Walmart Connect: Flywheel's Keystone

Walmart's Partner Connect event highlighted how advertising, membership and fulfillment can reinforce growth and improve digital profitability. We came away with increased confidence that the advertising "engine" (~$8bn of revenue) can keep scaling at 30%+ growth. U.S. advertising, including Connect, accounts for ~43% and ~29% of our digital profit tailwind in 2026e and 2027e, respectively. Our model implies digital variable margins of ~11% and ~13.5%, measured as incremental EBIT over incremental sales, generating $2.7bn and $3.3bn of incremental digital EBIT. Advertising alone contributes ~23bps and ~18bps to WMT U.S. EBIT margin. Our latest survey puts Walmart+ at ~22mn households, up ~20% y/y, with members interacting with WMT ~37x annually vs. ~21x for non-members. We model U.S. eComm sales rising from ~$124bn in 2026e to ~$148bn in 2027e, with digital EBIT increasing from $4.6bn to $7.8bn. Bottom Line: Walmart's opportunity is to pair frequency-led share gains with improving digi