Source: Form 8-K Item 2.02 earnings release dated October 27, 2026 (Exhibit 99.1) and UPS’s Q3 2026 financial supplement, for the quarter ended September 30, 2026. UPS reports on a calendar fiscal year.
Revenue grew 6.7% on 4.2% lower daily volume, so the question is how long higher revenue per piece can offset fewer packages.
UPS reported third-quarter 2026 revenue of $22,853 million, up 6.7% year over year, while average daily volume fell 4.2% and revenue per piece rose 7.7% to $15.96. Non-GAAP adjusted operating profit was $2,054 million against $2,132 million (a margin of 9.0% against 10.0%), adjusted EPS $1.69 against $1.74 and GAAP EPS $1.37 against $1.55, each gap smaller than the $330 million sale-leaseback gain, worth $0.30 a share, in last year’s results (calculated, Section 1 note). This year’s GAAP results carry a $182 million goodwill impairment in Supply Chain Solutions, which UPS excludes from adjusted results. U.S. Domestic adjusted operating profit rose 14.3% to $1,034 million. Nine-month free cash flow (non-GAAP) was $4,220 million against $2,744 million, a rise of $1,476 million from $838 million more operating cash flow and $748 million less capital spending (calculated, Section 3 note). UPS raised its full-year targets to about $92.6 billion of revenue, $8.75 billion of adjusted operating profit and $7.28 of adjusted EPS, and guided fourth-quarter revenue of about $25.7 billion and adjusted operating profit of about $3.3 billion. The question is whether revenue per piece can keep offsetting falling volume through the holiday quarter.
UPS released third-quarter 2026 results on October 27, 2026. The quarter ended September 30, 2026. The release (Exhibit 99.1) prints revenue only as $22.9 billion, and the October 27 Form 8-K carries no financial statement exhibit (EDGAR filing index), so the exact figures below come from UPS’s Q3 2026 financial supplement on its investor site. Terms used below:
Note on comparisons. The year-earlier quarter includes a $330M pre-tax gain from a sale-leaseback transaction within Supply Chain Solutions, worth $0.30 of EPS, which UPS left in both its GAAP and its adjusted results. The gain is 4.2 times the $78M fall in adjusted operating profit, so it explains more than the whole decline (calculated). Without it, Q3 2025 adjusted operating profit would be $1,802M, the adjusted margin 8.4% and adjusted EPS $1.44 (calculated), against $2,054M, 9.0% and $1.69 this year. GAAP operating profit fell $60M; the gain is 5.5 times that fall, and without it Q3 2025 GAAP operating profit would be $1,474M against $1,744M (calculated). The items UPS excludes from adjusted operating profit were $310M this year and $328M last year (calculated from the reconciliation). GAAP EPS fell $0.18. The items UPS excludes from adjusted EPS were a net charge of $0.32 per share this year (transformation costs and a $182M goodwill impairment, less a gain on aircraft parts of $43M pre-tax) and $0.19 last year (transformation costs of $0.29 less a $0.10 tax valuation allowance reversal), a change of $0.13. Together with the $0.30 gain in last year’s GAAP EPS, these items come to $0.43, more than the whole $0.18 decline (calculated). Q3 2026 had 65 operating days against 64.
Revenue per piece drove package revenue, and Supply Chain Solutions added about a third of the growth. Consolidated average daily volume fell 4.2% to 18,606 thousand while revenue per piece rose 7.7% to $15.96, and revenue grew 6.7%. UPS’s segment text says U.S. Domestic revenue “increased 4.5%, driven by a 6.1% increase in revenue per piece” and International revenue “increased 7.1%, driven by a 15.0% increase in revenue per piece.” Supply Chain Solutions added $459M of the $1,438M rise in consolidated revenue, or 32% (calculated). The release and supplement do not split the revenue change into volume, rates, fuel surcharge and currency. UPS says the planned volume reductions from its largest customer were completed in the second quarter of 2026.
% change, Q3 2026 vs. Q3 2025 · YoY as printed · revenue per piece and average daily volume (ADV)
UPS Q3 2026 financial supplement (QTD Operating)
Consolidated ADV was 18,606 thousand pieces against 19,419 thousand. Q3 2026 had 65 operating days against 64, so total consolidated volume fell 2.7% (1,209 million pieces vs. 1,243 million) while ADV fell 4.2%. Revenue per piece was $15.96 against $14.82.
All three segments reported higher revenue than in Q3 2025. U.S. Domestic Package revenue rose to $14,865M, International Package to $5,007M and Supply Chain Solutions to $2,981M. UPS CEO Carol Tomé says the results “demonstrate the continued strengthening of our business fundamentals, driven by premium growth and greater network efficiency.”
USD millions · Q3 2025 vs. Q3 2026 · segment revenue as printed
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), segment tables; Q3 2026 financial supplement (QTD Income)
Dollar changes (printed in the supplement): U.S. Domestic +$645M, International +$334M, Supply Chain Solutions +$459M, total +$1,438M. Within Supply Chain Solutions the supplement prints forwarding at $858M vs. $730M, logistics at $1,598M vs. $1,363M and other at $525M vs. $429M. UPS notes that Supply Chain Solutions consists of operating segments that do not meet the criteria of a reportable segment under ASC Topic 280.
Adjusted operating profit and EPS were lower than a year earlier as printed. Adjusted operating profit was $2,054M against $2,132M and adjusted EPS $1.69 against $1.74. The year-earlier base holds a large gain, set out in the note under the Section 1 table and in Section 3.
U.S. Domestic profit grew while its volume shrank. U.S. Domestic adjusted operating profit rose to $1,034M from $905M (+14.3%) and its adjusted margin to 7.0% from 6.4%, on average daily volume down 3.3% to 15,621 thousand. The July earnings deck guided a Q3 adjusted margin of about 7.0% for the segment (guidance), so the result is in line with it.
The margin comparison depends on the base. GAAP operating margin was 7.6% against 8.4% and adjusted margin 9.0% against 10.0%. With the year-earlier gain removed, the adjusted base is 8.4% (calculated), so the same quarter reads as a decline as printed and an improvement without the gain.
% of revenue · Q3 2025 vs. Q3 2026 · GAAP and adjusted (non-GAAP) shown separately · ex-gain bar is calculated
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), reconciliation tables and footnote on 3Q25 results
Ex-gain base: ($2,132M − $330M) ÷ $21,415M = 8.4% (calculated). The gain equals 1.5 percentage points of Q3 2025 revenue, more than the whole 1.0-point fall in the adjusted margin and the 0.8-point fall in the GAAP margin (calculated). On a GAAP basis the same exclusion gives ($1,804M − $330M) ÷ $21,415M = 6.9% against 7.6% this year.
Three items separate GAAP from adjusted profit. Transformation costs of $171M and a goodwill impairment of $182M were added back, and a $43M gain on aircraft parts was removed. UPS now expects non-GAAP adjusted operating expense to exclude $1.4B–$1.6B of cost for its Network Reconfiguration and Efficiency Reimagined initiatives in 2026, up from $1.3B–$1.5B in July, of which $1.2B is related to the Driver Choice Program.
USD millions · Q3 2026 · GAAP to non-GAAP adjusted operating profit · reported reconciliation
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), Reconciliation of GAAP and non-GAAP adjusted measures
After tax, the same three items are a net charge of $279M, or $0.32 per diluted share (printed). A year earlier the reconciliation held $328M of transformation costs and no impairment. The Q3 release and supplement do not say which income statement lines hold these items for Q3 2026 (Section 4 cost note). Quarter-to-quarter comparisons of adjusted profit are affected because Q1 and Q2 2026 were not adjusted for gains on aircraft parts: the Q2 10-Q reports $101M of gains on sales of properties and aircraft parts in Q2, without a split.
Free cash flow rose over nine months on higher operating cash flow and lower capital spending. Free cash flow was $4,220M against $2,744M, and operating cash flow $5,986M against $5,148M. UPS’s Q2 deck put first-half free cash flow at $1.6B, “including one-time payments made in 2Q26 for the Driver Choice Program.” The note under the chart sets out these payments and other items inside the nine-month figures.
USD millions · nine months 2025 vs. nine months 2026 · non-GAAP free cash flow · change by printed line (calculated)
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), free cash flow reconciliation; Q3 2026 financial supplement (Cash Flow)
Calculation: operating cash flow 5,986 − 5,148 = +838; capital expenditures 2,969 − 2,221 = +748; proceeds from disposals of property, plant and equipment 473 − 585 = −112 and other investing items −18 against −20 = +2, together −110. The Q3 release and supplement print cash flow year to date only. Subtracting the first-half figures from the Q2 release gives Q3 operating cash flow of $2,903M and free cash flow of $2,647M, against $2,482M and $2,002M in Q3 2025 (calculated). Items inside the nine-month figures, with their size against the $1,476M rise (calculated): the Q2 10-Q reports separation payments of about $1.0B in the first half, equal to more than half of the rise (about 68%) and working against it; it lists about $200M of IEEPA tariff refunds received from U.S. Customs and Border Protection that are payable to customers (about 14%); and among the offsets to operating cash flow it lists “An increase in accounts receivable from changes in collection of aged receivables, including $2.0 billion from our accounts receivable factoring program.” The pension and postretirement contribution line was $897M against $1,338M, $441M lower (30%). The 2025 disposal proceeds of $585M include about $465M from sale-leaseback transactions (Q3 2025 10-Q), equal to about 32% of the rise and also working against it. No Q3 2026 10-Q was on EDGAR as of 07:46 ET, so Q3 amounts for these items are not available. UPS’s full-year target for non-GAAP adjusted free cash flow is about $6.1B.
Volume was weaker abroad than at home. International average daily volume fell 8.7% to 2,985 thousand, against a 5.8% fall in Q2, while U.S. Domestic volume fell 3.3% to 15,621 thousand, the same rate as in Q2. Revenue per piece rose 15.0% in International and 6.1% in U.S. Domestic.
Segment profit moved in different directions. U.S. Domestic and International adjusted operating profit rose, while Supply Chain Solutions fell to $274M. The Supply Chain Solutions comparison is distorted by last year’s gain, and its GAAP result also carries the goodwill impairment (amounts and shares in the note under the chart).
USD millions · Q3 2025 vs. Q3 2026 · segment non-GAAP adjusted operating profit · ex-gain bar is calculated
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), reconciliation by segment
The $330M sale-leaseback gain sits in Supply Chain Solutions in Q3 2025. It is larger than the whole $262M fall in the segment’s adjusted operating profit (printed in the supplement). Without it the Q3 2025 base would be $206M (536 − 330, calculated) and the segment’s adjusted margin 8.2% (206 ÷ 2,522, calculated) against 9.2% this year. On a GAAP basis the segment’s operating profit was $92M against $525M, a fall of $433M; the gain equals 76% of that fall, more than half, and the $182M goodwill impairment 42% (both calculated).
Two of three segments were in line with or above July’s margin guidance. International’s adjusted margin of 14.9% was above its 13.0%–14.0% range and U.S. Domestic’s 7.0% was in line, while Supply Chain Solutions’ 9.2% was below its 10.0%–11.0% range.
Non-GAAP adjusted operating margin, % of revenue · Q3 2026 actual vs. Q3 guidance in the July 28, 2026 earnings deck
UPS Q2 2026 earnings webcast deck, July 28, 2026 (guidance slide); UPS Q3 2026 earnings release (actuals)
The Q3 2026 release prints no segment guidance for Q4 or the full year, and no Q3 2026 earnings deck was on the UPS presentations page as of 07:46 ET (Section 9).
Costs rose fastest in fuel and purchased transportation. Fuel expense rose $473M to $1,544M and purchased transportation $812M to $3,275M, while total operating expenses rose 7.6% against revenue growth of 6.7%; without the special items set out in the note under the chart, they rose 6.0% (calculated). Compensation and benefits fell 2.6%.
% change, Q3 2026 vs. Q3 2025 · consolidated operating expense lines as printed · USD millions in each label
UPS Q3 2026 financial supplement (QTD Operating Expense); Q3 2025 and Q2 2026 Form 10-Q
Q3 2025 10-Q: compensation and benefits included $284M of transformation costs and other expenses $44M, and the sale-leaseback gains were recognized within other expenses. The Q3 2026 split of the $171M is not printed, so the change in transformation costs inside compensation and benefits lies between $113M and $284M, or 36% to 91% of that line’s $311M fall (calculated). In the Q2 2026 10-Q, UPS recorded $1,117M of the quarter’s $1,172M of transformation costs in compensation and benefits and reported gains on sales of properties and aircraft parts within other expenses. Without the items UPS excludes from adjusted results and without the $330M gain, total operating expenses were $20,799M against $19,613M, up 6.0% (calculated: 21,109 − 171 − 182 + 43; 19,611 − 328 + 330).
Cash and debt both rose in the quarter. Cash and cash equivalents were $6,837M on September 30, 2026, $2,184M more than on June 30 (calculated), and debt including finance leases was $26,078M, $1,594M more (calculated). Over nine months UPS paid $4,064M of dividends, and the cash flow statement shows no purchases of common stock, against $1,000M in the first nine months of 2025. The declared dividend was $1.64 per share in each of the first three quarters of 2026.
USD millions · Sep 30, 2025, Jun 30, 2026 and Sep 30, 2026 · Dec 31, 2025 and Mar 31, 2026 not shown
UPS Q3 2026 financial supplement (Balance Sheet); Q2 2026 release, Exhibit 99.2; Q3 2025 release, Exhibit 99.2
Against Sep 30, 2025, cash is $73M higher and debt $1,296M higher (calculated). At Dec 31, 2025, cash was $5,887M and debt $24,127M (608 + 23,519, calculated). Goodwill fell from $5,770M on Jun 30 to $5,590M on Sep 30; the Q3 release and supplement do not link that $180M to the $182M impairment. In August UPS agreed to sell $1.0B of 4.850% senior notes due 2031 (agreement dated Aug 10, 8-K filed Aug 12) and $325M of floating rate senior notes due 2076 (dated Aug 14, 8-K filed Aug 18). The first 8-K says UPS intended to contribute $200M principal amount of the 2031 notes to the UPS Retirement Plan Trust and $250M to the Master Trust, and would not receive proceeds from that portion. Nine-month proceeds from borrowings were $870M against $4,153M a year earlier (printed).
UPS gives its outlook on a non-GAAP adjusted basis. The quarter guidance and the full-year guidance are shown separately.
USD billions · Q4 2025 actual vs. Q4 2026 guidance · separate scale for each panel
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), 2026 Outlook; Q4 2025 values from the Q3 2026 historical supplement and the Q4 2025 release
Implied adjusted margin: $3.3B ÷ $25.7B = 12.8% (calculated), against 11.8% printed for Q4 2025. Both guidance figures are rounded (“approximately”), so the percentages are approximate.
% of full-year 2026 guidance · nine months actual vs. implied fourth quarter (calculated) · guidance as raised on Oct 27, 2026
UPS Q3 2026 earnings release (Form 8-K, Exhibit 99.1), 2026 Outlook and nine-month results
Calculation: $92,600M − $66,889M = $25,711M; $8,750M − $5,478M = $3,272M; $7.28 − $4.52 = $2.76. Full-year guidance is rounded (“approximately”), so the remainders carry the same rounding. Other guided items, implied remainder for Q4 (calculated): free cash flow about $1.9B ($6.1B − $4,220M), capital expenditures about $0.8B ($3.0B − $2,221M) and dividends about $1.3B ($5.4B − $4,064M). The Q3 release does not say whether the $6.1B free cash flow target includes Driver Choice Program payments, which the April and July decks labelled “including DCP” at about $5.5B.
USD billions · guided FY 2026 revenue at each of the four 2026 earnings releases
UPS earnings releases of January 27, April 28, July 28 and October 27, 2026 (Form 8-K, Exhibit 99.1)
The April and July decks put the free cash flow target at about $5.5B “including DCP”, against about $6.5B in the January deck. The Q1 and Q2 2026 releases, decks and 10-Qs do not explain the change, and the October release does not say whether its $6.1B includes Driver Choice Program payments.
What the quarter proved. UPS grew revenue 6.7% with 4.2% fewer packages a day, grew U.S. Domestic adjusted operating profit 14.3%, was in line with or above its July margin guidance in two of three segments, produced more nine-month free cash flow than a year earlier and raised its full-year revenue, adjusted operating profit and adjusted EPS targets for the second time this year, after July.
What it did not prove. The Q3 release and supplement do not show how much of the revenue gain is rate and how much is fuel surcharge, and the quarter cannot show whether the Q4 outlook of about $3.3B adjusted operating profit holds while volume falls. Adjusted operating profit and EPS were lower than last year as printed and higher once the $330M gain is removed (calculated), because UPS left that gain in last year’s adjusted results. Supply Chain Solutions’ adjusted margin was below its guide, and its GAAP result carries a $182M goodwill impairment in a reporting unit the release does not name.
Can revenue per piece keep offsetting falling daily volume while UPS delivers the roughly $3.3 billion of fourth-quarter adjusted operating profit it now guides?
Method. Every figure carries one of these meanings. REPORTED is a Q3 2026 figure printed in the UPS release or financial supplement. PRIOR-PERIOD is a figure for an earlier period, printed in that period’s release, supplement or filing or in the current release or supplement. GUIDANCE is an outlook printed in a UPS release, earnings deck or filing. MGMT EXPECTATION is a statement made only on the earnings call; none is used here. CALCULATED is our own arithmetic from printed figures, with the working shown in the note, and is used only where UPS prints no such value. Adjusted operating profit, adjusted EPS and free cash flow are non-GAAP measures as UPS defines them. Year-over-year changes compare with Q3 2025, and the Q3 2025 figures in the Q3 2026 tables match the original Q3 2025 release.
This report is for information and education only. It is not investment advice and not an offer or solicitation to buy or sell any security. It is built from United Parcel Service’s public filings and investor site materials, and it may contain errors. Figures marked calculated are TheValueTrader’s own arithmetic. Do your own research before making any investment decision.