FY2026 Q1 Results
USPS reported their FY26 Q1 (Oct 1, 2025 – Dec 31, 2025) financials, volumes, and service numbers to their Board of Governors (BOG) and the Postal Regulatory Commission (PRC) on February 5th, 2026.
Financials
Total operating revenue was $22.2 billion for the quarter, compared to the same quarter last year. The decrease was due largely to declining volumes in First-Class Mail, Shipping and Packages, and Marketing Mail.
| In millions | FY2026 Q1 | FY2025 Q1 (SPLY) | Variance |
| Total Revenue | $22,240 | $22,537 | ($297) |
| Total Operating Expenses | $23,498 | $22,459 | $1,039 |
| Net Income / (Loss) | ($1,259) | $144 | ($1,403) |
| Controllable income* | $350 | $968 | ($618) |
*Controllable Income is a non-GAAP measure that excludes non-cash expenses like workers’ compensation adjustments and retirement amortization USPS 10-Q
Key drivers of the variance include:
- Revenue Decline: Operating revenue fell by 1.2% ($264 million), primarily due to declining volumes across major categories, despite the 7+% postage increase in July 2025.
- Expense Growth: Operating expenses grew by 4.6% ($1.0 billion). The biggest contributors to the expense growth were a rise in transportation costs due to higher use of freight auctions, the unique way that USPS must report its workers compensation liabilities, and the new “top-up” expense of $175 million that was recorded this quarter but did not exist in the same period last year. The new 2026 requirement for the Postal Service to make “top-up” payments for Retiree Health Benefits (RHB) was established by the Postal Service Reform Act of 2022 (PSRA).
The United States Postal Service (USPS) attributes its challenging financial position—highlighted by a $1.3 billion net loss for the quarter ended December 31, 2025—to a combination of systemic structural imbalances, declining mail volume, and legal constraints.
Primary Legislative Needs
During Chairwoman Amber McReynolds address at the BOG meeting last week she identified five primary legislative needs she said is needed from policy makers: 
- Diversification of Pension Assets: The Chairwoman requested the authority to diversify pension asset investments, moving away from exclusively U.S. Treasury-based instruments to allow for potentially higher market-based returns, she estimated this policy has cost the USPS roughly $900 billion.
- Civil Service Retirement System (CSRS) Reform: A call was made for the Office of Personnel Management (OPM) to reform the allocation of CSRS benefit obligations for legacy Post Office Department employees. She stated there is a $95 billion surplus that could be used to extend the life of the fund from 5 years to 25 years.
- Workers’ Compensation Administration Reform: Changes were sought to reform workers’ compensation administration; the chair quoted an OIG report that stated that USPS could have saved $694 million alone in FY24.
- Pricing System Flexibility: She requested a more “modern and flexible” pricing system arguing that the current inflation-based price cap system limits the agency’s ability to offset declining mail volumes and cover the costs of its universal service mandate.
- Raising the Statutory Debt Limit: USPS has exhausted their current $15 billion borrowing authority; the BOG and USPS ask for it to be raised to $30 billion.
Postmaster General Requests For Legislative Assistance
In Postmaster General David Steiner’s prepared remarks he echoed the same requests for legislative assistance. The PMG continued to stress the need for revenue, but in this speech, he did incorporate more comments on USPS cost reductions efforts than in prior speeches.
“And although I say we can’t cost-cut our way to prosperity, we can certainly cut costs. We continue to move forward with our network transformation initiatives to reduce costs and increase efficiency, while providing more reliable service.”
“We also recently put together a team to look at all aspects of our business to determine where we can reduce costs or reduce or eliminate capital. Like any large organization we need to constantly look at how we can improve in all our costs, revenue and customer service.”
Mr. Steiner has just completed his first six months in office.
Volumes
In the first quarter of fiscal year 2026, the Postal Service reported a total volume decline of 2.9 billion pieces, or 9.4%, compared to the same period the previous year. USPS attributed 1,531 million of that loss to the cyclical nature of political and election mail, accounting for 51% of the total loss.
Of the remaining 4.7% loss management attributed those losses to a combination of digital migration, and intense market competition.
- Marketing Mail: Volume fell by 10.9%, largely due to the absence of political and election mail that was present during the 2024 general election cycle last year.
- First-Class Mail: Volume fell by 6.1% due to continued migration to electronic communication, both selectively and various U.S. agencies directed moving to electronic mail as defaults.
- Shipping and Packages: Volume fell by 12.1% due to intense market competition. This is very troubling as USPS is heavily dependent on the growth of packages for revenue.
The following shows the volume and revenue at a product level for F26 Q1.
Service
The composite score for First-Class mail improved 4.6% over the same quarter last year.
The number shared at the BOG meeting is a composite of all First-Class mail product categories. The numbers when split out show very differently for flats versus letters. Using Chicago 60440, outbound nationally First-Class flats show performance almost 15% below Presort First-Class letters from the same zip code.
Marketing Mail improved, but by a much smaller margin of less than 1%.
Neither category met its service targets. We see the same service variance in Marketing Mail for letters and flats. The flats delivering nationally from zip code 60440 show lower than letters by 11.3%.
