FedEx’s QQ1 2025 results show a modest top-line decline with a still-healthy but compressed profitability profile. Revenue of 21.579 billion USD declined 0.5% year over year and 2.4% quarter over quarter, while gross profit was 4.376 billion USD for a gross margin of ~20.28%. Operating income reached 1.08 billion USD (operating margin ~5.0%), and net income was 0.794 billion USD with an EPS of 3.21. The quarter benefited from continued depreciation and amortization of 1.078 billion USD and offset by other expenses totaling 3.296 billion USD, contributing to an EBITDA of 2.286 billion USD and an EBITDA margin of about 10.6%. Cash flow remained robust on an absolute basis (operating cash flow ~1.187 billion USD; free cash flow ~0.42 billion USD), with capital expenditures of 0.767 billion USD and net debt around 31.8 billion USD after financing activity. FedEx ended the period with about 5.943 billion USD of cash and equivalents and a total debt of 37.765 billion USD, implying a leverage profile (debt to capitalization ~58.2%, debt to equity ~1.39) consistent with a highly leveraged, asset-light logistics operator.
Key takeaway for investors: near-term profitability is being pressured by industry-wide demand softness and cost headwinds, but the company continues to generate positive free cash flow and maintains ample liquidity. The main questions going forward relate to volume recovery, yield management, and debt reduction versus ongoing capital investment in network efficiency and capacity.