Costco delivered a solid QQ2 2025 quarter, highlighted by continued top-line growth and strong cash generation against a backdrop of a cautious consumer environment. Revenue rose 8.9% year over year to $63.72 billion, reflecting sustained demand across core categories and the favorable effects of a robust membership base. Despite a higher sales mix in lower-margin categories, gross margin remained resilient at approximately 12.5%, contributing to an operating margin of about 3.64% and a net margin near 2.81%. Earnings per share came in at $4.03 (GAAP), with diluted EPS of $4.02, underscoring Costco’s ability to translate volume into earnings through disciplined cost management and private-label efficiency.
Cash flow and liquidity remained exceptional. Net cash from operating activities was $2.748 billion for the quarter, with capital expenditures of $1.138 billion, yielding a free cash flow of roughly $1.611 billion. Costco ended the period with cash and cash equivalents of $12.356 billion and a net cash position of approximately $4.317 billion (net debt negative), signaling substantial balance-sheet flexibility to fund store expansion, share repurchases, and potential strategic investments. The balance sheet shows total assets of $73.224 billion and total equity of $25.577 billion, with a current ratio near 1.0, underscoring liquidity alongside moderate leverage (debt to equity ~0.31).
Looking ahead, the company’s leverage-free balance sheet and strong cash flow generation position Costco well to navigate a constructive macro backdrop while continuing investments in the membership model, international expansion, and omnichannel capabilities. However, valuation remains premium, and investors should monitor membership renewal dynamics, price sensitivity in core categories, wage costs, and currency effects as the company maintains its disciplined capital allocation stance.