Expeditors (NYSE: EXPD) EPS jumps 62% while staffing barely moves

What happened

Expeditors International of Washington, Inc. (NYSE: EXPD) reported third-quarter diluted earnings of $2.65 per share, up 62% from $1.64 a year earlier. The result bears on whether customers pay for Expeditors' people and network.

Chief Financial Officer David A. Hackett said in the Nov. 3 earnings release that revenue grew 42% to $4.1 billion while headcount rose only 1%. Net earnings attributable to shareholders rose 55% to $345 million, and operating income rose 55% to $445 million. Hackett said a lower tax rate and a lower share count helped lift EPS faster than operating income.

Key numbers

Metric	Latest	Change	Source
Diluted EPS, Q3	$2.65	from $1.64, +62%	SEC 8-K, Exhibit 99.1
Revenues, Q3	$4.11 billion	from $2.89 billion, +42%	SEC 8-K, Exhibit 99.1
Operating income, Q3	$445.41 million	from $288.04 million, +55%	SEC 8-K, Exhibit 99.1
Revenue after directly related transportation costs, Q3	$1.21 billion	from $955.09 million, +27.1%	Calculated from SEC 8-K
Net cash from operating activities, Q3	$212.56 million	from $201.37 million, +5.6%	Calculated from SEC 8-K
Cash returned to shareholders, Q3	$197 million		SEC 8-K, Exhibit 99.1

Read more: Expeditors International of Washington (EXPD) company research

Where the growth came from

Volumes were up across freight. Airfreight tonnage rose 13% and ocean container volume rose 7%. Airfreight revenue climbed to $1.54 billion from $1.02 billion a year earlier. Ocean revenue rose to $1.10 billion from $746.12 million, and customs brokerage and other services to $1.46 billion from $1.13 billion.

The company said customs, Transcon, distribution and order management each grew revenue by double digits for a third straight quarter. It also said airfreight rates stayed high, with demand outpacing available capacity.

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How much of the revenue Expeditors keeps

Directly related transportation costs rose 49% to $2.89 billion, faster than revenue. OptimistFi's calculation shows revenue left after those costs grew 27.1% to $1.21 billion from $955.09 million, while operating income grew 55%.

Salaries and other operating expenses rose just 15% to $768.27 million. That gap is the operating leverage Hackett described. He put operating efficiency at 36.7%, against a historical target of 30%.

Why it matters

OptimistFi has argued that Expeditors' value rests on customers paying for its people, network and systems rather than buying forwarding as a commodity. Operating income growing at roughly twice the pace of revenue after transportation costs, with headcount nearly flat, fits that view.

President and Chief Executive Officer Daniel R. Wall said the company continues to gain share, especially in markets it has made a strategic focus, and that strong demand drove the quarter.

Cash and buybacks

Cash flow did not keep pace with earnings. Accounts receivable rose $459.13 million in the quarter. Net cash from operating activities was $212.56 million, up 5.6% from $201.37 million a year earlier and well below net earnings.

Over nine months, operating cash flow was $700.44 million against $723.20 million a year earlier. Net earnings attributable to shareholders rose to $840.35 million from $609.63 million. Receivables stood at $3.09 billion on Sept. 30, up from $2.02 billion at Dec. 31, 2025.

Expeditors returned $197 million to shareholders in the quarter and $946 million over nine months. It repurchased 1.1 million shares at an average $178.36 in the quarter, versus 1.8 million shares at $119.65 a year earlier. Weighted diluted shares fell to 130.12 million from 135.29 million.

What the strength rests on

Management tied much of the customs brokerage strength to tariff-related additional-line fees and post-entry activity that began in Q3 2025. It said growth in the latest quarter came from new business wins, higher declaration volumes and broad-based customs services.

Wall said demand from certain customers, such as hyperscalers, has outpaced the market, though the company has worked to expand its customer base. Air capacity remains tight because fleets are growing slowly and aircraft deliveries are delayed. Expeditors expects congestion and supply chain challenges to last through the rest of 2026.

What's next

Expeditors plans an Investor Day on the morning of Wednesday, Nov. 18, in New York City. Questions submitted by the end of business on Nov. 6 will be considered for management's 8-K "Responses to Selected Questions."

Hackett said the company seeks to decouple headcount growth from revenue growth over the long term. Details on how it plans to do that would strengthen the case. A continued gap between earnings and operating cash flow would weaken it.

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