FedEx (FDX.US) delivers its first financial report after freight division spin-off: revenue and profit both exceed expectations, raises full-year guidance, announces new CFO
Thanks to rising package unit prices, increased business volume, and ongoing structural cost reduction measures, FedEx's revenue and profits for the quarter both exceeded Wall Street expectations. The company also raised its full-year earnings outlook for 2026.
According to Zhitong Finance APP, FedEx Group (FDX.US) released its quarterly financial report through September 30, 2026, on Wednesday (October 28) Eastern Time. Benefiting from higher parcel prices, growth in business volume, and ongoing structural cost-cutting measures, the company achieved both revenue and profit above Wall Street's expectations for the quarter, and raised its full-year earnings outlook for 2026. However, after the financial report was released, the company's stock price saw a slight decline in after-hours trading.
Core Performance: Revenue and Profit Both Beat Expectations
Financial results show that under US Generally Accepted Accounting Principles (GAAP), the company's net profit for the quarter was $290 million, or $1.21 per diluted share, down from $650 million ($2.73 per share) in the same period last year. The significant volatility in profit was primarily affected by one-time items, including losses related to short-term investments, gains on debt settlements, and certain restructuring costs. Excluding these items, the company's adjusted earnings per share (EPS) was $3.74, up roughly 28% from $2.93 last year and beating the market's expectation of $3.36.
The report indicates the company achieved quarterly revenue of $22.9 billion, up about 12% from $20.4 billion in the same period last year, exceeding the market's estimate of $22.42 billion; adjusted operating profit was $1.2 billion, and adjusted operating margin was 5.3%. The difference between GAAP net profit and adjusted net profit mainly arises from the one-time impact of the FedEx Freight spin-off: On June 1, 2026, the company completed the spin-off and public listing of FedEx Freight (the new company trades on the NYSE under the ticker "FDXF"), retaining a 19.9% equity stake. The company recognized a $1.2 billion book loss on this equity investment in the quarter; meanwhile, using approximately $4.1 billion in dividends received from the spin-off and its own cash, the company completed about $4.9 billion in debt tender offers, generating a pre-tax gain of $627 million.
First Adjusted Fiscal Year Report Shines
It is noteworthy that this is FedEx's first quarterly report following its fiscal year adjustment—from a year-end of May 31 to December 31, aligning the reporting period with the calendar year quarter. In addition, it is the first complete quarterly report released after the successful spin-off and separate listing of FedEx Freight as an independent company.
By business segment, FedEx’s U.S. domestic express operation saw profit growth for the quarter, mainly driven by higher parcel prices and increased business volume; international business benefited from growth in international export volumes, although this was partially offset by rising wages, increased purchased transportation costs, and changes in global trade policies.
FedEx President and CEO Raj Subramaniam stated, "Our strong operational performance and adjusted free cash flow demonstrate that FedEx continues to win market share in high-value segments while optimizing our network, which has led us to raise our full-year outlook."
Upgraded Full-Year Guidance and New CFO to Assume Role Next Month
Based on strong quarterly results, FedEx raised its 2026 adjusted full-year earnings per share forecast from the previous $16.90–$18.10 to $18–$18.60; at the same time, revenue growth for 2026 was revised up from a previous 11% year-over-year increase to about 12%.
Regarding capital returns, the company completed $2 billion in share repurchases during June through September. As of September 30, the company held $8 billion in cash, of which about $2.7 billion was IEEPA tariff refunds held on behalf of clients. In addition, on October 1, the company completed the sale of its subsidiary FedEx Supply Chain to CMA CGM for approximately $1.4 billion; starting January 4, 2027, FedEx’s parcel shipping rates will increase by an average of 5.9%.
Just earlier this week, FedEx announced the appointment of former AutoZone executive Jamere Jackson as its new Chief Financial Officer, effective November 30. He will succeed Claude Russ, who has served as interim CFO since June 1. The previous interim CFO, John Dietrich, announced his resignation from the role in April this year.
Market analysts pointed out that after completing the freight spin-off, selling the supply chain business, and restructuring fiscal years, FedEx is now focusing on high-value B2B parcel and air freight core operations, and the effects of its transformation are gradually being reflected in profitability. However, the uncertainties brought by global trade policies and cost pressures still warrant continuous attention.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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