FedEx (FDX) Q2 2026 earnings summary

Executive summary

• Achieved strong Q2 results with 7% revenue growth to $23.5 billion, margin expansion, and adjusted EPS up 19% to $4.82, despite headwinds from MD-11 fleet grounding, air traffic constraints, and global trade policy changes.

• Transformation initiatives (Network 2.0, Tricolor, cost reductions) and digital investments drove resilience, cost savings, and operational improvements.

• On track to spin off FedEx Freight as a separate public company by June 1, 2026, with leadership team in place and key regulatory filings submitted.

• Amended $1.75 billion credit agreements to permit the Freight spin-off, extend maturities, and adjust covenants and guarantees.

• Strong performance in U.S. domestic package services and B2B verticals, with new business wins in healthcare and automotive.

Financial highlights

• Q2 consolidated revenue up 7% year-over-year to $23.5 billion, driven by yield and volume strength in U.S. domestic package services.

• Adjusted operating income grew 17% to $1.6 billion; adjusted EPS rose 19% to $4.82; adjusted operating margin improved to 6.9%.

• Federal Express segment revenue up 8% to $20.4 billion; adjusted operating income up 24%.

• FedEx Freight revenue declined 2% to $2.14 billion; adjusted operating income declined, impacted by lower shipments and spin-off costs.

• Completed $276 million in share repurchases; cash on hand at quarter-end was $6.6 billion.

Outlook and guidance

• FY 2026 adjusted EPS outlook raised to $17.80–$19.00; revenue growth expected at 5–6%.

• FEC revenue to grow 7% at midpoint; FedEx Freight revenue expected flat to slightly down.

• Q3 adjusted EPS expected to be sequentially lower than Q2 due to peak season costs and MD-11 grounding; Q4 expected to be strongest quarter.

• Capital spending targeted at $4.5 billion for FY 2026, with $1 billion in permanent cost reductions.

• Pension contributions forecast reduced to $275 million.