UPS raised its revenue outlook to $92.6 billion while cutting Amazon

UPS raised its full-year revenue outlook from $91.2 billion to $92.6 billion on Tuesday, and its shares climbed roughly 5% on the news. The upgrade came with its third-quarter results, which beat expectations and offered early proof that scaling back its Amazon delivery business was a smart gamble.

The company had announced early last year that it would cut its Amazon delivery volume in half by this summer. Investors were skittish about severing ties with the carrier's largest customer. The Q3 numbers suggest the bet is working.

"We're driving more premium growth, improving revenue quality and mix, and creating greater operating leverage through a more efficient network," CEO Carol Tomé said in the earnings call. "All of this is strengthening the underlying performance of our business."

Why did UPS walk away from Amazon?

The economics of the deal were the problem, not the volume. "Amazon is our largest customer, but it's not our most profitable customer," Tomé said of the decision. She called the high-volume, low-margin arrangement "very dilutive to the US domestic business."

The scale was enormous. Amazon accounted for around half of UPS's domestic package deliveries in 2023, and represented 12% of its revenue. Shedding that volume in half, by design, means fewer boxes moving through the network — but at better margins per package.

The mechanism is simple. Low-margin volume filled trucks, warehouses and sortation facilities that cost money whether or not they run at premium rates. Removing it lets UPS chase business that pays more, which is what the raised outlook now reflects.

What did UPS keep from the Amazon relationship?

The carrier did not cut ties outright. UPS kept Amazon returns — the part of the business where customers bring packages back in person at UPS locations — while dropping the small, frequent doorstep deliveries that litter front porches with cardboard.

Tomé said the company handles returns "very, very well" and plans to hang onto that business. "Returns are the nemesis of anybody who's in the e-commerce space," she said. "In fact, 19% of all e-commerce sales are returned. And so with our great reverse network, the capabilities that we have for box-less, label-less returns, that relationship with Amazon is just going to continue to grow."

That 19% return rate turns a logistics burden into a durable revenue stream, and UPS owns one of the few networks built to handle it at scale.

How far does the turnaround still have to go?

The stock charts explain the urgency. The pandemic-era delivery boom sent UPS stock soaring in 2020, but its shares are now worth only half of what they were four years ago. Over the same period, shares of its chief rival FedEx climbed consistently, gaining roughly the same percentage of value that UPS lost.

Both companies are racing to undo pandemic-inspired expansion built for consumers stuck at home. UPS announced earlier this year that it would slash 30,000 jobs and shutter dozens of warehouses. That follows the 48,000 job cuts the company made in 2025.

"We're well into the largest U.S. network reconfiguration in UPS history," a UPS spokesperson told Fast Company at the time of the restructuring announcement. The company says it wants to become a "nimbler, more efficient operation" by winding down pieces of the business that aren't delivering.

What happens next?

The raised outlook covers the full year, but the Amazon volume cuts are nearly complete, which shifts the question from execution to growth: having shed its biggest customer's cheapest packages, UPS now has to show it can fill the freed-up network capacity with premium business fast enough to keep the recovery on track.