01—Abstract
Summary
Summary of the 10-Q filed November 4, 2026. Cited figures are marked; the original filing is the authoritative source.
United Parcel Service (UPS) reported its financial results for the nine months ended September 30, 2026.
Revenue for the period increased by 4.2% to $66.9 billiona, driven by higher fuel surcharges, improved revenue quality through pricing actions, and contributions from the acquisition of Andlauer Healthcare Group (AHG). However, operating profit saw a significant decline of 25.5% to $3.9 billion, and net income fell by 30.4% to $2.6 billion. This decline in profitability is largely attributed to increased operating expenses, which rose by 6.9%, driven by higher purchased transportation and fuel costs, increased third-party aircraft lease expenses, and transformation strategy costs related to workforce optimization and network reconfiguration.
The company also incurred a $182 millionb goodwill impairment charge in its Supply Chain Solutions segment. Despite the profit decrease, UPS demonstrated operational resilience and strategic execution. Average daily package volume across its global small package operations decreased by 5.2%, primarily due to planned volume reductions with its largest customer, but was partially offset by growth from small and medium-sized businesses (SMBs) leveraging the Digital Access Program.
The company returned $4.1 billionc to shareholders through dividends. Management highlighted ongoing transformation initiatives aimed at enhancing efficiency and focusing on high-growth markets, indicating a commitment to long-term strategic positioning despite short-term profitability pressures.
02—Key points
Key Highlights
- Revenue increased by 4.2% to $66.9 billion for the nine months ended September 30, 2026, driven by pricing strategies and acquisitions.
- Operating profit decreased by 25.5% to $3.9 billion, and net income fell by 30.4% to $2.6 billion, impacted by higher operating expenses.
- Operating expenses increased by 6.9% due to higher fuel, transportation costs, and transformation strategy costs.
- A goodwill impairment charge of $182 million was recorded in the Supply Chain Solutions segment.
- Global small package volume decreased by 5.2% due to strategic volume reductions with a major customer, though SMB growth provided some offset.
- The company returned $4.1 billion to shareholders through dividends.
- UPS continues to invest in strategic initiatives like network reconfiguration and focus on high-growth sectors such as healthcare.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed November 4, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $22.85B$21.41B | +6.7% |
| Operating Expenses | $21.11B$19.61B | +7.6% |
| Operating Income | $1.74B$1.80B | −3.3% |
| Net Income | $1.16B$1.31B | −11.3% |
| EPS (Basic) | $1.37$1.55 | −11.6% |
| EPS (Diluted) | $1.37$1.55 | −11.6% |
| Shares Outstanding (Basic) | 851.00M848.00M | +0.4% |
| Shares Outstanding (Diluted) | 852.00M848.00M | +0.5% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the decrease in operating profit despite revenue growth?
The decrease in operating profit is primarily driven by a significant increase in operating expenses. These expenses rose by 6.9% due to higher costs for purchased transportation and fuel, increased expenses related to third-party aircraft leases, and substantial transformation strategy costs associated with workforce optimization and network reconfiguration. Additionally, a goodwill impairment charge in the Supply Chain Solutions segment impacted profitability.
How has the company managed its volume with its largest customer, and what is the impact?
UPS successfully executed planned volume reductions with its largest customer, completing the planned reduction by over 50% from 2024 levels by the second quarter of 2026. While this strategic decision contributed to an overall decline in average daily package volume for global small package operations, it aligns with the company's strategy to focus on revenue quality and more profitable customer relationships. The impact was partially offset by growth from small and medium-sized businesses.
What are the key transformation initiatives UPS is undertaking, and what is their financial impact?
UPS is undertaking transformation initiatives, notably 'Network Reconfiguration and Efficiency Reimagined,' aimed at enhancing network efficiency through automation, facility consolidation, and process redesign. These initiatives have led to significant transformation strategy costs, primarily related to employee separation programs and third-party consulting fees, totaling $1.4 billion in the first nine months of 2026. While these costs have pressured short-term earnings, they are expected to yield substantial benefits and improve long-term operational efficiency.
What is the outlook for capital expenditures and shareholder returns?
For the full year 2026, UPS expects capital expenditures to be approximately $3.0 billion, with a significant portion allocated to network enhancement and technology initiatives. The company remains committed to returning capital to shareholders, having distributed $4.1 billion through dividends in the first nine months of 2026. Share repurchases were not undertaken in the nine months ended September 30, 2026, but a $1.3 billion authorization remained available.
06—Continue