Membership Fees Drive 64% of Costco’s Net Income, Q1 Fees Jump 14%
Costco generated $5.3B in membership fees in fiscal year ending August, representing roughly 64% of its $8.3B net income. In Q1 fiscal 2026 membership fee income rose 14% to $1.329B, driven by a U.S./Canada fee hike and growth in Executive memberships.
1. Membership Fees Propel Earnings
In the fiscal year ended August, Costco collected $5.3B in membership fees, accounting for approximately 64% of its $8.3B net income. This fee-based revenue underpins the company’s high-return, low-margin retail model and funds cash flow for dividends.
2. Q1 Fiscal 2026 Fee Income Surge
During the 12 weeks ended November 23, membership fee revenue climbed to $1.329B, a 14% year-over-year increase. Nearly half of this gain stemmed from a fee increase in the U.S. and Canada, while the remainder came from a larger member base and upgrades to higher-tier plans.
3. Executive Membership Expansion and Renewal
Total paid members reached 81.4M, up 5.2% year over year, with Executive memberships growing 9.1% to 39.7M. Renewal rates held at 92.2% in the U.S. and Canada and 89.7% globally, as digital sign-ups—typically younger shoppers—renew at slightly lower rates.
4. Predictable Cash Flow Supports Dividends
The steady inflow of membership fees provides a reliable cash stream that underwrites Costco’s regular quarterly dividends and occasional special payouts. Management cites this predictability as a key driver of its dividend growth strategy.