FedEx delivered stronger-than-expected results for its fiscal fourth quarter, reporting earnings and revenue that surpassed Wall Street forecasts. The logistics giant also announced it has successfully achieved its ambitious $4 billion structural cost-reduction goal and is now setting its sights on trimming an additional $1 billion in expenses during the upcoming fiscal year.
Despite the positive financial report, FedEx stock saw a dip of about 5% in after-hours trading. This reaction came as the company provided profit guidance for the current quarter (fiscal first quarter 2026) that fell slightly below analyst expectations. As of Tuesday’s market close, FedEx shares had declined more than 18% since the beginning of the year.
“We’ve hit our structural cost reduction target even while navigating persistent economic challenges,” stated CEO Raj Subramaniam in a media release. He expressed confidence that the company’s ongoing transformation efforts, particularly those focused on integrating networks and lowering the cost to serve customers, will generate substantial value over the long term.
Fiscal Fourth Quarter 2025 Highlights
For the quarter ending May 31, FedEx reported solid performance against analyst projections (based on LSEG survey):
Adjusted Earnings Per Share (EPS): $6.07 reported, compared to analyst estimate. (Original article doesn’t provide the estimate number, just that $6.07 beat, and the GAAP EPS of $6.88 was also reported).
Revenue: $22.22 billion reported, slightly above the analyst estimate.
Comparing directly to the prior year’s quarter, net income rose to $1.65 billion, or $6.88 per share, up from $1.47 billion, or $5.94 per share. Revenue saw a modest increase to $22.22 billion from $22.1 billion a year earlier.
Operational metrics also showed strength, with U.S. daily package volume increasing 6% year-over-year. Notably, U.S. ground home delivery volume jumped 10% compared to the same period last year.
For the full fiscal year 2025, FedEx posted revenue of $87.9 billion, a slight uptick from $87.7 billion in fiscal year 2024.
Achieving Cost Targets and Future Savings
A significant accomplishment highlighted was the successful completion of the DRIVE program’s initial phase. Introduced in fiscal year 2023 with the aim of improving long-term profitability, the program reached its target of $4 billion in total structural cost savings by the end of fiscal 2025, relative to a fiscal 2023 baseline.
Building on this success, FedEx’s guidance for the full fiscal year 2026 includes plans for an additional $1 billion in cost reductions. The company did not provide full-year fiscal 2026 earnings or profit forecasts.
Alongside cost cutting, FedEx has also significantly reduced capital spending. For fiscal 2025, capital expenditures totaled $4.1 billion, a 22% decrease from $5.2 billion in fiscal 2024. According to the company, this represented capital spending as its lowest percentage of revenue in FedEx history.
Mixed Guidance and Headwinds
While Q4 results were strong, the outlook for the fiscal first quarter of 2026 presented a mixed picture. FedEx forecasts revenue to be flat to up 2% year-over-year, which actually topped StreetAccount estimates predicting a slight decline. However, the company expects adjusted EPS for the quarter to be between $3.40 and $4.00, falling short of the StreetAccount estimate of $4.06.
Company executives attributed the expected EPS miss partly to international trade impacts. CFO John Dietrich noted a $170 million headwind from international exports, primarily stemming from global trade policies. Brie Carere, Executive Vice President and Chief Customer Officer, specified that the majority of this impact relates to shipments from China to the U.S., largely influenced by the “de minimis” tax provision for lower-value shipments.
Strategic Moves and Recent Events
Looking ahead, FedEx announced in December its intention to spin off its Freight division. This move would create two independent, publicly traded companies and is anticipated to be completed within 18 months as a tax-free transaction.
The earnings report comes shortly after the passing of FedEx founder and Executive Chairman, Fred Smith, at the age of 80. Smith had stepped down as CEO in 2022, succeeded by Raj Subramaniam.
As major players alongside rivals like UPS, FedEx’s performance and outlook are often watched closely as indicators of the broader global economy, given their extensive reach across diverse businesses.
