FedEx Beats Revenue Expectations in Q1 FY26 Earnings Report

• Revenue: $22.2B (vs. est. $21.65B) → beat

• EPS (GAAP): $3.46 (vs. est. $3.65) → miss

• EPS (Adj.): $3.83 (vs. $3.65 est.) → beat

• YoY Growth: Revenue +3%, EPS (GAAP) +8%

Operational Highlights

• FedEx Express revenue rose 4% to $19.1B, helped by higher U.S. domestic yields and volume.

• FedEx Freight revenue fell 3% to $2.3B, with operating income down 18% due to weaker demand and higher wage costs.

• Fuel expense declined 19%, boosting margins.

• Operating income up 10% YoY to $1.19B (adj. margin 5.8% vs. 5.6% last year).

• $500M share repurchases in quarter (2.2M shares), adding $0.02 EPS benefit.

Guidance (FY26)

• Revenue growth: +4% to +6% YoY

• EPS (non-GAAP, excl. MTM pension): $14.20–$16.00

• EPS (excl. spin-off, optimization & fiscal year change costs): $17.20–$19.00

• Capital spending: $4.5B

• Permanent cost reductions: $1B (Network 2.0 savings)

Strategic Update

• FedEx Freight spin-off on track for June 2026 (new ticker: FDXF).

• Filed confidential Form 10 with SEC; IRS private letter ruling request submitted.

• 2026 parcel and LTL rates to rise 5.9% from Jan 5, 2026.

Key Takeaways

• Solid Express growth and cost cuts offset weakness in Freight.

• Adjusted EPS beat helped by efficiency and share buybacks, but GAAP EPS missed consensus.

• Freight spin-off remains the biggest structural catalyst for FY26, alongside continued transformation savings.

• Compared to rival UPS (UPS), FedEx shows steadier domestic growth but faces margin pressure in Freight.