10-Q: RXO, Inc. Q2 2026: Revenue Up, But Losses Persist

RXO, Inc. reported a 25% revenue increase for Q2 2026, reaching $1.8 billion, but continued to post net losses and saw its cost of transportation services rise as a percentage of revenue.

Summary

• RXO, Inc. reported revenue of $1.774 billion for the three months ended June 30, 2026, a 25% increase from $1.419 billion in the same period of 2025.
• For the six months ended June 30, 2026, revenue was $3.199 billion, up 12.2% from $2.852 billion in the prior year.
• Despite revenue growth, the company reported a net loss of $9 million for the three months ended June 30, 2026, and a net loss of $45 million for the six months ended June 30, 2026.
• Cost of transportation and services increased as a percentage of revenue in both periods, primarily due to a tighter market and rising buy rates in truck brokerage.
• The company redeemed its 7.50% Notes due 2027 and issued $400 million in new 6.375% Notes due 2031.
• As of June 30, 2026, RXO had $335 million available under its $450 million ABL Facility.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral to slightly negative sentiment due to continued net losses and increased cost of services relative to revenue, despite revenue growth.

Positives

• Revenue increased by 25.0% to $1.8 billion for the second quarter of 2026 compared to the prior year.
• Truck brokerage revenue increased by $324 million, driven by a 44% increase in revenue per load due to higher freight rates and fuel prices.
• Last mile revenue increased by $29 million, with a 6% increase in rates and a 3% increase in volume.
• Sales, general, and administrative expenses decreased as a percentage of revenue to 11.9% in Q2 2026 from 15.1% in Q2 2025, driven by cost savings and improved operating leverage.
• The company had $335 million available under its ABL Facility as of June 30, 2026, indicating sufficient liquidity.
• The company was in compliance with its debt covenants as of June 30, 2026.

Negatives

• The company reported a net loss of $9 million for the three months ended June 30, 2026, and $45 million for the six months ended June 30, 2026.
• Cost of transportation and services as a percentage of revenue increased to 83.0% in Q2 2026 from 78.8% in Q2 2025, driven by rising buy rates in truck brokerage.
• Truck brokerage buy rates increased faster than contractual sell rates due to a tight market and capacity exiting.
• Net cash used in operating activities was $47 million for the first six months of 2026, compared to $21 million provided in the same period of 2025.
• A debt extinguishment loss of $11 million was recorded in the first quarter of 2026 due to the redemption of the 2027 Notes.

Risks

• Economic inflation can negatively impact operating costs and potentially depress activity levels.
• A prolonged period of inflation could cause interest rates, fuel, wages, and other costs to increase.
• The pricing environment can become more competitive during economic downturns, affecting the ability to obtain price increases.
• The company is involved in numerous legal proceedings, including class action and collective action cases related to driver misclassification, which could result in substantial monetary damages.
• The company's last mile subsidiary is involved in misclassification claims, and while two have been settled for immaterial amounts, others are still being defended.
• The company's insurance policies generally do not cover misclassification claims, meaning any required satisfaction of such claims could negatively impact financial results.

Future Outlook

The company believes its existing liquidity and sources of capital are sufficient to support operations over the next 12 months and thereafter. Capital expenditures in 2026 are planned for technology, equipment, and real estate, with significant discretion over timing and amount.

Management Comments

• "Our truck brokerage business has a history of generating robust free cash flow conversion and a high return on invested capital."
• "We provide our customers with highly efficient access to capacity through our digital brokerage technology. This proprietary platform is a major differentiator for our truck brokerage business, and together with our pricing technology, we believe it can unlock incremental profitable growth."
• "We believe that we have significant discretion over the amount and timing of our capital expenditures as we are not subject to any agreement that would require significant capital expenditures on a designated schedule or upon the occurrence of designated events."

Industry Context

StockSavvy.ai notes that RXO's performance reflects broader industry trends in the transportation and logistics sector, particularly the impact of tight capacity and rising freight rates on both revenue and costs. The increased cost of services relative to revenue suggests a challenging environment for maintaining margins, even with strong demand.

Comparison to Industry Standards

• The increase in revenue per load for truck brokerage (44% year-over-year in Q2 2026) outpaced the increase in load volume (2%), indicating a strong pricing environment, which is typical in periods of constrained capacity.
• The rise in cost of transportation and services as a percentage of revenue (from 78.8% to 83.0% in Q2 2026) suggests that RXO, like many in the industry, is facing pressure from higher carrier buy rates and fuel costs, potentially impacting gross margins if sell rates do not keep pace.
• The decrease in SG&A as a percentage of revenue (from 15.1% to 11.9% in Q2 2026) indicates improved operating leverage, a positive trend that competitors are also likely pursuing through efficiency gains and technology adoption.
• The net loss despite revenue growth is a concern, though common for companies undergoing integration or facing significant market pressures. Competitors like C.H. Robinson and Expeditors International may offer comparative insights into margin management during similar market conditions.

Legal Proceedings

• Involvement in numerous proceedings including claims for property damage, personal injury, environmental liability, commercial disputes, and employment-related claims.
• Several class action and collective action cases alleging misclassification of contract carriers as employees.
• Two misclassification claims (Gonzalez v. RXO Last Mile, Inc. and Espinal v. RXO Last Mile, Inc.) have been settled for immaterial amounts.
• The company continues to defend other misclassification claims, believing them to be without merit.
• The company has not accrued for losses in the ongoing misclassification claims as a loss is not considered probable at this time, and damages are not quantified.

Stakeholder Impact

• Shareholders: Continued net losses and increased operating costs may impact profitability and stock valuation.
• Creditors: The company has issued new debt and has revolving credit facilities, with covenants to be monitored.
• Employees: Restructuring costs and ongoing operations impact employment.
• Suppliers/Carriers: Increased buy rates in truck brokerage indicate a favorable market for carriers.
• Customers: Increased freight rates may be passed on to customers, impacting their logistics costs.

Next Steps

• Continue to manage operating costs and improve operating leverage.
• Monitor market conditions, including freight rates and capacity availability.
• Manage debt obligations and ensure compliance with covenants.
• Address ongoing legal proceedings, particularly misclassification claims.

Key Dates

Recommendation

While revenue growth is positive, the persistent net losses, increased cost of services as a percentage of revenue, and negative operating cash flow suggest caution. The company's ability to manage costs and improve profitability in a tight market will be key. The recent debt issuance and refinancing are strategic but add to the debt load. A hold recommendation is appropriate pending signs of sustained profitability and improved operating cash flow.

Keywords

truck brokerage, last mile delivery, managed transportation, freight rates, fuel prices, debt issuance, operating leverage, revenue growth