United Parcel Service’s second quarter saw a negative market reaction, as persistent declines in package volumes and mounting cost pressures overshadowed a modest revenue beat. Management pointed to ongoing challenges from shifting trade policies and soft consumer sentiment in the U.S., leading to a 5.7% year-on-year drop in sales volumes. CEO Carol Tome described the environment as “very volatile,” citing both tariff uncertainty and weak manufacturing activity as primary headwinds. Strategic actions, including the deliberate reduction of Amazon-related business and a network reconfiguration, also contributed to higher-than-expected expenses, particularly from slower-than-modeled employee attrition.
Is now the time to buy UPS? Find out in our full research report (it’s free).
United Parcel Service (UPS) Q2 CY2025 Highlights:
- Revenue: $21.22 billion vs analyst estimates of $20.87 billion (2.7% year-on-year decline, 1.7% beat)
- Adjusted EPS: $1.55 vs analyst expectations of $1.57 (1% miss)
- Adjusted EBITDA: $2.81 billion vs analyst estimates of $2.76 billion (13.3% margin, 1.8% beat)
- Operating Margin: 8.6%, in line with the same quarter last year
- Sales Volumes fell 5.7% year on year (0.1% in the same quarter last year)
- Market Capitalization: $74.1 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 From United Parcel Service’s Q2 Earnings Call
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Justine Brooke Laufer (Bernstein) asked if the absence of guidance signaled worsening conditions or simply heightened uncertainty. CEO Carol Tome responded that the breadth of possible outcomes was unusually wide, citing tariff timing and peak season unpredictability as key unknowns.
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Benjamin H. Mohr Mok (Citi) questioned whether UPS has enough infrastructure in Southeast Asia to handle trade lane shifts away from China. CEO Carol Tome and EVP Kathleen Gutmann noted ongoing network investments, including new air hubs, and emphasized the company’s ability to rapidly redeploy resources as trade patterns shift.
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Jizong Chan (Stifel) pressed for color on small and medium business (SMB) trends and the impact of policy uncertainty. CEO Carol Tome acknowledged that SMB customers face challenges from both trade uncertainty and tighter credit, while Matt Guffey highlighted supply chain mapping as a tool for customer support.
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Robert Hudson Salmon (Wells Fargo) sought detail on international margins and the cost impact from China-to-U.S. lane volume declines. CFO Brian Dykes explained that while margin pressure exists due to network adjustments, ongoing flexibility and export growth outside the U.S. are helping to offset some impacts.
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Kenneth Scott Hoexter (BofA) inquired about the Ground Saver product’s cost challenges and Amazon volume reduction pacing. CEO Carol Tome clarified that Ground Saver expenses were higher than anticipated due to flawed delivery density models, but conversations with USPS are underway to find efficiencies. She also confirmed that the Amazon glide down remains broadly on track, with attrition rates as the main variable.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely watching (1) the pace and cost impact of additional facility closures and voluntary driver separations, (2) the evolution of trade policy and tariff implementation—particularly as it relates to peak season demand forecasts, and (3) the effectiveness of UPS’s efforts to restore profitability in key product lines like Ground Saver. We will also monitor progress in healthcare logistics and digital services for signs of growth resiliency.
United Parcel Service currently trades at $87.50, down from $101.56 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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