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UPS (UPS) is surging today after delivering a much stronger-than-expected Q3 report, marking its largest EPS beat since 4Q21. The package delivery giant bounced back sharply following a disappointing Q2, as cost discipline and network optimization efforts began to show results.

• Q3 revenue fell 3.7% yr/yr to $21.41 bln, slightly above consensus estimates. EPS came in well ahead of expectations, representing the company's biggest earnings beat in nearly four years.
• The upside is particularly notable given that UPS is intentionally reducing exposure to low-margin Amazon deliveries — with plans to deliver over 50% fewer Amazon packages by the end of 2026.
• Q3 Amazon-related volume declined -21.2% yr/yr, compared to -13% in 1H25, but less than the -30% UPS had forecasted. The company emphasized that it's shedding unprofitable business while growing higher-margin volume.
• UPS closed 19 additional U.S. buildings in Q3, bringing the 2025 total to 93 closures, part of a broad network reconfiguration aimed at boosting long-term margins.
• U.S. average daily volume (ADV) declined yr/yr due to the Amazon glide down and reduced exposure to lower-yield e-commerce, but U.S. revenue per piece jumped 9.8%.
• International ADV grew 4.8%, aided by tariff-related rerouting of capacity, although export volumes softened modestly.
• For the peak holiday season, UPS expects U.S. ADV to decline given the Amazon strategy but anticipates strong operational performance, supported by improved network efficiency and lower reliance on seasonal hires and leased assets.

Briefing.com Analyst Insight:

UPS's Q3 performance was a pleasant surprise, showing that its margin-centric strategy is beginning to pay off despite weaker top-line growth. The company's decision to wean itself off Amazon's high-volume, low-margin business is a bold but necessary move for long-term profitability. The strong revenue per piece and tighter cost structure suggest UPS is successfully transitioning toward a more disciplined, high-quality revenue model. However, with volume pressure likely to persist into 2026 and FedEx ramping up competitive efforts with Amazon, sustained growth may remain challenging. UPS eased investors' fears with the huge EPS beat and fairly positive Q4 commentary.