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

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Understanding how a global logistics leader like FDX (formerly Federal Express) makes money is essential for investors and anyone interested in the business of transportation and delivery. 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 logistics and transportation network, offering express shipping, freight, and supply chain solutions. Revenue comes primarily from package delivery (Federal Express), freight transportation (FedEx Freight), and related logistics services. The company’s business segments include Federal Express, FedEx Freight, and Other/Eliminations, each contributing to its diversified income streams.

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 expanding e-commerce volumes, global trade recovery, and premium express services.

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 scalable logistics network, route optimization, and technology-driven efficiencies.
• Most costs come from transportation expenses, fuel, labor, and network maintenance.

Operating Income and Expenses

• Operating Income: $1.19B (+9.8% YoY, 5.3% margin)
• Operating Expenses: $4.6B (+45.2% YoY)
  • R&D: Data not disclosed for Q3 2025
  • SG&A: Data not disclosed for Q3 2025
  • FDX continues to invest in operational technology and network expansion while maintaining cost discipline.

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, pricing power, and ongoing cost optimization.

What Drives FDX's Money Machine?

• Express Package Delivery: 85.9% of revenue, driven by global e-commerce and business shipments.
• Volume Growth: Package volumes and premium services continue to rise, supporting revenue expansion.
• Network Investments: Strategic investments in automation, digital tracking, and fleet upgrades.
• Freight and Logistics Expansion: Freight segment faces margin pressure but is positioned for long-term growth as supply chains evolve.

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 (especially transportation and network costs) 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 express package delivery via its Federal Express segment.
• High gross margins illustrate the power of FDX's scalable logistics network and operational efficiency.
• Heavy investment in network technology and fleet modernization, balanced by cost controls.
• Ongoing growth is driven by e-commerce demand, international expansion, and premium services.

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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 package delivery services. Other sources include freight transportation and logistics solutions.

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, fuel) and operating expenses. R&D and SG&A details were not disclosed for Q3 2025, but network and technology investments remain priorities.

4. Why does FedEx Freight operate at a loss?

FedEx Freight, despite generating $2.26B in revenue, posted a YoY decline due to competitive pricing and high network costs. FDX invests aggressively in freight infrastructure, 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 previous years. This moderate rate is primarily due to international structuring and tax benefits from operational investments.