FedEx Corporation (NYSE: FDX) has reported its third-quarter financial results for fiscal 2025, revealing both resilience and challenges within its operations. The company operates in the transportation and logistics sector, providing a comprehensive array of shipping and delivery services worldwide.

In the third quarter ending February 28, 2025, FedEx saw a year-over-year revenue increase of 2%, totaling $22.2 billion, compared to $21.7 billion in the same quarter last year. Operating income similarly grew, reaching $1.29 billion, reflecting a growth from $1.24 billion a year prior. On an adjusted basis, the operating income was $1.51 billion, compared to $1.36 billion in the previous year, showing a healthy increase of 11%. Adjusted diluted EPS rose to $4.51, up from $3.86 in the prior year, marking a significant 17% growth.

The operating margin also improved, with the adjusted operating margin increasing 60 basis points to 6.8% compared to the prior year’s 6.2%. FedEx’s cost-containment strategies under the DRIVE program led to $600 million in cost savings this quarter alone, supporting profit growth despite adverse conditions including the expiration of the U.S. Postal Service contract and pressures from the industrial economy affecting B2B volumes.

The Federal Express segment, which is the company’s largest division, exhibited a revenue increase of 3% to $19.2 billion, driven largely by a 5% uptick in U.S. deferred package volumes. However, the FedEx Freight segment experienced a revenue decline of 5%, falling to $2.1 billion as a result of decreased shipment volumes and reduced fuel surcharges. While total average daily shipments for FedEx Freight decreased 5%, the composite revenue per shipment for priority services slightly increased.

For the full year 2025, FedEx has adjusted its earnings guidance downward, now forecasting adjusted EPS to be between $18.00 and $18.60, revised from a previous range of $19.00 to $20.00. The company maintains that it will achieve total DRIVE savings of $2.2 billion by the end of the fiscal year, which aims to offset ongoing headwinds and inflationary pressures.

Despite these challenges, FedEx continues to emphasize the robust performance of its operational initiatives, which have allowed for strategic optimizations in both network efficiency and cost management. The capital expenditure forecast has also been adjusted to $4.9 billion down from $5.2 billion, with a focus on network optimization.

As of February 28, 2025, FedEx’s cash balance stood at $5.1 billion, and the company has returned approximately $3.8 billion to shareholders in FY 2025, which includes $500 million in share repurchases during the current quarter. The ongoing separation preparations for FedEx Freight into a publicly traded entity are proceeding as planned, as the company prepares for future operational independence.