Q1 2026 Earnings — Reported April 28, 2026 · Beat on EPS & Revenue · Stock −4% on Transition Pain
Revenue $21.2B · Adj. EPS $1.07 vs $1.02 est. · $3B Healthcare Quarter · $600M Q1 Cost Savings
UPS beat consensus on both revenue and EPS but stock fell ~4% as investors reacted to continued volume declines (−7.7% avg daily volume) and operating margin compression to 6.0%. Q1 was a "critical transition period" — UPS reduced Amazon volume 500K pieces/day further, closed 23 buildings, cut 25K operational positions, and achieved $600M of its targeted $3B in annual cost savings. Healthcare logistics hit $3B in quarterly revenue for the first time. Revenue per piece rose 7.7% to $15.32. Full-year 2026 guidance reaffirmed: $89.7B revenue, 9.6% adj. operating margin.
Key Metrics — Q1 2026 Actuals (Official 8-K SEC Filing)
Consolidated Revenue
$21.2B
−1.6% YoY
Adj. EPS (non-GAAP)
$1.07
Beat $1.02 est. by 4.9%
GAAP EPS
$1.02
vs $1.40 Q1 2025
Adj. Operating Margin
6.2%
vs 7.7% Q1 2025
Revenue per Piece
$15.32
+7.7% YoY
Cash from Operations
$2.2B
Q1 2026
Adj. EPS Beat
+4.9%
$1.07 actual vs $1.02 consensus
Healthcare Revenue (Q1)
$3.0B
First-ever $3B healthcare quarter
Q1 Cost Savings Achieved
$600M
Toward $3B FY2026 target
SMB Share of U.S. Volume
34.5%
Up from 31.2% Q1 2025 · record
Beat / Miss Matrix
Beats
Adj. EPSEst. $1.02$1.07 (+4.9%)
RevenueEst. $20.99B$21.2B (+1.0%)
Revenue per Piece—$15.32 (+7.7% YoY)
Healthcare Revenue—$3.0B · first-ever $3B qtr
Supply Chain Solutions marginPrior year 3.6%8.1% (+450bps YoY)
Digital Access Program (DAP)—$1.2B global rev · 2nd consec. qtr
Concerns
Average Daily Volume—−7.7% YoY · deliberate
GAAP Operating MarginQ1 2025: 7.7%6.0% (−170bps)
Net IncomeQ1 2025: $1.19B$864M (−27.2%)
U.S. Domestic Revenue—$14.1B (−2.3% YoY)
Stock reactionBeat expected−4% · transition concerns
Supply Chain Solutions revenue—$2.54B (−6.5% YoY)
P&L Summary — Q1 2026 vs Q1 2025 (Official 8-K SEC Filing)
Select Financial Results — Three Months Ended March 31, 2026
Consolidated Revenue$21.2B$21.5B−1.6%
U.S. Domestic Package$14.1B$14.4B−2.3%
International Package$4.54B$4.37B+3.8%
Supply Chain Solutions$2.54B$2.72B−6.5%
Revenue per Piece (global)$15.32$14.22+7.7%
Consolidated Operating Profit$1.27B$1.67B−23.9%
GAAP Operating Margin6.0%7.7%−170bps
Adj. Operating Profit$1.32B—Non-GAAP
Adj. Operating Margin6.2%—Below FY 9.6% target
GAAP Net Income$864M$1,187M−27.2%
GAAP Diluted EPS$1.02$1.40−27%
Adj. Diluted EPS$1.07—Beat est.
Cash from Operations$2.2B—Q1 2026
Transformation charges (AT)$42M—$0.05/share
Segment Detail & CEO Quote
U.S. Domestic Package — $14.1B (−2.3%)
Avg. daily volume declineDeliberate Amazon reduction
Revenue per piece+6.5% YoY · mix upgrade
SMB share of U.S. volume34.5% (vs 31.2% Q1 2025)
Amazon daily vol. reduction500K pieces/day further in Q1
Buildings closed (Q1)23 additional closures
Operational positions reduced~25,000 YoY
Driver Choice separations est.$1.2B cost · voluntary program
International & Growth Segments
International revenue$4.54B (+3.8%) · 12.0% margin
International RPP+10.7% YoY
Healthcare logistics revenue$3.0B · first-ever $3B quarter
GLP-1 direct-to-consumerMarket leader position
Digital Access Program (DAP)$1.2B · UPS Digital +19.9%
Supply Chain Solutions margin8.1% (+450bps YoY)
Automation: % of U.S. volumeTarget 68% by year-end
"The first quarter of 2026 marked a critical transition period for UPS in which we needed to flawlessly execute several major strategic actions and we delivered. We further reduced non-lucrative Amazon volume by an average of 500,000 pieces per day and closed 23 additional buildings. We achieved our first-ever $3 billion quarter for healthcare revenue. We will never forget healthcare, because healthcare is such an important part of our growth engine. June of 2026 will be the inflection point for our network transformation."
Carol Tomé, CEO · Q1 2026 Earnings Call, April 28, 2026
FY 2026 Guidance — Reaffirmed April 28, 2026
Full-Year 2026 Financial Targets — All Reaffirmed
FY2026 Consolidated Revenue
~$89.7B
Reaffirmed
FY2026 Adj. Operating Margin
~9.6%
Reaffirmed
FY2026 Cost Savings Target
$3.0B YoY
$600M in Q1
FY2026 CapEx
~$3.0B
Reaffirmed
FY2026 Dividend Payments
~$5.4B ✓
$1.64/share/qtr
Amazon glide-down completion
June 2026 ✓
Inflection point
Automation: % of U.S. volume
68% by YE
28% lower CPP
Healthcare revenue target 2026
~$20B run rate
H2 2026 target
Positives & Concerns
Positives
▲Revenue per piece grew 7.7% YoY to $15.32 — demonstrating that the deliberate shift away from low-margin Amazon and commodity e-commerce volume is improving the quality of remaining revenue. SMB now at 34.5% of U.S. volume (vs 31.2% a year ago) and B2B penetration at record levels.
▲Healthcare logistics achieved its first-ever $3 billion quarterly revenue milestone — driven by temperature-controlled solutions, direct-to-consumer GLP-1 shipments (market leader), and end-to-end pharmaceutical logistics. Management targets a ~$20B annual run rate by late 2026 — double the current pace.
▲$600M of cost savings achieved in Q1 alone — on track toward the $3B full-year target. Network reconfiguration is reducing cost per piece: automated facilities run 28% cheaper than conventional buildings, and UPS is targeting 68% automation of U.S. volume by year-end.
▲Supply Chain Solutions operating margin expanded 450bps YoY to 8.1% — a significant improvement confirming that the segment restructuring is generating real profitability gains. International package also delivered a 12.0% operating margin with revenue per piece up 10.7%.
▲Management confirmed June 2026 as the Amazon glide-down inflection point — after which volume declines from deliberate reduction will end, and the leaner, higher-margin network will be fully operational. This is the most important forward signal in the Q1 report.
Concerns
▼Average daily volume fell 7.7% YoY — and while deliberately engineered, the fixed-cost deleveraging from lower volumes is compressing operating margins significantly. The 6.0% GAAP operating margin vs 7.7% a year ago and 9.6% FY target illustrates how much margin recovery depends on Q2–Q4 execution.
▼Net income fell 27.2% to $864M and GAAP EPS declined from $1.40 to $1.02 YoY — the sharpest EPS decline in the recent earnings history. While strategically justified, the earnings deterioration is real and keeps the stock under pressure from income-focused institutional investors.
▼Driver Choice voluntary separation program is expected to cost approximately $1.2B — a significant near-term cash outlay that compresses free cash flow and adds financial complexity to the transformation. This cost was not fully anticipated at the start of 2026.
▼U.S. Domestic Package revenue declined 2.3% to $14.1B — even as management describes the transition as deliberate, the risk is that SMB and healthcare volume growth does not fully replace the Amazon and commodity e-commerce volume before H2. Demand for premium logistics must materialize as predicted.
▼Key external risks flagged by management: fuel surcharge volatility from the Middle East war, U.S. consumer confidence at historic lows, and de minimis regulation changes in Europe affecting cross-border e-commerce flows. These macro headwinds could slow the premium volume ramp needed for margin recovery.
Analyst Coverage — Post Q1 2026
Wall Street Ratings — Post April 28, 2026
| Firm / Metric | Rating | Price Target | Note |
|---|
| Bullish (TIKR mid-case) | Buy | ~$135 | Healthcare + automation thesis · $179 by 2030 · 10% IRR |
| Consensus range | Mixed | $75–$135 | Wide range · $75 bear (prolonged pressure) vs $135 bull (H2 recovery) |
| FY2026 Adj. EPS Implied | Management | ~$7.10 | Based on $89.7B revenue + 9.6% adj. margin |
| Dividend yield | 6.31% | $1.64/qtr | $5.4B annual · FCF coverage under pressure short-term |
| Stock reaction (Apr 28) | −4% | ~$104 | Down from $108 pre-earnings · −34% past year |
| June 2026 catalyst | Inflection | Key watch | Amazon glide-down completion · margin recovery expected H2 2026 |
Earnings Verdict
Deliberate Transformation — June 2026 Is the Inflection Point
UPS's Q1 2026 is a transitional quarter by design, not by accident. Every metric that looks negative — volume down 7.7%, revenue down 1.6%, net income down 27%, margin compressed to 6.0% — is the direct result of deliberate strategic choices: shedding low-margin Amazon volume, closing 23 buildings, cutting 25,000 operational positions, and investing in automation infrastructure. The beat on EPS ($1.07 vs $1.02) and the record $3B healthcare quarter confirm the strategy is producing real outcomes. The $600M Q1 cost savings trajectory toward the $3B annual target, the expansion of SMB share to 34.5%, and revenue per piece growth of 7.7% are the leading indicators of what the normalized network will look like post-June. CEO Carol Tomé has staked the turnaround on June 2026 as the inflection point — when the Amazon glide-down completes, the network reconfiguration concludes, and margin recovery should begin in earnest. The 6.31% dividend yield at current prices provides a floor, though FCF coverage remains tight. The investment case is patient and binary: if the H2 margin recovery materializes as planned, UPS at $104 with a $1.64 quarterly dividend is an exceptional value. If the volume decline proves structural rather than transitional, the thesis breaks. Next earnings July 2026.
Healthcare Rev.
$3.0B Record