adjusted operating income is from ads and membership and growing.
Predictive Agentic Makes an Appearance: From OpenAI-powered shopping through ChatGPT to predictive, auto-built baskets in Chile and heavy supply chain automation, Walmart is quietly building a very tech-forward retail machine.
In short, Walmart is no longer just a retailer.
Importance of Walmart Earnings?
It’s Predictive for the Rest of Us
Why do I listen to earnings calls? While backward looking by definition, I also feel that earnings are predictive of the future. The giants have to report earnings, everyone else does not.
We can learn from what’s happening with the giants, and it gives us clues to our own business in the kinds of things we should or should not be investing in.
OK, let’s dive in.
eCommerce: The 27% Growth Powerhouse
Facts
Walmart US eCommerce sales up 28%
7th consecutive quarter above 20% growth.
Pickup, delivery, and advertising a key strength.
Rick’s Thoughts
Walmart describes the choice between value and convenience as a false choice. The reason is because of efficiency. You can invest a lot, but if you aren’t efficient, you cannot cut prices enough to deliver value.
Walmart has several margin-expanding revenue streams that they didn’t used to have: memberships and advertising. This allows them the ability to invest in convenience, which is paying off in their fastest-growing consumer cohort — higher-income consumers.
Agentic AI: A Highllight
Has Predictive Agentic Commerce Arrived? One killer call-out on the call was Walmart Chile eCommerce has created this feature which is now driving fully 20% of eCommerce sales in the country. Here’s how it works:
Walmart predicts based on your orders + patterns what you buy and how often.
Sends you a WhatsApp text with a pre-built cart you can then modify and order.
OpenAI partnership gets a mention:
Phase 1 is to be able to purchase Walmart and Sams directly through ChatGPT with checkout only.
More immersive and integrated in the future.
Rolling out OpenAI certifications and ChatGPT Enterprise licenses across the company.
AI Code Assistance: More than 40% of code is now either AI generated or AI-assisted. This as a surprising number to me.
General Management Commentary
Building a personalized and more relevant experience.
Multi-modal: voice, text, image, video, more conversational.
Ads present but contextual and helpful, mentioned bundling.
Walmart US
Facts
Comp sales up 4.5%.
eCommerce up 28%.
35% of digital orders delivered in under 3 minutes.
7,400 active rollbacks, half in grocery. 2,000+ rollbacks this year have become the new everyday low price (EDLP).
Walmart+ grew double digits. Q3 net adds strongest on record.
Fashion, home and automotive standout categories.
Rick’s Thoughts
Sometimes strength or weakness in a month can signal issues, but Walmart’s performance was very consistent across months.
Marketplace Sales Up 17% in the United States
Facts
Marketplace sales up 17%.
Automotive, toys, electronics and apparel growing 40+% y/y.
Rick’s Thoughts
Marketplaces got some callouts, but it was not the focus of this call. No mention of Walmart Fulfillment Services, either.
Advertising: 53% Growth, Hits New Heights
Facts
Global advertising up 53%.
Walmart Connect in the US ex-Vizio grew 33%.
34% growth in international advertising, led by Flipkart.
Rick’s Thoughts
53% is a killer number and great progress for the organization. This is the fastest number I have seen from any retailer in their ads network.
Supply Chain is Walmart’s Quiet Killer
Facts
Walmart US now has 35% of store fulfilled orders expedited to under 3 hours.
Sales using expedited fulfillment are up 70% this year.
60% of stores are receiving at least some fulfillment center freight from automated distribution centers.
More than 50% of eCommerce fulfillment center volume is now automated.
One of the fastest-growing channels is deliveries completed in under an hour.
Triple-digit growth from curbside pickup at Sam’s Club, after reducing basket minimums.
Rick’s Thoughts
Expedited fulfillment is one of the key drivers of Walmart margin improvement. Now only is their delivery network getting more efficient and denser, but customers are funding the margin gains - a win/win.
While Amazon is performing, Walmart is putting serious pressure on Amazon on multiple fronts.
The Consumer & Tariffs: Value Still Wins
Facts
Inflation steady at 1.3% with food and general merchandise up. Walmart resisting pressure on COGS.
Tariffs have had less impact on the business than expected.
Walmart described the consumer environment as “dynamic”, with “pockets of moderation.” The disparity in wage growth in lower income groups is the biggest factor here.
All income levels participating in faster delivery choices.
Rick’s Thoughts
Walmart is not worried overall about the consumer. Performance is consistent. The combination of value (which is appealing to everyone) and convenience (which is targeted at higher-income groups) is driving growth.
I thought the note on tariffs was interesting. It’s notable that their exposure to China is less than others.
Forward Looking Guidance
Facts
Full year sales guidance raised from 3.75% - 4.75% to 4.8 - 5.1% for full year sales.
Full year adjusted operating income should come in between 4.8% - 5.5%, with Q4 falling between 8-11%, likely on the strength of advertising.
Rick’s Thoughts
The company is predicting a great Q4, which they say is generally indicated by the Back to School performance. With the amount of historical data Walmart has, combined with their momentum, I would listen to this.
Odds and Ends, and a Wrap
Financials
3Q Revenue up 6% to $10B.
Ads and membership are now 33% of consolidated adjusted operating income.
YTD operating cashflow at $27B, up $4.5B compared to last year.
Inventory levels up 3% overall. In the US, inventory grew 2.6%.
International
Overall
Net sales up 17%.
Adjusted operating income up 17%.
eCommerce
eCommerce up 26%, including Flipkart and Big Billions Day (biggest ever)
700 orders per second at peak, $1B sales in first day.
China
33% of business outside of the United States is digital. In China it’s 50%.
80% of orders in China arrive in under 1 hour. More advanced in digital retail than anywhere else.
60 Sam’s Clubs in China now, with a big pipeline beyond this.
Category Notables
Here are a few items that were mentioned as standout categories on the call:
Apparel grew 5% each month of the quarter.
Fashion, Home, Hardlines, Automotive are strong performers.
Grocery gained share, and general merchandise grew.
Health/Wellness up low double digits.
Some Sources for Further Reading:
Wrap-Up
As I read through this report, I think Walmart’s international omnichannel exposure gives it a unique advantage to its competition. Being able to see consumer shifts and run experiments in various markets is essential to their success. But it would all be for nothing if they were not so damn good at execution.
Walmart leadership mentioned on the call that they feel they are setting a new standard for omnichannel retail. I would tend to agree. The biggest worry from analysts on the call was “are you investing too much of the profit back in the business”. Which from where I sit, seems to be paying returns.
Walmart’s key principles:
Price
Convenience
Broad Assortment
Sounds like a flywheel to me!
