United Parcel Service’s first quarter results for 2025 met Wall Street’s revenue expectations and delivered a non-GAAP profit above analyst estimates, yet the market responded with caution. Management attributed quarterly performance to ongoing strategic shifts, including the planned reduction of unprofitable Amazon volume and a major reconfiguration of its U.S. network. CEO Carol Tomé highlighted that while January showed resilient demand from B2B and healthcare customers, February and March saw a sharper decline in average daily volumes. Customers’ uncertainty around global trade policies and tariffs, especially in the U.S., led to muted demand from both large enterprises and small and medium businesses, putting pressure on overall shipment volumes. Tomé noted, “Uncertainty surrounding global trade policies and other matters led to a drop in consumer confidence and muted demand from some enterprise and SMB customers.”
Is now the time to buy UPS? Find out in our full research report (it’s free).
United Parcel Service (UPS) Q1 CY2025 Highlights:
- Revenue: $21.55 billion vs analyst estimates of $21.1 billion (flat year on year, 2.1% beat)
- Adjusted EPS: $1.49 vs analyst estimates of $1.38 (7.9% beat)
- Adjusted EBITDA: $2.68 billion vs analyst estimates of $2.59 billion (12.4% margin, 3.4% beat)
- Operating Margin: 7.7%, in line with the same quarter last year
- Sales Volumes fell 3.5% year on year (-5.1% in the same quarter last year)
- Market Capitalization: $84.06 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions United Parcel Service’s Q1 Earnings Call
- Tom Wadewitz (UBS) asked how the $3.5 billion in cost savings aligns with Amazon revenue loss. CFO Brian Dykes explained most cost reductions track with Amazon volume declines, with incremental savings from process automation and Efficiency Reimagined initiatives expected into 2026.
- Ariel Rosa (Citigroup) inquired about automation and labor reduction within the Efficiency Reimagined program. CEO Carol Tomé and Nando Cesarone, President U.S. Operations, detailed plans to automate up to 400 facilities, introducing robotics and AI to reduce labor dependency and boost productivity.
- Scott Group (Wolfe Research) questioned why U.S. margin improvements would slow in Q2 despite ramping cost savings. Dykes cited added “chaos costs” from building closures and pressure on SMB volumes from tariff uncertainty as key factors.
- Jordan Alliger (Goldman Sachs) asked for UPS’s updated view on secular volume growth after the Amazon reduction. Tomé pointed to low single-digit growth expectations domestically and mid-single-digit growth internationally, with healthcare logistics outperforming other segments.
- Ken Hoexter (BofA) focused on international trade shifts and the impact of de minimis changes. Kate Gutmann, President International, noted export growth from non-China lanes and ongoing customer efforts to diversify supply chains beyond China.
Catalysts in Upcoming Quarters
In the coming quarters, our team will monitor (1) the pace and effectiveness of UPS’s network consolidation and automation rollout, (2) customer response to new tariffs—including any rebound or ongoing softness in U.S. and international volumes, and (3) the integration and growth trajectory of healthcare logistics initiatives following the Andlauer acquisition. The timing and impact of trade policy changes will also be closely watched for their effects on demand and margins.
United Parcel Service currently trades at $99.69, up from $97.11 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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