Costco’s membership income rose 14% year-over-year in Q1 FY26, contributing approximately $4.2 billion in revenue that translates almost entirely into operating profit. With merchandise margins held at a razor-thin 2.96%, this high-margin recurring revenue stream underpins the company’s ability to invest in new warehouses, expand e-commerce capabilities and maintain competitive pricing without sacrificing earnings visibility.

The company reported a 92.3% membership renewal rate in the United States and Canada and 89.8% globally. These retention figures—among the highest in retail—reflect deep customer loyalty and translate into a stable base of more than 70 million paid members worldwide. Even a small fluctuation in renewal percentage can impact annual cash flow by hundreds of millions of dollars, underscoring the importance of this metric for forecasting and shareholder returns.

Executive membership upgrades grew 9.3% year-over-year, reaching 47.7% of paid members while generating 74.2% of total sales. Enhanced benefits such as 2% annual rewards, extended shopping hours and new Instacart credits have fueled this upgrade momentum. As executive members spend roughly 30% more per visit than standard members, further penetration of this tier could add $2–3 billion in incremental sales over the next 12 months.

CFO Gary Millerchip noted that a higher proportion of online sign-ups—nearly half of all new memberships—has temporarily lowered overall renewal rates, as younger digital members initially renew at slightly reduced levels. However, these customers represent decades of lifetime value, and the company expects their renewal rates to converge with warehouse-acquired cohorts over time. Monitoring this digital mix will be critical for projecting membership revenue growth and associated cash flow stability.