UPS (UPS) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered consolidated revenue of $21.2 billion, with operating profit of $1.3 billion and net income of $864 million, despite external challenges and lower volumes.

• Major strategic actions included reducing Amazon volume, closing 23 buildings, launching the Driver Choice buyout program targeting 7,500 driver reductions, and shifting Ground Saver volume to USPS.

• Focused on premium segments (SMB, B2B, healthcare), achieving record SMB penetration at 34.5% and the first $3.0B healthcare revenue quarter.

• Three consecutive quarters of performance above expectations, with transformation initiatives setting up for expected growth in Q2.

• Productivity and innovation efforts included RFID, cold chain logistics, and automation covering 67.5% of buildings.

Financial highlights

• Q1 2026 consolidated revenue: $21.2 billion; operating profit: $1.3 billion; operating margin: 6.0% (adjusted 6.2%).

• Net income: $864 million, down 27.2% YoY; adjusted net income: $906 million.

• Diluted EPS: $1.02; adjusted diluted EPS: $1.07; cash from operations: $2.2 billion; free cash flow: $1.28 billion.

• U.S. Domestic revenue: $14.1 billion, down 2.3% YoY; International revenue: $4.54 billion, up 3.8% YoY; Supply Chain Solutions revenue: $2.54 billion, down 6.5% YoY.

• Supply Chain Solutions operating profit doubled to $206 million; International operating margin: 12.1%; Supply Chain Solutions margin: 8.1%.

Outlook and guidance

• Reaffirmed 2026 targets: consolidated revenue ~$89.7 billion, adjusted operating margin ~9.6%.

• U.S. Domestic 2026 revenue expected flat YoY; International revenue to grow low single digits; Supply Chain Solutions revenue up high single digits.

• Free cash flow expected at ~$5.5 billion; $5.4 billion in dividends planned; capital expenditures of $3.0 billion.

• $3 billion in annual cost savings targeted for 2026, with $600 million realized in Q1.

• 2Q26 guidance expects flat year-over-year adjusted diluted EPS.