FedEx Predicts Strong Q3 Earnings Boost from 'Exceptional' Holiday Season

• FedEx projects $98 billion in revenue by fiscal 2029 (excluding freight business), representing a 4% compound annual growth rate, with expected operating income of $8 billion and 8% operating margin
• Fiscal 2026 revenue is projected at roughly $93.5 million including freight business, with the freight spinoff scheduled for June as a separate publicly traded entity
• International expansion focuses on achieving 8% operating margin through improvements in Europe, including the announced acquisition of European company InPost at 15.60 euros per share

Summary

Key Financial Projections:

FedEx announced ambitious growth targets at its Memphis investor day, projecting consolidated revenue of approximately $98 billion by fiscal year 2029 (excluding freight operations), representing a 4% compound annual growth rate. For fiscal 2026, the company expects roughly $93.5 million in revenue, including its freight division. By 2029, FedEx targets $8 billion in operating income, an 8% operating margin (up 2 percentage points from fiscal 2026 levels), and $6 billion in free cash flow.

Q3 Performance:

The company announced that third-quarter adjusted earnings are expected to exceed Wall Street estimates, driven by what CEO Raj Subramaniam described as an "exceptional" holiday season.

Strategic Developments:

FedEx is preparing to spin off its freight business into a separate publicly traded entity in June, marking a significant restructuring move. The company is also expanding internationally, having reached an agreement to acquire European company InPost for 15.60 euros per share.

Growth Drivers:

Management emphasized digital innovation and automation as key competitive differentiators. The company is investing heavily in digital intelligence to enhance operational efficiency. Internationally, FedEx targets an 8% operating margin with particular focus on improving European operations.

Market Context:

CEO Subramaniam highlighted the company's transformation, stating FedEx has "evolved our vision to make supply chains smarter for everyone," positioning the company for sustained growth through technological advancement and strategic expansion over the next three fiscal years.