Walmart reported second-quarter results for fiscal 2027 on August 20. Revenue of $187.9 billion, up 5.9%, or 5.1% in constant currency. Global eCommerce up 23%. Membership fee revenue up 17%. Operating income up $2.1 billion, 28.8% as reported and 17.4% adjusted in constant currency, helped by tariff refunds the company says it is putting back into price. Adjusted EPS of $0.81.
And the advertising line: global advertising up 38%, with Walmart U.S. advertising up 38%. In the first quarter, those numbers were 37% and 36% against 7.3% revenue growth. Two consecutive quarters of an ad business growing about six times faster than the company that owns it.
Ahead of the print, Reuters reported that Walmart Connect’s margins contribute roughly a third of Walmart’s operating income, with analysts estimating gross margins around 70%, and that Connect grew 44% in the quarter ending April 30 while U.S. same-store sales growth slowed to 4.1%. Walmart Connect impressions rose 17% in the second quarter against 9% at Amazon.
Every dollar in that line came out of a brand’s marketing budget. Probably yours.
A commitment a CFO forecasts is a commitment with a price
I spent years at Zeta and Oracle selling data and media products into the same brand teams that write these retailer checks, and the framing I heard in almost every account was some version of “that’s the cost of doing business with them.” Retail media budgets got treated like slotting fees with a dashboard: a toll you pay to keep the shelf, negotiated by whoever owns the account, and largely fenced off from the rest of the marketing conversation.
That framing made sense when the retailer’s ad business was a rounding error. It fits worse each quarter. When a segment throws off 70% gross margins and analysts think it accounts for a third of operating income, the retailer’s finance organization is modeling your commitment, sizing it, and telling public investors it will keep growing. Walmart’s ad business is small against $713 billion in annual sales and enormous against the company’s profit.
Suppliers on the other side of that model have more room than their rate card conversation suggests, and most are still negotiating like they don’t.
Two things can be true about who is winning here
Walmart is not extracting this money at gunpoint. The traffic is real, the closed-loop measurement is better than most alternatives, and a lot of brands earn a return on Walmart Connect that they cannot earn anywhere else. Walmart is also passing tariff refunds into lower shelf prices, which moves units for the same suppliers funding the ads. A retailer with a healthy ad business and a growing membership file is a better partner than one squeezing the same margin out of trade terms.
Both of those can hold while the negotiating position underneath them shifts. Growth rates of 38% against 5.9% mean the ad business is the part of the story investors are paying for, and the supply of that growth sits with a few hundred large suppliers. Amazon is still bigger in ads and grew impressions half as fast last quarter, which tells you brand dollars are already moving between the two.
What the commitment should buy
A joint business plan where you commit media dollars in exchange for nothing you can name is a donation with a deck attached. The commitment should buy things the retailer controls and a vendor cannot sell you:
Category share of voice with a floor, written down. Placement guarantees on the surfaces that convert, tied to the promo calendar rather than to whenever inventory clears. Access to first-party purchase data at a grain your own team can analyze rather than a quarterly readout. Measurement definitions in the contract, including how the retailer counts an attributed sale and over what window. And a term that lets you reduce spend without losing shelf position, which is the concession most suppliers assume is impossible and rarely test.
Then ask the question nobody asks in a JBP: what happens to this commitment if comps slow another point. If the answer is that the retailer needs the ad line to hold regardless, you have learned something about who needs the deal.
The number to bring into the room
Before your next planning cycle, get two figures side by side on one page. First, what share of your total spend with this retailer is media versus trade versus everything else, over the last eight quarters. Second, what the retailer’s ad business grew in each of those quarters against its total revenue.
If the second number is running five or six times the first, you are funding the fastest-growing, highest-margin part of a public company’s earnings story. Walmart’s own investor materials will tell you that. Bring the page.