UPS is breaking up with Amazon – and so far it’s paying off.

The delivery company issued its Q3 results on Tuesday, beating expectations and showing that scaling back its business schlepping packages for a major competitor was a smart gamble that could put its financials back on track.

“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.”

Investors were skittish about the shipping stalwart’s plan to sever much of its Amazon delivery business, but UPS just improved its outlook for the year, raising revenue expectations from $91.2 billion to $92.6 billion. The company’s shares were up around 5% on the news at the time of writing.

UPS announced that it would scale back its partnership with Amazon early last year with a plan to cut its Amazon delivery volume in half by this summer. “Amazon is our largest customer, but it’s not our most profitable customer,” Tomé said of the decision, calling its high volume, low margin arrangement with Amazon “very dilutive to the US domestic business.” Amazon accounted for around half of the carrier’s domestic package deliveries in 2023, accounting for 12% of its revenue.

The carrier didn’t cut ties with the online retail behemoth outright. Instead, UPS opted to continue handling Amazon returns while reducing the kind of small, frequent deliveries that litter front porches with cardboard boxes.

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