Walmart Earnings Call: E-Commerce, AI and Buybacks

Walmart Inc. ((WMT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Walmart Inc.’s latest earnings call struck a distinctly upbeat tone, with management emphasizing broad-based momentum in e-commerce, advertising, and membership while expanding profits faster than sales. Executives acknowledged macro and regulatory headwinds, but framed them as manageable against a backdrop of improving productivity, strong cash generation, and a record share repurchase plan.

Profits Outpace Sales in Solid Quarterly Performance

Consolidated revenue grew 4.9% in constant currency in the quarter, underscoring steady top-line expansion despite mixed consumer conditions. Adjusted operating income rose 10.5% in constant currency, with all three operating segments growing profits faster than sales, signaling improving margin leverage across the portfolio.

Crossing the $700 Billion Annual Revenue Threshold

For the full year, Walmart’s sales increased about 5% in constant currency, adding roughly $35 billion and pushing total revenue above $700 billion for the first time. Adjusted operating income advanced 5.4% despite sizable headwinds, reinforcing the company’s ability to absorb cost pressure while still delivering earnings growth.

E-Commerce Surges Past $150 Billion in Sales

Global e-commerce revenue climbed about 24% in the quarter and nearly 25% for the year, surpassing $150 billion in annual online sales. In the fourth quarter, e-commerce represented around 23% of total sales, up 550 basis points versus two years ago, with Walmart U.S. e-commerce jumping 27% in Q4 alone.

Rapid Delivery Strengthens Omnichannel Advantage

Customer adoption of fast delivery has accelerated, with users of sub-three-hour delivery increasing more than 60% year over year. In the U.S., about 35% of store-fulfilled orders now arrive in under three hours, while Flipkart is delivering in under 15 minutes in over 30 cities and Sam’s Club has doubled club-fulfilled delivery growth.

AI Assistant ‘Sparky’ Lifts Engagement and Basket Size

Walmart highlighted early traction from its AI-driven agentic assistant, Sparky, integrated into its app experience. Roughly half of app users have tried Sparky, and those users show about 35% higher average order values than non-users, as the tool improves product discovery, conversion and basket composition.

Advertising and Membership Become Profit Engines

Advertising revenue grew 37% in the quarter, with Walmart Connect U.S. up 41%, and full-year ad sales rising 46% to $6.4 billion. Membership income also showed strong momentum, with consolidated fees up more than 15% in Q4, full-year membership revenue topping $4.3 billion, and Walmart Plus and Sam’s Club both posting solid membership gains.

Automation Drives Inventory Discipline and Productivity

Inventory rose just 2.6%, roughly half the rate of sales growth, which supported better working capital management and fewer markdowns. Approximately 60% of stores now receive some freight from automated distribution centers and about half of e-commerce fulfillment center volume is automated, boosting labor and logistics efficiency.

Robust Cash Flow Fuels Record Buyback and Investment

Operating cash flow reached $42 billion and free cash flow grew 18% in FY2026, giving Walmart ample financial flexibility. The board authorized a $30 billion share repurchase program, its largest yet, while FY2027 capex is expected to run around 3.5% of sales as the company ramps spending on automation and store remodels.

Tariffs and Claims Add Meaningful Cost Headwinds

Management said full-year adjusted operating income growth was achieved despite roughly a 300 basis point headwind from higher claims costs and lingering tariff pressures. Tariffs remain a source of timing and cost uncertainty, complicating planning and margin visibility even as the company works to offset them with productivity gains.

Pharmacy Legislation Weighs on Sales Growth

New drug pricing rules under maximum fair pricing legislation are expected to cut about 100 basis points from full-year sales growth. The most recent quarter already saw an estimated 30 basis point drag, and management flagged pharmacy as an area where regulatory pressure will continue to be a structural headwind.

Lower-Income Shoppers Remain Under Strain

Walmart is gaining share most strongly among households earning over $100,000, highlighting its appeal to higher-income value seekers. But management noted that customers earning under $50,000 remain particularly wallet-constrained, with some living paycheck-to-paycheck, underscoring an uneven consumer backdrop by income tier.

Marketplace Focused on Scale Over Near-Term Margins

The company’s third-party marketplace remains in investment mode, with no explicit timeline for standalone profitability. Leadership stressed that the priority is building scale and seller penetration, indicating investors should expect continued spending as Walmart deepens its marketplace ecosystem and integrates it with advertising and logistics.

Growth Guidance Tempered by Macro and Ad Moderation

On the outlook front, management guided FY2027 constant-currency sales growth to 3.5%–4.5% and operating income growth to 6%–8%, with e-commerce as the main driver and margins aided by mix, automation and easing merchandise pressure. They also flagged that advertising growth, while still strong at 46% for the year, is likely to moderate over time due to its growing base and macro risks such as soft hiring trends, consumer sentiment, student loan delinquencies and tariff uncertainty.

Conservative Outlook With Margin Upside Potential

For the full year FY27, Walmart expects EPS of $2.75–$2.85 and says it is starting with conservative assumptions despite aiming to outperform. First-quarter guidance calls for constant-currency sales growth of 3.5%–4.5%, operating income up 4%–6% and EPS of $0.63–$0.65, with foreign exchange providing a modest tailwind and capex peaking at about 3.5% of sales as automation and remodel investments crest alongside the new $30 billion buyback.

Walmart’s earnings call painted a picture of a retail giant leaning into digital growth, automation and high-margin services while navigating regulatory and consumer crosscurrents. For investors, the story is one of solid top-line growth, faster-rising profits and disciplined capital returns, all wrapped in guidance that leaves room for upside if the macro backdrop proves more benign than feared.