FedEx Earnings Lift Outlook After Q2 Revenue Rise
FedEx earnings showed Q2 revenue of $23.5 billion and stronger margins, prompting a raised fiscal-2026 outlook that could shift near-term positioning.
KEY TAKEAWAYS
- Q2 revenue rose to $23.5 billion, prompting management to raise fiscal-2026 revenue guidance.
- Adjusted operating income improved to $1.6 billion, lifting margin to 6.9% year-over-year.
- Adjusted EPS excluding items set at $17.00-$18.00, with $1.02 per-share adjustments.
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FedEx earnings, disclosed in a Dec. 18, 2025 press release, showed fiscal second-quarter revenue rose to $23.5 billion and adjusted operating income improved, prompting the company to raise its fiscal-2026 revenue outlook and revise EPS guidance.
Quarter Results, Earnings, and Guidance
FedEx Corp. (FDX) reported fiscal second-quarter revenue of $23.5 billion, up from $22.0 billion a year earlier. Adjusted operating income increased to $1.61 billion, a 6.9% margin, while GAAP operating income rose to $1.38 billion, a 5.9% margin. Both figures improved from the prior-year quarter, when GAAP operating income was about $1.1 billion and adjusted operating income was roughly $1.4 billion with a 4.8% margin.
Adjusted diluted EPS was $4.82. The company said Q2 adjustments totaled $1.02 per share, including $205 million of FedEx Freight spin-off costs, $30 million of business-optimization charges, $8 million related to the fiscal-year change, and a $12 million favorable reversal tied to an international regulatory matter. These items were excluded from non-GAAP results.
FedEx raised its fiscal-2026 revenue growth outlook to 5%–6%, up from 4%–6%, and set adjusted EPS excluding specified items at $17.00–$18.00, narrowing the prior range. The pre-exclusion EPS guidance was $14.20–$14.80. Management said pension contributions will total $400 million and the effective tax rate is roughly 25% before mark-to-market retirement adjustments. The outlook assumes current economic and fuel-price expectations and no adverse geopolitical or trade developments.
Freight Spin-Off, Network Savings, and Capital Spending
The FedEx Freight segment declined due to lower shipments and higher wages as management advances plans for a tax-free spin-off scheduled for June 1, 2026, via the capital markets.
Management reaffirmed its Network 2.0 initiative, targeting $1 billion in permanent transformation-related savings through structural cost reductions. Capital spending for fiscal 2026 is set at $4.5 billion, focused on network optimization, fleet and facility modernization, and automation.
The combination of top-line growth, improved operating margins, and reaffirmed structural savings supported the decision to raise the fiscal-2026 outlook. Raj Subramaniam, president and CEO, said, "FedEx delivered an outstanding second quarter as we successfully executed our growth strategy and advanced our network transformation."
