10-QPeriod: Q3 FY2025

UNITED PARCEL SERVICE INC Quarterly Report for Q3 Ended Sep 30, 2025

Filed November 5, 2025For Securities:UPS

Summary

United Parcel Service (UPS) reported its third-quarter and year-to-date results for the period ending September 30, 2025. The company's revenue saw a decrease of 3.7% for the quarter and 2.4% year-to-date compared to the prior year, primarily attributed to the divestiture of Coyote in Q3 2024, a strategic reduction in volume from its largest customer, and pricing actions on certain e-commerce volumes. Despite lower volumes, revenue per piece increased, partially offsetting the decline. Operating expenses also decreased due to lower purchased transportation costs and efficiencies from transformation initiatives. However, net income and diluted EPS declined year-over-year, influenced by transformation strategy costs, higher interest expenses, and the reversal of a tax valuation allowance. The company continues to focus on higher-yielding business segments such as healthcare, small and medium-sized businesses, and international markets, while executing significant operational restructuring aimed at long-term efficiency and cost optimization.

Financial Highlights

51 data points
Beta

Revenue

$21.41B

Net Income

$1.31B

6.1% Net Margin

EPS (Diluted)

$1.55

Total Assets

$71.39B

Cash & Equivalents

$6.76B

Free Cash Flow

$1.51B

Financial Statements
Beta
Revenue$21.41B
Operating Expenses$19.61B
Operating Income$1.80B
Net Income$1.31B
EPS (Basic)$1.55
EPS (Diluted)$1.55
Shares Outstanding (Basic)848.00M
Shares Outstanding (Diluted)848.00M

Key Highlights

  • 1Total revenue decreased by 3.7% to $21.4 billion for the quarter and 2.4% to $64.2 billion year-to-date, impacted by divestitures and strategic volume reductions.
  • 2Operating profit declined by 9.1% to $1.8 billion for the quarter and 4.5% to $5.3 billion year-to-date, reflecting lower volumes and increased operational costs.
  • 3Net income decreased by 14.8% to $1.3 billion for the quarter and 6.9% to $3.8 billion year-to-date, impacted by transformation costs and other adjustments.
  • 4Diluted Earnings Per Share (EPS) fell to $1.55 for the quarter and $4.46 year-to-date, a decrease from $1.80 and $4.74, respectively.
  • 5Average daily package volume in global small package operations decreased by 9.8% for the quarter and 5.9% year-to-date, driven by strategic customer volume reduction and pricing adjustments.
  • 6Revenue per piece increased significantly, up 9.1% for the quarter and 5.9% year-to-date, indicating successful pricing strategies and a favorable product mix.
  • 7The company is actively pursuing transformation initiatives, including Network Reconfiguration and Efficiency Reimagined, which are contributing to cost savings but also incurring significant transformation costs.

Frequently Asked Questions

The primary drivers for the revenue decrease were the divestiture of Coyote in the third quarter of 2024, a strategic decision to reduce volume from its largest customer, and pricing actions taken on certain e-commerce customers. These factors led to a decrease in average daily package volume.

UPS is managing declining volumes through a focus on revenue quality, leading to an increase in average revenue per piece. This is achieved through strategic pricing actions, favorable customer and product mix shifts, and adjustments to fuel surcharges and accessorial rates. Additionally, the company is implementing significant cost-saving initiatives through its transformation strategy.

UPS is executing several transformation initiatives, including 'Transformation 2.0', 'Fit to Serve', and 'Network Reconfiguration and Efficiency Reimagined'. These initiatives aim to improve operational efficiency, right-size the business, and optimize the network. While these programs are generating significant cost savings, they also incurred transformation costs of $328 million in the third quarter and $460 million year-to-date, which impacted net income.

The company's total debt increased to $24.8 billion as of September 30, 2025, from $21.3 billion at the end of 2024, reflecting new debt issuances. However, UPS maintains a strong liquidity position with $6.8 billion in cash, cash equivalents, and marketable securities, and believes its resources are adequate to meet its short- and long-term obligations.