FedEx reported QQ1 2026 revenue of $22.244 billion, up 0.6% year over year and 0.38% quarter over quarter, with a gross profit of $5.786 billion and a gross margin of 26.01%. Operating income was $1.186 billion (operating margin 5.33%), while net income stood at $0.824 billion and earnings per diluted share of $3.46 (reported $3.48). Despite modest top-line growth, profitability deteriorated meaningfully versus the prior year, with operating income down 40.3% year over year and net income down 44.1% as the company absorbed higher costs and non-operating items. EBITDA was $2.226 billion, delivering an EBITDA margin of approximately 10.0%. The quarter’s expense structure included cost of revenue of $16.458 billion and other expenses of $4.60 billion, contributing to a total cost base of roughly $21.058 billion. The year-over-year deterioration in earnings occurred despite a small revenue uptick, underscoring ongoing margin pressure from fixed-cost intensity, mix effects, and incremental costs in the first quarter of calendar 2026. Management is expected to emphasize cost discipline, network optimization, and pricing actions as levers for margin recovery, along with disciplined capital allocation. In sum, the quarter confirms a stable revenue base in a constrained margin environment, with the path to improved profitability hinging on efficiency gains and pricing power amid competitive dynamics in global logistics.
Key Performance Indicators
Revenue
22.24B
QoQ: 0.38% | YoY:0.61%
Gross Profit
5.79B
26.01% margin
QoQ: 22.30% | YoY:12.94%
Operating Income
1.19B
QoQ: -8.20% | YoY:-40.31%
Net Income
824.00M
QoQ: -9.35% | YoY:-44.10%
EPS
3.48
QoQ: -8.18% | YoY:-41.81%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $22.244; YoY +0.61%; QoQ +0.38%
Cost of revenue: $16.458; Gross profit: $5.786; Gross margin: 26.01%
Key QQ1 2026 Metrics (USD, in billions except per-share data):
- Revenue: $22.244; YoY +0.61%; QoQ +0.38%
- Cost of revenue: $16.458; Gross profit: $5.786; Gross margin: 26.01%
- EBITDA: $2.226; EBITDA margin: 10.00%
- Operating income: $1.186; Operating margin: 5.33%; YoY margin change: -40.31%; QoQ: -8.20%
- Total other income/expenses net: -$0.052
- Income before tax: $1.134; Income tax expense: $0.310; Net income: $0.824; Net margin: 3.70%
- EPS (reported): $3.48; EPS (diluted): $3.46; Weighted avg shares: 243.0 million
- Cash flow proxy: D&A $1.092; Net income to cash flow dynamics not provided; EBITDA used as a cash-flow proxy for the quarter.
Note: YoY and QoQ comparisons are sourced from the provided quarterly metrics; revenue growth is modest while profitability declined meaningfully due to higher operating and non-operating costs in the period.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
22.24B
0.61%
0.38%
Gross Profit
5.79B
12.94%
22.30%
Operating Income
1.19B
-40.31%
-8.20%
Net Income
824.00M
-44.10%
-9.35%
EPS
3.48
-41.81%
-8.18%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript-derived insights are not available in the provided dataset. Consequently, no direct management quotes or themes from the QQ1 2026 earnings call can be cited here. If a full transcript is supplied, a thematically grouped summary would be added, covering topics such as: cost discipline and efficiency programs, pricing actions and mix optimization, capital allocation and capex plans, fuel and labor cost dynamics, network optimization and technology investments, and guidance on medium-term margin trajectory. In the interim, stakeholders should monitor indicators of operating leverage, SG&A normalization, and any stated targets for margin expansion or cash flow improvement.
Transcript data not provided in the current materials.
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Transcript data not provided in the current materials.
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Forward Guidance
Given the absence of explicit forward-looking guidance in the supplied data, the QQ1 2026 outlook should be interpreted with caution. Qualitatively, the path to improved profitability for FedEx likely hinges on: 1) sustained cost discipline across SG&A and operating expenses, 2) optimization of the network and route density to boost operating leverage, 3) pricing actions and service mix to offset fixed-cost intensity, and 4) continued integration of automation and technology to improve productivity. Investors should look for management commentary around target EBITDA margins, capital expenditure cadence (capex intensity vs. depreciation and amortization), and any stated medium-term goals for free cash flow generation. In a competitive environment with UPS and other logistics players, the key factors to monitor are margin recovery pace, fuel cost volatility, labor cost dynamics, and volume momentum in e-commerce-driven parcel and cross-border freight.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FDX.SW Focus
26.01%
N/A
N/A
N/A
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Fundamental view: FedEx sits at the intersection of a structurally growing e-commerce-driven logistics market and a capital-intensive carrier model. The QQ1 2026 results show modest revenue growth but meaningful pressure on profitability, underscoring the need for successful execution of cost containment and network optimization to realize margin expansion. Management commentary (when available) on a defined path to higher EBITDA margins and free cash flow will be crucial for reinforcing a constructive long-term thesis. In the near term, the investment stance should be cautious to neutral, contingent on tangible progress in efficiency, pricing power, and capital discipline, with upside potential if FedEx accelerates margin recovery and monetizes technology investments. Benchmarking against peers (e.g., UPS and other logistics players) will be important to assess relative efficiency and leverage improvements over time.
Key Investment Factors
Growth Potential
Moderate growth potential supported by secular e-commerce expansion and cross-border logistics. FedEx benefits from a diversified service mix (Express, Ground, Freight, Services) and ongoing investments in network optimization and automation that could unlock higher throughput at a lower marginal cost. The QQ1 2026 revenue uptick and EBITDA delivery suggest a pathway to improved margins if cost containment and pricing actions gain traction.
Profitability Risk
Key risks include persistent margin compression from high fixed-cost structure, fuel price volatility, labor costs, and competition (UPS, DHL, and emerging players). Macro headwinds affecting global trade could constrain volume growth, while regulatory changes, currency fluctuations, and supply chain disruptions could alter profitability. The absence of explicit forward guidance adds execution risk regarding margin recovery pace.
Financial Position
Limited balance sheet data in the provided dataset; EBITDA of $2.226B and net income of $0.824B imply ongoing cash-flow generation potential, but capex requirements and debt levels are not disclosed here. Liquidity appears adequate for near-term obligations, but investors should review full filings for liquidity ratios, debt maturities, and cash flow from operations to assess long-term financial flexibility.
SWOT Analysis
Strengths
Global, integrated logistics network with Express, Ground, and Freight segments providing diversified revenue streams
Strong brand presence and scale in the industrials/logistics space
EBITDA generation capability with a ~10% EBITDA margin in QQ1 2026, indicating underlying cash flow potential
Established cross-border capabilities and technology-enabled services to support e-commerce and business clients
Weaknesses
Material operating and profitability pressures despite modest revenue growth, evidenced by -40.3% operating income YoY
High fixed-cost structure and potential sensitivity to volume/seasonality in express and air operations
Limited disclosed near-term profitability metrics beyond quarterly figures, making liquidity and debt dynamics harder to assess from provided data
Opportunities
Capitalizing on e-commerce growth through expanding parcel and express capacity, pricing initiatives, and service differentiation
Network optimization and automation to lift operating leverage and margins over time
Cross-border enablement and value-added services to diversify revenue mix and improve pricing power
Threats
Intense competition from UPS, DHL, and emerging logistics players, with potential pricing pressure
Macro volatility in global trade, fuel costs, and labor costs affecting margins
Regulatory risks and geopolitical events impacting cross-border logistics and international volumes