FedEx announced on Tuesday that its quarterly earnings and revenue surpassed expectations, marking the successful realization of its $4 billion cost-cutting initiative. The company has set its sights on reducing costs by an additional $1 billion in the upcoming fiscal year.
CEO Raj Subramaniam emphasized the achievement of their “structural cost reduction target” despite facing numerous challenges in the market, according to a recent media release.
“Looking ahead, I’m confident that our transformation initiatives, which focus on integrating our networks and decreasing our cost-to-serve, will provide significant long-term value,” he stated.
However, following the announcement, FedEx’s stock saw a decrease of approximately 5% in after-hours trading due to profit guidance for the current quarter that fell slightly short of Wall Street’s expectations.
As of the close of trading on Tuesday, FedEx shares had taken a hit, dropping over 18% since the start of the year.
In their fiscal fourth-quarter results for 2025, FedEx’s performance compared to analyst expectations, as indicated by a survey from LSEG, was as follows:
- Earnings per share: $6.07 adjusted vs. $5.84 expected
- Revenue: $22.22 billion vs. $21.79 billion expected
The company noted a 6% increase in its U.S. daily package volume year over year, with U.S. ground home delivery volume rising 10% compared to the previous year.
For the quarter ending May 31, FedEx recorded a net income of $1.65 billion, equivalent to $6.88 per share, up from $1.47 billion, or $5.94 per share, from the same period last year. When adjusted for one-time items, including costs related to retirement plans, FedEx reported earnings of $6.07 per share.
The revenue for the fiscal fourth quarter reached $22.22 billion, a slight increase from $22.1 billion in the previous year.
For the entire fiscal year, FedEx’s revenue stood at $87.9 billion, slightly up from $87.7 billion in fiscal 2024.
FedEx, along with its competitor UPS, is often viewed as a key indicator of the global economic landscape, as both companies service a wide array of businesses.
The company stated that its capital expenditure for fiscal 2025 amounted to $4.1 billion, reflecting a 22% decline from $5.2 billion in fiscal 2024. This capital spending, as a proportion of revenue, reached its lowest level in the history of FedEx, according to their report.
This decline in spending is part of FedEx’s broader strategy to implement a long-term cost-cutting program. The DRIVE initiative, launched in fiscal 2023, aims to bolster long-term profitability. FedEx announced that it successfully met its $4 billion savings target related to DRIVE by the end of fiscal 2025.
Looking ahead to fiscal 2026, FedEx plans to introduce cost reductions of an additional $1 billion.
For its fiscal first quarter of 2026, FedEx provided a mixed outlook. The company anticipates revenue will remain stable or grow by up to 2% year over year, exceeding StreetAccount estimates, which predicted a slight revenue decline of 0.1%. However, FedEx is projecting adjusted earnings per share between $3.40 and $4.00, falling short of StreetAccount’s estimate of $4.06.
In December, FedEx unveiled plans to spin off its Freight division, creating two independent, publicly traded companies. The anticipated tax-free spin-off is expected to be completed within 18 months.
The release of these quarterly results comes just days after the passing of FedEx’s founder and executive chairman, Fred Smith, who died at the age of 80. Smith had stepped down as CEO in 2022, passing the reins to Subramaniam.
