Net income in FY2025 came in at $19.44B, a +25.33% jump from $15.51B in FY2024, driven partly by improved operating performance and partly by tax/other items embedded in the year’s results. Operating cash flow totaled $36.44B, essentially flat year-over-year (+1.99%), while free cash flow fell to $12.66B, down -16.27%, a contraction driven primarily by higher capital expenditures—capex rose to $23.78B, up +15.38% vs FY2024. The capex acceleration absorbed incremental cash and helps explain why free cash flow did not keep pace with net income gains, despite solid operating cash generation (FY2025 cash flow statement.

FY (year end)	Revenue ($B)	Gross Profit ($B)	Operating Income ($B)	Net Income ($B)	Operating Margin	Net Margin
2022	572.75	143.75	25.94	13.67	4.53%	2.39%
2023	611.29	147.57	20.43	11.68	3.34%	1.91%
2024	648.13	157.98	27.01	15.51	4.17%	2.39%
2025	680.99	169.23	29.35	19.44	4.31%	2.85%

(Data: Walmart FY2022–FY2025 consolidated filings) (source.

Two Calculated Ratios That Matter: Leverage and Cash Conversion#

Walmart’s balance sheet shows total assets of $260.82B against total stockholders’ equity of $91.01B and total debt of $60.11B, producing a calculated debt-to-equity of 0.66x (66.05%) and a net-debt-to-EBITDA of ~1.22x using net debt of $51.08B and EBITDA of $42.01B. These leverage metrics point to a conservative capital structure for a retailer with substantial fixed assets and strong cash flows, giving Walmart flexibility to invest in digital assets, return capital to shareholders, and absorb acquisitions or strategic spend without materially increasing risk. The current ratio stands at ~0.82x, which is normal for large retailers that operate with low working-capital balances and rely on inventory turns and trade payables to finance operations (FY2025 balance sheet.

Balance Sheet & Cash Flow (FY2025)	Value ($B)
Market capitalization (price $100.41)	800.55
Cash & equivalents	9.04
Total debt	60.11
Net debt (total debt - cash)	51.08
Total assets	260.82
Total equity	91.01
Operating cash flow	36.44
Free cash flow	12.66
Capital expenditures	23.78
Dividends paid	6.69
Share repurchases	4.49

(Values derived from Walmart FY2025 statements) (source.

The Strategic Shift: Retail Media (Walmart Connect) as a Margin Lever#

Walmart has actively repositioned a portion of its growth story around Retail Media—Walmart Connect—which the company reports as a rapidly expanding, high-margin business. Management cited advertising and e-commerce as explicit reasons for a guidance raise following Q2 FY2026 results, noting global ad revenue +46% and U.S. Walmart Connect +31% growth rates in that quarter. While the filings do not disclose a line-item ad revenue amount in the consolidated tables provided here, the arithmetic effect is evident: advertising and digital services can scale with far lower incremental cost compared with inventory-driven retail sales, so even modest ad revenue gains lift operating margins more than equivalent retail sales would.

The operating-income uplift (+8.66% year-over-year) versus revenue growth (+5.07%) is consistent with a mix shift toward higher-margin products. To the extent Walmart can continue growing advertising revenue at multi-tens-of-percent rates while maintaining retail scale, the operating leverage effect should persist. However, the magnitude of that effect depends on sustaining advertiser demand, successful measurement/attribution execution, and the ability to turn first-party shopper data and connected-TV inventory into monetizable impressions at attractive CPMs. Company commentary links the global advertising surge in part to greater CTV inventory following the VIZIO acquisition, which expanded Walmart’s addressable media footprint (company announcement and Q2 commentary.

Margin Decomposition: What Drove FY2025 Expansion?#

Decomposing the change year-over-year shows that gross margin remained broadly stable, while operating margin gained ~14 basis points (from 4.17% to 4.31%). The operating-margin improvement reflects a combination of modest gross-margin expansion, cost controls, and higher-margin mix. EBITDA rose to $42.01B, lifting EBITDA margin to 6.17% from 5.61% the prior year, an expansion of ~56 basis points. This pattern is emblematic of a retailer where fixed-cost dilution and high-margin services (advertising, marketplace fees, membership) are incrementally meaningful.

That said, the sustainability of margin expansion must be judged against cyclicality in retail, promotional intensity, and the company's ability to keep investing in digital measurement infrastructure. The company increased capital spending materially in FY2025, with capex at $23.78B, to support store remodels, logistics and digital investments—spend that competes with near-term free cash flow and repurchase capacity but may underpin longer-term margin gains if productized effectively.

Balance Sheet Strength and Capital Allocation Trade-offs#

Walmart’s capital allocation mix in FY2025 shows active reinvestment in the business and a continued shareholder-return profile. The company paid $6.69B in dividends and repurchased $4.49B of stock in the year. Compared with earlier years where repurchases were larger (e.g., FY2023 repurchases nearly $9.92B), FY2025 shows moderated buybacks amid higher strategic spend. The balance sheet remains investment-grade in posture: net debt of $51.08B against EBITDA of $42.01B yields a comfortable leverage multiple (~1.22x), leaving room for further investment or opportunistic M&A without endangering credit profiles (FY2025 cash flow and balance sheet.

At current market pricing (share price $100.41, market cap $800.55B), Walmart trades at a trailing P/E of ~37.89x (price / EPS $2.65), a premium that reflects market expectations for continued margin improvement and durable digital monetization. Our own enterprise-value calculation (market cap + debt - cash = ~$851.62B) yields an EV/EBITDA of ~20.28x using FY2025 EBITDA—somewhat higher than the 19.19x figure reported in certain TTM metrics, a discrepancy that stems from differing EV definitions and timing of market-cap inputs. We flag that difference to clarify how valuation multiples can shift depending on calculation method and the timing of price data (market data snapshot.

Competitive Position: Walmart Connect vs. Retail-Media Leaders#

Walmart’s retail-media push positions it directly against entrenched rivals in retail media. Amazon Advertising’s scale remains far larger, but Walmart’s differentiator is omnichannel measurement and a massive physical footprint that enables deterministic, purchase-level attribution across in-store and online channels. The addition of CTV inventory via VIZIO broadens reach and helps Walmart offer advertisers a multi-screen strategy, which, combined with first-party POS data, can be compelling for brands focused on closed-loop ROI.

Execution risk remains non-trivial: building advertiser trust, improving measurement accuracy, and sustaining high CPMs are essential. The Q2 FY2026 growth rates—global +46% and U.S. +31%—are impressive growth-in-isolation, but converting that growth into a durable component of operating income requires product maturity, pricing discipline and continued enhancements to attribution and cross-channel analytics (company commentary.

What This Means For Investors#

Walmart’s FY2025 results and subsequent Q2 FY2026 commentary point to a company in the late stages of structural evolution: a traditional retail cash-engine that is incrementally becoming a diversified platform with higher-margin digital services. The immediate implication is that reported earnings may become less volatile relative to topline-only retailers as advertising and membership revenue scale and raise revenue quality. Investors should weigh three core dynamics: (1) margin sensitivity to digital mix, (2) the trade-off between capex investment (which compressed free cash flow in FY2025) and longer-term margin upside, and (3) valuation expectations baked into a near-38x trailing P/E.

From a risk perspective, the principal near-term threats are a slowdown in advertiser demand, execution setbacks in measurement/attribution, and retail cyclical pressures that force promotional intensity. On the offsetting side, sustained advertising growth and successful CTV monetization would support continued operating-margin expansion, which is already reflected in raised analyst targets and guidance revisions in the wake of Q2 commentary.

Key Takeaways#

Walmart’s FY2025 results show a company growing revenue (+5.07%) while improving operating income (+8.66%) and expanding EBITDA margin (+56 bps), a pattern consistent with an improving revenue mix driven in part by high-margin advertising. Balance-sheet strength—net debt/EBITDA of ~1.22x and manageable debt-to-equity—provides the flexibility to invest in digital assets and continue shareholder distributions, although free cash flow was depressed by higher capex in FY2025 (-16.27% FCF change). The market is pricing future margin improvement into the stock, and the company’s disclosures on Retail Media growth (Q2 FY2026 advertising +46% globally, U.S. +31%) are the linchpin for whether that priced-in story is realized (Q2 FY2026 company commentary.

Conclusion: An Established Retailer With a Growing Digital Margin Story#

Walmart remains fundamentally a low-margin, high-volume retailer, but the recent acceleration in advertising and other digital channels is translating into outsized operating-income gains relative to revenue. The FY2025 numbers show the early financial footprint of that strategic shift: improved margins, stronger net income growth, and amplified investment in digital infrastructure—at the expense of near-term free cash flow. Whether Walmart sustains this transition hinges on execution in Retail Media, continued growth in higher-income shopper cohorts, and disciplined capital allocation that balances reinvestment with shareholder returns. For stakeholders, the story is now as much about platform economics and monetization as it is about scale in bricks-and-mortar operations.

(Stock snapshot: price $100.41, EPS $2.65, P/E ~37.89x, market cap $800.55B) (market data.