UPS Q4 2025 Earnings Report and 2026 Outlook with Amazon Volume Reduction

This article is based on an official press release and financial statements from UPS.

UPS Reports Q4 2025 Earnings, Targets 2026 as Strategic ‘Inflection Point’ Amid Amazon Volume Reduction

United Parcel Service (UPS) has released its fourth-quarter 2025 financial results, reporting consolidated revenues of $24.5 billion and a non-GAAP adjusted diluted earnings per share (EPS) of $2.38. While revenue saw a year-over-year decline of approximately 3.3%, the logistics giant highlighted significant improvements in revenue quality and operational agility.

According to the company’s official statement released on January 27, 2026, full-year 2025 revenue totaled $88.7 billion. CEO Carol Tomé described the past year as a period of “considerable progress,” noting that the company has been actively strengthening its network to prepare for future growth. Looking ahead, UPS has issued guidance for 2026, forecasting full-year revenue of approximately $89.7 billion as it executes a planned reduction in volume from its largest customer, Amazon.

Financial Performance: Q4 and Full Year 2025

Despite a challenging volume environment, UPS maintained strong profitability metrics through pricing discipline and cost management. The company reported a GAAP operating profit of $2.6 billion for the fourth quarter, with an adjusted operating margin of 11.8%.

Key Fourth Quarter Metrics

Data from the earnings report indicates that while overall volume dipped, the revenue generated per package increased, signaling a successful pivot toward higher-value shipments.

• Consolidated Revenue: $24.5 billion (down from ~$25.4 billion in Q4 2024).
• Adjusted Diluted EPS: $2.38.
• GAAP Diluted EPS: $2.10, which includes $0.28 in one-time charges.

The GAAP results were impacted by pre-tax charges totaling $238 million. These included a $137 million non-cash charge related to the write-off of the company’s MD-11 aircraft fleet and $101 million in transformation costs associated with network reconfiguration.

Segment Breakdown

Performance varied across the company’s three primary business segments, reflecting broader economic shifts and internal strategy adjustments:

• U.S. Domestic: Revenue fell 3.2% to $16.8 billion due to volume declines. However, the segment achieved an 8.3% increase in revenue per piece, demonstrating strong pricing power.
• International: Revenue grew 2.5% to $5.05 billion, driven by a 7.1% increase in revenue per piece. This segment remained highly profitable with an adjusted operating margin of 18.0%.
• Supply Chain Solutions: Revenue decreased 12.7% to $2.68 billion, a drop attributed primarily to lower volumes in the Mail Innovations business.

2026 Outlook: The Amazon ‘Glide-Down’ and Network Efficiency

UPS leadership has positioned 2026 as a pivotal year. The company’s guidance projects revenue of approximately $89.7 billion and an adjusted operating margin of roughly 9.6%. A central component of this outlook is the management of the relationship with Amazon.

Strategic Shift Away from Amazon

In its forward-looking statements, UPS detailed a strategy referred to as the “Amazon glide-down.” The company plans to reduce Amazon volume by an additional 1 million pieces per day in 2026. This move is consistent with UPS’s broader “Better not Bigger” strategy, which prioritizes high-margin B2B and SMB (small and medium-sized business) volume over low-margin e-commerce density.

“Looking ahead, upon completion of the Amazon glide-down, 2026 will be an inflection point in the execution of our strategy to deliver growth and sustained margin expansion.”

Carol Tomé, CEO of UPS

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Cost Savings and Network Modernization

To offset inflationary pressures and the reduction in specific volume streams, UPS is targeting $3 billion in cost savings for 2026. These savings are expected to come from the “Network of the Future” initiative and “Efficiency Reimagined” programs.

Operational adjustments made in 2025 have already set the stage for these efficiencies. According to the earnings report, UPS reduced its operational workforce by approximately 48,000 positions (including seasonal adjustments) and closed daily operations at 93 buildings throughout the year. Additionally, the company completed the retirement of its aging MD-11 aircraft fleet in the fourth quarter, a move aimed at modernizing air operations and reducing the company’s carbon footprint.

AirPro News Analysis

The data released by UPS suggests a decisive commitment to margin over market share. By voluntarily shedding 1 million packages a day from Amazon, UPS is effectively betting that its network can run more profitably with fewer, higher-yielding boxes than with a flood of low-margin parcels.

The 8.3% increase in U.S. Domestic revenue per piece is a critical indicator that this strategy is gaining traction. However, the forecast of a “bathtub effect”, a weaker first half of 2026 followed by a stronger second half, indicates that the transition will not be seamless. Investors will likely watch the adjusted operating margin closely; at a projected 9.6% for 2026, it remains healthy, but the pressure will be on the “Network of the Future” automation initiatives to deliver the promised $3 billion in savings to protect that bottom line.

Shareholder Returns

UPS continues to return significant capital to investors. In 2025, the company returned $6.4 billion through dividends and share repurchases. For the first quarter of 2026, the UPS Board of Directors has approved a dividend of $1.64 per share, payable on March 5, 2026. The company anticipates total dividend payments of approximately $5.4 billion for the full year of 2026.

Frequently Asked Questions

What is the UPS revenue outlook for 2026?
UPS forecasts full-year 2026 revenue to be approximately $89.7 billion.

How is UPS changing its relationship with Amazon?
UPS is executing a “glide-down” strategy, planning to reduce Amazon volume by another 1 million pieces per day in 2026 to focus on higher-margin business.

What happened to the UPS MD-11 fleet?
UPS completed the retirement of its MD-11 aircraft fleet in the fourth quarter of 2025, incurring a non-cash charge of $137 million.

Sources

• UPS Investor Relations