Fedex Stock Earnings Reports

Q3 highlights: Revenue grew 2% year-over-year (first Y/Y revenue growth this fiscal year) and adjusted operating income increased 12% (17% at Federal Express) despite weather, USPS contract expiration and a weak industrial economy. DRIVE cost-savings ramped to $600 million in Q3 (up from $390M in Q1 and $540M in Q2); management reiterates a FY’25 incremental DRIVE target of $2.2 billion and $4.0 billion versus the FY’23 baseline. Guidance and outlook: Management lowered FY’25 adjusted EPS to $18.00–$18.60 (midpoint ≈ $18.30) and expects flat-to-slightly-down full-year revenue, citing B2B/priority volume weakness, elevated inflationary cost pressures, international yield pressure (notably international economy), and the USPS contract expiration as key headwinds. Network and strategic progress: Network 2.0 rollout is progressing (≈12% of average daily global volume through optimized facilities by end of FY’25; targeted ~40% by end of FY’26), Tricolor has improved air payloads (+9%) and density (+5%), Europe is showing improved service and profitability momentum with targeted DRIVE savings, and RouteSmart acquisition adds route-optimization capabilities. FedEx Freight separation: separation management office established; $16B debt exchange completed to prepare for a tax-efficient spinoff. Capital allocation: FY’25 CapEx reduced to $4.9B (down $300M), aircraft purchases include eight new and two used 777 freighters (phased CY26–27), MD-11 retirements extended to FY’32, and shareholder returns continue (≈$2.5B buybacks YTD; ~$500M in Q3; on track to return ~$3.8B including dividends). Commercials & product initiatives: Ground and deferred services grew (Ground volumes +7%; international export package volumes +8%); expanded Sunday residential coverage to ~2/3 of the U.S. with early incremental volume commitments; onboarding nearly $400M of new annualized healthcare revenue. Risks and near-term drivers: continued weakness in the industrial economy, inflationary wage/cost pressures, global trade policy/tariff changes (including potential de minimis rule changes), and the pace of freight demand recovery; management expects DRIVE and network transformations to drive stronger operating leverage when demand rebounds.