FedEx Targets $98 Billion Revenue and 14% Profit Growth by 2029

Source: FedEx

Last Thursday, FedEx Corp. officially announced its financial targets for fiscal year 2029, aiming for a compound annual revenue growth rate of 4% and reaching $8 billion in adjusted operating income.

This strategy continues to prioritize premium growth in high-margin verticals within the industrial economy, expanding digital and AI capabilities, continuing network transformation, and turning efficiency gains into long-term advantages.

An Ambitious Financial Picture

Compared to the average outlook of $85 billion for the current fiscal year, FedEx (NYSE: FDX) expects to hit the $98 billion annual revenue mark with a 14% compound annual growth rate in adjusted operating profit by 2029.

For comparison, in the fiscal year ending last May, FedEx achieved revenue of $87.9 billion. The company is issuing adjusted income guidance of $5 billion for fiscal year 2026.

Specifically, FedEx plans to achieve:

•    An operating margin of 8%, an increase of 200 basis points.

•    Return on Invested Capital (ROIC) of 11%.

•    Adjusted free cash flow of $6 billion.

This three-year outlook was announced during the Investor Day event held at its headquarters in Memphis, Tennessee. Earlier on Monday, FedEx also announced an investment of approximately $2.6 billion to acquire a 37% stake in InPost, a European parcel locker specialist.

Improving Domestic and International Performance

The integrated logistics giant also projects improved performance for its domestic and international business segments:

•    US Operations: Targeting a 10% operating margin, up from a baseline of 8.9%.

•    International Operations: Targeting an 8% margin, a sharp increase from 3.6%.

Chief Financial Officer (CFO) John Dietrich stated that the projected revenue increase is evenly distributed: $6 billion from higher yields and $6 billion through modest volume growth of 2% from core domestic and international networks. Additionally, $1 billion in growth is expected from segments such as FedEx Office, FedEx Logistics, FedEx Supply Chain, and FedEx Dataworks.

Spinning Off FedEx Freight and Capital Discipline

These financial targets exclude FedEx Freight, the unit the company expects to spin off into an independent company this summer.

FedEx stated it will keep capital expenditures (CapEx) at near-record lows, with aircraft spending not exceeding $1 billion through 2029. Over the next three years, FedEx expects the CapEx-to-revenue ratio to be approximately 4%, significantly lower than historical levels (compared to 8.6% in 2020 and 7% in fiscal 2023, excluding FedEx Freight).

Notably, 90% of capital investments will be dedicated to network maintenance, facility and equipment modernization, and other efficiency needs rather than capacity expansion.

The company also raised its adjusted earnings per share guidance for the third quarter thanks to strong business results and a positive peak holiday season.

Strategic Pillars

FedEx's growth strategy is based on four focus areas. The company continues to target premium B2C and specialized B2C segments, such as healthcare, automotive, aerospace, data centers, and premium e-commerce. Recently, the company highlighted that nearly half of its revenue growth comes from B2B business with heavier weights and higher margins.

Management also reiterated plans to build on FedEx’s data and technology advantage, leveraging the company’s two petabytes of data and advanced AI capabilities to better support customers and drive new revenue streams.

FedEx continues to modernize and consolidate its air and ground networks, part of a multi-year initiative to achieve efficiency, increase profits, and improve service levels.

A key part of achieving financial goals, according to FedEx, involves ensuring that new operational savings are formalized so they can be sustained long-term.

Commenting on the company's outlook, Mr. Ken Hoexstra, an equity analyst at Bank of America, said in a recent client note: “FedEx remains one of our top transport picks in 2026. We see momentum with its network integration, cost cutting strategy, profitable share gains, yield discipline, upcoming June 1, 2026, spin of FedEx Freight, and benefits from the potential end of the nearly four-year freight recession.”

In the second fiscal quarter, FedEx recorded revenue of $23.5 billion, up 7% year-over-year, while adjusted operating income rose 17% to $1.6 billion. Adjusted earnings per share reached $4.82, up 19% year-over-year.

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Source: Phaata.com (According to Freight Waves)

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