AI Takeaway
McDonald's delivered a strong Q1 FY2026 with revenue rising 9.4% YoY to $6.52B and operating income surging 11.5% to $2.95B, reflecting robust franchise-driven margin expansion despite elevated long-term debt of $40.1B.
Revenue
$6.52B
++9.42% YoY
EPS (Basic)
$2.79
++6.90% YoY
Operating Income
$2.95B
++11.52% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue increased 9.4% YoY to $6.52B in Q1 FY2026 (vs. $5.96B in Q1 FY2025), with the asset-light franchise model continuing to generate high-margin royalty and rent income while limiting direct cost exposure.
Source: Source: 10-Q Income Statement Data
Operating margin improved to 45.3% from 44.5% in the prior-year period, as operating income grew 11.5% to $2.95B — outpacing revenue growth — reflecting operating leverage and disciplined cost management.
Source: Source: 10-Q Income Statement & Key Ratios Data
SG&A expenses rose 11.3% YoY to $759M, slightly outpacing revenue growth of 9.4%, suggesting incremental investment in corporate overhead, technology, or marketing that management will need to monitor for margin sustainability.
Source: Source: 10-Q Income Statement Data
2 more insights available
Upgrade to unlockMcDonald's carries $40.1B in long-term debt as of Q1 FY2026, up 3.2% YoY, against a negative stockholders' equity of -$1.29B. While the franchise model generates strong cash flows, rising interest rates could increase refinancing costs and compress net income, as evidenced by net income growth (6.2%) lagging operating income growth (11.5%).
Source: Source: 10-Q Balance Sheet & Income Statement Data
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $2.83 versus the $2.77 analyst consensus — a +2.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.52B | $5.96B | +9.42% |
Cost of Revenue | $676M | $620M | +9.03% |
Operating Income | $2.95B | $2.65B | +11.52% |
Net Income | $1.98B | $1.87B | +6.16% |
EPS (Basic) | $2.79 | $2.61 | +6.90% |
EPS (Diluted) | $2.78 | $2.60 | +6.92% |
SG&A Expense | $759M | $682M | +11.29% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $60.04B | $56.33B | +6.58% |
Current Assets | $4.71B | $4.74B | -0.55% |
Current Liabilities | $4.15B | $4.01B | +3.44% |
Stockholders' Equity | $-1.29B | $-3.45B | +62.77% |
Cash & Equivalents | $1.17B | $1.24B | -5.49% |
Long-Term Debt | $40.1B | $38.84B | +3.24% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $2.41B | $2.43B | -0.66% |
Investing Cash Flow | $-777M | $-771M | -0.78% |
Financing Cash Flow | $-1.23B | $-1.54B | +20.61% |
Share Buybacks | $396M | $477M | -16.98% |
D&A | $111M | $107M | +3.74% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 45.3% | 44.5% | +0.85% |
Net Margin | 30.4% | — | — |
ROE | -154.2% | — | — |
ROA | 3.3% | — | — |
Current Ratio | $1.136 | — | — |
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McDonald's revenue grew 9.4% YoY to $6.52B in Q1 FY2026, up from $5.96B in Q1 FY2025. This growth was driven by the company's franchise model, which generates high-margin royalty and rent income with limited direct cost exposure.
The key takeaways from McDonald's Q1 FY2026 earnings were strong top-line growth (+9.4% revenue to $6.52B), expanding operating margins (45.3% vs. 44.5% prior year), and EPS of $2.78 (+6.9% YoY). However, net income growth of 6.2% lagged operating income growth of 11.5%, likely due to interest costs on $40.1B of long-term debt.
Based on the financial data, the most prominent risks include McDonald's $40.1B long-term debt burden, which is causing net income growth to lag operating income growth, and SG&A expenses rising 11.3% YoY — faster than revenue growth of 9.4%. The company also maintains a negative stockholders' equity of -$1.29B, a structural feature of its aggressive capital return history.
Yes, McDonald's is highly profitable in Q1 FY2026, reporting net income of $1.98B and a net margin of 30.4%, meaning it keeps about 30 cents of profit for every dollar of revenue. Operating income was even stronger at $2.95B, representing a 45.3% operating margin.
McDonald's financial health is strong operationally, with $2.41B in operating cash flow and a current ratio of 1.14x, but the balance sheet carries $40.1B in long-term debt and negative stockholders' equity of -$1.29B. The equity deficit is improving (from -$3.45B a year ago) and reflects the company's deliberate strategy of returning capital to shareholders rather than a sign of financial distress.