In its fourth-quarter report for 2025, United Parcel Service, Inc. (NYSE: UPS) announced revenue of $24.5 billion coupled with an operating profit of $2.6 billion. When adjusted on a non-GAAP basis, operating profit improved to $2.9 billion. Following the earnings release, UPS shares experienced an uptick as the results exceeded Wall Street’s forecast and the company offered a positive outlook for 2026.
Diving into profitability metrics, the company recorded diluted GAAP earnings per share (EPS) of $2.10, while the non-GAAP adjusted diluted EPS stood at $2.38. The earnings results were described by UPS as outperforming their financial expectations for the quarter. Wall Street had projected adjusted EPS of $2.20, which UPS outpaced, and revenue was also higher than anticipated with estimates at approximately $24 billion.
The quarter’s GAAP results incorporated total charges amounting to $238 million, or approximately 28 cents per diluted share. Notably, these charges included a $137 million after-tax non-cash expense related to the write-off of the MD-11 aircraft fleet, an indication of fleet modernization steps. Additionally, $101 million in after-tax transformation charges were recognized. UPS accelerated its plans for updating its transportation assets, fully retiring the MD-11 fleet in the final months of 2025.
From a shareholder perspective, UPS declared a first-quarter dividend for 2026 valued at $1.64 per share, payable on March 5 to all shareholders recorded by February 17. Throughout 2025, UPS distributed $6.4 billion back to shareholders through dividends and share buybacks, underscoring its commitment to returning capital.
Analysis of segment performance revealed mixed results. In the U.S. Domestic segment, revenue dropped to $16.756 billion from $17.312 billion the previous year, marking a 3.2% decrease attributed mainly to a reduction in shipment volumes. However, revenue per piece increased by 8.3%, partially mitigating overall revenue declines. Operating margins for this segment stood at 8.5%, with a non-GAAP adjusted operating margin higher at 10.2%.
The International division experienced revenue growth, increasing to $5.045 billion from $4.923 billion year-over-year. This was driven by a 7.1% rise in revenue per shipped item, leading to an operating margin of 17.5% and an adjusted margin of 18.0%.
Conversely, UPS's Supply Chain Solutions segment saw a revenue contraction, decreasing to $2.678 billion from $3.066 billion. The decline, 12.7%, was primarily due to lower volumes in the Mail Innovations business. Operating margin for this segment was 9.8%, with an adjusted margin of 10.3%.
For the fiscal year 2025, UPS reported overall revenue of $88.7 billion alongside an operating profit of $7.9 billion. On a non-GAAP adjusted basis, operating profit reached $8.7 billion, translating to operating margins of 8.9% and 9.8%, respectively. GAAP diluted EPS was $6.56, with an adjusted EPS of $7.16, reflecting efficient profitability.
The company generated $8.5 billion in cash from operating activities and reported non-GAAP adjusted free cash flow of $5.5 billion for the year. This solid cash flow performance supported UPS’s ongoing investments and shareholder return programs.
UPS CEO Carol Tomé remarked on the company’s progress in 2025, emphasizing actions taken to enhance revenue quality and develop a more adaptable network infrastructure. She described 2026 as an inflection point for UPS’s strategy aimed at growth acceleration and margin expansion, particularly following the completion of the “Amazon glide-down.”
Elaborating on the shifting relationship with Amazon, CFO Brian Dykes disclosed in an October report that UPS intends to reduce its Amazon delivery volume by 50% by the end of 2026. This adjustment denotes a strategic realignment after nearly 30 years of partnership, highlighting a reassessment of where UPS believes it generates the most value.
Looking forward, UPS projects 2026 revenues around $89.7 billion, modestly exceeding analyst estimates of $87.9 billion. The company anticipates a non-GAAP adjusted operating margin near 9.6%, and plans capital expenditures of approximately $3.0 billion.
Dividend payments are expected to total about $5.4 billion in 2026, pending board approval. UPS forecasts an effective tax rate close to 23%, a figure consistent with prior periods.
In disclosing risks, UPS noted potential headwinds such as "new or increased tariffs" and "more stringent regulations related to climate change,” among other factors that could impact operational and financial outcomes.
Following the earnings release, UPS shares rose 2.70% in premarket trading to $109.86, reflecting investor optimism about the company’s strategic adjustments and earnings performance.
Overall, UPS’s latest results and guidance suggest it is entering a new phase marked by both challenges and opportunities as it navigates changing customer relationships and evolving market conditions.
Diving into profitability metrics, the company recorded diluted GAAP earnings per share (EPS) of $2.10, while the non-GAAP adjusted diluted EPS stood at $2.38. The earnings results were described by UPS as outperforming their financial expectations for the quarter. Wall Street had projected adjusted EPS of $2.20, which UPS outpaced, and revenue was also higher than anticipated with estimates at approximately $24 billion.
The quarter’s GAAP results incorporated total charges amounting to $238 million, or approximately 28 cents per diluted share. Notably, these charges included a $137 million after-tax non-cash expense related to the write-off of the MD-11 aircraft fleet, an indication of fleet modernization steps. Additionally, $101 million in after-tax transformation charges were recognized. UPS accelerated its plans for updating its transportation assets, fully retiring the MD-11 fleet in the final months of 2025.
From a shareholder perspective, UPS declared a first-quarter dividend for 2026 valued at $1.64 per share, payable on March 5 to all shareholders recorded by February 17. Throughout 2025, UPS distributed $6.4 billion back to shareholders through dividends and share buybacks, underscoring its commitment to returning capital.
Analysis of segment performance revealed mixed results. In the U.S. Domestic segment, revenue dropped to $16.756 billion from $17.312 billion the previous year, marking a 3.2% decrease attributed mainly to a reduction in shipment volumes. However, revenue per piece increased by 8.3%, partially mitigating overall revenue declines. Operating margins for this segment stood at 8.5%, with a non-GAAP adjusted operating margin higher at 10.2%.
The International division experienced revenue growth, increasing to $5.045 billion from $4.923 billion year-over-year. This was driven by a 7.1% rise in revenue per shipped item, leading to an operating margin of 17.5% and an adjusted margin of 18.0%.
Conversely, UPS's Supply Chain Solutions segment saw a revenue contraction, decreasing to $2.678 billion from $3.066 billion. The decline, 12.7%, was primarily due to lower volumes in the Mail Innovations business. Operating margin for this segment was 9.8%, with an adjusted margin of 10.3%.
For the fiscal year 2025, UPS reported overall revenue of $88.7 billion alongside an operating profit of $7.9 billion. On a non-GAAP adjusted basis, operating profit reached $8.7 billion, translating to operating margins of 8.9% and 9.8%, respectively. GAAP diluted EPS was $6.56, with an adjusted EPS of $7.16, reflecting efficient profitability.
The company generated $8.5 billion in cash from operating activities and reported non-GAAP adjusted free cash flow of $5.5 billion for the year. This solid cash flow performance supported UPS’s ongoing investments and shareholder return programs.
UPS CEO Carol Tomé remarked on the company’s progress in 2025, emphasizing actions taken to enhance revenue quality and develop a more adaptable network infrastructure. She described 2026 as an inflection point for UPS’s strategy aimed at growth acceleration and margin expansion, particularly following the completion of the “Amazon glide-down.”
Elaborating on the shifting relationship with Amazon, CFO Brian Dykes disclosed in an October report that UPS intends to reduce its Amazon delivery volume by 50% by the end of 2026. This adjustment denotes a strategic realignment after nearly 30 years of partnership, highlighting a reassessment of where UPS believes it generates the most value.
Looking forward, UPS projects 2026 revenues around $89.7 billion, modestly exceeding analyst estimates of $87.9 billion. The company anticipates a non-GAAP adjusted operating margin near 9.6%, and plans capital expenditures of approximately $3.0 billion.
Dividend payments are expected to total about $5.4 billion in 2026, pending board approval. UPS forecasts an effective tax rate close to 23%, a figure consistent with prior periods.
In disclosing risks, UPS noted potential headwinds such as "new or increased tariffs" and "more stringent regulations related to climate change,” among other factors that could impact operational and financial outcomes.
Following the earnings release, UPS shares rose 2.70% in premarket trading to $109.86, reflecting investor optimism about the company’s strategic adjustments and earnings performance.
Overall, UPS’s latest results and guidance suggest it is entering a new phase marked by both challenges and opportunities as it navigates changing customer relationships and evolving market conditions.