Walmart Inc.: Form 10-Q for the period ended Apr 30, 2025

Overview

This discussion, which presents Walmart Inc.'s ("Walmart," the "Company," "our," "us" or "we") results for periods occurring in the fiscal year ending January 31, 2026 ("fiscal 2026") and the fiscal year ended January 31, 2025 ("fiscal 2025"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three months ended April 30, 2025, and the accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Consolidated Financial Statements as of and for the year ended January 31, 2025, the accompanying notes and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the year ended January 31, 2025.

Recent Developments, Macroeconomic Conditions and Potential Impacts

We expect continued uncertainty in our business and the global economy due to tariffs and trade restrictions; inflationary trends; fluctuations in global currencies; swings in macroeconomic conditions and their effect on consumer confidence; volatility in employment trends; and supply chain pressures, any of which may impact our results. Information on certain risks, factors, and uncertainties that can affect our operating results and an investment in our securities can be found herein under "Item 1A. Risk Factors" and "Item 5. Other Information."

For a detailed discussion on results of operations by reportable segment, refer to "Results of Operations" below.

Company Performance Metrics

We are committed to helping customers save money and live better through everyday low prices, supported by everyday low costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which we operate. We define our financial priorities as follows:

• Growth - serve customers through a seamless omnichannel experience;
• Margin - improve our operating income margin through productivity initiatives as well as category and business mix; and
• Returns - improve our Return on Investment through margin improvement and disciplined capital spend.

Growth

Our objective of prioritizing growth means we will focus on serving customers and members however they want to shop through our omnichannel business model. This includes increasing comparable store and club sales through increasing membership at Sam's Club U.S. and through Walmart+, accelerating eCommerce sales growth and expansion of omnichannel initiatives that complement our strategy.

Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar. We focus on comparable sales in the U.S. as we believe it is a meaningful metric within the context of the U.S. retail market where there is a single currency, one inflationary market and generally consistent store and club formats from year to year.

Calendar comparable sales, as well as the impact of fuel, for the three months ended April 30, 2025 and 2024, were as follows:

Comparable sales in the U.S., including fuel, increased 3.0% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The Walmart U.S. segment had comparable sales growth of 3.1% for the three months ended April 30, 2025 driven by growth in transactions and unit volumes, with strong sales in health and wellness and grocery. The Walmart U.S. segment's eCommerce net sales positively contributed approximately 3.4% to comparable sales, which outpaced the total segment growth for the three months ended April 30, 2025. This growth reflects continued strength in customer and Walmart+ member engagement with omnichannel offerings, which was primarily driven by store-fulfilled pickup and delivery.

Comparable sales in the Sam's Club U.S. segment increased 2.8% for the three months ended April 30, 2025, driven by growth in club and digital transactions as well as unit volumes, including strong sales in grocery and health and wellness. The Sam's Club U.S. segment's eCommerce sales positively contributed approximately 3.3% to comparable sales for the three months ended April 30, 2025, which outpaced the total segment growth as a result of lower fuel sales. This growth reflects continued strength in member engagement with omnichannel offerings.

Margin

Our objective of prioritizing margin focuses on growth by driving incremental margin accretion through a combination of productivity improvements, as well as category and business mix. We invest in technology and process improvements to increase productivity, manage inventory and reduce costs, and we operate with discipline by managing expenses and optimizing the efficiency of how we work. We measure operating discipline through expense leverage, which we define as net sales growing at a faster rate than operating, selling, general and administrative ("operating") expenses. Additionally, we focus on our mix of businesses, including expanding our ecosystem in higher margin areas, such as digital advertising and marketplace. Our objective is to achieve operating income leverage, which we define as growing operating income at a faster rate than net sales.

(Amounts in millions)

(1) Gross profit defined as net sales less cost of sales.

Gross profit as a percentage of net sales ("gross profit rate") increased 12 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to the Walmart U.S. segment driven by disciplined inventory management, including lower levels of markdowns, and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories. Additionally, the increase was partially offset by ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 6 basis points for the three months ended April 30, 2025 when compared to the same period in the previous fiscal year. The increase was primarily due to increased depreciation and amortization and casualty claims expense in the U.S., partially offset by the lapping of business restructuring charges incurred in the previous fiscal year.

Operating income as a percentage of net sales increased 7 basis points for the three months ended April 30, 2025, primarily due to the factors described above.

Returns

As we execute our financial framework, we believe our return on capital will improve over time. We measure return on capital with our return on investment and free cash flow metrics. In addition, we provide returns in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.

Return on Assets and Return on Investment

We include Return on Assets ("ROA") and Return on Investment ("ROI") as metrics to assess our return on capital. ROA is the most directly comparable measure based on our financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP") while ROI is considered a non-GAAP financial measure. Management believes ROI is a meaningful metric to share with investors because it helps investors assess how effectively Walmart deploys its assets. Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts.

Our calculation of ROI is considered a non-GAAP financial metric because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in ROA, the most directly comparable GAAP financial measure. ROA is consolidated net income for the period divided by average total assets for the period. We define ROI as operating income plus interest income, depreciation and amortization, and rent expense for the trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and amortization, less average accounts payable and averaged accrued liabilities for that period. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.

The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

(Amounts in millions)

CALCULATION OF RETURN ON ASSETS

(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by two.

ROA was 7.5% and 7.9% for the trailing 12 months ended April 30, 2025 and 2024, respectively. The decrease in ROA was primarily due to an increase in average total assets, resulting from higher purchases of property and equipment, as well as a slight decline in net income during the trailing 12 month period. The decline in net income was the result of net decreases in the fair value of our equity and other investments, partially offset by higher operating income. ROI was 15.3% and 15.0% for the trailing 12 months ended April 30, 2025 and 2024, respectively. The increase in ROI was the result of an increase in operating income, primarily due to improvements in business performance and lapping business reorganization charges incurred in the comparative trailing 12 months, partially offset by an increase in average invested capital primarily due to higher purchases of property and equipment.

Capital Allocation

Our strategy includes allocating our capital to higher-return areas such as automation and investments in stores and clubs. The following table provides additional detail regarding our capital expenditures:

(Amounts in millions)

20

Free Cash Flow

Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating activities, net cash used in investing activities and net cash provided by or used in financing activities.

We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows.

Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow.

The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash provided by or used in financing activities.

(Amounts in millions)

(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

Net cash provided by operating activities was $5.4 billion for the three months ended April 30, 2025, which represents an increase of $1.2 billion when compared to the same period in the prior year. The increase was primarily due to an increase in cash provided by operating income and timing of certain payments. Free cash flow for the three months ended April 30, 2025 was $0.4 billion, which represents an increase of $0.9 billion when compared to the same period in the prior year. The increase in free cash flow was due to the increase in net cash provided by operating activities described above, partially offset by an increase of $0.3 billion in capital expenditures to support our investment strategy.

Results of Operations

Consolidated Results of Operations

(Dollar amounts and retail square feet in millions)

(1) Membership and other income includes membership fees and other items such as rental and tenant income, recycling income, gift card breakage income, as well as other income from corporate campus facilities.

(2) Gross profit is defined as net sales less cost of sales. Operating expenses refers to operating, selling, general and administrative expenses.

Our total revenues increased $4.1 billion or 2.5% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to strong positive comparable sales in our U.S. segments and international markets driven by growth in transactions and unit volumes, with strength in eCommerce as well as strong sales in grocery and health and wellness. Net sales for the three months ended April 30, 2025 were negatively affected by $2.4 billion in currency exchange rate fluctuations. Additionally, net sales growth was also impacted by approximately 1% due to one extra day in February 2024 as a result of a leap year. Membership and other income increased $0.1 billion or 3.7% for the three months ended April 30, 2025, primarily due to strong growth in membership fee income globally, partially offset by decreases in other income items.

Gross profit rate increased 12 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to the Walmart U.S. segment driven by disciplined inventory management, including lower levels of markdowns, and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories. Additionally, the increase was partially offset by ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 6 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to increased depreciation and amortization and casualty claims expense in the U.S., partially offset by the lapping of business restructuring charges incurred in the previous fiscal year.

Other gains and losses consist of certain non-operating items, such as the change in the fair value of our investments and gains or losses on business dispositions, which by their nature can fluctuate from period to period. Other gains and losses for the three months ended April 30, 2025 and 2024 consisted of net losses of $0.6 billion and net gains of $0.8 billion, respectively, which primarily consisted of changes in fair value of our equity and other investments driven by changes in their underlying stock prices.

Our effective income tax rate was 22.6% for the three months ended April 30, 2025, compared to 24.6% for the same period in the previous fiscal year. Our effective income tax rate may fluctuate as a result of various factors, including changes in our assessment of unrecognized tax benefits, valuation allowances, business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, changes in tax law, changes in the administrative practices, principles, and interpretations related to tax, and the mix and size of earnings among our U.S. operations and international operations, which are subject to statutory rates that may be different than the U.S. statutory rate.

As a result of the factors discussed above, consolidated net income decreased $0.7 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. Accordingly, diluted net income per common share attributable to Walmart was $0.56 for the three months ended April 30, 2025, which represents a decrease of $0.07 when compared to the same period in the previous fiscal year.

Walmart U.S. Segment

(Dollar amounts and retail square feet in millions)

Net sales for the Walmart U.S. segment increased $3.5 billion or 3.2% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was due to comparable sales of 3.1% for the three months ended April 30, 2025, driven by growth in transactions and unit volumes, with strong sales in health and wellness and grocery. The Walmart U.S. segment's eCommerce sales positively contributed approximately 3.4% to comparable sales, which outpaced the total segment growth for the three months ended April 30, 2025. This growth reflects continued strength in customer and Walmart+ member engagement with omnichannel offerings, which was primarily driven by store-fulfilled pickup and delivery.

Membership and other income increased 3.8% for three months ended April 30, 2025, primarily driven by double-digit percentage growth in membership fee income from Walmart+.

Gross profit rate increased 25 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily driven by disciplined inventory management, including lower levels of markdowns, and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 8 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to increased depreciation and amortization, casualty claims expense, as well as VIZIO operating costs following the acquisition in December 2024, partially offset by the lapping of business restructuring charges incurred in the previous fiscal year.

As a result of the factors discussed above, operating income increased $0.4 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Walmart International Segment

(Dollar amounts and retail square feet in millions)

Net sales for the Walmart International segment decreased $0.1 billion or 0.3% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The decrease was primarily due to negative fluctuations in currency exchange rates of $2.4 billion, partially offset by positive comparable sales across our international markets.

Gross profit rate decreased 66 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The decrease was primarily driven by ongoing channel and format mix shifts, partially offset by ongoing business mix changes.

Operating expenses as a percentage of net sales increased 22 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to strategic growth investments, including investments in associate wages in our Mexico and Central America and Canada markets, partially offset by format mix shifts primarily in China.

As a result of the factors discussed above, operating income decreased $0.3 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Sam's Club U.S. Segment

(Dollar amounts and retail square feet in millions)

(1) We believe the "Excluding Fuel" information is useful to investors because it permits investors to understand the effect of the Sam's Club U.S. segment's fuel sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club U.S. segment in the future.

Net sales for the Sam's Club U.S. segment increased $0.6 billion or 2.9% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was primarily due to comparable sales, including fuel, of 2.8% for the three months ended April 30, 2025, driven by growth in club and digital transactions as well as unit volumes, including strong sales in grocery and health and wellness. Sam's Club U.S. eCommerce sales positively contributed approximately 3.3% to comparable sales for the three months ended April 30, 2025, which outpaced the total segment growth as a result of lower fuel sales. This growth reflects continued strength in member engagement with omnichannel offerings.

Membership and other income increased 8.2% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase was due to growth in the membership base and Plus penetration.

Gross profit rate increased 36 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase for the three months ended April 30, 2025 was primarily due to improved margins in fuel.

Operating expenses as a percentage of net sales increased 25 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year, primarily due to lower fuel sales combined with continued technology and associate wage investments.

As a result of the factors discussed above, operating income increased $0.1 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Liquidity and Capital Resources

Liquidity

The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or all of the remaining available cash flow has been used to fund dividends on our common stock and share repurchases. We believe our sources of liquidity will continue to be sufficient to fund operations, finance our investment activities, pay dividends and fund our share repurchases for at least the next 12 months and for the foreseeable future.

Net Cash Provided by Operating Activities

(Amounts in millions)

Net cash provided by operating activities was $5.4 billion as compared to $4.2 billion for the three months ended April 30, 2025 and 2024, respectively. The increase was primarily due to an increase in cash provided by operating income and timing of certain payments.

Cash Equivalents and Working Capital Deficit

Cash and cash equivalents were $9.3 billion and $9.4 billion at April 30, 2025 and 2024, respectively. Our working capital deficit was $22.7 billion as of April 30, 2025, which increased when compared to the $18.9 billion working capital deficit as of April 30, 2024. The increase in our working capital deficit was primarily driven by the timing of certain payments combined with an increase in long-term debt due within one year, partially offset by an increase in inventories related to sales growth. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of cash dividends and share repurchases.

As of April 30, 2025 and January 31, 2025, cash and cash equivalents of $3.7 billion and $3.3 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions or are subject to the approval of the noncontrolling interest shareholders.

Net Cash Used in Investing Activities

(Amounts in millions)

Net cash used in investing activities was $5.1 billion as compared to $4.4 billion for the three months ended April 30, 2025 and 2024, respectively. The increase of $0.7 billion for the three months ended April 30, 2025 is primarily due to an increase in payments for property and equipment and the change in other investing activities related to certain short-term investments.

Net Cash Provided by (Used in) Financing Activities

(Amounts in millions)

Net cash from financing activities generally consists of debt transactions, dividends paid, repurchases of Company stock and transactions with noncontrolling interest shareholders. Net cash provided by financing activities increased $0.3 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year. The increase is primarily due to new long-term debt issued in the current fiscal year as well as lapping debt repayments made in the previous fiscal year, partially offset by increased share repurchases and lower short-term borrowings in the current year.

In April 2025, the Company renewed and extended its existing 364-day revolving credit facility of $10.0 billion as well as its five-year credit facility of $5.0 billion. In total, we had committed lines of credit in the U.S. of $15.0 billion at April 30, 2025, all undrawn.

Long-term Debt

The following table provides the changes in our long-term debt for the three months ended April 30, 2025:

(Amounts in millions)

(1) Proceeds from issuance of long-term debt are net of deferred loan costs and any related discount or premium.

During the three months ended April 30, 2025, our total outstanding long-term debt increased $4.6 billion primarily due to the issuance of new long-term debt in April 2025. Refer to Note 4 to our Condensed Consolidated Financial Statements for details.

Dividends

Effective February 20, 2025, the Company approved the fiscal 2026 annual dividend of $0.94 per share, a 13% increase over the fiscal 2025 annual dividend of $0.83 per share. For fiscal 2026, the annual dividend was or will be paid in four quarterly installments of $0.235 per share, according to the following record and payable dates:

The dividend installments payable on April 7, 2025 and May 27, 2025 were paid as scheduled.

Company Share Repurchase Program

From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during the three months ended April 30, 2025 were made under the current $20 billion share repurchase program approved in November 2022, which has no expiration date or other restrictions limiting the period over which the Company can make repurchases. As of April 30, 2025, authorization for $7.5 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.

We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded through the Company's free cash flow. The following table provides, on a settlement date basis, share repurchase information for the three months ended April 30, 2025 and 2024:

(Amounts in millions, except per share data)

During the three months ended April 30, 2025, the Company repurchased $4.6 billion in shares of its common stock, an increase of $3.5 billion as compared to the same period in the previous fiscal year. The increase was driven by opportunistic prices during the quarter as part of the Company's long-term strategy.

Material Cash Requirements

Material cash requirements from operating activities primarily consist of inventory purchases, employee related costs, taxes, interest and other general operating expenses, which we expect to be primarily satisfied by our cash from operations. Other material cash requirements from known contractual and other obligations include short-term borrowings, long-term debt and related interest payments, leases and purchase obligations.

Capital Resources

We believe our cash flows from operations, current cash position, short-term borrowings and access to capital markets will continue to be sufficient to meet our anticipated cash requirements and contractual obligations, which includes funding seasonal buildups in merchandise inventories and funding our capital expenditures, acquisitions, dividend payments and share repurchases.

We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. As of April 30, 2025, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing. The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.

Other Matters

In Note 6 to our Condensed Consolidated Financial Statements, which is captioned "Contingencies" and appears in Part I of this Quarterly Report on Form 10-Q under the caption "Item 1. Financial Statements," we discuss, under the sub-captions "Settlement of Certain Opioid-Related Matters," and "Ongoing Opioid-Related Litigation," certain opioid-related matters, as well as the Prescription Opiate Litigation, and other matters, including certain risks arising therefrom. In Note 6, we discuss, "Asda Equal Value Claims" the Company's indemnification obligation for the Asda Equal Value Claims matter, "Money Transfer Agent Services Matters," a United States Federal Trade Commission complaint related to money transfers and the Company's anti-fraud program and a government investigation by the U.S. Attorney's Office for the Middle District of Pennsylvania into the Company's consumer fraud prevention and anti-money laundering compliance related to the Company's money transfer agent services, as well as matters related to independent contractor drivers on our Spark platform under "Driver Platform Matters." In Note 6, under "Mexico Antitrust Matter," we also discuss a quasi-judicial administrative process initiated by COFECE against Walmex and Walmex's related constitutional challenge. In Note 6 we also discuss a show cause notice and requests issued by the Directorate of Enforcement to Flipkart regarding Foreign Direct Investment rules and regulations in India and an India Antitrust Matter. We reference various legal proceedings related to the Prescription Opiate Litigation, the DOJ Opioid Civil Litigation, Opioids-Related Securities Class Actions and False Claims Act Litigation; Asda Equal Value Claims; Money Transfer Agent Services Litigation; Driver Platform Matter; Mexico Antitrust Matter; and an India Antitrust Matter in Part II of this Quarterly Report on Form 10-Q under the caption "Item 1. Legal Proceedings," under the caption "I. Supplemental Information." We also discuss an environmental matter with the State of California and an environmental matter with the U.S. Environmental Protection Agency in Part II of this Quarterly Report on Form 10-Q under the caption "Item 1. Legal Proceedings," under the sub-caption "II. Environmental Matters." The foregoing matters and other matters described elsewhere in this Quarterly Report on Form 10-Q represent contingent liabilities of the Company that may or may not result in the incurrence of a material liability by the Company upon their final resolution.

Market risks relating to our operations result primarily from changes in interest rates, currency exchange rates and the fair value of certain equity investments. As of April 30, 2025, there were no material changes to our market risks disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025. The information concerning market risk set forth in Part II, Item 7A. of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, as filed with the SEC on March 14, 2025, under the caption "Quantitative and Qualitative Disclosures About Market Risk," is hereby incorporated by reference into this Quarterly Report on Form 10-Q.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries.

In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems, automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations and increasing monitoring controls. We are continuing to upgrade our financial systems globally, and modernize functions across the business which will impact our internal control over financial reporting.

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. There has been no significant change in the Company's internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2025, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A, under the caption "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, which risks could materially and adversely affect our business, results of operations, financial condition and liquidity. No material change in the risk factors discussed in such Form 10-K has occurred. Such risk factors do not identify all risks that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally.