FedEx delivered a stronger-than-expected fiscal second quarter and raised its full-year outlook on Thursday, December 18, 2025, as the shipping giant said peak-season pricing, higher package yields, and structural cost reductions helped offset a difficult macro and trade backdrop. The update lands as FedEx pushes ahead with a sweeping, multi-year overhaul of its network and prepares to spin off its FedEx Freight business in 2026. [1]
The Memphis-based company reported results for the quarter ended November 30, 2025, and pointed to momentum in its “network transformation,” even as it flagged headwinds tied to global trade policy shifts and the grounding of its MD11 aircraft fleet. [2]
FedEx earnings highlights: the numbers investors are focused on
Here are the key takeaways from FedEx’s fiscal Q2 report:
- Revenue:$23.5 billion (up from $22.0 billion a year earlier). [3]
- Operating income:$1.38 billion (GAAP) and $1.61 billion (adjusted); operating margin 5.9% (GAAP) and 6.9% (adjusted). [4]
- Earnings per share (EPS):$4.04 (GAAP) and $4.82 (adjusted) versus $3.03 (GAAP) and $4.05 (adjusted) last year. [5]
- Net income:$956 million (GAAP) and $1.14 billion (adjusted). [6]
Wall Street expectations varied by survey, but multiple outlets noted FedEx exceeded consensus estimates on both earnings and revenue. [7]
What powered the quarter: pricing, yields, and cost reductions—plus mixed volume signals
FedEx attributed the quarter’s improvement to a combination of pricing and execution—especially in its largest business line—while acknowledging that not every part of the network is growing at the same pace.
FedEx’s own summary of the quarter emphasized:
- Strength in U.S. domestic and International Priority package yields
- Continued structural cost reductions
- Higher U.S. domestic package volume [8]
Under the hood, segment performance showed a clear split:
Federal Express segment: revenue and profit rose sharply
- Federal Express segment revenue:$20.433B (up 8% year over year). [9]
- Federal Express segment operating income:$1.551B (up from $1.052B). [10]
Operational metrics also pointed to domestic volume growth:
- Total U.S. domestic average daily package volume:14.716M (thousand shown in the stat book) in fiscal Q2 2026, up from 13.888M a year earlier. [11]
- Total average daily volume (ADV):17.906M in fiscal Q2 2026 versus 17.128M in fiscal Q2 2025. [12]
At the same time, the stat book reflects that performance varies by product mix and lane, with international categories showing very different growth rates and yield dynamics. [13]
FedEx Freight: revenue dipped and operating income fell
- FedEx Freight segment revenue:$2.139B (down 2% year over year). [14]
- FedEx Freight segment operating income:$90M, down from $312M a year earlier. [15]
FedEx said Freight operating results declined due to lower shipments and higher wage rates, along with preparation costs tied to the planned separation—partially offset by improved yield. [16]
The “sweeping overhaul” storyline: Network 2.0, structural savings, and a leaner operating base
A central theme across coverage on December 18 is that FedEx’s ongoing transformation is starting to show up more clearly in margins and guidance.
FedEx has been pursuing a multi-year cost overhaul since 2023, aiming to remove billions from its operating base through actions such as idling aircraft, closing facilities, and integrating its formerly separate Ground and Express operations. For the fiscal year ending in May 2026, FedEx is targeting an additional $1 billion in savings, according to Reuters. [17]
FedEx itself reiterated it expects $1 billion in permanent cost reductions in fiscal 2026 from transformation savings and the advancement of Network 2.0, while continuing to invest in efficiency improvements like modernization and automation. [18]
In management’s view, the transformation is not just about cutting costs—it’s also about improving service economics through higher yields and better network utilization. CEO Raj Subramaniam said the company executed its growth strategy and advanced network transformation despite a “highly challenging external environment.” [19]
FedEx raises full-year guidance: what changed (and what didn’t)
FedEx raised parts of its fiscal 2026 outlook, including the lower end of its profit forecast, and also lifted its revenue growth expectation.
Updated fiscal 2026 outlook (as of Dec. 18, 2025)
FedEx now expects:
- Revenue growth:5% to 6% year over year (up from 4% to 6%). [20]
- Adjusted EPS:$17.80 to $19.00 (the low end raised from $17.20). [21]
- EPS before mark-to-market retirement plan accounting adjustments:$14.80 to $16.00. [22]
- Pension contributions:$275 million (down from a prior forecast of up to $400 million). [23]
The company also reaffirmed:
- Capital spending:$4.5 billion (focused on optimization, fleet/facility modernization, and automation). [24]
- Effective tax rate (prior to MTM adjustments): ~25%. [25]
Adjusted vs. GAAP: why FedEx’s “headline EPS” looks different this quarter
For fiscal Q2, FedEx highlighted several items that affected comparability, including:
- FedEx Freight spin-off costs
- Business optimization costs
- Fiscal year change costs
- An international regulatory matter adjustment [26]
FedEx’s release shows these items had a per-share impact in the quarter, with Freight spin-off costs representing a notable component. [27]
FedEx Freight spin-off: timeline, ticker, and why it matters
One of the biggest strategic moves hanging over FedEx’s 2026 story is the planned separation of FedEx Freight into a new publicly traded company.
FedEx says the spin-off remains on track for June 1, 2026, and the new company is expected to list on the NYSE under the ticker FDXF. FedEx Freight is also scheduled to host an Investor Day on April 8, 2026, in New York City. [28]
FedEx also disclosed that Freight incurred $152 million in one-time spin-off-related costs during the quarter. [29]
Separately, FedEx says it plans to change its fiscal year end from May 31 to December 31, effective June 1, 2026—a shift that has also generated transition-related costs. [30]
FDX stock reaction and “breakout” chatter: what markets heard on Dec. 18
Investors initially welcomed the combination of an earnings beat and higher guidance. Reuters reported FedEx shares were up 1.4% to $291 in after-hours trading following the results. [31]
In the technical-trading world, Investor’s Business Daily framed the report as a potential breakout moment, highlighting the post-earnings move and noting FedEx shares had built momentum since its prior quarterly report. [32]
From the expectations side, a Yahoo Finance segment about the report cited estimates of roughly $4.12 in adjusted EPS and $22.8B in revenue, versus FedEx’s reported $4.82 and about $23.47B in revenue. [33]
The Associated Press earnings snapshot similarly said results topped Wall Street expectations, citing Zacks estimates of $4.07 EPS and $22.86B in revenue. [34]
Macro and trade backdrop: why FedEx is still treated as an economic bellwether
Even with the improved outlook, FedEx is operating in an environment where investors remain sensitive to shipping demand and industrial activity.
Reuters noted that U.S. manufacturing contracted for the ninth consecutive month in November, with factories facing slumping orders and higher input prices as import-tariff effects persisted—conditions that can pressure volumes for a carrier with heavy exposure to business-to-business shipping. Reuters also reiterated that FedEx and UPS are widely viewed as barometers of the global economy because of their broad customer footprints. [35]
FedEx’s own release echoed that the quarter faced headwinds from the financial impact of global trade policy changes, alongside wage and transportation cost pressures. [36]
Labor and reliability enter the conversation: FedEx pilots push back on “peak” performance
Not all the news on December 18 was purely financial.
The Air Line Pilots Association (ALPA), which represents FedEx pilots, said pilots held an informational picket on Dec. 18 ahead of the earnings report, arguing that corporate cost-cutting and resource decisions hurt operational integrity during peak shipping season. ALPA cited increased schedule revisions, extensions, and rising cancellations at key hubs, and said contract talks have been ongoing for more than four years and are now under the National Mediation Board. [37]
That tension sits alongside FedEx management’s upbeat tone on the quarter, with leadership praising execution during peak season while acknowledging operational disruptions such as the MD11 fleet grounding. [38]
What to watch next for FedEx in 2026
With earnings momentum building, the next major checkpoints for FedEx investors are straightforward—and high stakes:
- Can yield gains persist once peak-season pricing fades and competition intensifies? [39]
- Will Network 2.0 deliver the promised savings while maintaining service reliability under heavy demand? [40]
- What happens to freight demand as industrial activity remains uneven—and as FedEx prepares to separate the business? [41]
- How big is the trade-policy headwind in coming quarters, and does it change the revenue trajectory FedEx is now forecasting? [42]
For now, FedEx’s message to markets is clear: the overhaul is moving from plan to performance—just as the company enters a pivotal stretch toward a major corporate split in 2026. [43]
References
1. www.reuters.com, 2. newsroom.fedex.com, 3. newsroom.fedex.com, 4. newsroom.fedex.com, 5. newsroom.fedex.com, 6. newsroom.fedex.com, 7. finance.yahoo.com, 8. newsroom.fedex.com, 9. s21.q4cdn.com, 10. s21.q4cdn.com, 11. s21.q4cdn.com, 12. s21.q4cdn.com, 13. s21.q4cdn.com, 14. s21.q4cdn.com, 15. s21.q4cdn.com, 16. newsroom.fedex.com, 17. www.reuters.com, 18. newsroom.fedex.com, 19. newsroom.fedex.com, 20. newsroom.fedex.com, 21. www.reuters.com, 22. newsroom.fedex.com, 23. newsroom.fedex.com, 24. newsroom.fedex.com, 25. newsroom.fedex.com, 26. newsroom.fedex.com, 27. newsroom.fedex.com, 28. newsroom.fedex.com, 29. newsroom.fedex.com, 30. newsroom.fedex.com, 31. www.reuters.com, 32. www.investors.com, 33. finance.yahoo.com, 34. www.expressnews.com, 35. www.reuters.com, 36. newsroom.fedex.com, 37. www.alpa.org, 38. newsroom.fedex.com, 39. newsroom.fedex.com, 40. newsroom.fedex.com, 41. s21.q4cdn.com, 42. newsroom.fedex.com, 43. newsroom.fedex.com
