FedEx Delivers Q1 Beat, Cautiously Optimistic FY26 Outlook

Core Viewpoint - FedEx Corporation reported better-than-expected results for Q1 FY 2026, with revenue and earnings surpassing market estimates, leading to a more than 5% increase in shares during after-market hours [2][3] Financial Performance - FedEx's Q1 2026 revenue increased by 3% year-over-year to $22.26 billion, driven by stronger domestic package volumes [2] - Adjusted earnings rose 6% year-over-year to $3.83 per share, exceeding analyst expectations of $3.59 per share [2] - The Federal Express segment saw a 4% year-over-year revenue increase to $19.1 billion, with adjusted operating income surging 17% to $1.16 billion [5] - FedEx Freight experienced a 3% year-over-year revenue decline to $2.26 billion, with adjusted operating income falling 16% to $369 million [6] Outlook and Guidance - FedEx reinstated its full-year 2026 outlook, projecting revenue growth of 4% to 6% and adjusted earnings per share between $17.20 and $19.00 [3][10] - The company anticipates $1 billion in headwinds from trade tariffs and the expiration of the de minimis exception, along with an additional $160 million impact from the expiration of the U.S. Postal Service contract [10] Capital Allocation - FedEx returned $845 million to shareholders in Q1 2026 through $500 million in share repurchases and $345 million in dividends [9] - The company invested $623 million in capital expenditures during the quarter, ending with a cash balance of $6.2 billion and total debt of $21.1 billion [9] Strategic Initiatives - FedEx is advancing its transformation agenda with Network 2.0, optimizing operations and enhancing efficiency [12] - The company is focusing on high-value verticals, particularly healthcare and small and medium businesses (SMBs), with significant revenue growth in these segments [13] - FedEx is on track to complete the spin-off of FedEx Freight into a standalone entity by June 2026, with nearly half of the planned salesforce positions already filled [7][8] Conclusion - FedEx's Q1 results demonstrate resilience amid macro challenges, with management confident in achieving earnings growth despite external pressures [14]