FedEx (FDX) Exceeds Revenue Estimates in Q1 FY26

FedEx has announced its Q1 financial results, showcasing mixed performance across its business segments.

Key Financial Metrics:

– Revenue reached $22.2 billion, beating the $21.65 billion estimate.

– GAAP EPS came in at $3.46, below the $3.65 estimate.

– Adjusted EPS hit $3.83, surpassing the $3.65 expectation.

– Year-over-year, revenue rose 3%, and GAAP EPS grew 8%.

Operational Highlights:

– FedEx Express revenue climbed 4% to $19.1 billion, thanks to higher domestic yields and volume.

– FedEx Freight revenue dropped 3% to $2.3 billion, with operating income down 18% due to lower demand and increased wage costs.

– Fuel expenses fell 19%, boosting margins.

– Operating income grew 10% year-over-year to $1.19 billion, with an adjusted margin of 5.8% compared to 5.6% last year.

– Share repurchases totaled $500 million (2.2 million shares), adding a $0.02 EPS benefit.

FY26 Guidance:

– Revenue growth is projected at 4% to 6% year-over-year.

– Non-GAAP EPS (excluding MTM pension) is forecasted between $14.20 and $16.00.

– EPS (excluding spin-off, optimization, and fiscal year change costs) is expected to range from $17.20 to $19.00.

– Planned capital spending is set at $4.5 billion.

– Permanent cost savings of $1 billion are targeted through Network 2.0.

Strategic Updates:

– The FedEx Freight spin-off is planned for June 2026, with the new ticker symbol FDXF.

– A confidential Form 10 has been filed with the SEC, along with an IRS private letter ruling request.

– Parcel and LTL rates are set to rise 5.9% starting January 5, 2026.

Key Takeaways:

– Strong growth in Express services and effective cost-cutting measures offset challenges in the Freight segment.