Wall Street can be a cold place. One day you’re the darling of the pandemic era, and the next, analysts are picking apart your margins like vultures at a roadside. Honestly, that's exactly where United Parcel Service stands right now. People look at the surface-level United Parcel Service earnings and see a giant in retreat. They see declining volumes. They see job cuts. But if you actually sit down and look at the numbers Carol Tomé is putting up, a different story starts to emerge. It’s a story of a company intentionally getting smaller to get richer.
Basically, UPS is breaking up with its biggest customer. It’s messy.
The Amazon "Glide Down" is Real
For years, Amazon was the elephant in the brown truck. In 2024, the tech giant still accounted for a massive chunk of UPS revenue, but that relationship had a major flaw: it wasn't very profitable. In the recent Q3 2025 cycle, we saw the fruits of a very deliberate "glide down." UPS has reached an agreement to slash its Amazon volume by over 50% by the middle of 2026.
Think about that for a second. Most CEOs would lose their jobs for intentionally cutting half the business from their top client. But Tomé is betting the farm on "Better Not Bigger."
The Q3 2025 data shows consolidated volumes fell nearly 10%. That sounds like a disaster until you look at the revenue per piece, which jumped significantly. In the U.S. domestic segment, while volume dipped, the money made on every package actually grew. It’s simple math, really. Why deliver 100 packages for a $1 profit when you can deliver 50 packages for a $2 profit?
The Numbers You Need to Know
Let's get into the weeds of the most recent financial snapshots. On January 27, 2026, the company is set to report its Q4 2025 results. Most observers are bracing for a revenue hit. We’re talking about a projected decline of roughly 5.4% year-over-year.
- Q3 2025 Revenue: $21.42 billion (Beating the $20.94 billion estimate).
- Adjusted EPS: $1.74 (A massive beat against the $1.31 consensus).
- Cost Savings: $2.2 billion realized so far in 2025.
- Job Cuts: Approximately 48,000 positions eliminated in the "Transformation 2.0" drive.
The stock market reacted to these United Parcel Service earnings with a sort of cautious optimism. The stock had been beat up—down over 20% in the last year—but the Q3 beat showed that the cost-cutting is actually "sticking." By closing 93 facilities in the first nine months of 2025, the company is proving it can flex its network downward without breaking it.
Why B2B is the New North Star
If Amazon is the ex-partner, who is the new flame? It’s the boring stuff. Healthcare. Industrial parts. Small and medium-sized businesses (SMBs).
UPS is chasing "high-margin" logistics. When a hospital needs a temperature-controlled shipment of specialized medicine, they don't care if it costs $50 or $100; they just need it to get there. That’s where the 20% margins live. Domestic porch deliveries—where a driver has to find a spot to park just to drop off a $10 tube of toothpaste—are a margin killer.
During the Q3 calls, executives noted that B2B now represents over 45% of U.S. volume. They’re also leaning hard into their Digital Access Program (DAP), which helps small businesses ship like the big guys. That program alone generated $2.8 billion in revenue in the first nine months of 2025.
The 2026 Outlook: What Most People Get Wrong
Most investors are worried about the "top line" shrinking. They see the revenue number going from $91 billion down toward $88 billion and panic. But they’re missing the "jaws" effect.
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As revenue stabilizes, the massive cost-out initiatives (like the $1 billion expected from the "Efficiency Reimagined" program in 2026) will fall straight to the bottom line. Analysts like those at Barclays and Susquehanna have maintained price targets well above the current $108 trading range, some as high as $150 or $175. They see a leaner, more automated UPS emerging from this transition.
By the end of 2025, UPS expects to move 66% of its volume through automated processes. That’s a huge jump. Machines don’t need health insurance, and they don't get tired during the "peak" holiday season.
The Hidden Headwinds
It’s not all sunshine and dividend checks, though. The 6.1% dividend yield is great for income seekers, but it also reflects a stock that the market is still skeptical about.
Tariffs are the big wildcard. With 2025 seeing some of the most dramatic shifts in trade policy in decades, international shipping has become a game of musical chairs. While UPS saw a 6% revenue growth in international segments recently, the volatility of global trade routes makes forecasting a nightmare. If a trade war heats up, those high-margin international air express routes could dry up fast.
Also, the U.S. manufacturing economy hasn't exactly been on fire. B2B shipping relies on factories actually making things. If the industrial sector stays stagnant, UPS will have a hard time finding enough "high-value" packages to fill the void left by Amazon.
Is it a Buy?
Sorta. It depends on your stomach for change. If you're looking for the explosive growth of a tech stock, you’re in the wrong place. But if you want a company that is ruthlessly optimizing its footprint and paying you a fat dividend to wait, the United Parcel Service earnings story is actually quite compelling.
The "reset year" of 2025 is almost over. 2026 is when we see if this smaller, faster UPS can actually outrun its competitors.
Actionable Insights for Investors and Shippers:
- Watch the Operating Margin: Don't just look at total revenue on January 27. Look for the U.S. Domestic operating margin. If it stays above 10%, the strategy is working.
- Monitor Facility Closures: UPS plans to close around 10% of its U.S. buildings. If you’re a shipper, check if your local hub is on the list to avoid logistics hiccups.
- Dividend Safety: With a payout of around $5.5 billion annually, the dividend is safe as long as free cash flow stays above the $6 billion mark.
- B2B Pivot: If you own a small business, leverage the Digital Access Program. UPS is desperate for your business right now to replace Amazon's volume, meaning you have more bargaining power than you did three years ago.
The era of "volume at any cost" is dead. Long live the era of "profit per package."