UPS Revenue Climbs 6.7% to $22.9 Billion as Company Raises 2026 Outlook

United Parcel Service reported a 6.7% increase in third-quarter revenue to $22.9 billion and raised its 2026 financial outlook on Tuesday, as sales grew in each of its three operating segments. The Atlanta-based delivery company now expects annual revenue of about $92.6 billion, compared with its July forecast of $91.2 billion.

The higher sales did not translate into higher companywide earnings. UPS reported diluted earnings of $1.37 a share for the quarter ended September 30, down from $1.55 a year earlier. Adjusted earnings were $1.69 a share, compared with $1.74 in the prior-year period. Consolidated operating margin also fell, leaving a more mixed picture than the revenue growth alone suggests.

In its third-quarter earnings release, UPS reported an operating margin of 7.6%, versus 8.4% a year earlier. Its non-GAAP adjusted margin was 9.0%, down from 10.0%. Management pointed to higher revenue per package and changes to its delivery network as it raised guidance ahead of the busiest shipping period of the year.

Higher revenue per package supports U.S. and international sales

The U.S. Domestic Package business generated $14.87 billion in revenue, up 4.5% from $14.22 billion a year earlier. UPS said revenue per piece increased 6.1%, a measure that reflects what it collects on the average package handled. The distinction matters because stronger revenue per piece can lift sales without requiring an equivalent increase in the number of parcels delivered.

Domestic operating profit rose to $906 million from $603 million on a reported basis. Excluding specified adjustments, operating profit increased to $1.03 billion from $905 million, and the adjusted operating margin widened to 7.0% from 6.4%. The improvement in the company’s largest segment contrasts with the decline in UPS’s consolidated margin.

UPS has been reducing less-profitable volume from its largest customer while reshaping the U.S. network. That is a change in the type of shipments it wants to handle, not simply an effort to deliver more packages. The third-quarter figures show better domestic profit and revenue per piece, though they do not establish that higher prices alone caused the improvement; shipment mix and other revenue factors can also influence the per-piece measure.

International Package revenue climbed 7.1% to $5.01 billion from $4.67 billion. Revenue per piece in that business increased 15.0%, according to UPS. Operating profit reached $746 million, up from $676 million a year earlier, and adjusted operating profit also totaled $746 million, compared with $691 million in the 2025 quarter.

The international segment’s 14.9% adjusted operating margin was slightly above the approximately 14.8% level a year earlier. Its profitability remained higher than that of domestic delivery, illustrating why international operations can contribute meaningfully to group results despite accounting for a smaller share of total revenue.

Supply-chain profit falls despite double-digit sales growth

Supply Chain Solutions posted the fastest revenue growth of the three businesses, with sales rising 18.2% to $2.98 billion from $2.52 billion. UPS attributed the increase primarily to forwarding and logistics activity, including healthcare-related services. Profit, however, moved in the opposite direction.

The segment recorded just $92 million of reported operating profit, compared with $525 million in the year-earlier quarter. Its adjusted operating profit was $274 million, down from $536 million. That left an adjusted margin of 9.2% and a reported margin of 3.1%, making the business a major reason that consolidated margins lagged sales growth.

There is an important complication in the comparison. UPS said the third quarter of 2025 included a $330 million pretax gain from a sale-leaseback of properties in Supply Chain Solutions, adding about 30 cents to earnings per share at the time. The unusually large gain makes the prior-year profit base less representative of ordinary operations. It does not erase the decline in the latest adjusted segment result, but it helps explain why the profit comparison needs more context than the revenue figures.

At the consolidated level, reported operating profit slipped to $1.74 billion from $1.80 billion, while adjusted operating profit declined to $2.05 billion from $2.13 billion. UPS also reported a net charge of $279 million, equivalent to 32 cents a diluted share, involving transformation costs and a goodwill impairment in Supply Chain Solutions, partly offset by a gain on sales of MD-11 aircraft assets. These accounting items further separate reported earnings from the adjusted figures management uses to describe operating performance.

UPS continues to overhaul its distribution network as it seeks to lower expenses and direct resources toward more profitable deliveries. The company expects nearly $3 billion of benefits from its network and efficiency initiatives during 2026. As of September 30, it had incurred $1.4 billion of related costs during the year and $1.9 billion since the programs began. Those are program costs, not the same measure as the projected savings.

Revised 2026 targets put emphasis on the holiday quarter

UPS increased its full-year revenue forecast by about $1.4 billion from the outlook issued in July. That earlier target, published in its second-quarter earnings release filed with the SEC, called for approximately $91.2 billion in sales, $8.65 billion in adjusted operating profit and adjusted diluted earnings of $7.22 a share. The new projections are $92.6 billion in revenue, $8.75 billion in adjusted operating profit and $7.28 in adjusted earnings per share.

For the fourth quarter alone, UPS forecasts approximately $25.7 billion in revenue and $3.3 billion in adjusted operating profit. Those projections place considerable weight on the holiday delivery period, when shipping demand usually rises. The raised targets reflect management’s expectations, not results that UPS has already achieved.

The company also raised its adjusted free cash flow target to approximately $6.1 billion. It still expects about $3.0 billion of capital spending during 2026, while dividend payments of around $5.4 billion remain subject to board approval. UPS provided the profit and free cash flow outlook on a non-GAAP adjusted basis, noting that certain future items cannot be forecast or reconciled reliably to reported results.

The guidance comes after UPS completed its planned volume reduction from its largest customer in the second quarter, according to the latest release. Its broader Efficiency Reimagined work is expected to continue through the fourth quarter of 2027, so the network changes are not all finished. In the nearer term, the fourth-quarter results will show whether improved shipping revenue and the company’s cost initiatives are translating into the operating profit UPS now expects.