Executive Summary

Q4 FY25 delivered a clean beat on both adjusted EPS and revenue: adjusted EPS $6.07 vs S&P Global consensus $5.80*, revenue $22.2B vs $21.75B*; GAAP EPS was $6.88 .
Operating margin expanded YoY to 8.1% GAAP (9.1% adjusted) on DRIVE savings, higher Express volumes, and base yield improvement; Express margin rose to 8.4% while Freight remained strong at 20.8% despite softer shipment metrics .
FY25 transformation delivered $2.2B structural cost reductions (cumulative $4.0B vs FY23 baseline), capital intensity fell to 4.6% of revenue; $4.3B returned to shareholders (buybacks + dividends) .
Q1 FY26 guidance: revenue flat to +2% YoY, ETR ~25%, GAAP EPS $2.90–$3.50 and adjusted $3.40–$4.00; management targets $1B additional cost reductions in FY26 and lifted the annual dividend to $5.80 per share .
Near-term stock catalysts: transformation-driven margin resilience and capital returns vs. macro/tariff headwinds (China-U.S. lane) and USPS contract expiration; management emphasized network flexibility (Tricolor, Network 2.0) and B2B recovery optionality .

What Went Well and What Went Wrong

What Went Well

Express operating leverage: Adjusted operating income increased on higher U.S. and international export volumes and base yield growth; Express margin expanded to 8.4% in Q4 (9.0% on an adjusted basis) .
Transformation execution: Achieved FY25 DRIVE $2.2B structural cost reduction target and delivered $4.0B total structural reductions vs FY23; lowered capital spending 22% YoY to $4.1B (4.6% of revenue, lowest in company history) .
Shareholder returns: $4.3B returned in FY25; additional 5% dividend increase to $5.80 per share and intent to continue robust buybacks in FY26 .
Quote: “We will continue to leverage the unique scale and flexibility of our global network… integrating our networks and further reducing our cost-to-serve, will create meaningful long-term value.” — Raj Subramaniam .

What Went Wrong

Tariff/macro pressure: Management flagged a material headwind on Asia→U.S. (particularly China) lanes and de minimis changes; guided Q1 to flat-to-2% revenue with ~$170M adjusted operating income headwind from international export .
USPS contract expiration and fewer operating days: Headwinds of ~$120M in Q1; Q4 noted one fewer operating day impacting results .
Freight softness: Operating margin declined YoY in the quarter (20.8% vs 21.2% prior-year) as shipments and weight per shipment remained pressured; though sequential improvement occurred, segment remains tied to weak industrial economy .

Financial Results

Metric	Q4 FY24	Q2 FY25	Q3 FY25	Q4 FY25
Revenue ($USD Billions)	$22.109	$21.967	$22.160	$22.220
Operating Income (GAAP, $USD Billions)	$1.555	$1.052	$1.292	$1.793
Operating Margin (GAAP, %)	7.0%	4.8%	5.8%	8.1%
Diluted EPS (GAAP, $)	$5.94	$3.03	$3.76	$6.88
Adjusted Diluted EPS (non-GAAP, $)	$5.41	$4.05	$4.51	$6.07

Segment breakdown:

Segment Metric	Q4 FY24	Q2 FY25	Q3 FY25	Q4 FY25
Express Revenue ($USD Millions)	$18,792	$18,841	$19,181	$18,977
Express Operating Income ($USD Millions)	$1,305	$1,052	$1,294	$1,586
Express Operating Margin (%)	6.9%	5.6%	6.7%	8.4%
Freight Revenue ($USD Millions)	$2,387	$2,177	$2,089	$2,297
Freight Operating Income ($USD Millions)	$507	$312	$261	$477
Freight Operating Margin (%)	21.2%	14.3%	12.5%	20.8%

KPIs:

KPI	Q4 FY24	Q2 FY25	Q3 FY25	Q4 FY25
U.S. Domestic ADV (000s)	13,064	13,888	14,818	13,826
International Export ADV (000s)	1,086	1,180	1,141	1,115
Composite Package Yield ($)	$16.21	$15.78	$15.69	$16.14
Composite Freight Yield ($/lb)	$1.18	$1.22	$1.17	$1.21
Operating Weekdays	65	63	63	64

Estimate comparison (Wall Street consensus vs actual, Q4 FY25):

Metric	Consensus	Actual
Adjusted EPS ($)	5.80*	6.07
Revenue ($USD Billions)	21.755*	22.200
# of Estimates (EPS)	21*	—
# of Estimates (Revenue)	19*	—

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth YoY	Q1 FY26	N/A	Flat to +2%	New
Effective Tax Rate	Q1 FY26	N/A	~25%	New
Diluted EPS (GAAP)	Q1 FY26	N/A	$2.90–$3.50	New
Diluted EPS (Adjusted)	Q1 FY26	N/A	$3.40–$4.00	New
Permanent Cost Reductions	FY26	N/A	$1B from DRIVE + Network 2.0	New
Pension Contributions	FY26	N/A	Up to $600M (vs $800M in FY25)	New
Capital Spending	FY26	N/A	$4.5B (network optimization priority)	New
Dividend (Annual Rate)	FY26	$5.52/share	$5.80/share (+5%)	Raised

FY25 context (actuals vs prior quarter guidance revision): FY25 adjusted EPS $18.19 vs Q3 guide $18.00–$18.60; Capex came in at $4.055B vs Q3 guide $4.9B .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Network 2.0 & DRIVE	Ongoing optimization; FY25 DRIVE $2.2B target reiterated	~2.5M ADV on optimized stations by end of June; 100 stations closed, 290 integrated; long-tail $2B savings by FY27	Execution ramping; savings to ramp through FY26
Tariffs/Macro & Supply Chain	USPS expiration headwind; industrial softness; revised FY25 EPS outlook	Material Trans-Pacific headwind (China-U.S. de minimis); network capacity flexed (Asia→Americas capacity down 35% early May)	Headwinds increasing; agile response via Tricolor
Pricing & Revenue Quality	Pricing discipline, base yield supporting Express; Freight pricing offsetting volume	Improved pricing environment; 2% fuel surcharge change; best YoY yield improvement for home delivery & ground commercial	Improving discipline and monetization
Regional Mix Shift	International export volume growth; Southeast Asia momentum emerging	Growth from Southeast Asia (direct Singapore-U.S. flight); Europe cost-per-package down two years; India/LATAM opportunities	Diversification continuing
Freight Spin-off	Board decided to pursue full separation; tax-efficient within ~18 months	Leadership named; spin-off targeted June 2026; separate investor day planned	Execution progressing
Capital Allocation	$3.8B commitment in FY25	$4.3B delivered in FY25; dividend raised; FY26 buybacks + dividends ≈ adjusted FCF	Stronger returns

Management Commentary

Raj Subramaniam: “We will continue to leverage the unique scale and flexibility of our global network… integrating our networks and further reducing our cost-to-serve, will create meaningful long-term value.”
Brie Carere on pricing: “We do see improvement in the pricing environment… we pulled multiple pricing levers… we made a significant change in our fuel surcharge of 2%… best year-over-year yield improvement for home delivery and ground commercial in Q4.”
John Dietrich on savings cadence: “We expect $1 billion of transformation-related savings in FY26… $200 million in Q1, ramping through the year; Network 2.0 financial impact material by end of FY27.”
Raj on network agility: “We reduced capacity on our Asia to America’s lane by more than 35% the first week of May… continued to adjust as needed.”

Q&A Highlights

Savings bridge and cadence: $200M transformation benefit in Q1; $1B for FY26; DRIVE savings continue as a “journey” with Network 2.0 layering in over time .
Tariff impact breakdown: Vast majority of international headwind from China→U.S. and de minimis changes; visibility expected to improve over 30–60 days .
Pricing dynamics: Improved environment; monetizing differentiated capabilities (large package, rural coverage); 2% fuel surcharge change .
Network 2.0 margins: Pickup-and-delivery savings hitting targets; cost to implement drives lag to financial flow-through; $2B by FY27 remains on track .
Freight metrics: Sequential moderation in declines; FY25 Freight CapEx ~$437M; margin still robust albeit pressured by industrial softness .

Estimates Context

Q4 FY25 adjusted EPS beat: $6.07 vs S&P Global consensus $5.80* (+4.6%); revenue beat: $22.2B vs $21.75B* (+2.1%); 21 EPS estimates, 19 revenue estimates* .
Setup for estimate revisions: Q1 FY26 guidance implies near-term revenue pressure (flat to +2% YoY) with tariff headwinds and USPS expiration offset by transformation savings; Express margins guided modestly up at the midpoint .