How FDX (FedEx) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a global logistics and transportation leader like FDX (formerly FedEx Corporation) makes money is essential for investors and anyone interested in the business of integrated shipping, freight, and logistics services. In this post, we break down FDX's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick FDX Overview

FDX operates a global network providing express shipping, freight transportation, e-commerce logistics, and supply chain solutions. Revenue comes primarily from parcel delivery (FedEx Express), less-than-truckload freight (FedEx Freight), and related logistics services. The company’s business segments include Federal Express Revenue, FedEx Freight Revenue, and Other/Eliminations, each targeting different logistics and transportation markets.

Revenue Breakdown

• Total Revenue (Q3 2025): $22.2B (+3.1% YoY)
  • Federal Express Revenue: $19.1B (85.9% of total, +4.4% YoY)
  • FedEx Freight Revenue: $2.26B (10.1% of total, -3.1% YoY)
  • Other and Eliminations: $0.87B (3.9% of total, -7.8% YoY)
• Growth is powered by international express shipping demand and e-commerce parcel volume, partially offset by softness in freight markets.

Gross Profit and Margins

• Gross Profit: $5.79B (26.0% gross margin)
  • Cost of Revenue: $16.5B (-4.3% YoY)
  • FDX maintains robust margins due to its scale, network optimization, and technology-driven efficiencies.
• Most costs come from transportation (fuel, vehicles), labor, and network infrastructure.

Operating Income and Expenses

• Operating Income: $1.19B (+9.8% YoY, 5.3% margin)
• Operating Expenses: $4.60B (+45.2% YoY)
  • R&D: Not separately disclosed in this quarter
  • SG&A: Not separately disclosed in this quarter
  • FDX continues to invest in digital transformation and network upgrades while controlling costs through operational streamlining.

Net Income

• Pre-Tax Income: $1.13B (+7.4% YoY, 5.1% margin)
• Income Tax: $310M (27.3% effective tax rate)
• Net Income: $824M (+3.8% YoY, 3.7% net margin)
• FDX converts a moderate portion of sales into profit due to its scale and operational leverage, despite competitive and cost pressures.

What Drives FDX's Money Machine?

• Parcel and Express Shipping: Over 85% of revenue comes from Federal Express, driven by global e-commerce and time-sensitive shipments.
• Volume and Yield Metrics: Growth in average daily package volume and pricing power in premium express services.
• Strategic Investments: Heavy investment in automation, digital logistics platforms, and fleet modernization to drive long-term efficiency.
• Future Growth Areas: E-commerce logistics, last-mile delivery, and international expansion, though some segments (like freight) face margin pressure.

Visualizing FDX's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (network, labor, and technology investments) taking the largest chunk.
• Even after significant investments and high operating costs, 3.7% of revenue drops to the bottom line.

Key Takeaways

• FDX's money comes overwhelmingly from global express shipping and logistics services
• High gross margins illustrate the power of FDX's integrated network and scale
• Heavy investment in automation and digital platforms, balanced by ongoing cost control
• Ongoing growth is driven by e-commerce parcel demand and international shipping

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FAQ About FDX's Income Statement

1. What is the main source of FDX's revenue in 2025?

FDX generates over 85% of its revenue from Federal Express (parcel and express shipping). Other sources include FedEx Freight 10% and miscellaneous logistics services.

2. How profitable is FDX in Q3 2025?

FDX reported net income of $824M in Q3 2025, with a net margin of approximately 3.7%, reflecting moderate profitability driven by scale and operational efficiency.

3. What are the largest expense categories for FDX?

The biggest expenses on FDX's income statement are cost of revenue (transportation, labor, infrastructure) and operating expenses. R&D and SG&A are not separately disclosed this quarter, but technology and network investments remain priorities.

4. Why does FedEx Freight operate at a loss?

FedEx Freight, despite generating $2.26B in revenue, posted a YoY revenue decline and faces margin pressure due to competitive pricing and higher operating costs. FDX continues to invest in network optimization, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does FDX's effective tax rate compare to previous years?

FDX's effective tax rate in Q3 2025 was 27.3%, consistent with recent years. This moderate rate reflects the company’s global structure and available tax benefits.