Freight delivery company RXO’s second quarter results fell short of Wall Street’s revenue expectations, leading to a significant negative reaction from the market. Management attributed the quarter’s mixed performance primarily to ongoing softness in the freight market, persistent automotive sector headwinds, and a deliberate shift in customer mix within truckload brokerage. CEO Drew Wilkerson noted that a 45% increase in less-than-truckload (LTL) volume drove gains in brokerage, while truckload volumes declined due to both industry pressures and a focus on optimizing profitability. Wilkerson described the quarter as one where “our brokerage business outperformed the market and grew volume by 1% year-over-year, driven by 45% growth in less than truckload volume.”
Is now the time to buy RXO? Find out in our full research report (it’s free).
RXO (RXO) Q2 CY2025 Highlights:
- Revenue: $1.42 billion vs analyst estimates of $1.43 billion (52.6% year-on-year growth, 1% miss)
- Adjusted EPS: $0.04 vs analyst estimates of $0.03 ($0.01 beat)
- Adjusted EBITDA: $38 million vs analyst estimates of $33.24 million (2.7% margin, 14.3% beat)
- EBITDA guidance for Q3 CY2025 is $38 million at the midpoint, above analyst estimates of $37.33 million
- Operating Margin: 0.7%, in line with the same quarter last year
- Sales Volumes rose 1% year on year (4% in the same quarter last year)
- Market Capitalization: $2.55 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 RXO’s Q2 Earnings Call
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Thomas Richard Wadewitz (UBS) asked about the duration and impact of efforts to optimize the truckload business mix. CEO Drew Wilkerson explained that much of this work was completed during the recent bid season, and expects volumes to be roughly flat sequentially as the company focuses on profitability rather than volume growth.
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Kenneth Scott Hoexter (Bank of America) inquired about the margin characteristics of LTL versus truckload and the realization of Coyote integration synergies. Wilkerson stressed the margin stability provided by LTL, while CFO Jamie Harris confirmed that most cost synergies are now reflected in results, with remaining benefits to materialize as tech integration concludes.
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Stephanie Lynn Benjamin Moore (Jefferies) sought clarity on RXO’s third quarter outlook and underlying freight market assumptions. Chief Strategy Officer Jared Weisfeld reiterated that the company is planning for ongoing softness in the freight environment and continued automotive headwinds, but highlighted procurement gains as a tailwind for margins.
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Daniel Robert Imbro (Stephens Inc.) probed the sustainability and drivers of last mile growth. Wilkerson confirmed that all growth was organic, driven by cross-selling and new customer wins, while Harris noted that profitability varies depending on whether the company operates out of its own hubs or customer facilities.
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Ariel Luis Rosa (Citigroup) questioned expectations for LTL growth relative to truckload and the value RXO provides to shippers. Wilkerson emphasized that LTL growth is built on strong truckload relationships and technology, and the company aims to expand both segments organically.
Catalysts in Upcoming Quarters
In future quarters, our analysts will monitor (1) the pace of technology integration and realization of Coyote-related synergies, (2) whether LTL volume growth can remain robust as RXO targets a higher mix, and (3) signs of stabilization or recovery in automotive and broader freight markets. Execution on further productivity improvements through AI and maintaining strong cash generation will also be key markers of RXO’s progress.
RXO currently trades at $15.55, in line with $15.44 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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