Fedex 2025 Q4 Earnings Beats Expectations with Net Income Up 11.8%

Fedex (FDX) reported its fiscal 2025 Q4 earnings on Jun 24th, 2025. FedEx surpassed analyst expectations with revenue at $22.22 billion compared to the anticipated $21.84 billion, and adjusted earnings per share of $6.07, exceeding predictions of $5.87. However, the company’s guidance for FY2026 adjusted EPS fell below expectations at $3.40 to $4.00 against analysts’ consensus of $4.15. FedEx maintained a cautious outlook for the upcoming fiscal year, anticipating revenue growth to be flat to 2% due to trade disruptions and contract expirations, which could affect investor sentiment.

Revenue
FedEx's total revenue increased by 0.5% to $22.22 billion in Q4 2025, compared to $22.11 billion in the same quarter of the previous year. The FedEx Express segment generated $18.98 billion, demonstrating its significant contribution to overall revenue. Meanwhile, the FedEx Freight segment reported $2.30 billion, and the category of Other and eliminations added $946 million, completing the revenue distribution across the company’s business segments.

Earnings/Net Income
FedEx's earnings per share (EPS) surged by 48.4% to $6.88 in Q4 2025, up from $4.64 in Q4 2024. The net income of the company rose to $1.65 billion in the same period, marking an 11.8% increase from the previous year's $1.47 billion. This performance highlights FedEx's continued profitability and operational resilience, showing a robust earnings outlook.

Post Earnings Price Action Review
The investment strategy of purchasing FedEx shares after a quarter-over-quarter revenue increase during the earnings release date and holding for 30 days has historically yielded poor results. This approach resulted in a compound annual growth rate (CAGR) of -3.92%, significantly underperforming against the benchmark by -69.40%. The strategy’s Sharpe ratio stood at -0.11, indicating substantial risk compared to the returns. Despite revenue growth, the market response to FedEx’s earnings release has been negative, as reflected in the stock’s performance. Investors may want to consider other factors contributing to price movement beyond revenue increases, such as broader economic conditions and company-specific news.

CEO Commentary
Rajesh Subramaniam, CEO of FedEx, expressed pride in the company's solid finish to FY '25, highlighting an 8% increase in adjusted operating income and 60 basis points margin expansion despite challenging demand conditions. He emphasized the successful execution of a $2.2 billion structural cost reduction commitment, which led to a total of $4 billion over two years. Subramaniam underscored the adaptability of FedEx's network, stating that they successfully optimized operations in response to shifting trade flows and demand trends. He maintained an optimistic outlook, stating, "We are confident in the operating results we can deliver when the industrial economy recovers."

Guidance
For FY '26, FedEx expects revenue growth to be flat to 2%, reflecting approximately $570 million in revenue headwinds from the expiration of the U.S. Postal Service contract and recent trade disruptions. The company anticipates adjusted earnings per share to range from $3.40 to $4.00, including about $200 million in transformation benefits. Additionally, FedEx projects $1 billion in transformation-related savings from DRIVE and Network 2.0 initiatives throughout the fiscal year, with capital expenditures estimated at approximately $4.5 billion.

Additional News
FedEx faced significant challenges following the death of its founder and former CEO, Fred Smith, at the age of 80. Smith was instrumental in establishing FedEx’s global presence, starting with just 186 deliveries on its first day of operations in 1973. In recent strategic shifts, FedEx announced the spin-off of its Freight division, aiming to enhance operational focus and efficiency. Furthermore, FedEx has returned over $4.3 billion to shareholders through buybacks and dividends in FY2025, showcasing its commitment to shareholder value. However, macroeconomic uncertainties, including tariffs impacting shipments from China to the U.S., continue to weigh on FedEx’s growth outlook.