Good afternoon, everyone, and thank you for joining us at Oppenheimer's 25th Annual Consumer Growth and E-commerce Conference. My name is Rupesh Parikh. I'm the Senior Food, Grocery, and Consumer Products Analyst here at Oppenheimer. I'm very excited to introduce our next presenting company, Walmart. After major outperformance and gains in 2024, Walmart shares are up about 8% year to date, outperforming a modest increase in the S&P 500. We remain very upbeat toward the company's prospects, including the potential for outsized profit growth to continue in the coming years. Joining us are John David Rainey, EVP and CFO, and Kary Brunner, Senior Director, too, of Investor Relations. Thank you all for being here today. The format of today's session will be a fireside chat. We'll go through a number of questions that I've prepared. With that, let's get started. John David, I'd like to kick it off on the U.S. consumer. In Q1, top-line strength continued at Walmart U.S. with a 4.5% comp increase. On the positive side, you saw momentum in grocery and health and wellness, and you noted that consumers are still responding to key seasonal moments and events. However, on the negative side, you did see some softness in the general merchandise category, particularly at the start of the quarter. How would you describe the overall health of your U.S. consumer as we sit here today? What are you planning for on the consumer front for the balance of the year? Sure. First, Rupesh, thanks for hosting this fireside chat. I appreciate everybody that's listening in. It's a pleasure to have the opportunity to speak about Walmart. The consumer has been very consistent, and I know everyone is looking for any detection of a change in behavior. By and large, if I were to generalize, just looking at the first few months of the year, it's been very consistent with what we've seen in prior quarters. That said, there was a little bit of choppiness in the first quarter. In particular, for us, February was weaker than what we had expected. We believe that the majority of that was related to unseasonably cold weather, which affected store traffic. We certainly saw the impact of that. We were able to detect some other changes potentially related to maybe negative consumer sentiment around, at the time, tariffs, looming tariffs, immigration noise. We think that had some impact on our business. March actually was more in line with what we expected. With Easter moving to April, we saw really strong performance around that. We are off to a good start this quarter. Overall, we continue to see that consumers are shifting some of their spending dollars towards food versus general merchandise. That has contributed to maybe the sluggish rebound in general merchandise that we have been going through for a couple of years now since we had a bout of higher inflation a few years back. We have been pleased with the things that we are doing around general merchandise to actually see the impact on our business as we are expanding our assortment, expanding our marketplace. I feel good about the progress there. Overall, as a category, it is still lagging. Okay. It is impressive to see that e-commerce grew more than 20% across each segment of the enterprise, with consumers willing to pay for faster delivery despite the uncertain macro. Do you view this as sustainable? I do. I feel like we've got a lot of good momentum here. One of the things that stands out to me that I think is most impactful or influences the performance here is our ability to deliver things at a faster speed and the consumer's willingness to pay for that. In the last year, we've almost doubled from the first quarter of last year the number of deliveries in under three hours. It's up, I believe, 90% is the exact number. We continue to see that customers are willing to actually pay for that expedited delivery. If you want something within an hour or need ingredients to make a meal at your home within three hours or whatever it is, we can do that, I would argue, as well as anyone. We'd have some weeks here recently where as much as 40% of our deliveries were this express delivery where customers are willing to pay for it. In the last quarter, fully a third of our overall deliveries were this express delivery. That has really helped drive some of the economics of our e-commerce business. Speed and convenience is something that I think matters to everyone, regardless of what their income level is. Certainly, it's something that we're leaning into strongly. We expect this to persist. Yeah, that's impressive. Now, switching to the competitive backdrop, overall, what is your team seeing on the competitive promotional fronts here in the U.S.? How do you feel about your price gaps today? I would describe it as a pretty rational environment right now. We've highlighted in prior quarters that we did not like our price gaps or where they were relative to some others. We've invested into some of that, both in our club format at Sam's as well as at Walmart in specific geographies. We feel much better about how we're positioned there right now. Probably still opportunities for us to address some of those price gaps. Overall, we really like where we are positioned right now. We want to continue to be known for value as well as convenience for customers. We're also going into a period that I think we'd all agree is going to be somewhat different, marked by tariffs versus looking backwards in the rearview mirror. We'll need to play offense there. We want to continue to be that price leader for customers. I know there's been quite a bit of commentary and might even describe it as noise around how retailers are intending to address tariffs. Let me be really clear on one point. We'll continue to be price leaders. We're not going to lose that positioning. That's a great segue into my next question. Tariffs, everyone's favorite question right now. Versus your report in mid-May, have there been any changes of note or any new thinking emerging through the tariff backdrop? Nothing really new, Rupesh. I mean, we continue to try to navigate this. It is week to week, in some cases day to day in terms of the changes. Fortunately, we have had the opportunity to have an ongoing dialogue with the administration to help them understand what we are seeing around or what we would expect to see around consumer behavior, level of prices. I think all companies, whether you are a retailer or not, would love to get to a period where there is a little more certainty for the operating environment. Hopefully, we can get to a resolution in a short period of time around the level of tariffs that will be implemented and that will become the new normal that we will need to navigate. There has been nothing meaningful to report that has changed. We continue to keep an eye on port activity to make sure that we're not getting any kind of stoppage there, backlog. We are being very conscious around that and working with our suppliers. We continue to work with our suppliers as they're having to navigate this as well as we are. How are you planning general merchandise category performance in the second half of the year, just given potential tariff-induced industry price increases in the fluid macro consumer backdrop? Yeah, you know it really depends upon category. So it's tough to generalize. But certainly, when you look at higher AUR items, higher priced items, let's use a barbecue pit as an example. If that's coming, if that's being imported and it has a certain tariff applied to that, given the elasticity expectations around that, we're going to sell fewer of them. There are categories like that, as an example, hypothetically, where we're going to be buying less, and in some cases, as much as 20% less of items to make sure that or try to ensure that we don't get into a situation where we can't sell through the inventory that we have, particularly related to seasonal items, items that you can't carry throughout the year. We bought less of many of those items to make sure that we're not in that position. Okay, great. Now I'd like to shift to some strategic questions. Starting with Walmart U.S. merchandising efforts, we've seen strong grocery comp momentum in the mid-single-digit range for multiple quarters. As we look at the category, grocery private brand penetration moved higher by another 60 basis points in Q1. We've seen more of a push in your new premium brand, bettergoods, in store. What are some of the bigger opportunities your team sees going forward to sustain momentum in grocery categories and potentially drive further share gains? Yeah, we've been really pleased with our grocery performance overall, but we still have an opportunity there to get even better. One of the things that stands out to me is just broadening the assortment. We want to be able to provide all those things that customers want for whatever household. If you want a specialty cheese or a certain type of meat, we want to be able to provide that, maybe not just the typical assortment that you maybe have seen historically at Walmart. We have leaned into that. Bettergoods is, you mentioned private brand penetration. Bettergoods has been a big success story for us. We have launched roughly 400 different items. I think something like 70% are priced below the $5 mark. These are chef-inspired healthy choices. Since its launch, which has been about a year ago, we've had almost $0.5 billion in sales. What's exciting to me about this is 40% of the customers that buy a Bettergoods item are coming back as repeat customers. I think it really speaks to the quality of the overall assortment. We've done similar things in our general merchandise business, but specific to food, Bettergoods is something that really stands out there. The fact is, if you want convenience, you want fresh food, and you want it at your house today or tomorrow at a certain time, we can do that as well as anyone. We're leaning into that, but also in other parts of our business to complement that with maybe a general merchandise purchase or pharmacy or something like that. On the general merchandise front, we also continue to see various styles or conditions as I do my checks around the country. I think the remodels hold significant longer-term potential. What do you view as some of the bigger opportunities going forward to drive share gains over time? Within general merchandise, are there any particular categories where you see bigger opportunities at this juncture? I appreciate you doing your checks. Certainly, what we have done in terms of improving the overall experience in store has been focused on fashion and home. We continue to expand our assortment there with brands like CamelBak, Dale, others to provide that broad expanded assortment for our customers. Marketplace is something that certainly stands out to me as a big opportunity for us with general merchandise as well. Other categories that stand out would be like auto care as an example. We have seen digital growth in auto care that is north of 20%. I am really pleased about that. Marketplace is the one that I would really point to. Roughly half of our GMV growth for general merchandise has been in our marketplace business. We will continue to focus on that because that also unlocks other opportunities like advertising, Walmart Fulfillment Services, things like that, which are all accretive to our bottom line. Okay, I'm going to go back to marketplace later because it's an exciting area for Walmart. Finally, wrapping up with health and wellness. We've seen outsized momentum continue at both Walmart U.S. and Sam's Club with high teens comp increases on really difficult comparisons. Remind us of some of the bigger opportunities your team still sees in this area and how you think about your ability to sustain some of the recent momentum. Yeah, it's maybe a little bit unfortunate that the progress we've made in health and wellness has been overshadowed by the benefit we've received from GLP-1 drugs. We've said that given the high AURs around GLP-1 drugs, those have contributed to about a point of the top line growth there. We changed leadership in our health and wellness business roughly six months ago. We've continued to see really, really good progress there. If you were to exclude GLP-1, our sales in the most recent quarter grew about 10%. Really pleased with the overall progress of that. One of the areas that we've really focused on the most during this period of time that I referred to is around pharmacy delivery. As of sitting here today, we've rolled out pharmacy delivery to the majority of our stores. Really pleased around the progress that we're seeing around that. What's great about that is pharmacy in general, and certainly pharmacy delivery, is a very sticky behavior among customers. If you think about having your prescriptions filled at a certain pharmacy, that's not something that you want to change every single month or every couple of months. There's a stickiness to that, and there's a recurrence in terms of shopping behavior to that. With pharmacy delivery, we can easily provide the opportunity for customers to add in additional food items or add in general merchandise, or maybe there's other items within the pharmacy that they want to have delivered in addition to the prescriptions. There's no company that can do all three of those: GM, food, and pharmacy for us. We're seeing really good progress there. It is at a period of time when some of the other pharmacies seemingly are struggling more with stores being closed down, recent bankruptcy announcements, among other things. We view this as an opportunity for us, and we're leaning in strongly to it. Okay, great. Then before I get into alternative revenue streams, which remain most topical in investor conversations outside of tariffs, I think it's important to highlight the Q1 milestone achieved in delivering e-commerce profitability at Walmart U.S. What were the main drivers here, and do you expect these trends to continue? Yeah, in some ways it's unfortunate that there was so much focus on the tariffs in the quarter because I think it took away from what was a milestone moment for us, achieving e-commerce profitability for both the U.S. business as well as the global enterprise. And just to pause there a second, we're roughly kind of break-even to slightly positive at Sam's. We made a profit in the U.S. We still lose a little bit of money in the international segment, but when you combine, you add all those together, we're profitable at a global level. That's been a long journey for us, you know, from, suffice to say, billions of dollars of losses to where we are today. I think there's a lot of things that have contributed to that. One are these alternative revenue streams that help augment the profitability of this business. I also talked about the fact that we have so many customers that are willing to pay something more for express delivery. That really helps us. Also, the fact that we just have more and more customers that are taking advantage of this now, it lowers our delivery costs. We look at something called batch density, which is the number of orders that we have per delivery truck, if you will. If you're delivering one or two orders every time a delivery driver goes out, you're spreading the cost over those two orders versus if you're delivering 10 or 20, it spreads the cost over those orders, and it overall lowers the unit cost of that. We have seen continued progress there with continuing to have more digitally active customers that are taking advantage of this. All of these things working together are contributing to the progress that we've made around e-commerce profitability. Okay, great. Moving on to alternative revenue streams, at the annual state, your team highlighted an expectation for about two-thirds of profit growth coming from alternative revenue streams such as advertising, membership, marketplace, data, et cetera, with this representing a key pillar for operating income growing faster than sales in the coming years. What is your overall confidence in these alternative revenue streams being able to contribute such a high level of growth? Yeah, I feel really good about it, Rupesh. You know, and it would be obvious for me to say that given the position that I'm in, but I just think that we have so many factors that are contributing to the success here. These are largely digital businesses. If you look at other digital businesses, scale really, really matters. We focused for a long period of time. Sorry about the background noise of the dogs. We have focused for a long period of time of trying to be contribution profit positive or contribution margin positive. That's great, but you've got this base level of investment, the infrastructure that you've got to ultimately sort of overcome. We've done that now. These are businesses that you look at, we have several hundred million customers that are coming to our properties, digital and physical, every week. Customer acquisition is not a challenge for us. We're now allowing our customers to shop with us in the way that they want. As you've got more eyeballs coming to our websites, you're going to have more marketplace sellers wanting to sell there, more advertisers wanting to pitch their products there. The more marketplace sellers that you have there, the more opportunity that we have to use Walmart fulfillment services with those. Fully 50% of those sellers are availing themselves of that today. I feel like this is all working together within the broader omni ecosystem that we have. I don't see this stopping. I think we'll continue to have the progress that we've seen here. As we look at the different alternative revenue stream buckets, how can we think about which could be most impactful for profitability? Yeah, advertising is one that stands out to me there. I think we are still underpenetrated in terms of advertising revenue relative to our GMV levels, relative to what others are doing there. I think we have a big opportunity. I do not think there is any reason that we cannot get to the level that others have already realized. In fact, I would argue that there are aspects of our business that might enable us to go beyond that. An example of that would be the Vizio acquisition. That gives us another channel to provide advertising to customers. If you think about our business today, the advertising that takes place is largely endemic. It is a seller wanting to advertise for their product. By having streaming media and the Vizio acquisition, you can get into non-endemic advertising. Think about Ford Motor advertising an F-150 pickup truck. We'll probably never sell an F-150 pickup truck on our website, but we certainly can advertise it through our streaming channels. I think that gives us an opportunity to think more expansively about the opportunity that advertising has. Given the margin profile that we've had there, given the 30% growth that we've seen there consistently period after period, that has to stand out to me as one of the best opportunities for us. Okay, and I'm going to sneak in one more question on alternative revenue streams. We saw early this morning, Synchrony Financial become the exclusive issuer of OnePay credit cards at Walmart in the U.S., with the experience actually embedded within the OnePay app. Can you share with us the rationale to actually approach this agreement through OnePay versus going direct? Then secondly, I know we haven't seen the architecture of the new credit card, but just curious what benefits you think this could bring to the Walmart U.S. consumer and the company over time. Yeah, we're really excited to be launching this product. I'm not sure exactly what's been disclosed today, so I don't want to get in front of that, but I think the value proposition for Walmart customers is going to be best in class, and we're super excited about that. Obviously, it's going to have some benefits that are a little extra for our Walmart+ customers, which I think is only going to enhance the value proposition of that and potentially become one of the single largest acquisition channels for Walmart+ customers. Really excited about that. We launched this partnership with Ribbit Capital several years ago, and we've been exceedingly pleased with the progress that we've made. We had an agreement with Capital One that we terminated, and that slowed down some of the initial product around credit. As you think about a digital wallet, that one is providing credit is a vital piece of that. Giving customers the ability to tap into more money via credit to spend is hugely important to this. What this partnership has, or this JV that we have has effectively done, has allowed us to reinvent a certain group of employees at one to just focus on financial services. I think anyone could arguably look at Walmart historically and say that we have punched below our weight in financial services. This is an opportunity to really dedicate a group of employees just on financial services to help drive this, to make it become something more meaningful for the Walmart enterprise. We are doing that in combination with Ribbit, which brings their best-in-class abilities and insights into financial services overall. We have been really pleased with this. I think this is the kind of a seminal moment in the history of this partnership. There'll be a lot more exciting things to talk about as we continue to grow this platform. Okay, I'm a credit card junkie, so I'm going to have to get the card eventually. We appreciate it. I guess just going back to the marketplace, it has continued to grow in the mid-to-high 20s from a GMV perspective. We have seen the assorted material increase. I think now it is around about 700 million SKUs. We have also seen new brands, Skechers, Hill's dog foods that you guys called out, La Roche-Posay, join the platform. How do you feel about the SKU coverage today in the more discretionary categories? Are there still opportunities that you see remaining from here? Yeah, we are pleased with the progress that we've made. You mentioned some of the new assortment that we've added. Premium beauty, auto, collectibles are ones that come to mind, but we definitely want to continue to grow the marketplace business. We're not necessarily content with the number of sellers that we have or the number of items that we're providing. Again, I think this is a vehicle for us to continue to expand our assortment going forward. You can look at certain areas, like we've talked for several quarters in a row, where there are categories of general merchandise that overall, both at an industry level and at a company level, might be flat to even growing down slightly, that in our marketplace business is growing 20-30%. Tires and auto is an example. This is an area where we have this new ship-to-store installation program that customers are loving. We have really gained in this category. We are adding share there. I think there is a lot of opportunity going forward. If you are a seller on the marketplace, you want to sell where people are buying. It goes back to my point I made earlier, as we have hundreds of millions of customers, this is effectively a two-sided network. In a two-sided network, there is always a bit of a chicken and egg problem, but we have already solved the customer side. It makes it a lot easier to add the sellers on the seller side. Those become self-reinforcing. The more sellers that you have selling product, the more customers are going to come and take advantage of that marketplace. This is a journey for us, but we're pleased with the progress, but there's much more to come. The last area I wanted to touch on, just Walmart+. I've been a Walmart+ member since it launched. Commentary has been very positive on what you guys have been seeing there, the Walmart+ sign-ups. What does your team still see as the big opportunities to improve the experience? Yeah, to reflect, Walmart+ started roughly five years ago, and we're sitting here today at an all-time high in our NPS, our net promoter score. I'm really pleased with how that's resonated with customers, the value proposition, the value that you're getting out of it. Look, we're always looking for feedback on what we can do to improve that offering to customers. One of the more recent ones has been adding pharmacy delivery, which we've done. Adding in-home, which is a service that we provide where a trusted associate can go into a member's garage, their kitchen, or even their refrigerator and place the items that they've ordered. We'll continue to add amenities like that. Fundamentally, Rupesh, and you and I have talked about this before, I think we just need to continue to focus on the basics. The single best value proposition, or the single most compelling part of the value proposition with Walmart+, is reliable delivery and having it fast. We continue to focus on speed, and we continue to get better, just grading ourselves at our ability to have the items that a customer wants when they come shop with us, not have to substitute those, and then deliver them when they're expecting them. We still have opportunity for improvement there. We've made a lot of progress, but that is going to be, I think, continue to be the single most compelling element of the value proposition. Okay, great. I was hoping to discuss your international Sam's Club businesses. In Q1, Walmart International again saw very healthy momentum overall with strong double-digit comp growth in China, helping to offset maybe relatively softer performance in Mexico and Canada. How should we be thinking about the international growth for the balance of the year? We have been really pleased with the Sam's Club growth internationally, in particular in China. We talked about that at our investor day. We have, I think we said seven stores now that are roughly $500 million in annual sales, which is amazing to think about the level. We have had a couple of new launches there with Sam's Clubs in China that are just mind-boggling, the number of customers that are going through the store on the first day. Pulling up and just more broadly thinking about the international business without respect to Sam's individually, the business continues to perform well. We have said that we expect this segment of our business to drive more growth on the top line as well as the bottom line over the coming years. As I look at across the various markets there in our portfolio, a couple stand out worth mentioning. I talked about Sam's, or I've talked about China. China is roughly 50-50 in terms of its digital physical penetration today, which I think is a little bit of an indicator for how some of these other markets can look longer term. India is another one that is extremely exciting. PhonePe has recently launched or announced their intention to do an IPO in the next year. We're excited about that. And our Flipkart business continues to have really strong growth. We've invested a little bit more in that business, certain aspects of their product offering this year, which have contributed a little bit of pressure to the bottom line, but the top line has been doing really well. And then Walmart, Walmart's being our largest market in the international segment. We were seeing some softness there towards the tail end of last year in the early part of this year. We called that out. This is nothing new. We've talked about this on our earnings calls. That has recovered a little bit in the more recent months. That has kind of gone back to our expectations. We are pleased about the progress there. We continue to invest in all of these markets, whether it is supply chain automation or an expanded customer value proposition, store formats, things like that. It is a big part of our growth going forward. Now on to Sam's Club in the U.S. In early April, your team announced a new aggressive target to potentially double the membership base over the next eight to 10 years. This includes ramping stores to eventual 15-unit openings annually. We expect an even more crowded club channel with Costco continuing to open about 15 units a year. BJ's is now accelerating growth. What do you believe represents the key differentiators and value proposition of a Sam's membership today that could help to sustain momentum of Sam's Club and drive towards these longer-term targets? Yeah, just to reflect on the last four or five years, last five years, I believe we've grown the top line at Sam's about 50%. And that's really without adding any significant number of clubs at all. We've talked about our intention to grow more clubs with our enhanced and expanded value proposition, and we're remodeling clubs as well. We're excited about that. What stands out to me about this format for us, this segment for us, is really what we're doing around e-commerce. Actually, it's broader than just e-commerce. It's digital. Because by saying just e-commerce, it really, it's limiting because it doesn't refer to the in-club experience. The in-club experience, you know, Rupesh, you've seen some of this firsthand, but Scan & Go penetration is a third of the customers that shop there. We've got the new exit arches where you walk out and you never have to go to a cash register to check out. Everything is scanned. The NPS scores around this are fantastic. With Scan & Go alone, it's 90% NPS scores. There aren't a lot of other examples of 90% NPS scores. Importantly, we're also seeing operational improvements related with these improved member experience. An operational improvement would be a reduction in shrink. By not going to a checkout register and not having someone look through your basket and just going through the exit arches, we're seeing a decline in shrink that is quite meaningful and helpful to our business. The other thing that stands out to me, we've recently launched this as delivery from club. That has grown triple digits in the last quarter, I think 160% growth, if I remember correctly, in the last quarter. It has emboldened us to think more broadly about club delivery in general. We have started delivering rotisserie chickens. We have started delivering pizzas. You may hear that and think, gosh, that cannot be very economical for you to deliver a pizza to someone from a club. Here is the thing. The average basket size of a pizza delivery is over $100. Members are taking advantage of the broad assortment that we have. While they are getting a pizza delivered, they are buying general merchandise or other items to go along with that, which makes that e-commerce delivery very attractive from an economic perspective for us. All of these things working together, I think, really help us to feel emboldened to continue to expand and grow our Sam's format. Okay, great. I'm going to try to fit in one more financial question. Just on capital allocation, your team reiterated CapEx guidance. Your team has continued to increase returns to shareholders through dividends and buybacks even in this environment. Can you remind us of your priorities on the capital allocation front from here? Yeah. We like having a balanced capital allocation plan. I'll start there. We view that, I've said this before, every dollar of capital has to compete for the best returns that are out there. We continue to see very attractive returns related to investing in Walmart. Our supply chain automation is one of the things that stands out there. We also, look, we want to be opportunistic and respond to dislocations in our stock price, which we did in the most recent quarter. We bought back an amount of stock in the most recent quarter, roughly equivalent to the entirety of what we bought back last year. We will continue to want to have some dry powder to lean into those moments when there might be a dislocation in stock price. We want to continue to grow the dividend. We've grown the dividend in the last two years more than we have at any point in time in the decade before that. Generally, we want to see that grow in line with our free cash flow growth. We've been really pleased about the progress that we've made there. I think there's more opportunity to see higher payout ratios, a higher dividend yield going forward while still buying back stock. Great. I'm going to slip in one last question in the last minute and a half. Walmart emerged even stronger coming out of the pandemic. Do you expect to see any potential positive changes in sourcing, supply chain, et cetera, that could position the company even stronger coming out of this new tariff backdrop? Yeah. Optimizing our supply chain is something that we constantly do. It is not necessarily just a response to tariffs. It is worth noting that maybe this is probably not well known, but roughly 60% of our suppliers in our U.S. business are small businesses. It is important for us to work with our suppliers and make sure that they are viable going forward too, and that we can work together with them. With some of the tariffs, like if you use examples like some of the tariffs on steel or aluminum, we are working with some suppliers to change some components of the things that they sell to not have a tariffed element related to that. We work very closely with our suppliers to try to lower their costs, to provide more sales. You're seeing some of that happening right now as we're responding to the current environment that we're in. Great. We're out of time. Thank you to John, David, and Kerry for joining us today. All right. Thank you, Rupesh.