Walmart (WMT) — Q2 FY27 Earnings Preview
Key Takeaways
| Theme | Details |
|---|---|
| Guidance vs. Consensus | Guidance for Q2 FY27: Net sales +4% to +5% cc, Adj. Op. Income +7% to +10% cc, Adj. EPS $0.72–$0.74. Consensus: Revenue $186,956M, EPS $0.74. |
| Momentum & Mix | Strong eCommerce (+26% globally in Q1), marketplace (+50% in U.S.), advertising (+37% globally), and membership (+17% globally) are driving higher-margin mix. |
| Macro Headwinds | Elevated fuel costs impacted Q1 OI by -250 bps; management expects continued pressure in Q2 but reiterates full-year guidance. |
| Comp Trends | Walmart U.S. Q1 comp +4.1% (would have been +5.1% ex-pharmacy headwind); Sam’s Club U.S. comp +3.9%. General merchandise share gains at 5-year highs. |
| AI & Agentic Commerce | Rapid adoption of Sparky (AI agent): >100% increase in weekly active users QoQ, 35% higher AOV for Sparky users. AI/automation driving productivity and margin. |
| Year-Over-Year Compare | Q2 FY26 revenue $174,319M, adj. op. income $7,876M, adj. EPS $0.68. Q2 FY27 consensus revenue implies +7.2% YoY, but guidance is for +4% to +5% cc. Q2 FY26 had strong eCommerce (+25%), but also significant claims expense headwind. |
Most Important Factors to Watch This Quarter
| Factor | Why It Matters | What to Watch For |
|---|---|---|
| eCommerce Growth | Key driver of top-line and higher-margin mix; 26% global growth in Q1, 9th straight 20%+ quarter in U.S. | Is growth sustained at 20%+? Contribution from store-fulfilled delivery, marketplace, and advertising. |
| Marketplace Expansion | Marketplace net sales up nearly 50% in Q1; critical for assortment, margin, and ad revenue. | Seller count, SKU expansion, WFS adoption, cross-border traction. |
| Advertising Revenue | High-margin profit pool; up 37% globally, 44% in U.S. (ex-VIZIO) in Q1. | Growth rate, contribution from 3P sellers, VIZIO integration, international ramp. |
| Membership Income | Recurring, high-margin; up 17% globally in Q1. Walmart+ net adds at record Q1 high. | Membership fee revenue growth, engagement, new benefit uptake. |
| Gross Margin & Mix | Q1 saw first positive merchandise mix tailwind in 18 quarters (+29 bps). | Sustainability of GM tailwind, impact of general merchandise/fashion, offset from fuel costs. |
| Operating Income Leverage | Q2 guidance: Adj. OI +7% to +10% cc (vs. Q1 +5.1% cc). | Ability to deliver OI growth despite fuel headwinds; incremental margins in eComm. |
| Consumer Health | Higher-income cohort strong; lower-income pressured by fuel, SNAP, inflation. | Traffic/ticket trends by cohort, trade-down, elasticity, fuel impact. |
| AI/Agentic Commerce | Sparky adoption, impact on AOV, frequency, and conversion. | Further rollout, new capabilities, measurable P&L impact. |
Forward Guidance and Consensus
Q2 FY27 Guidance (as of May 21, 2026)
| Metric | Guidance (cc) | Prior Year Actual (Q2 FY26) | Notes |
|---|---|---|---|
| Net Sales | +4% to +5% | $174,319M | Constant currency; excludes tariff refund upside |
| Adj. Operating Income | +7% to +10% | $7,876M | Constant currency |
| Adj. EPS | $0.72–$0.74 | $0.68 |
FY27 Full-Year Guidance (Unchanged)
| Metric | Guidance (cc) | Prior Year Actual (FY26) | Notes |
|---|---|---|---|
| Net Sales | +3.5% to +4.5% | $706,413M | Constant currency |
| Adj. Operating Income | +6% to +8% | $31,096M | Constant currency |
| Adj. EPS | $2.75–$2.85 | $2.64 | |
| Capital Expenditures | ~3.5% of sales |
Q2 FY27 Consensus (FactSet/Company Data)
| Metric | Consensus Estimate |
|---|---|
| Revenue | $186,956M |
| EPS (GAAP) | $0.74 |
Recent Results and Year-over-Year Comparison
Quarterly Results — Last Five Quarters
| Quarter | Revenue ($M) | YoY Growth | Adj. Op. Income ($M) | Adj. EPS | eComm Growth | U.S. Comp Sales | Key Margin/Notes |
|---|---|---|---|---|---|---|---|
| Q1 FY27 | $177,751 | +7.3% | $7,674 | $0.66 | +26% | +4.1% | OI up 5.0%, -250 bps from fuel; GM +29 bps |
| Q4 FY26 | $190,656 | +5.6% | $8,574 | $0.74 | +24% | +4.6% | OI up 10.8%; GM +13 bps; ad +37%, membership +15% |
| Q3 FY26 | $179,496 | +5.8% | $7,246 | $0.62 | +27% | +4.5% | OI flat, adj. OI +8% cc; ad +53%, membership +17% |
| Q2 FY26 | $175,750 | +4.8% | $7,876 | $0.68 | +25% | +4.6% | OI -8.2% (claims headwind); adj. OI +0.4% cc |
| Q1 FY26 | $165,609 | +6.0% | $7,135 | $0.61 | +22% | +4.5% |
*Adj. Op. Income and Adj. EPS per company non-GAAP reconciliation.
Q2 FY27 Setup: Are They Coming Off a Tough Comparable?
- Q2 FY26: Revenue $175,750M (+4.8% YoY), adj. operating income $7,876M (+0.4% cc), adj. EPS $0.68.
- eCommerce +25% globally.
- U.S. comp sales +4.6%.
- Significant claims expense headwind (-560 bps to adj. OI growth).
- Merchandise mix was a headwind; general merchandise comps positive but not as strong as Q1 FY27.
- Q2 FY27: Consensus revenue $186,956M (+6.4% YoY vs. reported, +7.2% vs. restated), guidance for +4% to +5% cc.
- Lapping a period with claims expense headwind and only modest adj. OI growth.
- eCommerce, marketplace, and advertising momentum are stronger entering Q2 FY27.
- General merchandise mix is now a tailwind, not a headwind.
Conclusion: Walmart is coming off a relatively easier comparable for operating income and margin, given last year’s claims expense headwind and less favorable merchandise mix. The bar for eCommerce and marketplace growth is higher, but the company has shown accelerating momentum in these areas.
Management Commentary and Intra-Quarter Color
- Macro/Consumer: Higher-income customers remain resilient; lower-income customers are pressured by fuel and inflation. Walmart continues to gain share across cohorts, especially in general merchandise and fashion.
- Fuel Costs: Q1 OI was negatively affected by $175M in higher fuel costs; management expects continued pressure but is maintaining full-year guidance.
- AI/Agentic Commerce: Rapid adoption of Sparky, with >100% increase in weekly active users QoQ and 35% higher AOV for Sparky users. AI is driving both customer-facing and supply chain productivity.
- Marketplace: Nearly 50% net sales growth in Q1; expansion into Canada and Mexico underway. WFS units shipped same/next day up 150%.
- Advertising: 37% global growth in Q1, 44% in U.S. (ex-VIZIO); 3P seller ad spend up 50%.
- Membership: Walmart+ net adds at record Q1 high; members spend 4x more than non-members and visit 7x more online.
Summary and Conclusions
- Walmart enters Q2 FY27 with strong momentum in eCommerce, marketplace, advertising, and membership, all of which are driving higher-margin mix and operating leverage.
- Guidance for Q2 is for net sales growth of +4% to +5% cc and adj. OI growth of +7% to +10% cc, with adj. EPS $0.72–$0.74. Consensus is at the upper end of this range.
- Key factors to watch are the sustainability of eCommerce and marketplace growth, the durability of general merchandise share gains, the impact of fuel costs on margins, and continued adoption of AI-driven commerce solutions like Sparky.
- Walmart is lapping a relatively easier comparable for operating income and margin, given last year’s claims expense headwind and less favorable merchandise mix.
- Management remains confident in delivering full-year guidance, with incremental margins in U.S. eCommerce at 12% in Q1 and about one-third of operating income now coming from advertising and membership.
- The company’s ability to sustain high growth in alternative profit pools (advertising, membership, marketplace) and to manage macro headwinds (fuel, consumer pressure) will be the most important signals when they report next.
Tables
Q2 FY27 Guidance vs. Consensus
| Metric | Q2 FY27 Guidance (cc) | Q2 FY27 Consensus | Q2 FY26 Actual | YoY Change (Guidance Midpoint) |
|---|---|---|---|---|
| Net Sales ($M) | +4% to +5% | $186,956 | $175,750 | +6.4% (consensus) |
| Adj. Op. Income ($M) | +7% to +10% | $7,876 | ||
| Adj. EPS | $0.72–$0.74 | $0.74 | $0.68 | +8.1% (midpoint) |
Q1–Q2 FY27 Key Metrics
| Quarter | Revenue ($M) | Adj. Op. Income ($M) | Adj. EPS | eComm Growth | U.S. Comp Sales | Ad Revenue Growth | Membership Fee Growth |
|---|---|---|---|---|---|---|---|
| Q1 FY27 | $177,751 | $7,674 | $0.66 | +26% | +4.1% | +37% | +17% |
| Q2 FY27E | $186,956* | $0.74* |
*Consensus estimate
Final Thoughts
Walmart is set up for another strong quarter, with easier YoY compares on operating income and margin, robust momentum in digital and alternative profit streams, and a clear focus on leveraging AI and automation for both customer experience and cost efficiency. The most important factors to watch are the sustainability of high-margin growth drivers (eCommerce, marketplace, advertising, membership), the impact of fuel and macro headwinds, and the ability to deliver on or above the upper end of guidance.
