FedEx reports improved Q3 results
Higher package yields, increased shipment volumes and cost savings boosted third-quarter operating results, while the company advanced its transformation through the Freight spin-off and Supply Chain sale.
FedEx has announced its consolidated financial results for the quarter ended September 30, with adjusted figures excluding specified items. Consolidated operating results improved in the third quarter, supported by higher package base yields, increased shipment volumes, and continued structural cost savings from business optimisation initiatives.
FedEx reported revenue of $22.9 billion in the third quarter of 2026, up from $20.4 billion in the same period last year. Reported operating income increased to $1.07 billion from $0.97 billion, while adjusted operating income rose to $1.20 billion from $1.03 billion. Adjusted operating margin improved to 5.3% from 5.1%. Adjusted net income climbed to $0.90 billion from $690 million, and adjusted diluted earnings per share increased to $3.74 from $2.93. However, reported net income declined to $0.29 billion from $0.65 billion, while reported diluted EPS fell to $1.21 from $2.73, highlighting the impact of specified adjustment items on the company’s reported results.
Raj Subramaniam, FedEx president and chief executive officer, said, “As our strong operating results and adjusted free cash flow demonstrate, FedEx is winning across high-value market segments while we optimise our network, driving an increase to our full-year outlook. As we advance our transformation, we remain committed to disciplined operational execution to reduce our cost-to-serve while focusing on profitable growth. We have the right strategy in place to continue to be the world’s premier B2B parcel and air freight provider, leverage our digital insights to unlock new markets, and use disciplined capital allocation to create additional stockholder value.”
Operating income in FedEx’s U.S. Domestic Express segment increased during the quarter, supported by higher package yields, rising shipment volumes, an improved service mix and continued cost savings from transformation initiatives. However, the gains were partly offset by higher purchased transportation rates and increased salaries and employee benefits expenses.
The Express International segment also reported an improvement in operating results, driven by stronger base yields, increased international export volumes and higher freight weights. These gains were partially offset by rising wage rates, higher purchased transportation costs and the financial impact of changes in global trade policies.
FedEx Freight Spin-Off
FedEx completed the spin-off of FedEx Freight on June 1, 2026, retaining a 19.9% stake in the newly separated business. During the quarter, the company recorded a loss of $1.2 billion under “Gain/(loss) on short-term investment” in its income statement. As of September 30, 2026, the carrying value of its equity stake stood at $3.3 billion, reported under “Short-term investment” in the condensed consolidated balance sheets.
Following the spin-off, FedEx used approximately $4.1 billion in cash proceeds from a dividend received from FedEx Freight, along with available cash reserves, to finance cash tender offers for approximately $4.9 billion in outstanding debt securities. The transactions generated a non-GAAP, pre-tax gain of $627 million.
FedEx Supply Chain Sale
On October 1, 2026, FedEx completed the sale of its subsidiary, FedEx Supply Chain, to CMA CGM Group for approximately $1.4 billion. The transaction marks another milestone in FedEx’s ongoing transformation strategy, aimed at streamlining its business portfolio, strengthening its strategic focus, and allocating resources to areas with the greatest potential for long-term value creation.
