FedEx Corporation

On a consolidated basis, FY2026 revenue and adjusted operating income each increased 8% year over year, and adjusted EPS was $20.24. In Q4, consolidated revenue grew 13%, adjusted operating income rose 3%, and adjusted EPS was $6.31, above the high end of the outlook. FedEx Express Corporation (FEC) drove much of the improvement: FY2026 revenue increased 9%, adjusted operating income rose 17%, and adjusted margin expanded 60 basis points to 7.7%; in Q4, FEC revenue increased 14% and adjusted operating income rose 13%. The company also cited $4.7 billion of adjusted free cash flow in FY2026, $3.8 billion of CapEx in FY2026, and a 5% dividend increase after the Freight spin. For CY2026, FedEx guided to adjusted EPS of $16.90 to $18.10, revenue growth of about 11%, CapEx of about $3.9 billion, and a midpoint of $17.50 EPS; management also said the June-to-December transition period implies about 20% EPS growth and about $3.8 billion of adjusted operating income.

Rajesh Subramaniam framed the quarter as proof that FedEx’s network transformation and premium-growth strategy are working. He emphasized gains in higher-yielding B2B and international segments, continued Network 2.0 rollout, 12 straight quarters of European international revenue share gains, and momentum in health care, automotive, aerospace, and data centers. His tone was confident and upbeat, repeatedly pointing to strong execution, structural cost reduction, and the company’s long-term 2029 targets.

Claude F. Russ focused on margin, cash flow, and capital allocation. He highlighted FY2026 adjusted free cash flow of $4.7 billion, up $800 million year over year, CapEx of $3.8 billion or 4% of revenue, and FY2026 adjusted EPS of $20.24. He said the company plans about $3.9 billion of CapEx in CY2026, expects to contribute $475 million to pensions, and remains committed to its $6 billion adjusted free cash flow target for CY2029. He also noted Q4 adjusted EPS of $6.31, the $23 million noncash impairment tied to retiring 10 more jet aircraft, and that the $100 million of remaining variable compensation headwind in the transition year will be concentrated in the third quarter.

Analysts pressed on why the transition-year outlook implies faster growth than Q4, and management pointed to seasonality, easing variable compensation headwinds, and strong base-business momentum. They also asked about stranded costs after the Freight spin, and Claude said $250 million has already been conveyed to Freight, another $100 million should come out in CY2026, and he does not expect to talk about stranded costs past CY2027. On capital allocation, management said the cash position gives flexibility but reiterated a balanced approach, a 5% dividend increase, and plans to repurchase up to $1 billion of stock in the remainder of CY2026, while also funding the planned InPost investment. Several questions focused on fuel surcharges; management said fuel did not materially affect operating income, demand was not hurt by higher fuel prices, and Rajesh added that excluding fuel surcharge effects, margin would have been up year over year.