FedEx reported QQ2 2025 consolidated revenue of $21.97 billion, flat versus the prior year (-0.89% YoY) and up modestly QoQ (+1.80%). The company posted a gross profit of $5.64 billion with a gross margin of 25.7% and an operating income of $1.05 billion, yielding an operating margin of 4.79%. Net income was $0.741 billion, translating to $3.07 per share on a diluted basis (vs. $3.05 in the prior quarter). While revenue stability reflects solid volumes in a challenging macro environment, profitability proceeded at a rate that suggests ongoing cost pressures and mix effects, with YoY earnings softness (-17.7% YoY) and QoQ declines in net income (-6.7%). Free cash flow reached $0.50 billion for the period, supported by $1.32 billion of operating cash flow and capex of $0.82 billion. FedEx maintained a strong balance sheet and liquidity profile (cash and equivalents around $5.03B; total debt ~$37.27B; net debt ~$32.25B), enabling continued capital allocation including a $1.02B share repurchase and $0.337B in dividends during the quarter. The quarter reinforces a defensible market position in a fragmented global logistics landscape, but the leverage load and near-term margin pressures warrant close attention to cost control, price realization, and volume recovery across Express, Ground, and Freight. Management commentary on call (where available) was not included in the provided data; the analysis below integrates the reported metrics with typical sector dynamics and known driver themes for the period.
Revenue and profitability snapshots (Q2 2025 vs prior periods):
- Revenue: $21.967B; YoY: -0.89%; QoQ: +1.80%
- Gross Profit: $5.642B; Gross Margin: 25.68%; YoY Gross Profit: +0.45%; QoQ: +28.93%
- Operating Income: $1.052B; Operating Margin: 4.79%; YoY: -17.55%; QoQ: -2.59%
- Net Income: $0.741B; Net Margin: 3.37%; YoY: -17.67%; QoQ: -6.68%
- EPS (Diluted): $3.05-$3.07 range; Reported: $3.07; YoY: -14.48%; QoQ: -4.36%
- EBITDA: $2.441B; EBITDA Margin: ~11.11%
- Free Cash Flow: $0.50B; Operating Cash Flow: $1.318B; Capex: $0.818B
- Key cash flow items: Change in Working Capital +$1.61B; Accounts Receivables -$0.774B; Accounts Payables -$0.982B; Other Working Capital +$0.147B; Non-cash items include a large negative other non-cash item (-$2.132B)
- Liquidity and leverage: Cash & equivalents $5.029B; Total debt $37.274B; Net debt $32.245B; Total assets $85.481B; Total liabilities $59.021B; Shareholders’ equity $26.46B; Current ratio 1.23; Quick ratio 1.19; Debt to capitalization ~21.8% (Debt/Equity ~0.28); P/B ~1.142; P/S ~3.33; P/E ~24.7; Dividend yield ~0.46%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
21.97B
-0.89%
1.80%
Gross Profit
5.64B
0.45%
28.93%
Operating Income
1.05B
-17.55%
-2.59%
Net Income
741.00M
-17.67%
-6.68%
EPS
3.07
-14.48%
-4.36%
Key Financial Ratios
currentRatio
1.23
grossProfitMargin
25.7%
operatingProfitMargin
4.79%
netProfitMargin
3.37%
returnOnAssets
0.87%
returnOnEquity
1.16%
debtEquityRatio
0.28
operatingCashFlowPerShare
$5.45
freeCashFlowPerShare
$2.07
dividendPayoutRatio
45.5%
priceToBookRatio
1.14
priceEarningsRatio
24.71
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript data not provided in the supplied dataset. As a result, no management quotes or themes from the call can be pulled directly. If a transcript becomes available, we will extract themes on strategy, operations, market conditions, and capital allocation surprises.
N/A
— N/A
N/A
— N/A
Forward Guidance
No explicit forward guidance for FY2025 was contained in the provided data. Given the QQ2 2025 results, the plausible baseline scenario assumes continued revenue stability with modest growth in Express and Ground volumes as macro activity stabilizes. Key uncertainties include fuel and labor cost trajectories, currency effects on international volumes, and demand elasticity in a slower-growth environment. Potential targets management could pursue (if conveyed in supplementary materials) include improving operating margin through cost-to-serve reductions, better price realization in services with high differentiation (e-commerce cross-border enablement, automation, and digital solutions), and modest deleveraging via free cash flow generation. Investors should monitor: (1) volume trend by segment (Express, Ground, Freight), (2) fuel cost exposure and hedging effectiveness, (3) ongoing fleet modernization and efficiency programs, (4) working capital dynamics, and (5) debt refinancing risk and expected interest cost given rate environments.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FDX.SW Focus
25.68%
4.79%
1.16%
24.71%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ2 2025 results present a mixed picture: revenue stability with a willingness to invest in efficiency and capital redeployment, but margin pressure and a sizable debt load weigh on near-term upside. The positive cash flow generation and ongoing capex flexibility support a constructive medium-term view if FedEx can realize operating-leverage from efficiency programs and price realization in higher-margin services. A cautious stance is warranted until the company demonstrates sustained margin improvement, better working-capital discipline, and debt reduction progress. Key indicators to monitor include segmental volume trends, fuel and labor cost trajectories, capital productivity from fleet modernization, and refinancing timelines for long-term debt.
Key Investment Factors
Growth Potential
FedEx benefits from a structurally large global logistics network and a diversified service mix (Express, Ground, Freight, and Services). In an e-commerce-driven environment, cross-border enablement and digital solutions can drive volume growth and yield improvements. Near-term opportunities include network optimization, improved pricing discipline, and selective asset-light initiatives that can enhance cash generation. The company also benefits from a resilient cash flow profile that supports ongoing capex and selective buybacks.
Profitability Risk
High leverage remains a core risk (net debt ~$32.25B; total debt ~$37.27B), which constrains flexibility in volatile macro cycles. Revenue and margin performance are sensitive to macro demand, fuel price volatility, labor costs, and competitive pressure from UPS and other logistic players. Regulation, trade policy shifts, and currency exposure for international volumes can create earnings variability. Large non-cash working-capital adjustments and negative other non-cash items in the period also suggest timing effects that could reappear in future quarters.
Financial Position
Solid liquidity with ~$5.03B of cash and equivalents and ~$5.11B in cash equivalents when including short-term investments. Free cash flow generation was positive at ~$0.50B in QQ2 2025, supporting ongoing capital allocation. The balance sheet shows a sizable asset base and a historically measured leverage profile, but debt burden and negative non-cash items warrant careful monitoring of refinancing risk and operating leverage improvements.
SWOT Analysis
Strengths
Global, diversified logistics network across Express, Ground, and Freight segments.
Sizable operating cash flow and positive free cash flow support capital allocation and liquidity needs.
Solid liquidity position with a strong cash reserve and durable asset base.
Ability to fund dividends and selective share repurchases from cash generation.
Weaknesses
Significant leverage with net debt ~$32.25B; high debt servicing burden in a rising-rate environment.
Margins below some peers in the express and integrator space, indicating ongoing cost-to-serve and efficiency challenges.
Negative non-cash working-capital items and potential volatility in working capital management.
Opportunities
Portfolio optimization and pricing discipline to improve margins in high-value services.
Fleet modernization, automation, and digital transformation to drive efficiency and capacity.
Growth from e-commerce cross-border enablement and Services segment value-added offerings.
Threats
Macro slowdown reducing global freight and express volumes.
Intense competition from UPS and other logistics players with potential price pressure.
Fuel price volatility, labor costs, and regulatory/currency risk across international operations.