FedEx Corporation (FDX) Earnings & Analysis

Latest quarter

FedEx reported Q4 FY2026 revenue of $25.0 billion, above the $24.2 billion consensus, while adjusted earnings per share of $6.31 exceeded the $5.91 consensus. Revenue rose 12.5% from $22.2 billion a year earlier, while diluted earnings per share fell to $6.60 from $6.88.

CEO Raj Subramaniam said Federal Express revenue rose 14%, driven by yield and volume gains across nearly all its services. Interim CFO Claude Russ said higher U.S. and international export volumes, pricing gains and cost reductions lifted Federal Express’s adjusted operating income, partly offset by increased expenses. Russ said FedEx Freight’s quarterly adjusted operating income fell by $114 million.

FedEx reported an operating margin of 6.20%, compared with 8.07% a year earlier, and a gross margin of 69.6%, compared with 72.0%. The company reported quarterly free cash flow of $1.8 billion, up from $1.1 billion a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q4 call, Chief Customer Officer Brie Carere said business-to-business services accounted for most of the quarter’s revenue growth. Asked what was driving that demand, she pointed to market-share gains and improvements across four industry verticals, including data-center-related business, while adding that some customers appeared to be building inventories and restocking.

Carere said international volume had grown for two consecutive quarters, with demand from Asia to Europe and U.S. exports among the areas she discussed. In Europe, she said FedEx was trading domestic volume for intra-Europe shipments to improve yield and profitability. Asked about competition and customer retention, she said renewal rates were in the mid-90s and that customers renewed at different times.

On pricing, interim CFO Claude Russ said higher fuel surcharges had not materially driven quarterly adjusted operating income. In response to a question, Russ said the surcharge resets weekly and had largely offset higher fuel costs in FedEx’s own operations and purchased transportation. Carere said elevated fuel prices had not affected demand.

CEO Raj Subramaniam said network changes and cost reductions helped FedEx exceed its fiscal-year transformation savings target. He said FedEx expected 65% of eligible volume to flow through Network 2.0 optimized stations before peak season, after which implementation would pause until early 2027. Russ said FY2026 capital spending was $3.8 billion.

Asked about margins and costs left behind after the FedEx Freight spin-off, Russ said he expected margins to improve year over year in both calendar 2026 and the June–December transition period. He said FedEx expected to remove $100 million of the remaining stranded costs during calendar 2026 and mitigate the rest by the end of calendar 2027.

For the period ahead, Russ said on the June call that FedEx expected Q4 revenue trends to continue into the first four months of the transition period, while U.S. domestic growth would decelerate as it moved past the prior year’s growth.

Guidance

In its October update, FedEx raised its calendar 2026 adjusted earnings outlook for continuing operations to $18.00 to $18.60 per diluted share, from $16.90 to $18.10. It also raised expected revenue growth to approximately 12.0% from approximately 11%.

FedEx expects GAAP earnings from continuing operations of $35.30 to $35.90 per diluted share, compared with its previous $16.55 to $17.75 forecast, which excluded the effects of marking the FedEx Freight investment to market and a debt-extinguishment gain. The company expects an effective tax rate of approximately 22.5%, compared with its prior forecast of approximately 23%.