FedEx beats earnings estimates, forecasts $1 billion cost savings in the next fiscal year

FedEx reported better-than-expected quarterly earnings and revenue Tuesday as the company announced it had achieved its $4 billion cost-cutting goal and will aim to trim another $1 billion in its upcoming fiscal year.

The company achieved its "structural cost reduction target, in the face of ongoing headwinds," CEO Raj Subramaniam said in a media release.

"Looking ahead, I'm confident that our transformation initiatives, which are focused on integrating our networks and further reducing our cost-to-serve, will create meaningful long-term value," he said.

FedEx stock dropped about 5% in after-hours trading as the company offered current-quarter profit guidance that came in slightly below what Wall Street was expecting.

As of Tuesday's close, shares of FedEx had dropped more than 18% year-to-date.

Here's how the company did in its fiscal fourth quarter of 2025 compared with what analysts were anticipating, based on a survey of analysts by LSEG:

FedEx reported its U.S. daily package volume was up 6% year over year. U.S. ground home delivery volume, specifically, was up 10% year over year.

The company reported net income for the quarter ended May 31 of $1.65 billion, or $6.88 per share, compared with $1.47 billion, or $5.94 per share, a year earlier. Adjusting for one-time items, including accounting costs associated with retirement plans and other charges, FedEx reported earnings per share of $6.07.

Revenue for the fiscal fourth quarter rose to $22.22 billion, up slightly from $22.1 billion a year earlier.

For the full fiscal year, revenue was $87.9 billion, up from $87.7 billion in fiscal 2024.

FedEx and rival UPS are typically seen as bellwethers for the global economy since they touch a wide variety of businesses.

FedEx reported its capital spending for fiscal 2025 was $4.1 billion, down 22% from $5.2 billion in fiscal 2024. Capital spending as a percentage of revenue hit its lowest level in FedEx history, according to the release.

The reduction in spending comes as FedEx chases a long-term cost-cutting initiative. Its DRIVE program, introduced in fiscal 2023, is aimed at improving long-term profitability. FedEx said on Tuesday it achieved its target of $4 billion total in DRIVE savings by the end of fiscal 2025, relative to a fiscal 2023 baseline.

Its full-year fiscal 2026 guidance includes cost-cutting reductions of $1 billion. The company declined to give full-year fiscal 2026 earnings and profit forecasts.

For its fiscal first quarter of 2026, FedEx gave mixed guidance. The company forecasts revenue will be flat to up 2% year over year, topping StreetAccount estimates that called for revenue to decline by 0.1%. However, FedEx expects adjusted earnings per share of $3.40 to $4.00, slightly under the StreetAccount estimate of $4.06.

CFO John Dietrich said on a Tuesday call with investors that the company's fiscal first-quarter revenue guidance includes a $170 million headwind from international exports due to global trade policy impacts.

Brie Carere, executive vice president and chief customer officer, said on the call the "vast majority of that is impact from China to the U.S. and within that, the vast majority is the impact of de minimis," referencing a tax provision dealing with lower-value shipments.

FedEx in December announced long-anticipated plans to spin out its Freight division, leaving two publicly traded companies. At that time, FedEx said it expected the tax-free spin-off would be executed within 18 months.

The quarterly results come just days after FedEx's founder and executive chairman, Fred Smith, died at the age of 80. Smith stepped down as CEO in 2022 and was succeeded by Subramaniam.