Adjusted earnings and full-year guidance both rose, yet the stock edged lower after hours—FedEx’s first earnings report under its reset fiscal year tells two different stories.
After moving its fiscal year-end from May 31 to December 31 and spinning off FedEx Freight, the company reported its first quarter under the reset fiscal calendar. For the third quarter ended September 30, adjusted earnings per share came in at $3.74, well above expectations of $3.36. Revenue of $22.86 billion also beat the $22.42 billion estimate. FedEx raised its adjusted EPS guidance for calendar 2026 to $18.00–$18.60, up from $16.90–$18.10, and lifted its revenue growth forecast from 11% to approximately 12%.
But under GAAP, quarterly net income was just $290 million, or $1.21 per share, far below the $645 million, or $2.73 per share, reported a year earlier. The gap was almost entirely due to a one-time write-down: an equity investment retained after the Freight spin-off incurred a loss of approximately $1.2 billion this quarter, partly offset by a $627 million gain on debt extinguishment. Operations were actually improving: package yields and volumes both rose, the adjusted operating margin expanded from 5.1% to 5.3%, and adjusted free cash flow was positive.
So this is not a story of deteriorating operations, but of a disconnect in how the results are reported: the market is focused on GAAP earnings being more than halved, while overlooking record adjusted earnings and raised guidance. As a logistics giant shifts its fiscal year back to the calendar year, perhaps the most important thing to watch in its first report is not year-over-year net income, but its underlying cash-generating ability after optimizing its network. Which set of books do you trust more?
After moving its fiscal year-end from May 31 to December 31 and spinning off FedEx Freight, the company reported its first quarter under the reset fiscal calendar. For the third quarter ended September 30, adjusted earnings per share came in at $3.74, well above expectations of $3.36. Revenue of $22.86 billion also beat the $22.42 billion estimate. FedEx raised its adjusted EPS guidance for calendar 2026 to $18.00–$18.60, up from $16.90–$18.10, and lifted its revenue growth forecast from 11% to approximately 12%.
But under GAAP, quarterly net income was just $290 million, or $1.21 per share, far below the $645 million, or $2.73 per share, reported a year earlier. The gap was almost entirely due to a one-time write-down: an equity investment retained after the Freight spin-off incurred a loss of approximately $1.2 billion this quarter, partly offset by a $627 million gain on debt extinguishment. Operations were actually improving: package yields and volumes both rose, the adjusted operating margin expanded from 5.1% to 5.3%, and adjusted free cash flow was positive.
So this is not a story of deteriorating operations, but of a disconnect in how the results are reported: the market is focused on GAAP earnings being more than halved, while overlooking record adjusted earnings and raised guidance. As a logistics giant shifts its fiscal year back to the calendar year, perhaps the most important thing to watch in its first report is not year-over-year net income, but its underlying cash-generating ability after optimizing its network. Which set of books do you trust more?